The Market Radar

We anticipate, monitor, and comment on market moving global economic and geopolitical issues.  No dark side brooding, no wanting the world to end, no political rants.  Traders, investors, policymakers, or market observers can’t  afford to ignore us.

Dude, Where Is Food and Crude?

Now these are the tax cuts we like!   Especially because the big flop in food prices directly benefits the poor (x/ farmers) more than anyone else.

Thus far, these are relative price shifts and and not a sign of general deflation.  We don’t see rents or medical insurance flopping.

Let’s hope the monetary policy geniuses will let food and crude continue to fall, which will increase real wages and, ultimately, consumption and growth.  We have our doubts, however, as the noise from Wall Street about a deflationary collapse will grow,  markets will grow nervous,  and the horn of QE3 will grow louder.

The People’s Bank is also walking a tightrope here.

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Thank You

Let us remember.

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Week in Review

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Quote of the Day: So Churchill

One day shortly after the Second World War ended, Winston Churchill and Labour Party Prime Minister Clement Attlee encountered one another at the urinal trough in the House of Common’s men’s washroom. Attlee arrived first. When Churchill arrived, he stood as far away from him as possible. Attlee said, “Feeling standoffish today, are we, Winston?” Churchill said: “That’s right. Every time you see something big, you want to nationalize it.“

Source:  Stephen Bainbridge

Global Trend Indicators

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Stratfor: Problems With a “Greek Euro”

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Weekly Eurozone Watch: Is Eurogeddon Exaggerated?

Key Data Points
German 10-year Bund yield down 6 bps to 1.37 percent;
France 28 bps tighter;
Italy 9 bps tighter;
Spain 10 bps wider;
Belgium 21 tighter;
Portugal 5 wider;
Ireland 3 wider;
Greece 113 wider;
Large Eurozone banks flatish to slightly higher;
Euro currency down 1.7 percent against U.S. dollar;

Comment:   Euro market x/ currency had a relatively benign week given the ugly headlines.   Also note x/Spain and Greece all sovereigns tighter vs. Bund on the year.  Looking at this data either our Eurogeddon  fears and emotions are exaggerated and wrong or the market is wrong;  and/or the ECB is doing a decent job containing the crisis to Greece and Spain, at least for now.

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U.S. Consumer Sentiment Highest In Years

From Econoday,

The sell-off in the stock market and rising problems in Europe aren’t rattling the US consumer whose sentiment is clearly stronger than it’s ever been during the recovery. The Reuters/University of Michigan index jumped to 79.3, up nearly 3 points from April and up 1.5 points from the mid-month reading. This last comparison, which puts the index at an implied 80.8 over the past two weeks, indicates that the rise in optimism is now picking up intensity…

The Reuter’s/University of Michigan’s consumer sentiment index in early May was up a solid 1.4 points at mid-month to a preliminary 77.8 versus April’s 76.4. The latest reading edged out February 2011 for the best reading so far of the recovery. The latest report showed a decline in the expectations component, which is now off recovery highs with a six tenth dip to 71.7. Optimism over the future is limited, a factor that limits consumer spending. The good news in the report was a rise in the assessment of current conditions, up a very strong 4.4 points to a recovery best 87.3.

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About that other 800 pound Macro Swan in the room…

Good stuff from the Economist’s cover story and 14-page special report on China’s economy.  Run, don’t walk, to read it.  Here’s a taste,

CHINA’S weight in the global economy means that it commands the world’s attention. When its industrial production, house building and electricity output slow sharply, as they did in the year to April, the news weighs on global stockmarkets and commodity prices. When its central bank eases monetary policy, as it did this month, it creates almost as big a stir as a decision by America’s Federal Reserve. And when China’s prime minister, Wen Jiabao, stresses the need to maintain growth, as he did last weekend, his words carry more weight with the markets than similar homages to growth from Europe’s leaders. No previous industrial revolution has been so widely watched.

But rapid development can look messy close up, as our special report this week explains; and there is much that is going wrong with China’s economy. It is surprisingly inefficient, and it is not as fair as it should be. But outsiders’ principal concern—that its growth will collapse if it suffers a serious blow, such as the collapse of the euro—is not justified. For the moment, it is likely to prove more resilient than its detractors fear. Its difficulties, and they are considerable, will emerge later on.

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Today’s U.S. Economic Data

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