North American Wrap-up: The Storm Has Passed

The Storm Has Passed

The North American trading session was predictably mundane today as investors from around the world wound down their activity as the Easter holiday creeps ever closer.  In a show of positivity ahead of the holiday, talks between interested powers helped to ease the rising tension in Ukraine whom promised to de-escalate some of their recent actions.  Since the investing world felt that WWIII was at least put on hold for the weekend, equity markets limped higher and served to drag the USD with it.

Not all of the positivity surrounding the USD was Ukraine based though as a flotilla of encouraging North American economic releases revealed themselves.  Starting with Canadian CPI which rose 1.5% year over year and ending with the US’ Philly Fed Manufacturing Index which rose to 16.6, there was a never-ending string of positive data.  The Canadian inflation reading was the best since June 2012 and the Philly Fed was the highest since October 2013 and to top it off, US Initial Jobless Claims beat consensus with the Continuing Claims coming in at the lowest level since December 2007.

As economic report after economic report about US activity is released we are really beginning to see that the prognostication by many market commentators, that the harsh winter was having a serious effect on growth, seems to be coming true.  The Federal Reserve’s Beige Book, released yesterday, still mentioned the weather quite a few times, but did so less than the month previous, and data seems to be agreeing with the assumption that there may have been pent up activity during the winter. 

So far in April, we’ve seen that Employment is growing, Manufacturing is strengthening, Consumer Confidence is high, Consumer Credit is increasing, Sales are blistering, Production is up, and Inflation is rising.  Could new Fed Chair Janet Yellen have picked a better time to become the leader of the world’s most vital monetary policy body?  It seems the only way we can go is up from here as the tapering of Quantitative Easing hasn’t hindered the animal spirits of the US consumer; at least for now.

As we’ve discovered in the recent past, just because economic figures are heading in the right direction doesn’t mean that all is well and good.  That is why we are on the third iteration of QE; the other two versions led to economic growth as well, but that momentum wasn’t sustained.  If Yellen can sustain the current surge and usher the economy back to independence by continuing to taper QE, see unemployment continue to drop, cultivate the current trend in inflation, and actually *gasp* increased interest rates; she could be viewed as one of the most successful Chair’s to run the 100 year old organization.  Not bad for the first woman to sit at the head of the table.

Of course, before we start showering her with praise, those “IF” statements need to turn in to “REMEMBER WHEN” statements, and we are a really long way away from that happening.  Perhaps spring fever is playing with my emotions, but I find it increasingly more difficult to not believe that the US economy is heading in the right direction; and if we continue to see improving figures from the US and blasé ones from Europe and China, the USD could be a very popular currency for many years to come.

Looking Forward                                                                       

Nothing.  Absolutely nothing.  Good Friday looms which means that most developed nation’s equity markets will be closed down for the holiday and activity will be extremely light.  I suppose there is the Tertiary Industry Index being released in Japan, but the market will likely ignore it as the only thing that could give the JPY a shove is some additional QE from the Bank of Japan.  Since that likely isn’t happening tonight, activity could be painstakingly slow.