Consumers Upbeat About Providing For Their Families

08:04AM Apr 25, 2014
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Yesterday, we learned that the Bloomberg Consumer Comfort Index spiked to the highest level in 8 months, and the second highest level in 6 years. The trend for this index has stalled at times, but overall was up since the bottom of the 2008-2009 recession that was exaggerated by a financial crisis. Recessions are mostly about a business problem while depressions are a recession gone awry from a financial crisis. The 2008-2009 was called the Great Recession in that it was more than a recesssion but less than outright depression. Traders discussed this index performance as suggesting consumers were upbeat about the prospects of taking care of their families.

In general for last week and this week, macro economy news was more positive than negative. But news out of China continues to suggest a slower pace of economic growth, and then there is the issue of grain cancellations, which has turned into a "nasty" bit of business. This week the Ukraine/Russia conflict returned to headlines. And the stock market assumed more positive input than otherwise with a rally from last week into this week, but our in house business cycle model does offer a setback by next week. Could a continued rise of Ukraine/Russia tension be a driver of this forecast.

Commodities rallied for the first quarter of 2014 and there was brief surge in demand for cargo ships to move purchased commodities. (Baltic Dry Freight index spiked in February alongside higher commodities prices but has since declined.) Traders are now discussing whether it is time for a correction of the price of commodities in general or can the up trend extend into summer. (An inhouse business cycle model offers a set back for several commodities in May.)

Cool weather has delayed Corn Belt planting and this in turn propped up corn futures prices. Traders continue to debate as to whether it is late or if there will be an abrupt opening for a surge in plantings. A glance at a planting pace chart since the 1980s does not suggest anything unusual at this time. But looking out the window at the corn field one might entertain otherwise. Planting pace should pop to 9% to 11% but there is a lack of confidence.

Traders are discussing daily and weekly lows as potential support for agriculture markets. What will it mean for the month of May if important support levels are violated. Just a setback before a summer rally or a lengthy downtrend.