It was the most amazing session for oil in years. It came at an odd time as they are still shutting down rigs in North Dakota and laying off people in Houston. Some say the reversal that saw oil up almost 6% for the session was related to oil option contracts expiring, but any sign of strength is a plus. No, I am not rooting for $100, but instead for equilibrium that keeps the drilling miracle alive, even as it comes under attack from Saudi Arabia and President Obama's newest rules on methane.
The downtrend is intact and will be until a move through resistance that begins at $55 through $57. However, it was good for the stock market, which could have easily seen the Dow off more than 400 points. Speaking of miracles, a lot of people are still scratching their heads about the latest retail sales report.
Retail Miracle...Not Yet
Looking at the details, some are obvious like gas station sales swooning, but others are not, and the most important item is the massive difference between month-to-month changes compared to year-over-year.
| Destination Retail Sales December 2014 | M/M | Y/Y |
| Gas Stations | -6.5% | -14.2% |
| Building Materials | -1.9% | +5.2% |
| Misc Retailers | -1.9% | +0.9% |
| Clothing | -0.3% | +3.8% |
| Sporting Goods | -0.2% | +4.8% |
| Auto | -.03% | +9.8% |
There were a few standouts, and it is clear people would use some of that gas money for a night on the town, sprucing up their homes, or spending a day at the spa. There is some legitimacy to the idea, where people have to be confident gasoline will remain cheap for a long time. I have already written about this in a previous commentary that some of that money would find its way into empty coffee cans.
| Destination Retail Sales December 2014 | M/M | Y/Y |
| Resturants | +0.8% | +8.2% |
| Furniture | +0.8% | +5.8% |
| Personal Care | +0.4% | +6.1% |
Big Banks and Main Street
The other big news yesterday came from the banks. Two Powerhouses posted results.
Back to the markets and the message from earnings- first the banks. Wells Fargo (WFC) and J.P. Morgan (JPM) posted results yesterday and while both stocks were down, it is clear Wall Street was more disappointed with J.P. Morgan. Still, what about Main Street?
The message seems to be that people are reaching more for their credit cards, maybe the auto boom is fading, and no one is buying homes anymore. In fact, for WFC only 60% of originations were for purchases, down from 70% in the third quarter.
The Fed might be happy about increased credit card volume, but it had better come with higher wages; of course, I covered this already.
| Main Street Lending Wells Fargo | Change Y to Y |
| Credit Card Volume | +17% |
| Auto Loans | -1% |
| Mortgage Originations | -12% |
| Main Street Lending JP Morgan | Change Y to Y |
| Credit Card Volume | +10% |
| Auto Loans | -1% |
| Mortgage Originations | -1% |