Key News

  • Volcker Says Rise of China Underscores Decline in U.S. Economy, Leadership (Bloomberg)
  • Europe Confidence in Economic Outlook Rose to a 12-Month High in September (Bloomberg)
  • Yen weakens as finance minister backpedals (Financial Times)

Quotable

“People only see what they are prepared to see.”

Ralph Waldo Emerson

FX Trading – A Crude Indicator for the Real Economy Greater-than-expected confidence numbers again come out of Europe. The status relative to historical numbers can be seen in the chart below.

chart 1

Plus, new US Consumer Confidence numbers are due out later this morning. Consensus estimates expect a nice improvement from the last reading: 57 vs. 54.1.

chart 2

Certainly the uptick would be a welcomed boost, however insignificant it might seem after looking at the long-term chart of the Conference Board’s consumer confidence data above. Considering the fact that the US consumer still appears strapped for cash, with efforts aimed largely at paying down debt and with employment stuck in the mud, a rebound only to the lows of the previous 28 years does not seem unusual. It is going to take time before the numbers begin looking respectable. It will be interesting to see whether confidence numbers halt their climb if the data does not soon follow. The last year’s worth of US crude oil inventory data has been characterized by infrequent drawdowns that put only a small dent into totals crude oil stocks.

chart 3

Certainly the uptick would be a welcomed boost, however insignificant it might seem after looking at the long-term chart of the Conference Board’s consumer confidence data above. Considering the fact that the US consumer still appears strapped for cash, with efforts aimed largely at paying down debt and with employment stuck in the mud, a rebound only to the lows of the previous 28 years does not seem unusual. It is going to take time before the numbers begin looking respectable. It will be interesting to see whether confidence numbers halt their climb if the data does not soon follow. The last year’s worth of US crude oil inventory data has been characterized by infrequent drawdowns that put only a small dent into totals crude oil stocks.