This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Global Macro: Autos, Palladium Strong in a Weak Economy

NEW YORK ( TheStreet) -- The Federal Reserve extended its stimulus program on Wednesday, saying the economy has improved only gradually. U.S. auto sales, though, have been zooming.

U.S. auto sales have reached multiyear highs, which has implications for financial markets as seen below.

The first chart is of First Trust NASDAQ Global Auto Index (CARZ - Get Report). The index reached yearly highs, thanks to strong domestic and global demand.

The European economy has vastly improved since Europe's debt crisis, and strong sentiment surrounding the region has pushed European equity indexes to record highs.

The recovery of U.S. and European consumer spending should continue to push auto indexes higher, and the strong uptrend represented by the chart below shows no sign of a major pullback.

The next chart is of ETFS Physical Palladium Shares (PALL).

Palladium is considered a precious metal, known as a less expensive version of platinum. As a precious metal with industrial properties, it generally trades alongside most other metals such as gold.

Palladium is used in cars as a converter in the exhaust of harmful gases into cleaner substances such as water vapor. Increased demand for cars supports its price.

As most precious metals sold off in August following diminished fear over conflict in Syria, palladium showed relative strength among the group.

With the Fed's announcement on Wednesday, precious metals received a strong bid higher. Palladium accelerated off of its monthly lows after the announcement and continued its move higher into Thursday as most other assets pulled back.

The combination of low interest rates and strength in the auto industry should continue to push both palladium and car makers higher for as long as stimulus and economic data persist.

At the time of publication the author had no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Andrew Sachais' focus is on analyzing markets with global macro-based strategies. Sachais is a chief investment strategist and portfolio manager at the start-up fund, Satch Kapital Investments. The fund uses ETF's traded on the U.S. stock market to gain exposure to both domestic and foreign assets. His strategy takes into consideration global equity, commodity, currency and debt markets. Sachais is a graduate of Georgetown University, where he earned a degree in Economics.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CARZ $41.00 0.00%
PALL $76.13 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs