The positive effects of lower oil prices on stocks was agian over ridden by economic weakness. This was very similar to what happened a few days ago when we got lower oil prices but a large drop in the transport index, based on economic weakness drove the market lower. Yesterday the culprit was weak retail sales. Just about everyone has been talking about if and when the overindebted consumer will crack for over a year now, so its a big deal. Ex auto and gas the number was -.1%,. The last time it was negative Greenspan was talking about a soft patch. Obviously this can have important ramifications for the dollar and interest rates.
I have a hunch that the pattern we will see now, is weakness on days of reports reinforcing the economic weakness theme and recoveries thereafter. We have very supportive oil prices and long term interest rates to provide some rally days.
The dollar is stronger on an IMF report reinforcing the theme of stronger U.S. growth and weaker growth in Europe and Japan. This is old news of course. The euro should find support around the February lows of 127.40. It should start to firm if more sign of U.S. economic weakeness emerge.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment