Market uncertainty over upcoming elections
We had a mixed bag of economic reports come out last week, some good some bad. The jobless claims report was good but the bad was in retail sales and small business sentiment, which hit a new year low. We believe a lot of business owners have fears concerning the upcoming elections. There is an uncertainty and the markets don’t like uncertainty.
No oil freeze from OPEC
The Doha meetings happened over the weekend with the primary oil ministers. There was hope that there would be an oil production freeze but that did not happen when Iran didn’t even show up to the meeting. The major oil producers, like Russia, want to freeze production but Iran is saying they just got back in the game and they want some time to catch up. Our expectations were low as each country has its own interest and they are not in line.
Earthquake in Japan
The earthquake in Japan has caused a drop in the Asian markets. Several large producers have pulled their factories off line. So investors are looking at a falling market from Japan, as well as oil prices falling over the unproductive Doha meeting. We think we are going back to the $35 oil trading range.
Last week we discussed on the vlog that the IMF (International Monetary Fund) was going to ask governments to increase their infrastructure spending. They did but the global growth forecast has slowed once again.
Possible positive China impact on US Markets
For the last couple of years the topic of China’s impact on the US economy has been a large one. Over the weekend China’s growth data came out at 6.7% for the first quarter. For the first time in a long while it has leveled off from a history of decline. The Chinese have gone in with a good deal of stimulus and engineered a soft landing. Most of the pressure on the US from China has been the indirect price pressure on our multinational companies. Now we are beginning to see a leveling out of the indirect price pressure on steel, iron ore, and other non-oil related products. Retail sales and the building of factories in China are accelerating which we haven’t seen in a long time. It will be some time before we see if this holds up, but for now, the bleeding has stopped.
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