Sunday, February 16, 2014 Friday, November 23, 2012 Monday, July 16, 2012
Credit creation continues and supports the case that consumers are more comfortable using debt and/or small business are finding more opportunities for expansion.   

Credit creation continues and supports the case that consumers are more comfortable using debt and/or small business are finding more opportunities for expansion.   

Monday, May 14, 2012 Wednesday, May 9, 2012 Tuesday, January 24, 2012
Credit continues to expand and is fodder for the bulls.  

Credit continues to expand and is fodder for the bulls.  

Friday, January 20, 2012

Weekly Bull/Bear Recap: January 16-20, 2012

Bull

+ Jobless claims plunge 50K to their lowest level in almost 3 years and clearly demonstrate a strengthening labor market.  Increased confidence means increased credit use = strengthening recovery.  Banks and homebuilders have been leading the ongoing S&P 500 rally. 

+ Manufacturing shows more signs of stabilization, not an imminent recession.  The Empire Manufacturing Survey rises more than 5 points, while the 6-month outlook surges 10 points.  Last week’s ghastly rail traffic report (intermodal) was nothing more than an aberration.  This week’s report shows a sharp rebound, outperforming last year by 7.4%.  Industrial Production rebounds 0.4%, lead by manufacturing’s best performance since December 2010 (+0.9% vs. -0.4% in November).     

+ Inflation is cooling and will give the Fed leeway to initiate further monetary policy (it’s becoming a worldwide phenomenon: Goldilocks environment coming up?).  If economic conditions slow, the bears won’t be able to seize control of the market as the Fed will act as a bullish albatross over their machinations.

+ Risk markets power higher for the week, while copper breaks out of its consolidating triangle to the upside, a sign that the global economy is poised to reaccelerate.  Chinese data strengthens the “further stimulus" and "soft-landing" thesis.  Furthermore, markets are sensing continued progress in the Eurozone crisis.  Confidence is making a comeback, as the German ZEW investor survey hints at a turning point for the Eurozone’s largest economy.  

+ The housing market continues its recovery.  Mortgage applications for purchase rise 10.3% after an 8.1% increase in the prior week; the result is higher home sales.  Furthermore, record low mortgage rates are spurring refinancing applications, surging 26.4% this past week to their best levels since August.  More refinancings = more disposable income for the consumer due to lower monthly mortgage payments.  Finally, the NAHB housing market index rises 4 points to its best reading in 4.5 years.    

Bear

- Sentiment is nearing euphoric levels.  Retail investors and even financial advisors are expecting stock prices to move higher.  The wall of worry that characterizes bull markets has crumbled.  Remember rule number 5 by Bob Farrell, “The public buys the most at the top and the least at the bottom.”

- Meanwhile, this earnings season has seen the lowest percentage of companies beating analysts estimates since the 3rd quarter in 2008; I don’t need to tell you what happened thereafter.  Furthermore,…

- … the EFSF is hit with a downgrade.  Authorities brush it off.  More downgrades are coming.  The political tide is turning against the Euro .  Marine La Pen of the anti-euro National Front party is making serious gains in the polls.  François Hollande is closer to winning the French presidency and will demand a renegotiation of the euro fiscal compact. On the Greek front, “Even members of the committee concede the process (Greek private sector involvement negotiations) is unlikely to succeed in time for the crunch date: a 14.5bn bond repayment falling due on March 20."  Finally, if things were all hunky dory, why is the IMF asking for $500 billion?  —-The news trend keeps getting worse.     

- ISCS and Redbook weekly consumer metrics are showing a serious slowdown, even after last month’s disappointing Retail Sales report.  Furthermore, national gas prices have risen roughly 3.6% and the consumer is already feeling it.  Bloomberg’s Consumer Comfort Index falls to -47.4.

- While China’s GDP numbers beat analyst expectations, they portray significant weakening in the country’s export and real estate sectors.  Furthermore, persistently high inflation will limit the amount of stimulus authorities can administer.   

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Be sure to check out my latest macro outlook and market forecasts.  Thanks for your support.   

Thursday, January 19, 2012 Monday, June 20, 2011 Friday, March 11, 2011

Bull/Bear Weekly Recap: Mar 7 - Mar 11 — March Madness Edition!

Bull

+ Oil concerns are starting to recede as evidenced by this weeks performance in Saudi equities.  They have rebounded approximately 10-14%.  Investors in the region are anticipating that the “Day of Rage” in Saudi Arabia will not be as bad as previously thought.

+ The job market continues to improve as per the Conference Board Employment Trends Index.  “The strong growth in the Employment Trends Index suggests that the pickup in jobs may accelerate in the next couple of quarters.”—Gad Levanon, Associate Director, Macroeconomic Research at The Conference Board.

+ Atlanta Fed chief Dennis Lockhart signals that he would vote for more accommodation should oil prices rise substantially and endanger the recovery.  The Fed will be ready to support economic growth if it begins to falter.

+ Weekly retail metrics have shown resilience while retail sales for February experienced the biggest jump in 4 months and have been positive now for 8 months running.  These results show that higher oil prices haven’t destroyed consumer demand to this point. 

+ Mortgage Applications for purchase and refis rocketed higher last week as lower rates spurred demand.  The Mortgage Bankers Association cited an improved job market paving the way for increased demand. 

+ Confidence among consumers is rising as consumer credit for January rose by $5.0 Bln, the fourth increase in a row.  If credit is being used, it may mean that consumer’s feel more at ease with economic conditions and are increasing their consumption.

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Bear

- Spain is downgraded by Moodys and yield spreads for the PIIGS continue to widen.  Furthermore, there was little sign of a long-term solution from the recent EU summit.  The financial crisis’s best kept secret continues to grow.   

- Middle East issues continue to grow, as Kuwait and Yemen are the latest countries making news.  Kuwait is the world’s 4th largest exporter.  Despite the recent rally in Saudi indexes, reports of violence are beginning to surface.

- China inflation numbers raise concerns that inflation may be getting out of hand and officials will need increase rates at the expense of stronger economic growth.  If China is in the midst of a housing bubble, the economy may be vulnerable at this point.  Copper prices continue to fall and are at a 3 month low. 

- Signs of a slowdown in manufacturing growth rates are becoming more noticeable.  YoY growth rates in rail traffic are slowing.  

- Consumer credit numbers for January showed an increase for sure, but it was all government related.  Revolving credit actually fell.  While the headline made for some bullish fodder, the details show that consumers are still cautious. 

- While the US recovery continues, it remains very fragile and vulnerable to  negative exogenous shocks.  We have plenty of those at the moment (which seem to be affecting the US economy already): higher oil prices, a possible blow up in the Eurozone, or a massive earthquake in the world’s 3rd largest economy.