Scoreboard: Cold comfort

Wall Street made an exception to poor retail data on the basis of bad weather.

Most of the data-flow flow that we saw out of the United States wasn’t great. Retail sales fell 0.4 per cent in January, after a 0.1 per cent fall the month prior. Core sales were 0.2 per cent lower after a 0.1 per cent increase. I think most investors accept that weather has distorted this data though, and the northeast of the US is now being hit with snow storms. They’re pretty serious – 3500 flights have been delayed and many hundreds of thousands have no power, some 400,000 down south around Georgia and Carolina. With those conditions, seeing a small increase in jobless claims was fairly irrelevant as well. In the week to February 8, claims rose to 339,000 from 331,000.

Wall Street took the data and the weather distortions in its stride. Stocks were bid from the open, and at the time of writing, the S&P500 was up a decent 0.6 per cent (1829). The Dow then rose 63 points (16,027) and the Nasdaq is currently up 0.8 per cent (4233), brushing off poor earnings from Cisco (that still beat expectations anyway). European markets had a mixed session, with the Dax up 0.6 per cent and CaC 0.2 per cent higher, while the FTSE100 was off 0.2 per cent.

Commodities were mixed and moves were small. Gold is up almost $5 to $1299, silver is 0.1 per cent higher and copper is down 0.3 per cent. WTI crude fell 0.1 per cent ($100.3) and Brent was 0.3 per cent higher ($108.5).

Forex news saw the Australian dollar recover somewhat after being sold off on yesterday’s disappointing jobs figures, where the unemployment rate hit a 10-year high. The unit rose some 55 pips from a low soon after the data were released, to be at 0.8985. Still heavily undervalued on any metric. Elsewhere, the euro is about 65 pips higher at 1.3674, the British pound is about 35 pips higher at 1.6651 and the yen is at 102.27.

Rates were bid overnight and so yields fell. The US 10-year yield was off about 3 bps to 2.73 per cent, the 5-year is at 1.5 per cent and the 2-year is at 0.31 per cent.

In other news, while the Australian employment numbers yesterday were worse than expected, many headlines around the figures were simply alarmist – hysterical, even. Firstly, the labour market lag and the lift in confidence has only been very recent. Jobs growth will lift. Secondly, the country doesn’t have a jobs crisis and the fact remains there is no sign of broad-based job-shedding. That jobs aren’t being created reflects excessively cautious business. Offshore, German inflation was steady at 1.2 per cent year-on-year, while in the US, business sales were 0.1 per cent higher in December and inventories rose 0.5 per cent.

In markets today, there isn’t a lot of data locally, although we do get a speech from an Assistant Reserve Bank Governor Christopher Kent on the resources boom and the Australian dollar (0900 AEDT). I expect the RBA to try to talk the currency down, but the fact remains that the resources boom is not over and the Australian dollar should be higher – much higher. Otherwise, the key news for the region is likely to be the Chinese inflation figures. Tonight we see European GDP and trade figures, while for the US, industrial production and the University of Michigan’s consumer confidence index are the ones to watch.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.

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