Market Commentary From David Rosenberg: Just Call It “Deflationary Growth”
by ilene - September 21st, 2010 11:12 am
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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USING THE ECRI AS AN INVESTMENT TOOL
by ilene - June 2nd, 2010 12:42 pm
USING THE ECRI AS AN INVESTMENT TOOL
Courtesy of The Pragmatic Capitalist
Great tool here from David Rosenberg at Gluskin Sheff. As we note on a weekly basis the ECRI’s leading index has proven to be a fairly prescient market indicator. Mr. Rosenberg did the legwork for us and shows us how to utilize this tool in our investment plans. He broke down the historical market performance based on the ECRI’s varying phases. As noted last Friday, we are clearly in a Phase 3 slowdown according to the ECRI. Therefore, it can be expected that the S&P will remain volatile and likely underperform:
(Right click for larger image)
Source: Gluskin Sheff
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THE BEST APPROACH TO 2010: THE OPPOSITE OF 2009?
by ilene - February 2nd, 2010 9:25 am
THE BEST APPROACH TO 2010: THE OPPOSITE OF 2009?
Courtesy of The Pragmatic Capitalist
A recent note from David Rosenberg highlights the schizophrenic market we have been experiencing over the last few years. What works one year quickly stops working the next year. Thus far in 2010 that trend has been true again. After a very bullish 2009, Rosenberg now thinks the market could be entering a bearish phase in 2010. And that means, what worked in 2009 likely won’t
“It is interesting that heading into 2008 all you had to do as an investor was flip everything around from market performance in 2007 — across just about every asset
class . Then in 2009, what you wanted to do was the exact opposite as what worked in 2008 (see Table 1 below). Here we are in 2010 and it seems to us as if, yet again, what worked the year before is not going to work in the coming year and vice versa. Take emerging markets for example — most of them doubled in 2009, and here we are in the first month of 2010 and the MSCI excluding Japan Asian index is already trading at its lowest level in two months. The region still trades at 2x book value versus the 1.8x historical norm so don’t think for a second that we have approached some oversold low … at least not yet.”
Source: Gluskin Sheff
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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.