As far as the second bullet goes, U.S. March retail sales plunged by 1.1 percent. It was the first drop in sales in three months and it clearly caught the market unaware.
Consuming spending is the driver behind two-thirds of domestic economic activity. Thus, after surprisingly strong growth through the previous three months, last month’s pullback is sales is a stark reminder of consumer’s extant unease.
Finally, per the Fed’s Beige Book:
Reports from the Federal Reserve Banks indicate that overall economic activity contracted further or remained weak. However, five of the twelve Districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level.
Golly… five of the twelve Districts noted a moderation in the pace of decline. Breakout the bubbly. After all, less bad is good… right? Wrong, bad is bad. Things are getting worse here in the U.S. Unemployment is rising and the factory economy is lifeless.
However, at the end of the day, these headlines apparently do not matter. The market is just ignoring them. Why focus on cold hard numbers like industrial production growth (and the attendant knock-on to energy consumption) in China and the U.S. when we got some unexpected good (although suspect) news from the banks?
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Stephen Schork is the Editor of, "The Schork Report"and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.
