Slipstream

The U.S. economy seems to be standing alone on the sunny side of the street. Worries elsewhere are a drag on the whole world, and Europe, Japan and China can't expect the U.S. to carry the whole burden of interminably providing growth.

The frissons of electricity that zapped through world markets yesterday shows the limits of America's ability to sway markets single handedly, even though economic news for the world's largest economy was better than average, better than expected.  

Today, two economic reports gave a slightly blurry picture but were nonetheless upbeat. Housing starts jumped 13.2% in April led by new apartment construction. Experts were expecting a 4% increase after a rise of 3% in March. Even more impressively, housing starts in April were 26.4% higher compared to a year earlier.  

Nevertheless, consumer confidence fell. Not by much, but a bit of a worry. However, consumer confidence is a polled question and people often say things that directly contradict the way they're acting in the marketplace.

Regardless of U.S. dynamism, Europe and China are worries. Europe can't seem to rev up its consumer base, especially in areas where consumption has been dormant or even involved in a reversed pace of growth - Portugal, Spain, Greece, Italy and portions of the eastern third of the zone.

Something is also brewing in China, and it's not good. Of course there is always a lack of transparency there, but the sudden quest for corruption-free business practices; the jitters the U.S. is creating through its manufacturing sector's growth; and shrinking pools of candidates for urbanized internal markets, all create conundrums for the huge country. If China really has to compete with the U.S. in manufacturing, they will be hurt.

While we embrace the notion that economic news is somewhat mixed across the world, we are finding it harder to believe that gold has not been a beneficiary of the clogged pipes. The price of 10-year bonds has steadily been pushing up while the yield falls, a sign of economic instability and a sign of a quest for haven plays.

Next week we will find the answers to some of these riddles.

As always, wishing you good trading,