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Sunday, August 1, 2010

The WEEK That Was

*The S&P 500 has yet to break out above the 200 Day Moving Average. This is a key level of resistance. When you take into consideration that we are in earnings season, you would expect them to hoodwink us into buying the kool-aid. But surprise surprise. We are still in a traders market and they are becoming a little smarter to their game and sending them packing. But, you never know.

The "Real" Mega-Bears
August 1, 2010 weekend update
It's time again for the weekend update of our "Real" Mega-Bears, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high.
This chart is consistent with my preference for real (inflation-adjusted) analysis of long-term market behavior. The nominal all-time high in the index occurred in October 2007, but when we adjust for inflation, the "real" all-time high for the S&P 500 occurred in March 2000.

Has the Growth Index also served as a leading indicator of the stock market? The next chart is an overlay of the index and the S&P 500. The Growth Index clearly peaked before the market in 2007 and bottomed in late August of 2008, over six months before the market low in March 2009.
The most recent peak in the Growth Index was around the first of September, 2009, almost eight months before the interim high in the S&P 500 on April 23rd. Since its peak, the Growth Index has declined dramatically and is now well into contraction territory.
It's important to remember that the Growth Index is a moving average of year-over-year expansion/contraction whereas the market is a continuous record of value. Even so, the pattern is remarkable. The question is whether the latest dip in the Growth Index is signaling a substantial market decline like in 2008-2009 or a buying opportunity like in June 2006.

*are they serious? A shortage of boxes? How about a shortage of consumers you morons!
US shippers wary as box shortages continue
Large shippers concerned about supply as back-to-school and pre-Christmas peak season gets underway
SOME of the largest shippers in the US are continuing to suffer from container shortages as the back-to-school and pre-Christmas peak shipping season gets underway on the transpacific trade.
During what is a traditional financial results season for US-listed corporations, executives leading firms shipping toys, clothing and household goods reported facing problems with both capacity on vessels and a shortage of boxes.
However, with US retailers of these products reluctant after being stuck with vast amounts of stock when the recession first hit and consumer spending tightened, friction was growing with shippers who were concerned goods weren’t being ordered far enough in advance.
Toymaker Mattel’s chief executive Bob Eckert said: “Today I am probably more concerned about supply than demand. In China we see labour supply tightening, the rates are up, shipping containers are in short supply and freight is taking longer to move than it sometimes does.”

*everytime we get this sort of headline, the market drops another 100 points. We will keep an eye on the rabbit.
Chinese Manufacturing Growth SlowsBEIJING—China's manufacturing activity expanded at the slowest pace in 17 months in July, an official gauge showed Sunday, reflecting that tightening measures introduced earlier this year and growing uncertainty over global demand continued to weigh on the country's economic expansion.
China's official PMI, issued by the China Federation of Logistics and Purchasing and the National Bureau of Statistics, fell to 51.2 in July from 52.1 in June, the third straight month in which it has declined. The reading was also closer to the expansionary threshold of 50 than it had been in 17 months. A reading below 50 signals contraction.

*in the black all week long, albeit slightly. Explains the back and forth in the stock market too.
30 July 2010
Baltic Dry Index (BDI) +25 1967

*GDP was rejiggered to the downside and its not a very good Q for earnings is it? Those rosy forecasts that those scheiter CEO's were making are going to bite the dust too. Will the real Obama please stand up? JOBS JOBS JOBS! Get that do nothing Congress to do what it should be doing to earn the overbloated salary its getting: forge a public works project bill IMMEDIATELY! And you should be taking a page from reagans playbook: Embarrass the useless bastards on TV. You are not gonna get reelected if you don't start creating some serious work life for all of us.

Great Recession was Worse than Thought
I detailed that Q1 GDP was revised up one full point... great news right?
Not when past quarters have been revised down. Per Calculated Risk:
The recession was worse in 2008 than originally estimated.Q1 2010 was revised up, but Q3 and Q4 2009 were revised down. So the recovery is a little weaker than originally estimated.

Changes to Q1 were extremely broad since the numbers went "final" a month back, GDP jumped a full point from 3.7% to 2.7% due to a large jump in non-residential investment and a huge spike in inventory build (the question is who will be buying) offset by a rather large drop in service consumption.

1 comment:

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