Less bad is good… so goes the mantra of today’s bull. So goes the rational for buying global shares… and so goes the rational for buying oil.
That is to say, the global economy continues to sputter along, but it is doing so at a slightly faster pace.
Be that as it may, it is still sputtering… and that is bad. As we analyze in today’s issue of The Schork Report, telltales still exist that suggest that economies in every corner of the globe are far from turning the proverbial corner.
The three highlights from last week’s economic headlines were:
- China First Quarter Growth
- U.S. March Retail Sales
- U.S. Federal Reserve Beige Book
With regard to the first, China’s economy grew by 6.1 percent in the first quarter from a year ago. It was the weakest growth since the 1999 fourth quarter. The news was so surprising that is was actually able to stem copper’s meteoric rise… albeit for one day.
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?
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.