First days can be awkward. After Wall Street took the holiday off, the Dow (DJINDICES: ^DJI) dropped 135 points Thursday to start the new year. The blue chip index rose 27% during 2013 for its best year since '95, so it probably earned a little rest.
1. U.S. Dollar is star of global markets on 2014 debut
America is the popular choice for where to park money in 2014. China's growth is corrupt and slowing, and Europe's still dragging in its debt crisis. But America actually grew 4.1% in the third quarter, and econ data is solid. Investors bought loads of U.S. government debt Thursday, reducing the 10-year interest rate America borrows at to 2.99%. You need U.S. Dollars (USD) to buy U.S. bonds, so the USD rose on the demand. Our USD broke the new year's resolution mold -- it's pledging to gain weight this year.
What's better, the USD or the euro? The only way to measure the value of a currency is by comparing it to another. And Thursday, the dollar pounded its euro friend like in one of the world wars. The euro dropped 0.6% in value compared to the dollar, to $1.36 (that's how much it costs to buy one euro right now. On Tuesday it was $1.38). A $0.02 drop in value doesn't seem like much (although it used to buy a tootsie roll), but so much crap is valued in either euro or USD, that the implications of the change is freaking massive.
A strong USD isn't as nice for America as you'd think. In fact, the Godfather of the economy, Ben Bernanke, would probably prefer a weak dollar. Cheap dollars means that our stuff is cheaper for foreigners to buy, which is good for the economy because we export more abroad. The strong dollar is a sign of a strengthening America in the global economy, but Uncle Sam would prefer a strengthening protein shake instead.
2. U.S. Manufacturing ends 2013 on a high note
According to the Institute of Supply Management (ISM), manufacturing activity in the U.S. increased in December at its second fastest pace since April 2011 -- cha-ching. Investors are big fans of the research firm's all-inclusive monthly report on the industry, which makes up 12% of U.S. Gross Domestic Product.
Manufacturing is fun, but what was the highlight? Factory orders. In the automobile industry, in particular, rising sales have pushed major manufacturers like General Motors (NYSE: GM) and Ford Motor Co. (NYSE: F) to add more workers than Santa up north.
The takeaway is that America's manufacturing recovery looks even hotter compared to the rest of planet Earth. Other international manufacturing reports released Thursday showed the industry slowing down a tad in the U.K., with manufacturing in France and China falling to end 2013 on a more depressing note than a Miley Cyrus New Year's Eve special.
Motor Vehicle Sales
Three Fed Presidents and Chairman Ben Bernanke have big speeches