Unresolved Cliff Drags Back Lethargic Market
The market grudgingly comes back to work today, overdosed on caffeine and other alkaloid derivatives, a day when traditionally everyone calls in sick, as absolutely nothing has been resolved over the Fiscal Cliff with just 3 real trading sessions left in the year. And the likelihood that no real trading will take place is very high as both the House and Obama are still out of town, although the latter will take a late night AF-1 trip back to D.C. to rekindle rumors of an imminent 11th hour deal. It is increasingly looking as though the E-bay market, when all real trading take places at 3:59:59 pm, will manifest itself at the calendar level too, with either a market surge or plunge in what appears to be the last trading day of the year. One can only hope if the news is negative that it has a hard limit like the ES limit down plunge last Thursday.
The overnight newsflow was sparse, although we learned, to little surprise, that despite all the cheerleading by various TV outlets that the holiday retail season was the weakest one in 4 years. As the WSJ reported, "The annual holiday shop-a-thon drew to a muted close for many retailers, according to preliminary data, reflecting what some experts said was the slowest growth in spending since the 2008 recession. For the eight weeks from Oct. 28 through Christmas Eve, retail sales for the holidays rose just 0.7% from the year before, according to MasterCard Inc.'s SpendingPulse unit." So much for all those soaring personal spending and income numbers from last week. Remember: when the government is in doubt how to let the market know that the news is horrible and getting worse, it baffles with seasonally adjusted BS. As it has been for the past 4 years.
Elsewhere, in Japan the BOJ released its latest meeting minutes, which together with the resignation of the Noda cabinet (who is finally no longer watching), has sent the Japanese Yen into freefall, and the USDJPY touching the highest since April of 2011. Apparently 2% inflation targeting in a country in which 2% interest rates will mean all government revenues go to paying down the cash interest on the debt, is a good thing. Of course, all this assumes that Abe will succeed where he bombed so spectacularly last time. Which he won't.
Oh yes, apparently the Netflix service crashed on Christmas Eve (some even noticed it in real life). The firm with the zero barriers to entry and which pays far more for content (starting in 2016) than it can afford, promptly blamed it on Amazon. At least it wasn't Sandy, the Fiscal Cliff, or Bush.
Overnight we also learned that the Chinese Q3 current account surplus was $70.8 billion, even as the capital and financial account posted a deficit of $51.7 billion. Perhaps this explains why China has refused to buy any US government bonds for well over 1 year running.
Today brings us Case-Shiller data, which is expected to come in stronger on a seasonally adjusted Y/Y basis, as the last marginal benefits of the ongoing REO-to-Rent, not to mention the Foreclosure Stuffing strategy employed by all banks to subsidize the low end of the housing market, provides the last benefits to this latest, fourth, round of the housing dead cat bounce. Aside from that it will dead quiet once again with total market volume expected to barely top Monday's year lows.