And they're off!
Coming around the clubhouse turn it's Hang Seng at 29,133 followed by Bombay at 18,814, Nikkei is in third at 17,458 followed by The Dow at 14,078, who is coming on strong. Filling out the pack we have the NYSE at 10,264 and falling behind are Dax at 8,044, FTSE at 6,705 and CAC at 5,871.
Sure it's a silly way to rank the markets but what difference does it make? There is no sense of reality to these levels from a historical standpoint so what does it matter how you measure them.
Today we are seeing a market rally based on the fact that Dow component WMT posted better than expected results while we ignore disappointing results from JCP, TGT, JWN, M and even SKS. So American consumers are leaving the stores with better paid salespeople and heading for the discount land of minimum wage-slaves to save money – woo hoo! Sounds like a reason to rally to me, right?
Pretty much anything is a reason to rally in this market but don't forget is has NOTHING to do with the fundamentals. SMRT had a 9.1% drop in same-store sales, MWRK is down 7% and CTR is off 7% – these are those empty stores in the strip malls we talked about yesterday.
The Asian markets are having a party as the BOJ keeps their lending rate steady at half a point above FREE, allowing international money to continue to flow into the markets at record paces. The dollar is continuing to fall with only the even weaker Yen keeping it from losing a full 50% of its value against the normal basket of currencies (we do not include China, which would also make us look bad). Japan's policy of printing Trillions of Yen and handing them out like candy to hungry investors at 0.5% interest got the thumbs up from Moody's (whose clients REALLY need that money) as they upgraded Japan's domestic debt rating to A1. Party on Japan – Moody's has you covered!
Also manning the global keg to keep the party going is the Peterson Institute, a "Washington Think Tank" who says "The world economy is expected to largely shrug off the effects of the recent financial turbulence." The WSJ mentions the IMF throughout this article, giving you the impression this is from them but it's not. While there are ties, this story, which is driving the rally, is based on bullish speculation of a usually bullish IMF treated as fact.
Jobless claims were down a touch and our trade gap narrowed by import prices were up 1% (that's for 1 month!) so it was weak demand that narrowed our trade deficit along with a weak dollar that spurred demand for our exports, especially inflating items like gold, cotton and chemicals (up $927M), food and beverages (up $606M) and consumer goods (up $186M). Those all pretty much accounted for 120% of the $1.4Bn improvement in trade. Also keep in mind that the big ticket item, oil, averaged "just" $70 a barrel during August while September came in around $79 (up 20% from last September) so we still have that to look forward to in the next report. Crude imports were $21.73Bn in August so we are looking at perhaps a $3Bn increase next month based on oil alone!
So let's get out there and party like it's 1999! I'd say be careful but that just seems silly doesn't it?
