The US Markets have traded higher of late, but so have the precious metals, especially gold and silver, when ordinarily the inverse is true. As stated earlier in this column, gold and silver do seem to have diverged, not just from the equity markets, but from each other. This has been attributed to the fact that silver has not participated equally percentage wise in the upside of the market. However, gold traded higher yesterday, then lower, but did close with a gain. Silver made an all time high when it broke the $20 an ounce level and technically it is poised to go even higher.
The global markets are now watching for the US Government figures to be released, especially Retail Sales for August. Analysts largely agree that US Consumer Spending is equal to 70% of the world’s largest economy. Economists are looking for an .03% rise in Consumer Spending for August, which would help to put to rest overseas some of the worries about a double dip recession here at home.
Should the August Consumer Spending Figures not meet expectations, it could mean a temporary sell-off, or it could signal the unmistakeable beginning of the double dip recession or worse, depending on the other government numbers that are due out. Analysts and Economists, as well as Traders also pay attention to the “Revised” numbers that are released a month later and are very often revised downward and show real weakness in this market.
In Currencies, the Yen made another 15 year high against the US $dollar and European markets were up but mixed moderately because the strength of the yen brought back worries that reinforced lack of conviction in the EU recovery.
There are many EU economic figures, just as US government figures, that can and do influence the direction of the markets nationally and globally. One such EU Index is the ZEW (the German Investor Sentiment Index) which fell from a positive 14 in August to a negative 4.3 in September. The last time this index was negative was March 2009. This drop confirms that the EU zone recovery has definitely slowed.
All eyes will be watching the US Government numbers released this week, especially retail sales for August. Analysts, Economists, Traders and Investors all wait to see if the expected rise of .03% is achieved or if the index fails to meet expectations or worse, turns negative. Analysts agree that US Consumer spending equals 70% of the world’s largest economy.
Has double-dip recession been stalled by consumer spending? As stated, experts and the street are expecting .03% increase and anything less will definitely be seen as a negative, not just in US markets, but across the globe.
China’s currency hit a new high versus the US $ dollar for the 3rd straight trading day yesterday. This has been attributed to lawmakers hearings on Bejings Foreign Exchange Policies.
Sometimes when the “adjusted” numbers come out for the month before, just a day or so prior to the release of the current figures, those who watch notice there is usually a downward revision. It would behoove the average investor to know his product or his advisor.