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April 14, 2009. Confusing signs at the Bottom.
By Resource Intelligence · April 14, 2009 · 3:49 pm · Leave a Comment
The economic signs permeating the media are decidedly confusing.
Weak Retail and Price Data Dim Hopes of Quick Recovery
Retail sales data sours Wall Street mood
Bernanke sees signs of recovery
Obama optimistic on economy
PC sales recovering: Intel
Signposts of (eventual) better times
On one side there are “dim hopes” and “sour moods” and on the other side “signs of recovery” and optimism.
It’s no surprise, of course, that U.S. Federal Reserve Board Chairman Ben Bernanke and President “Aloha” Obama’s tone of optimism coincide with less than positive reports from the retail sector. Now’s the time for first quarter reports, and early reports from companies like Intel indicate that the bottom has been (more or less) reached. A new, shaky, baby steps, Bambi legs stability may have been achieved. Intel Chief Executive Paul Otellini has said that PC sales bottomed in the first quarter and that the U.S. economy has already seen the worst of the barrage of bad news.
We know by now what unfettered public opinion can do: Without context, it slides into fear and then panic. President Obama (and Bernanke with him) is acting preemptively when he speaks in tandem with quarterly reports and sales data from the retail sector.
“The Commerce Department reported that consumers spent less on a range of goods last month, from automobiles to home furnishings, gasoline to clothing. Spending on electronics and appliances dropped 5.9 percent in March from the previous month,” reports the New York Times.
At the same time Wall Street discounts retails sales news, it can’t ignore the positive signs from giants like Intel, Johnson & Johnson and Goldman Sachs (Johnson & Johnson, Goldman Sachs big movers). And nor should Obama and Bernanke.
Cautiously, Bernanke said there were “tentative signs that the sharp decline in economic activity may be slowing.” Within 24 hours of that, Obama told audience members at Georgetown University that the measures his government have taken are beginning to show signs of success.
Still, to the resource investor, one of the clearest signs of global economic recovery will be the prices of commodities, and in turn miners.
Miners push TSX to three-month high
Copper has always been known as a measure of economic health, and now is a better time than any in recent history why that should be so. Strong growth in the price of copper will in this case indicate growth in physical demand, rather than as a pure speculation play, as was happening in the months leading up to the bursting of the commodities bubble.
Copper, or Dr. Copper with a PhD in commodities, as the important infrastructure metal is known, as ripping up the market right now, with an 8% jump on Tuesday alone.
STEVE LADURANTAYE from the Globe and Mail argues five reasons why “Five reasons copper will hit $3 a pound”. Namely, China, China, China, China, China. (Ladurantaye uses vastly different wording).
