Posts Tagged ‘consumer credit’

CONSUMER CREDIT CONTINUES TO CONTRACT

CONSUMER CREDIT CONTINUES TO CONTRACT

Courtesy of The Pragmatic Capitalist 

Consumer credit contracted $3.6B in July.  In short, the year over year rate is improving, but the bottom line is that consumer credit continues to contract as the de-leveraging continues at the household level (via Econoday):

“Consumer credit outstanding in June contracted $1.3 billion-but at least it was at a slower pace than in recent months. Credit in May fell $5.3 billion while April dropped a particularly severe $14.9 billion. Simply, the consumer sector is showing weak demand for loans combined with tight bank lending and heavy charge offs by banks.”

CC CONSUMER CREDIT CONTINUES TO CONTRACT


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An Avoidable Depression

An Avoidable Depression

Great DepressionCourtesy of MIKE WHITNEY at CounterPunch

The economy has gone from bad to worse. On Friday the Commerce Department reported that GDP had slipped from 3.7% to 2.4% in one quarter. Now that depleted stockpiles have been rebuilt and fiscal stimulus is running out, activity will continue to sputter increasing the likelihood of a double dip recession. Consumer credit and spending have taken a sharp downturn and data released on Tuesday show that the personal savings rate has soared to 6.4%. Mushrooming savings indicate that household deleveraging is ongoing which will reduce spending and further exacerbate the second-half slowdown. The jobs situation is equally grim; 8 million jobs have been lost since the beginning of the recession, but policymakers on Capital Hill and at the Fed refuse to initiate government programs or provide funding that will put the country back to work. Long-term "structural" unemployment is here to stay.

The stock market has continued its highwire act due to corporate earnings reports that surprised to the upside. 75% of S&P companies beat analysts estimates which helped send shares higher on low volume. Corporate profits increased but revenues fell; companies laid off workers and trimmed expenses to fatten the bottom line. Profitability has been maintained even though the overall size of the pie has shrunk. Stocks rallied on what is essentially bad news.

This is from ABC News:

"Consumer confidence matched its low for the year this week, with the ABC News Consumer Comfort Index extending a steep 9-point, six-week drop from what had been its 2010 high….The weekly index, based on Americans’ views of the national economy, the buying climate and their personal finances, stands at -50 on its scale of +100 to -100, just 4 points from its lowest on record in nearly 25 years of weekly polls…It’s in effect the death zone for consumer sentiment."

Consumer confidence has plunged due to persistent high unemployment, flat-lining personal incomes, and falling home prices. Ordinary working people do not care about the budget deficits; that’s a myth propagated by the right wing think tanks. They care about jobs, wages, and providing for their families. Congress’s unwillingness to address the problems that face the middle class has led to an erosion of confidence in government. This is from the Wall Street Journal:

"The lackluster job market continued to weigh on confidence. The share of


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Consumer Credit: Yuck

Consumer Credit: Yuck

Courtesy of Karl Denninger at The Market Ticker 

There’s nothing here that I like:

Consumer credit increased at an annual rate of 1/2 percent in April 2010.  Revolving credit decreased at an annual rate of 12 percent, and nonrevolving credit increased at an annual rate of 7 percent.

Yeah yeah.

In dollars, non-revolving loans went from $1.5925 trillion to $1.602 trillion, an increase of $10 billion.  But revolving (credit card) debt decreased $8 billion from $846.5 to $838.

The previous values were revised (negatively) as well.

To put this in chart terms in percentages:

Yeah, ok, the rate of change has leveled out in the credit card space and turned up a tiny bit in the non-revolving.  But in dollars it looks like this:

Nice little hook there eh? 

The consumer continues to say "screw that!" on more spending - especially spending that goes on plastic.

Believe whatever you want about the magic market pumpers, the numbers do not lie, and it appears the stock market is figuring it out too, with RTH (Retail Holders) down to just under 93 from $108 just a couple of months ago, a loss of 14%.

"Here it comes!"


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PARTS OF THIS MARKET ARE LOOKING IRRATIONAL

PARTS OF THIS MARKET ARE LOOKING IRRATIONAL

Courtesy of The Pragmatic Capitalist 

I haven’t thought the 75%+ rally was particularly irrational over the course of the last 12 months.  Surprised by the strength?  Absolutely.  But irrational, no.  As of late, we’ve begun to see signs that the consumer is back, but the equity action implies that the consumer is not only back, but ready to break records.  In late 2006 I wrote a letter that said:

“So here we sit with a relatively healthy economy, signs of inflation and record housing prices. Sounds pretty good, right? Not so fast. The markets could certainly move higher if housing doesn’t collapse, but we see very few scenarios in which that can happen.  When the housing market slows consumers will spend less and businesses will begin to suffer. The US economy will then fall into a recession and European and Asian countries will quickly follow suit as the world’s greatest consumers wilt under the environment of low liquidity and higher debt….The credit driven housing bubble remains the greatest risk to the equity markets at this time.”

I said the market was due for a potentially crippling recession as the yield curve inverted, consumer balance sheets were turned upside down, and a housing bubble was brewing.  Just days before the market crashed in 2008 I said the market had all the ingredients for a crash.  In late 2008 I said the market had overreacted and would likely revert towards the mean in 2009 for a total return of 18%.

The day before the market bottom in March 2009 I said government intervention would likely generate an equity rally.  But I did not come close to predicting that we were on the precipice of a 75% 12 month move.  Not even close.  On the other hand, I have never thought the move was particularly irrational and didn’t fight the tape through 2009.

I was very constructive on the market heading into 2010 and maintained that stimulus, strong earnings and an accommodative Fed would result in higher stock prices in H1.  I point this out not because I am trying to toot my own horn or gloss over my many imperfections (many can be emphasized), but overall I have been able to not only foresee the macro mechanics driving the market, but have also done a fine job translating that into…
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Mortgage Debt as a Percentage of Consumer Credit. You Have Officially Entered Hell.

Mortgage Debt as a Percentage of Consumer Credit. You Have Officially Entered Hell.

Courtesy of Paco Ahlgren at Bottom Violation

mortgage, consumer, credit, debt, bernanke, fannie, freddie, housing, collapse, recoverySee the green part of the graph? That’s home mortgage debt up until 2008.

See the blue part? That’s consumer credit.

Call me mathematical, but what’s wrong with this picture? More importantly, what propaganda machine continues to succeed in preventing the breathing portion of humanity from recognizing that the government sponsored and encouraged lending in the home mortgage industry for decades, and this is what happened.

Stated another way: The government not only caused this, it encouraged it. This has nothing to do with market action. This is pure, politically-motivated manipulation. For those of you still so mind-numb that you remain skeptical, ask yourself this: why is the commercial mortgage market still solvent? Answer? Because it doesn’t have government sponsorship.

 


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Retail sales rise – don’t get too excited

Retail sales rise – don’t get too excited

Courtesy of Tim Iacono at The Mess That Greenspan

The Commerce Department reported higher retail sales in January, the third increase in the last four months, as American consumers continue to open their wallets after one of the sharpest contractions in spending since the Great Depression.

IMAGE Following an upwardly revised decline of 0.1 percent in December, overall sales adjusted for seasonal variations rose 0.5 percent in January and the gains were broad-based with a full nine of 13 categories posting increases.

After rising 0.1 percent in December, auto sales were unchanged last month and, excluding autos, overall sales were up 0.6 percent following a decline of 0.2 percent. Excluding both automobile sales and sales at gasoline stations, January saw an increase of 0.6 percent after a decline of 0.3 percent in December. 

Best Buy Raises Earnings Estimate

On a year-over-year basis, overall retail sales were up 4.7 percent and, excluding autos, sales rose 4.6 percent. As these figures are not adjusted for inflation and when considering the level of sales one year ago (see chart above), the recent data loses some of its luster, particularly when considering which components contributed most to the increase in sales over that time. 

Sales of food and clothing, aided by government assistance to a degree never seen before, continued to rise at about the rate of inflation, but, with unemployment still quite high, incomes flat or falling, and consumer credit collapsing as it has over the last year, it’s hard to see how spending in the U.S. will rebound to anywhere near the levels seen during the middle of the last decade absent the hefty contributions from discretionary spending.

Moreover, as we move further into 2010, the year-over-year comparisons will become increasingly difficult since the worst of the spending slowdown occurred in late-2008 and early-2009.

For example, from last January, gasoline station sales rose 29 percent and this was due exclusively to higher prices since the average price at the pump was about 50 percent higher than a year ago. Other categories posting the biggest gains were sales at nonstore retailers that rose 12.4 percent and auto sales that were 6.7 percent higher than immediately after the virtual shutdown…
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Consumer Credit: Awful

Consumer Credit: Awful

Courtesy of Karl Denninger at The Market Ticker

Plant shoots

Where are my green shoots?

Consumer credit decreased at an annual rate of 6 percent in the third quarter of 2009.  Revolving credit decreased at an annual rate of 10 percent, and nonrevolving credit decreased at an annual rate of 3-3/4 percent.  In September, consumer credit decreased at an annual rate of 7-1/4 percent.

Yuck.

Here’s the graphical representation.

Nothing good in here.  The non-revolving flattened out some in September (gee, you think "cash for clunkers" might have influenced August and September?) but revolving credit – that is, credit cards – continues its base jump without any appreciable change in slope.

Here’s the longer-term view:

 

We are a credit-based system, as are all modern monetary systems.   No meaningful economic recovery can or will occur until the consumer has purged his balance sheet of the inappropriate debt he has and is once again able to earn and borrow.

FOOD

If we supposedly exited the recession on or before September, it sure isn’t apparent in this report.  You can put a fork in that line of garbage – it’s done.

PS: The next update of the Z1, due out in a couple of months, should be interesting….. especially the "Ponzi Finance" indicator….

 


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Three Yahoo Tech Tickers: Deflation, Gold, Stock Market

Three Yahoo Tech Tickers: Deflation, Gold, Stock Market

Courtesy of Mish

I was on three Tech Ticker segments yesterday with Henry Blodget and Aaron Task.

Tech Ticker – Inflation or Deflation?

Inflation or Deflation? "It’s Definitely Deflation," Mish Says

Ask an economist about their biggest concern about the U.S. economy and you’re likely to get one of two starkly different answers: America is either about to be swamped by a major bout of inflation or decimated by deflation.

Count Mike "Mish" Shedlock of Sitka Pacific Capital among the deflationistas.

While some consumer prices are rising and the Fed is printing money like crazy, Shedlock says deflation is "definitely" a greater threat than inflation.

People looking at prices are completely missing the mark," says Shedlock. "Consumer credit is falling, banks aren’t lending, and we’ve got bank failures at a massive rate. These are the same kind of conditions as in the Great Depression."

Indeed, bank lending has tumbled and the Fed reports consumer credit has shrunk for seven consecutive months and was down 5.8% on an annualized basis in August, the most recent month available.

…..

Tech Ticker – Ignore The Euphoria

Dow Breaks 10,000: Don’t Get Caught Up in "Euphoria", Mish Warns

The Dow Jones Industrial Average closed above 10,000 today for the first time in a year, and more than a decade after first breaking the mark. Since hitting lows in March, the Dow is up an astounding 50%, while the S&P 500 has gained 60%.

Before you get your broker on the phone or start trading that dormant online brokerage account, take heed of this warning from Mike “Mish” Shedlock, the blogger behind MISH’S Global Economic Trend Analysis: "Five years from now, I think its quite likely the Dow is not going to be much more than 10,000," he says.

Why so negative?

"We’ve still not solved any of those structural problems" in the housing, banking and debt markets, that caused last year’s crisis, he claims.

Shedlock’s advice: ignore the euphoria, and "take some chips off the table. Now’s just not a good time to be invested."

Shedlock, also an investment advisor representative for SitkaPacific Capital Management, thinks investors are better positioned in gold and cash.

Tech Ticker – Thoughts On Gold

Exploding Gold Prices Have Nothing To Do With


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UNPRECEDENTED PLUNGE IN CONSUMER CREDIT CONTINUES

UNPRECEDENTED PLUNGE IN CONSUMER CREDIT CONTINUES

Courtesy of The Pragmatic Capitalist

Consumer credit fell 13% year over year in a sure sign that the deleveraging cycle is alive and well.  Consumers are paring back on credit in an unprecedented fashion.

 UNPRECEDENTED PLUNGE IN CONSUMER CREDIT CONTINUES

Those who are curious as to why this recession is different from past recessions need look no further than the following chart.  You’ll notice that consumer credit is falling at a rate that has never been seen before. In fact, consumer credit declined marginally during the 1991 recession and actually climbed throughout the 2001 recession.   Why is this important?  An economy that is based on a fractional reserve banking system has trouble expanding if the debt in the system does not continually expand.  Consumers are still deleveraging and that means a robust and sustainable recovery is unlikely to occur.

 UNPRECEDENTED PLUNGE IN CONSUMER CREDIT CONTINUES 

The biggest risk in such an environment is not whether the consumer recovers – the consumer needs to deleverage and clean up their balance sheet – but whether the government continues to pummel the currency and rack up massive debts as they try to dig our way out of the debt hole.  These are the same mistakes Japan made in the 90’s.  Let’s hope we wise up and stop the printing presses before they cause an even larger boom/bust cycle….

 


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The Government’s Effort Has Failed

The Government’s Effort Has Failed

Courtesy of Karl Denninger at The Market Ticker


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Phil's Favorites

Interview with John Rubino

I had the good fortune of visiting with my friend John Rubino from Dollar Collapse last weekend, and that led to my latest interview with John in which we discuss the likely effects of Donald Trump's plans to stimulate the US economy and "make America great again." John shares some investing ideas to help guard against the probable outcome of increased borrowing and spending and the eventual devaluation of the dollar.  

****

Ilene: What are your investing expectations and premises now that we know that Donald Trump has been elected president? Have any of your premises changed as a result?

John: Trump is looking like Obama/Bush on steroids. That...



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Zero Hedge

"Hard-Core Clinton Fanatic" Manufactured "Viral Fake News" That MSNBC Used To Discredit Wikileaks

Courtesy of ZeroHedge. View original post here.

Authored by Glenn Greenwald via The Intercept,

The phrase “Fake News” has exploded in usage since the election, but the term is similar to other malleable political labels such as “terrorism” and “hate speech”; because the phrase lacks any clear definition, it is essentially useless except as an instrument of propaganda and...



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ValueWalk

Do Electoral College Challenges Have Any Chance Of Succeeding? Not Likely Says One Organizer

By Mark Melin. Originally published at ValueWalk.

A major anti-Trump protest is being planned for December which, in part, supports Electoral College elector revolt against the voter’s state-by-state decision. Does it have a high probability of succeeding?  Don’t count on it, says one of the movement’s organizers.

Electoral College

Image source: Wikimedia Commons

Texas Republican elector, upset with Trump tweets and policy choices, makes a stand

Texas Republican elector Christopher Suprun made waves when he said he will not be voting for Donald Trump on the basis of his judgement Trump is not qualified for the job.

“Mr. Trump goes out of...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

OPEC, Russia see smooth road to global deal on output cut (Reuters)

Russia and Saudi Arabia said they expect OPEC and non-OPEC producers to reach an agreement on Saturday to curtail oil output and prop up prices in the first such joint move since 2001.

OPEC, Russian Oil Cut Deal Pushes Up Asian Natural Gas Prices (Forbes)

The OPEC agreement reached last week to cut oil output by 1.2 million b/d (removing around 1% ...



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Kimble Charting Solutions

Gold could blast off, if this resistance cluster holds!

Courtesy of Chris Kimble.

Below looks at the US Dollar/Gold Ratio over the past 30-years. When the ratio is heading lower, US$ is weaker than Gold/Gold stronger than US$. When the ratio is heading higher, US$ is stronger than Gold/Gold weaker than the US$

At this time, the ratio in the chart below, has created a Power of the Pattern setup, that is seldom if ever seen.

CLICK ON CHART TO ENLARGE

A rare cluster of resistance is in play for the US$/Gold ratio at (1...



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Biotech

The Medicines Company: Insider Buying

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

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Members' Corner

How To Poop At A Party?

Courtesy of Nattering Naybob.

Once again, it's "Toilet Thursday" or "Thursday in the Loo", so we follow up on Second Hand Stink with How to Poop At A Party. 

This hilarious video demonstrates how to control the Shituation when needing to Poopulate at a gathering, in no uncertain terms. 

We hope this recurring bathroom humor theme "shits" well with our readers. So please do relax, drop the cursor below, click and enjoy.

...

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Chart School

Dow Jones Gann Angle Update

Courtesy of Read the Ticker.

When the Dow Jones moves the media must have an explanation for it. However the insiders have the nod to what is going on.

The media story so far is that since the TRUMP win, managers have been rotating their portfolios to represent TRUMP trends (lower taxes, go easy on the 'too big to fail' Wall Street banks, more jobs for Americans). Prior the election the stock market was set up for a HILLARY win, due to more of the same, status quo, FED support. But....

Using Richard Ney logic, the short answer is, stocks were always going up and the election results do not matter nor would a higher 10 yr bond or lackluster fundamentals. The real story is the marke...

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Promotions

Phil's Stock World's Las Vegas Conference!

 

Come join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017.            

Beginning Time:  8:00 am Sunday morning

Location: Caesar's Palace in Las Vegas

Notes

Caesar's has tentatively offered us rooms for $189 on Saturday night and $129 for Sunday night. However, we have to sign the contract ASAP. We need at least 10 people to pay me via Paypal or we may lose the best rate for the rooms. (Once we are guaranteed ten attendees, I will put up instructions to call the hotel for individual rooms.)

The more people who sign up,...



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OpTrader

Swing trading portfolio - week of December 5th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Largest US Bitcoin Exchange Is "Extremely Concerned" With IRS Crackdown Targeting Its Users

Courtesy of ZeroHedge. View original post here.

Last Thursday we reported that in a startling development seeking to breach the privacy veil of users of America's largest bitcoin exchange, the IRS filed court papers seeking a judicial order to serve a so-called “John Doe” summons on the San Francisco-based Bitcoin platform Coinbase.

The government’s request is part of a bitcoin tax-evasion probe, and se...



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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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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...

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