The market is under pressure today morning mainly due to overseas weakness because Japan raised the severity of its Nuclear crisis. There is probably some impact of Alcoa’s disappointing earnings report. Alcoa is never a good indicator of the earnings season as it frequently disappoints due to company specific issues. From an economic perspective I don’t consider the Japanese issue very critical.
Oil is down pretty significantly even though the dollar is weaker, this is an interesting development and I think it maybe just a technical breakdown in the momentum and the US trade data showed that oil imports actually fell. So there is indication that the higher prices are affecting demand. Goldman Sachs is also out with a negative note on oil.
I think as long as oil prices do not spike very strongly the economy could handle higher prices. Over longer periods of times economies can handle slow and steady price rises. It gives people time adjust their behavior and consumption patterns. It is the very fast spikes which are hard to adjust to.
We will have our first important earnings from JP Morgan tomorrow morning and Bank of America is on Friday morning. Most of the tech earnings start rolling in next week.