The market is all backwards
Durable goods orders were down 1.7% last month. Ouch. Durable goods are things like appliances, your stove, your washer dryer etc. This might be due to great weather stateside, but I doubt that people still hang their laundry on clotheslines.
Either way, this sets up the perfect storm for May-June financial boost. Durable goods numbers are very important to economists and investors as a way to gauge demand for manufactured goods. The fact that is number dropped doesn’t surprise me, people don’t want to spend money. This sets up the perfect investment rally for May and June when the numbers don’t look so hot.
Oil is likely to peak around $110 this May as it retests its highs. The price of oil has historically peaked in the May-June months only to fall until hurricane season and hedge funds speculate the price to death. Now that we have indication that demand for goods is falling, the market will probably trade sideways or move lower for the next couple months. As oil starts to make headlines, don’t expect Dow 12,000 look more towards the 11000s.
The stimulus checks are likely to kick in right in the heat of the summer months. Chances are that the checks will be spent on things like air conditioning, heaters, aka durable goods. This is a perfect storm opportunity. With orders slumping heavily, there is a good chance that summer will bring a huge boost to economic indicators and make the billion dollar trade deficits and overspending A20 news.
Let the market correct just a little then be ready to get in heavy. The combined $500+ Billion in FED loans, plus economic stimulus package should bring beautiful inflation fueled budget sheets.