The Morning Call will be off the Air for an extra long weekend. We are going to London and will be back and writing on April 23rd.
Yesterday Yellen spoke at the University of Michigan.The economy is doing OK. The FED doesn't need to"step on it". She said that the "Neutral" target rate was "Pretty Low". She seems to be in line with the view that Soft economic Data leads Hard data by 6 to 9 months. Nomura's Gaynor's work shows that we will only know if something is amiss if Q2 and early Q3's hard data doesn't come through. Soft data showed the way in 2009. Likewise in 2000 after Y2K.
The CPI in the UK was +2.3% year over year. Sequentially the monthly rate of Inflation was +0.4%. Like the FED the BOE has a 2% target. The UK always leads the way. Always. Germany's ZEW economic Index rose to 80.1 from last month's 77.3. Investor sentiment was up to 19.5. Last month was 12.8. The Euro was up +0.2%. Important Soft data. The Polls in France are moving. The second round is likely Le Pen against the Leftist Melenchon. The markets care more about Germany at this point.
Hedgies are getting more Bullish on oil. There has been 5 weeks of Declines. They'er back up to 700 mm bls. The peak in February was 950 mm bls. The low last November was 420 mm bls. The Long/Short ratio is 4:1. This morning Crude inched above $53. Rising prices is bringing out buyers. Coincidentally, there's been a Monster find in the Permian basin. EOG again. They will all lift.
The Fed minutes told us that they are going to sell down their Balance Sheet. Paul Ryan seemed to underscore those comments. This is the opposite of Quantitative Easing. The market should have not only sold of that day but carried on Down. It didn't. The missile strikes against Syria should have seen a flight to safety. The 10 year yield broke below support at 2.3%. The carry through didn't happen. The 10 year yield is at 2.34%. Fridays Jobs number was horrible. A Huge Surprise. The USD should have fallen. It Didn't. The 10 year yields should have fallen. They Didn't . They're Up. The NFIB was down for the second month.Near its highs but down.
Markets that don't want to go Down, Go Up. My friend Bruce just gave me a piece from Credit Suisse. The VIX closed above 15, a post Election high. The VIX futures have inverted for the first time since the Election. We are on our way to breaking out to well above 2500.
Invest the Money.
Edward Pennock CFA, Founding Partner
647-287-6800 | email@example.com
PS. we've used Tiffany's as one leading Indicator for our view on the economy. We are going to add LMVH. Luxury goods are doing well. Their sales were up 15%.