We’ve got some good news and we got some bad news. Seems to have become the story of the U.S. economic recovery. The good news is that Washington managed to pass the debt ceiling law which takes the anchor from around the economy’s neck till next year. Then the passed the budget which removed any further shutdowns until 2015 as well.
The debt limit was passed with much drama. The only thing House speaker John Boehner could do was punt the issue and put a clean bill on the floor. This put the onus on the Democrats to pass the debt bill. He attempted to put something together the Republicans would have liked, but there was such drama that nothing worked. The drama makes the Republicans look like one big dysfunctional family.
Soft Economic Data Continues to Worry Investors
The bad news is that we have gotten a flurry of weak economic reports that hit us last week. This could give the Republicans more ammunition that the administration policies are not working. Still, it way too early to even think this data is indicative of a slowdown and Yellen agrees. One thing is clear, the harsh winter weather is taking its toll.
Retail sales tumbled by a surprising 0.4 percent in January. We expected an increase. Industrial Production fell by 0.3 percent, we had expected a 0.2 percent fain. Heating bills rose, thanks to cold, taking away from consumer spending, increasing inventories and hitting new factory orders.
The only good news, slightly at best, was that that University of Michigan consumer sentiment was steady at 81.2 for early February. It was unchanged from the last report in January. This indicates the volatility in the jobs report have not scared the public into thinking we are on a verge of a spring dive for the economy.
The next couple of months will be critical as we will get a clear perspective of the labor markets. If the job data and other economic recover right their ships and return to their pace of growth, then the GOP will lose ammunition against Obama and his administration. Job creation and economic activity are key indicator of voter behavior.
Good Signs Data will Pick Up
There are many good reasons indicating the uptrend will resume. Consumer balance sheets are better than they have been in quite some time. Corporations still have enormous cash piles to use once they become confident in demand. The fact Washington passed the budget and debt ceiling shows corporations that Washington won’t wreck the economy installs confidence.
Another good sign comes from Wells Fargo. They have dropped their lowest acceptable FICO score from 640 to 600. This means they are about to reenter the “subprime” lending market. Wells Fargo is the nation’s biggest home lender. This is good news for the housing market and its continued recovery.
With credit starting to flow freely and Washington adverting disaster, we could see the park that is needed to drive the economy in 2014. This is great news for the economy and helps the Democrats who wish to hold on to the Senate in the November elections.
BINARY OPTION’S TAKE FOR THE DAY
We should see movement in the Forex market today as the Dollar continues to weaken. Look to the EUR/USD to show more strength. Capital should also flow into Gold as the Dollar weakens.