Ten Things That Would Turn Rosie Bullish, And A Realistic Read On Today’s GDP Data
by Zero Hedge - July 30th, 2010 1:28 pm
Courtesy of Tyler Durden
One of the world’s most realistic people (which for some reason the permabulls take as an indication of extreme bearishness: which is fine – after all they themselves live in an imaginary world populated with market marking unicorns and benign computer programs), David Rosenberg has shared ten things that would make him bullish. Alas reading through these gives one the impression that Hades would first turn endothermic before any of these actually were to come true. And for some more practical views from Rosie, we also include his spot on interpretation of today’s GDP data.
I was recently asked to provide a list of developments that would make me more bullish on the macro and market outlook. Here are a few:
1. Initial jobless claims below 400k on a sustained basis. This would lead to job growth strong enough to generate organic wage growth.
2. Improvement in housing inventories to a 5-6 months’ supply backdrop. This would help establish a floor under home prices.
3. Signs of a turnaround in the money multiplier, money velocity and the ratio of commercial bank non-liquid assets/total assets. Any sign that the debt deleveraging cycle has run its course.
4. A new “killer app” or some major technological breakthrough would be nice.
5. A sustained decline in oil prices that is induced by new supplies (or peace in the Mideast?) as opposed to demand destruction would act as a de facto tax cut.
6. Structural economic reforms in the world’s “surplus saving” countries like China, India and Germany that stimulate their domestic demand, and hence bolster our exports and reduce the global reliance on the U.S. as the consumer of last resort, would be a huge plus.
7. A peaking out in the personal savings rate (the sooner we get to 6%-8%, the better) – get to a level consistent with pent-up demand.
8. Consumer confidence closer to 100 (typical of expansion) than the current 50 reading.
9. An end to the steep cutbacks at the state and local government level.
10. New and more effective political leadership globally – could the Cameron victory in the UK be a leading indicator towards fiscal probity?
And here is Rosie’s take on today’s most important economic data point:
The economy underperformed expectations in the
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DiggWho Flipped The Switch On The Market?
by Chart School - July 30th, 2010 1:03 pm
Who Flipped The Switch On The Market?
This is your captain speaking, we’ve turned off the keep your seat belts on sign (for those of you who have short exposure, those who have long exposure? Please fasten your seatbelts). You are now free to move about the cabin. This MAY now conclude our in flight turbulence for the time being.
So what happened to the market Thursday? I mean wow we were up like 80 points on the Dow and the OTC was up nice too so what gives? Simple, it’s all because of this guy!
He flipped the switch! If you’ve ever seen the remake of lost in space you know what we mean.
It’s because we had a brand new EMOTIONAL subscriber (shown below) call us and say we were nuts! Can’t you see this market is flying? We’ve talked about being in control of your emotions and managing them. They say the fastest way to find out who you are is to start trading. The markets give INSTANT feedback.
It’s quite obvious to us this investor is finding out who he is right now and what he needs to work on to improve his game.
Of course the captain sees the runway just ahead and that’s why he’s not emotional mind you.
On to the charts
Yesterday we told our subscribers:
“So from here? IF we are at a turning point we should not go over the red line on the two charts below, even if we do though we’ve got 1131 not far away which is another resistance level.”
As you can see we’ve still got the green line to deal with to the downside. Call us pinned between the red line or the 1120 level on the S&P 500 to the upside and the green line to the downside.
From a daily perspective in the charts below look at the Full Stoh’s, still in overbought territory and the Bollinger Bands both still have quite a ways to go.
Everything looks encouraging to those that are short this market. We’ve hit resistance/fib levels, indicators flashing overbought and in the zone, a fair amount of go-go names staging the makings of “New Highs And Dies” which is what you want to see and a classic pop and drop Thursday.
To learn…
Consumer Metrics Institute News: July 30, 2010 – Inside the New GDP Numbers
by ilene - July 30th, 2010 12:48 pm
Consumer Metrics Institute News: July 30, 2010 – Inside the New GDP Numbers
Courtesy of Rick Davis at Consumer Metrics Institute
Bureau of Economic Analysis (‘BEA’) released its "advance" estimate of the annualized growth rate of the U.S. Gross Domestic Product (‘GDP’) during the 2nd quarter of 2010. Per their report, the GDP grew during the quarter at an annualized rate of 2.4%, down from 3.7% in the 1st quarter of 2010. Several points from the report merit comment:
* Readers familiar with prior GDP reports will be more surprised by the reported 1st quarter growth as by the new 2nd quarter number (which had been leaked by Mr. Bernanke last week), since only last month the Q1 of 2010 was supposedly growing at a 2.7% rate. Why did the Q1 number suddenly get altered upward by 1%? The BEA quietly revised the 1st quarter inventory adjustment up to a level that represents a 2.64% component within the revised 3.7% figure, with 1st quarter "real final sales of domestic product" now reported to be growing at a modestly improved 1.06% annualized clip, compared to the 0.9% number reported last month. In short, factories were piling on inventory at a substantially higher rate than previously thought, while the "real final sales" remained anemic.
* The 2.4% figure will garner all of the headlines, but the more important "real final sales of domestic product" continues to be weak, growing at a reported 1.3% annualized rate. The real cause for concern is that the reported inventory adjustments dropped from a 2.64% component in the revised 1st quarter to a 1.05% component during the 2nd quarter. If factories have begun to realize that end user demand remains anemic, the inventory adjustments could well go negative soon, pulling the reported total GDP down with it.
(Click on chart for fuller resolution)
* The BEA revised much more than the first quarter of 2010. They revised down 2009, 2008 and 2007 as well. Apparently the "Great Recession" has been worse than our government has previously reported. And the recovery’s brightest moment, Q4 2009, has been revised down from 5.6% to 5.0%. Similarly Q3 2009 dropped from 2.2% to 1.6%. And so on. The bottom of the recession was shifted back one quarter, with Q4 2008 now reported to have contracted at a -6.8% rate, revised down from the…
RANsquawk US Afternoon Briefing – 30/07/10
by Zero Hedge - July 30th, 2010 12:28 pm
Courtesy of RANSquawk Video
Decoupling Is Back After Plunging 10 Year Yields Reflect 10 Point ES Disconnect
by Zero Hedge - July 30th, 2010 12:27 pm
Courtesy of Tyler Durden
Yesterday may go down in the history books for being the only day in months in which the daily decoupling, either between risk and FX, or risk and Bonds did not occur. Alas, today the binary market hijacking mutants are back to their signal chasing momentum ploys, as a result despite the 10 year about to plunge below 2.90, stocks are flat. As either stocks are rich (no question there) or bonds are (yields are low), the intraday recoupling surefire trade is back, and promises to pay a few nickels to those willing to short stocks and short the 10 year (and pray there is no steamroller in the vicinity).
Mike Krieger Discusses Politics, Economics, And Gold On Keiser Report
by Zero Hedge - July 30th, 2010 12:06 pm
Courtesy of Tyler Durden
Mike Krieger, who has been a staple poster at Zero Hedge courtesy of his willingness to speak the truth no matter how gory or controversial, was on the Max Keiser show, discussing everything from trivial items such as Goldman Sachs movie casting, to far more serious issues such as Obama’s failed presidency, corporatism, information oligopolies, the overturn of various core fundamental democratic principles, consumer culture, the Federal Reserve, and gold as the one true money standard. As always an objective and highly informative discussion between Mike and Max.
Fast forward to 14 minutes in the clip below for the full Krieger interview.
DARK HORSE HEDGE: BOOM! take profits and run
by Sabrient - July 30th, 2010 12:00 pm
DARK HORSE HEDGE: BOOM! take profits and run
By Scott at Sabrient and Ilene at Phil’s Stock World
Buy to cover Dynamic Materials Corp (BOOM) at the Market, Friday July 30, 2010
In the spirit of "second verse, same as the first" Dark Horse Hedge will take advantage of the less than well received earnings report from BOOM after Thursday’s close to cover the SHORT position taken on 7/23/10 at $16.15.
BOOM is down over 9% for the day and we will replace BOOM with another short during the day as we monitor the market’s activity.
Check back.
Dark Horse Hedge: BOOM! take profits and run
by ilene - July 30th, 2010 11:50 am
DARK HORSE HEDGE: BOOM! take profits and run
By Scott at Sabrient and Ilene at Phil’s Stock World
Buy to cover Dynamic Materials Corp (BOOM) at the Market, Friday July 30, 2010
In the spirit of "second verse, same as the first" Dark Horse Hedge will take advantage of the less than well received earnings report from BOOM after Thursday’s close to cover the SHORT position taken on 7/23/10 at $16.15.
BOOM is down over 9% for the day and we will replace BOOM with another short during the day as we monitor the market’s activity.
Check back.
Turkey is on the Menu
by Zero Hedge - July 30th, 2010 11:33 am
Courtesy of madhedgefundtrader
The boarding of a Turkish ship by Israeli commandos and the international brouhaha that it sparked has thrown a searing spotlight on that emerging nation. Several hedge fund friends and not a few readers of this newsletter in Istanbul have urged me to explore this intriguing nation further. So I thought I would use this otherwise glacial news day to do exactly that.
I first trod the magnificent hand woven carpets of the Aga Sophia in the late sixties while on my way to visit the rubble of Troy and what remained of the trenches at Gallipoli, a bloody WWI battlefield. Remember the cult film, Midnight Express? If it weren’t for the nonstop traffic jam of vintage fifties Chevy’s on the one main road along the Bosporus, I might as well have stepped into the Arabian Nights. They were still using the sewer system built by the Romans.
Four decades later, and I find Turkey among a handful of emerging nations on the cusp of joining the economic big league. Q1 GDP grew at a blazing 11.4% annualized rate, second only to China, exports are on a tear, and the cost of credit default swaps for its debt is plunging. Prime Minister Erdogan, whose AKP party took control in 2002, implemented a series of painful economic reform measures and banking controls which have proven hugely successful. Since the beginning of this year, Turkey’s ETF (TUR) has outperformed BRIC poster boy China’s ETF (FXI) by a whopping 11.8%.
Foreign multinationals like general Electric, Ford, and Vodafone, have poured into the country, attracted by a decent low waged work force and a rapidly rising middle class. The Turkish Lira has long been a hedge fund favorite, attracted by high interest rates. With 72 million, the country ranks 18th in terms of population and 17th in terms of GDP, some $615 billion. It has a near perfect population pyramid; with young consumers greatly outnumbering expensive retirees (click here for more depth in my “Special Demographic Issue” at http://www.madhedgefundtrader.com/november_6__2009.html ).
Still, Turkey is not without its problems. It does battle with Kurdish separatists in the east, and has suffered its share of horrific terrorist attacks. Inflation at 8% is a worry. The play here long has been to buy ahead of membership in the European Community, which it has been denied for four decades.…
An Open Letter to President Obama
by Zero Hedge - July 30th, 2010 10:55 am
Courtesy of Phoenix Capital Research
Dear Mr. President,
You don’t know me, but I was one of the millions of Americans who voted for you in the last election. I have since been fairly critical of your Presidency largely because I, like many others, feel betrayed by the policies you have enacted upon winning said election.
However, rather than simply becoming yet another “I voted for Obama and regret it” commentator who has a lot of complaints but no ideas, I thought it better to do my duty as a citizen of this country and try to offer a solution to some of the problems plaguing the US today.
The following is a plan that I believe would bring about a significant change not only in the US economy, but in the US mindset. The last 30+ years in this country have been dominated by an overall regression in moral character and beliefs.
Somehow, and I’ll leave the “how” up to the historians, our nation’s moral framework seems to have shifted from asking ourselves “is this right or wrong?” to “is this legal or illegal?” Even worse, we now seem to be shifting from “is this legal or illegal?” to “can I get away with this?”
This is most obvious in the financial community where a small sliver of our citizenry continues to make billions, if not trillions, of dollars, through ill-gotten means. I won’t bother going into details here, because the “ill-gotten means” have been well documented by others.
For now I will simply state that it is absolutely OBVIOUS that the market is manipulated, that insider trading and front-running of investor orders is permitted with impunity, that Americans got a RAW deal on the bailouts (that’s putting it mildly), and that the worst thing that happens to those who break the law in the financial and large corporate sectors is a fine equal to maybe a few days’ worth of profits.
The fact that this activity continues to be permitted and that those who engage in it make salaries in the six if…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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