Another Day, Another Flatline

Another day treading water as we wait for month end. Volumes are actually pretty reasonable today, trending from 100% down c85% but most across the street report of being quiet. Bonds have rallied again today, this in spite of today’s $39bn 5 year auction and the $ has taken a rare foray north.

Equities just can’t seem to make much progress in any direction however. Not even better mortgage apps, home sales and durables could really push us. Ok, the durables number wasn’t so great and the core came in light, but there was a big revision to last month from 1.1% to 2.5%. On another day, at another time, I’m sure it would’ve taken us higher.

So in the interest of something to talk about, I draw attention to two things. One is an article in the Guardian today informing that Toyota, the world’s largest automaker, is to suspend one of its production lines in Japan (220k vehicles). Now while it only last week announced an increase in its 2009 target by 150k to c6m, Reuters reported yesterday that Toyota are also due to cut global capacity by 1m. This is from 10m to 9m. So whether production is going up by 150k or down by 70k net is pretty paltry in the scheme of things…and demand of 6m, when it was more like 8m last year and you have capacity for 10m gives shows that why things may be stabilising in the economy, it’s far from back to the good times.

Secondly, and from the musings of Mr. Rosenberg, noting that while consumer confidence number in the US yesterday was better than expectations at 54.1. The average index level during recessions is actually 73 and post a 55% rally, you would expect it to be 100. So maybe consumers aren’t confident enough? Or maybe the market is getting ahead of itself. Food for thought on a quiet day.