This page has been archived and commenting is disabled.
Morning Musings From Art Cashin
Via UBS Financial Services
Dollar And Data Help Bulls Assault March Highs – A softening dollar helped lift stocks, gold and oil very early on in the last full trading session before Easter. Also, helping stocks were the best numbers in Factory Orders in nearly six years. Throw in an uptick in auto sales and a mild dip in Initial Unemployment Claims and you had a nearly perfect bull stew.
Another factory boosting stocks was a parade of economists and pundits on TV screens. Each seemed to outdo another in waxing poetic about the looming non-farm payroll data.
Speculation about the number to be released Friday morning seemed to climb with each projection. We’d add 200,000 jobs, then 250,000, then 300,000 with some even projecting as high as 400,000.
That kind of optimism helped put a floor under the rally for all of the morning into mid-afternoon. Around 1:45, the dollar began to rally, causing stocks, oil and gold to give back some of the day’s gains. That pullback continued, somewhat erratically, until about 2:30.
Then, the dollar steadied and so did stocks. For the next hour, the stock market moved choppily higher. In the final twenty minutes, they rallied more decisively in what some traders saw as short covering in front of Friday’s payroll data.
As previously noted, the action gave the bulls their fifth up-week in a row. It also left the Dow within hailing distance of 11,000.
Good But Not Great – The payroll data Friday was roundly trumpeted as a sign the economy was advancing strongly. White House advisor, Larry Summers, is quoted in a headline projecting that the economy had achieved “escape velocity”. The concept, we suppose, is that the economy is finally free of the recession gravity that has been holding it back.
The 162,000 jobs added were the best in three years. But the number was below the consensus and well below the more optimistic estimates that blossomed late Thursday.
The primary negative in the report was a drop in hourly earnings. That is a rather rare occurrences with some mild deflationary implications. Another negative was the length of unemployment for so many folks.
Oh Good! Another “Secret” Meeting – The Fed Board of Governors has scheduled a meeting for 11:30 this morning. The topic will be matters pertaining to the Discount Rate. The meeting will be closed to the public.
The last time they held such a meeting, rumors flew of a Discount Rate hike by end of day. While no hike came, it certainly roiled the markets all day. Let’s see what happens today.
A Fed Speech Of Note – On Thursday, New York President, Bill Dudley, gave a speech at Washington and Lee University. He detailed how the “Great Recession” has been much worse than any we have seen since World War II. He says the recovery will be “quite muted” citing a hamstrung consumer.
It is an enlightening speech but not exactly a quick read. He goes through various types of analyses to assess which stage of recovery we may be in and how rate structures may respond.
Cocktail Napkin Charting – In Thursday’s Comments, we said the napkins saw S&P resistance around 1180/1183. The intra-day high was 1181.43. For today, the napkins suggest S&P resistance a notch higher around 1185/1188. Support looks like 1165/1168.
Sunspot Data Spotty – We are still having some computer problems in getting actual spot numbers. We hope to rectify that in a couple of days.
Coming Attractions – Sometime this week, we hope to expound on some new data on China and why some surprise may lie ahead. Just need to get a little more data.
Consensus – Lots of markets closed so U.S. activity may be sleep walk. ISM Service Number could move things in a less liquid market. Stay very nimble.
Trivia Corner
Answer - This was a tough one for the smart people who figured the logical answer couldn't be right and that there was some magic formula. "Sure" was the operative word. The only way you could be sure there were three blue marbles was to pick 75 marbles.
Today’s Question - Pass the leftovers - Some numbers leave remainders when divided. What is the smallest number that leaves 1 when divided by 2; 2 when divided by 3; 3 by 4; and 4 by 5? We want a single number that meets all conditions (obviously it's an odd number).
AN ENCORE PRESENTATION
On this day (-2) in 1954, a somewhat strange and, in light of future events, a rather ironic meeting took place. The Secretary of State stood up to address a secret but bipartisan meeting of eight key leaders of Congress. The Secretary of State was John Foster Dulles and the President was, of course, Dwight Eisenhower.
Dulles told the congressmen that France was on the verge of losing its war with communist guerrillas in Indochina. Dulles laid out a proposal for a quick military strike that would not only help the French; it would change the war and bottle up communism. Dulles said the effort would be brief and very effective. It would not bog us down in an Asian land war. (Something Gen. MacArthur had preached against.) The legislators saw both the logic and opportunity. But would we go it alone? Would we aid the French without getting UN approval or, at least, a flood of allies?
The Senate Minority Leader, who was a Democrat, said he would not come along without a UN resolution or a large cluster of allies. For weeks, Dulles tried secretly for a UN resolution or some allies to aid the French with a quick decisive military move.
Despite these efforts, neither France nor Dulles could persuade the UN (Russian veto, you know) nor could they mount a significant coalition. The Senate Minority Leader opted out. No military move occurred.
Ten years later, that same Senate Leader, Lyndon Baines Johnson had become the President. In that role he poured hundreds of thousands of troops and munitions into Indochina, which was now called Vietnam - in a vain attempt to regain an initiativethat had been lost a decade before.
History is filled with ironies. There's no sense crying over spilt wine.
There was no spilt wine on Wall Street Thursday, at least as far as I could tell. The bulls racked up their fifth rally week in a row.
»
- 4680 reads
- Printer-friendly version
- Send to friend
- advertisements -
I was thinking it was more about passing the "event horizon" than achieving "escape velocity."
"Escape velocity" sounds like something out of the Outer Limits. It would be on par for this fantasy market.
"Escape velocity" is simply the 'speed' that you have to go to get into orbit or above. The shuttle did that this morning and is nothing unusual nowadays.
We passed the metaphorical "event horizon" for our financial system a few years back. So what if we spend a few $1,000,000,000,000 on healthcare, welfare, or "shovel-ready-projects" (chuckle-chuckle, wink-wink, on SRP's), we are fucked. Save every penny or print Quadrillions, we are fucked... event horizon has been passed, so we might as well make the ride as comfortable and quick as possible before the inevitable collapse.
59
Escape velocity is going to run into a brick wall of rising oil prices and long bond rates.
Sounds like we hit SPX 1200 this week...
answer to trivia is: 11
59
My toilet has an escape velocity, too and it reaches it every time I push the flush handle. Thank you, Mr. Summers. I think I understand what you mean.
There is a dynamic at work and it is not explained by either the doomers or the cheerleaders. Consumers are spending money, but I've yet to see a credible explanation for the source of the funds. People I deal with at all levels are not ignorant and many see there is a problem in the economy. Many have unemployed family members and one is about to lose his home to foreclosure. A vendor to my business has his shop on a 32-hour work week to reduce costs. So where is the money coming from that fuels consumer spending?
MM funds, delinquent first and second mortgage payments and credit cards ( the " stealth stimulus " ), unemployment checks, tax refunds. Lots of cash spending can be generated from these and other sources. At least for a while.
Answer to the trivia is 59.
Good linux hosting package offered by ucvhost which not only provides the best in terms of hosting packages but also believes in truly being there for the customer, 24x7. cheap hosting Moreover , they offer unlimited bandwidth as well as nearly 1GB storage along with database maintenance, email facility along with storage, availability of sub domain and many other important features for a very low price. windows hosting Thanks forex vps