This abridged, holiday week saw both the U.S. dollar, which recently hit a one-year high, and metals prices surge, abandoning their usual behavior, as investors grew excited about the prospects for both infrastructure spending and a stronger U.S. currency.
How strong is the dollar? The predictions of a December Federal Reserve interest rate increase are above 90% and the euro is headed in the opposite direction as the currencies are already nearing parity.
The recent rise in metals prices has had some strange market effects. The supposedly more reliable “upstream business,” that Alcoa, Inc. recently separated its aerospace and automotive products into, Arconic, was expected to have a higher stock price and better prospects than the commodity aluminum business that retained the Alcoa name. So much so that CEO Klaus Kleinfeld left with Arconic. Well, Alcoa’s stock has soared since the October split became official. Arconic’s hasn’t.
Here in the U.S., we celebrated the Thanksgiving holiday and the traditional beginning of the Christmas shopping season. Retailers are offering big discounts as they hope that consumers, weary of the election that finally came early this month, are ready to spend, particularly on rare-earth-using electronics.
Online shopping was on pace to reach $2 billion on Thanksgiving Day, up 16% from a year ago, according to Adobe Systems Inc., which tracked visits to e-commerce sites. Even our friends in the U.K. are chasing the online deals.
If consumer spending increases this season it will be another sign that the U.S. economy is ready to turn a page and maybe, just maybe, return to strong growth. We may have a lot to be thankful for this holiday season.