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Posts Tagged ‘consumer sentiment’

Market Commentary From David Rosenberg: Just Call It “Deflationary Growth”

Market Commentary From David Rosenberg: Just Call It "Deflationary Growth"

Courtesy of Tyler Durden

If the way to classify the September stock move as "a confounding ramp on disappointing economic news" gets you stumped, here is Rosenberg to provide some insight. Just call is "deflationary growth or something like that." And as for the NBER’s pronouncement of the recession being over, Rosie has a few words for that as well: "this recovery, with its sub 1% pace of real final sales, goes down as the weakest on record."

It’s a real commentary that the National Bureau of Economic Research (NBER) decision on the historical record mattered more than the actual economic data. The National Association of Home Builders’ (NAHB) housing market index is the latest data point in an array of September releases coming in below expected:

  • Philly Fed index: actual -0.7 versus 0.5 expected
  • Empire manufacturing index: actual 4.14 versus 8 expected
  • NAHB: actual 13 versus 14 expected
  • University of Michigan Consumer Sentiment: actual 66.6 versus 70 expected

It’s early days yet, and these are only surveys, but it would seem as though the economy remains very sluggish as we head towards the third-quarter finish line.

It is truly difficult to come up with an explanation for the breakout, which in turn makes it difficult to ascertain its veracity. If we are seeing a re-assessment or risk or a major asset allocation move, then why did Treasury yields rally 4bps (and led lower by the “real rate”, which is a bond market proxy for “real growth expectations”)?

If it was a pro-growth move, why did copper sell off and the CRB flatten? And where is the volume? Still lacking? So we have a breakout with little or no confirmation. All we can see is that many sentiment measures have swung violently to the upside in recent weeks and the VIX index is all the way back to 21x —- somewhat contrary negative signposts for the bulls.

But the price action is undeniable and the bulls are in fact winning the battle in September, a typically negative seasonal month, after a bloody August. The fact that bonds rallied yesterday is a tad bizarre and perhaps the explanation, if there is one, is that the equity market is enamoured with the cash leaving the corporate balance sheet in favour of dividend payouts and share buybacks and


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Trillions for Wall Street

Trillions for Wall Street

Courtesy of MIKE WHITNEY writing at CounterPunch

High angle view of a stack of Indian banknotes of different denominations near a flame Square

On Tuesday, the 30-year fixed rate for mortgages plunged to an all-time low of 4.56 per cent. Rates are falling because investors are still  moving into risk-free liquid assets, like Treasuries. It’s a sign of panic and the Fed’s lame policy response has done nothing to sooth the public’s fears. The flight-to-safety continues a full two years after Lehman Bros blew up. 

Housing demand has fallen off a cliff in spite of the historic low rates. Purchases of new and existing homes are roughly 25 per cent of what they were at peak in 2006. Case/Schiller reported on Monday that June new homes sales were the "worst on record", but the media twisted the story to create the impression that sales were actually improving! Here are a few of Monday’s misleading headlines: "New Home Sales Bounce Back in June"--Los Angeles Times. "Builders Lifted by June New-home Sales", Marketwatch. "New Home Sales Rebound 24 per cent", CNN. "June Sales of New Homes Climb more than Forecast", Bloomberg.

The media’s lies are only adding to the sense of uncertainty. When uncertainty grows, long-term expectations change and investment nosedives. Lying has an adverse effect on consumer confidence and, thus, on demand. This is from Bloomberg:

The Conference Board’s confidence index dropped to a 5-month low of 50.4 from 54.3 in June. According to Bloomberg News:

"Sentiment may be slow to improve until companies start adding to payrolls at a faster rate, and the Federal Reserve projects unemployment will take time to decline. Today’s figures showed income expectations at their lowest point in more than a year, posing a risk for consumer spending that accounts for 70 per cent of the economy.

“Consumers’ faith in the economic recovery is failing,” said guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, whose forecast of 50.3 for the confidence index was the closest among economists surveyed by Bloomberg. “The job market is slow and volatile, and it’ll be 2013 before we see any semblance of normality in the labor market." (Bloomberg)

Confidence is falling because unemployment is soaring, because the media is lying, and because the Fed’s monetary policy has failed. Notice that Bloomberg does not mention consumer worries over "curbing the deficits". In truth, the public has only a passing interest in the large…
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With Stocks, It’s Not the Economy

Decoupling between stock prices and the domestic economy – and Zachary Karabell explains why he believes this trend will continue. – Ilene 

With Stocks, It’s Not the Economy

By Zachary Karabell, courtesy of TIME 

 

Illustration by Harry Campbell for TIME

From the beginning of May until late June, stock markets worldwide declined sharply, with losses surpassing 10%. The first weeks of July brought only marginal relief. Ominous voices began to warn that the weakness of stocks was a direct response to the stalling of an economic recovery that has lasted barely a year. Anxiety over debt-laden European countries — most notably Greece — combined with stubbornly high unemployment in the U.S. to create a toxic but fertile mix that allowed concern to blossom into full-bloom fear.

The most common refrain was that stocks are weak because global economic activity is sagging. A July 12 report by investment bank Credit Suisse was titled Are the Markets Forecasting Recession? With no more stimulus spending on the horizon in the U.S., Europeans on austerity budgets and consumer sentiment best characterized as surly, the sell-off in stocks was explained as a simple response to an economy on the ropes. 

It’s a good story and a logical one. But it distorts reality. Stocks are no longer mirrors of national economies; they are not — as is so commonly said — magical forecasting mechanisms. They are small slices of ownership in specific companies, and today, those companies have less connection to any one national economy than ever before.

As a result, stocks are not proxies for the U.S. economy, or that of the European Union or China, and markets are deeply unreliable gauges of anything but the underlying strength of the companies they represent and the schizophrenic mind-set of the traders who buy and sell the shares. There has always been a question about just how much of a forecasting mechanism markets are. Hence the saying that stocks have…
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Getting a Grip on Reality – Reflation Dead in the Water

Getting a Grip on Reality – Reflation Dead in the Water

Courtesy of Mish

Economist Dave Rosenberg warns investors to Get a Grip on Reality.

Double-dip risks in the U.S. have risen substantially in the past two months. While the “back end” of the economy is still performing well, as we saw in the May industrial production report, this lags the cycle. The “front end” leads the cycle and by that we mean the key guts of final sales — the consumer and housing.

We have already endured two soft retail sales reports in a row and now the weekly chain-store data for June are pointing to sub-par activity. The housing sector is going back into the tank – there is no question about it. Bank credit is back in freefall. The recovery in consumer sentiment leaves it at levels that in the past were consistent with outright recessions. Last year’s improvement in initial jobless claims not only stalled out completely, but at over 470k is consistent with stagnant to negative jobs growth. And exports, which had been a lynchpin in the past year, will feel the double-whammy from the strength in the U.S. dollar and the spreading problems overseas.

Spanish banks cannot get funding and another Chinese bank regulator has warned in the past 24 hours of the growing risks from the country’s credit excesses. A disorderly unwinding of China’s credit and property bubble may well be the principal global macro risk for the remainder of the year. Indeed, perhaps the equity market finally realized yesterday that allowing China more control to defuse an internal property and credit bubble may well be a classic case of “be careful of what you wish for.”

The Bond Cycle and Deflation

I was at an event recently where I was able to see two legends among others – Louise Yamada and Gary Shilling. Louise made the point that while secular phases in the stock market generally last between 12 and 16 years, interest rate cycles tend to be much longer – anywhere from 22 to 37 years; and she has a chart back to 1790 to prove the point! So while all we ever hear is that this secular bull market in bonds is getting long in the tooth, having started in late 1981, it may not yet be over. After all, the deleveraging part of this cycle


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Consumer = Unhappy, but Spending

Consumer = Unhappy, but Spending

Courtesy of Jake at Econompic Data 

Confidence Falls
Per Marketwatch:

U.S. consumer sentiment dipped in early March, according to media reports on Friday of the Reuters/University of Michigan index.

Amid signs that the labor market is approaching a trough but remains frail, the consumer sentiment index declined to 72.5 in March from 73.6 in February. Economists surveyed by MarketWatch had been expecting the sentiment index to hit 74 in March.

Yet, Still Shopping
Retail sales showed strength in February. Per the AP:.

For February, sales rose 0.3 percent, the Commerce Department said Friday. That surpassed expectations that sales would decline 0.2 percent.

The overall gain was held back by a 2 percent decline in auto sales, reflecting in part the recall problems at Toyota. Excluding autos, sales rose 0.8 percent. That was far better than the 0.1 percent increase excluding autos that economists had forecast.

If you’re going to stay home (unemployed), perhaps that is cause for the new flat panel TV or laptop?

Calculated Risk does point out that while the trend is improved, the overall level is actual less than what was reported just one month ago:

January was revised down sharply. Jan was originally reported at $355.8 billion, an increase of 0.5% from December.

February was reported at $355.5 billion – a decline without the revision to January.

In other words, reports got ahead of themselves (no surprise), but the actual trend remains moving in an upward trajectory even though things quite frankly suck for the average consumer.

Source: Census 

 


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THOUGHT’S ON FRIDAY’S DATA

THOUGHT’S ON FRIDAY’S DATA

Courtesy of The Pragmatic Capitalist

cash for clunkersNothing mind blowing to report this morning.  In fact, more of the same – weak consumers, signs of deflation and “better than expected” earnings.  Consumer sentiment came in essentially flat this morning at 65.7.   This was a slight drop from the last reading, but nothing significant.

The more important news this morning is the personal income and outlays.  Personal incomes were flat for the month and fell 2.4% year over year.  Consumer spending was up 0.2% for the month and 1.1% year over year.  It’s nice to see that people are making less and spending more.  All joking aside, the boost in spending was due almost entirely to cash for clunkers which we all know is about the most fiscally irresponsible program this government has ever put together. As I mentioned a few weeks ago, this program has the potential to be highly destructive.  Taking out a loan from China to finance a program that encourages consumers to take out a loan to purchase a depreciating asset they likely don’t need….The effect on retail sales should be large, but the government just wants to see the near-term boost in GDP.

The market is rising on good earnings news, however (at least it was when I started writing).  Intel raised their guidance, Dell posted horrible (though “better than expected”) numbers and Tiffany’s and J. Crew both posted terrible, but “better than expected” quarters.  The analysts are still playing catch-up here and that alone is enough to give the market a reason to jump.

 


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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Zero Hedge

Oil Tops $83, Gold Over $1255 As Commodities Spike Higher & Riyal Slides To 2009 Lows

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

It is unclear what the catalyst is - aside from the bounce back from The FT's rejection of Reuters rumor-spreading about ECB corporate bond buying but instead of the usual morning smackdown, precious metals are spiking higher. Gold hit $1255 - its highest in over 5 weeks). Oil is also spiking higher, WTI just broke above $83 (so much for that consumer tax cut?)

 

 

And oil is spiking too...

&nbs...



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Sabrient

Sector Detector: Sharp selloff in stocks sets up long-awaiting buying opportunity

Courtesy of Sabrient Systems and Gradient Analytics

Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.

Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity -- i.e., th...



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Phil's Favorites

Schedule Note

Courtesy of Lee Adler of the Wall Street Examiner

The cycle screening data update will be posted Tuesday morning. I have just finished producing today’s new Radio Free Wall Street  program. It will be available shortly. Thanks for your patience!

...

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Chart School

Weekly Gasoline Price Update: Down Another Nine Cents

Courtesy of Doug Short.

It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny Regular dropped another nine cents and Premium eight cents. Regular is now at its lowest price since January 2011.

According to GasBuddy.com, only one state (Hawaii) has Regular above $4.00 per gallon. The highest continental average price is in California at 3.49. Missouri has the cheapest Regular at $2.76.

How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here's a visual answer.

...



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All About Trends

Mid-Day Update

Reminder: David 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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OpTrader

Swing trading portfolio - week of October 20th, 2014

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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Insider Scoop

UPDATE: Bank Of America Reiterates On ITT Educational Services As Shares Surge But Risks Remain

Courtesy of Benzinga.

Related ESI Urban Outfitters Drops On Q4 Profit Warning; Mead Johnson Nutrition Shares Spike Higher ITT Educational Services Shares Soar On Preliminary Results

In a report published Monday, Bank of America analyst Sara Gubins reiterated an Underperform rating on ITT Educational Services, Inc. (NYSE: ESI), and raised the price target from $7.00 to $8.00.

In the report, Bank of America noted, “ESI shares rall...



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Market Shadows

Falling Energy Prices: Sober Look takes a Sober Look

Falling Energy Prices: Sober Look takes a Sober Look

What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices?  In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Just sign in with your PSW user name and password. (Or take a free trial.)

#457319216 / gettyimages.com

 

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Option Review

Release Of Fed Minutes, Icahn Tweet Boost Shares In Apple

Shares in Apple (Ticker: AAPL) are near their highs of the session in the final hour of trading on Wednesday, adding to the muted gains seen earlier in the day, following the release of the September FOMC meeting minutes and after activist investor and Apple shareholder Carl Icahn tweeted, “Tmrw we’ll be sending an open letter to @tim_cook. Believe it will be interesting.” Icahn’s tweet hit the ether at 2:33 pm ET and was met with a spike in volume in Apple shares. The stock is currently up 2.0% on the day at $100.75 as of 3:15 pm ET.

Chart – Apple rally accelerate...



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Digital Currencies

Bitcoin Has Been Getting Obliterated

Joe has found a place for Bitcoins, and if you hold a lot of them, you won't like it.

Bitcoin Has Been Getting Obliterated

Courtesy of 

Remember Bitcoin?

There's not much to say about it, except that it's doing TERRIBLY.

Here's a chart going back to earlier this summer. Charts don't get uglier than this.

Bitcoinwisdom

Interestingly, the Bitcoin industry continues to be quite excited about the prospects for the digital currency, and there continue to be announcements about expand...



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Promotions

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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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