Bull/Bear Weekly Recap

Tyler Durden's picture

Submitted by RCS Investments

Bullish

+ Global trade continues to expand.  Industrial production in emerging market economies is up more than 10% from their prerecession peak. (Link Courtesy of News-to-Use). 

+ Chicago PMI shows an increase in activity during the month of July. Manufacturers continue to report expansion in the Mid-West, a very important manufacturing hub.  All sub-components rose, particularly the all important “New Orders” implying that activity is set to increase in the months ahead.  (Links Courtesy of Briefing.com )   
+ Earnings reports continue to impress and various global trade bellwethers cite improved outlooks in the quarters ahead.  These negative macro trends that the bears cite are not affecting company bottom lines.  In fact, revenues are showing more signs of life.

+ Continued reports of Eurozone financial tensions easing as yield spreads continue to contract and the Euro is near a 2.5 month high.  Eurozone sovereign woes? Where?  Meanwhile more countries are finding themselves having to raise rates as economies are overheating in growth. (Courtesy of The Big Picture)

+ The American Staffing Association’s staffing index shows that demand for temporary workers continues to rebound.  Demand levels are quickly approaching 2006 & 2008 levels.  This shows that demand for labor is out there and will soon translate to more robust job reports.

+ Mortgage Applications for purchase rose again for the second week in a row and lends more credence that a floor for demand has been formed. 

+ Case-Schiller Home Prices Index shows that property values are stabilized and will help reinforce consumer confidence and spending.
 

Bearish

- Durable Goods Orders surprised to the downside.  The one sector that was keeping this recovery alive is fading.  The demand side of the equation is still a no show.  The last line of defense for the bulls is looking quite tenuous at this point.

- Chicago Fed’s National Activity Index (one of the best proxies for GDP) came in negative as production and employment related indicators led the deterioration.  This further confirms that employment is not making a significant rebound and end-demand has not taken the baton from the “inventory-bounce-led” recovery.

- GDP growth comes in lighter than expected and the recession was deeper than once thought.  Meanwhile the consumption sub-component grew at a measly 1.6% vs. an already weak 1.9% increase in the first quarter.  Consumption = 70% of the economy and unfortunately it is slowing.  End demand continues to not show and this is what ultimately drives everything else.  A good breakdown can be found here (Courtesy of CalculatedRisk Blog)  

- Beige Book confirms what the Bears (at least me) have been saying: “Economic growth is decreasing rapidly a double-dip is coming much much sooner than anyone is expecting”.  Investors are not prepared for this scenario as most, if not all “pundits” write it off.

- Evidence of a fall in consumer confidence continues to mount as this time the UMich Sentiment survey confirms that confidence took a turn south in the last month. Despite the “better than expected” headline, let’s not forget that this level is far below last month’s closing level of   Cautious consumers = Wallets held close.  

- Dangerous  signs are surfacing that foretell a possible sharp drop in economic activity in the immediate months ahead.  The lights from the oncoming train are getting bigger quickly. (Courtesy ZeroHedge)

- The housing “supply-restraint” dam, which had been in place to buoy home prices, is beginning to crack.  Foreclosures are set to increase a good bit, and with recent underwhelming performance of purchase mortgage applications, prices have nowhere to go but down.  Banks will be under renewed pressure as their "extend-and-pretend" schemes blow up in their collective faces.

 
Observations/Thoughts

>This is welcomed news for the whole country.  Perhaps further good news will actually work to increase overall psyche given that we’ve had solid evidence that confidence has taken a turn for the worse.  Why this recent bout of pessimism?  Perhaps everyone is collectively realizing how big of a mess we are in and how long it will take to actually resolve the structural imbalances.     

> First, an example of what I’ve feared for a while now and mentioned in my Q1 Outlook.  Look for it to get worse.  Second, this is an interesting story in the continued move for more fiscal austerity (something I expect to happen in the quarters ahead: see my Q2 Outlook).  I believe that letting the Bush tax cuts expire on the wealthy would hurt consumption.  Even though it may affect approx. 2% of the population, those 2% account for a large portion of consumption.  However, Obama and the democrats, looking more desperate by the day it seems, may have hit the political hot button they’ve been looking for.  Letting the tax cuts for the wealthy expire is something that they support, and by the way, most of the nation supports as well.  The growing division between the wealthy and the rest is alarming and will no doubt cast a shadow on the build up to the big decision.  I believe that tax cuts for the wealthy will be allowed to expire.  However it is way too soon to be completely confident in that outcome.  If recession hits before the November elections, this sentiment may change quickly. 

>India seems to be having some trouble containing inflationary pressures.  Stimulus and loose monetary conditions are now biting back.  China is having these problems as well.  Various reports of labor unrest (higher wages) and inflationary CPI/PPI reports are becoming daily fodder over there.  I believe they are in a particularly tough spot.  Raising interest rates would help contain inflation, but at the expense of possibly popping a real estate bubble, while letting the Yuan rise would cause another headwind for their already pressured export sector.

> So we have Barton Biggs who nailed the recent bottom with his “I’m off risk” after touting risk all the way over the edge and now we have Barton Biggs &“perma-bear” Richard Russell announcing to get back in.  Since then the market has gone down.  Like Rosenberg says, a “meat-grinder” market is what we have on our hands here.  It loves making fools out of us all doesn’t it?! (Links Courtesy of Zero Hedge and ETF Daily News)

> So we’re in a sustainable recovery?  Yawn

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B9K9's picture

Speaking of recap (dawning awareness), has anyone seen Denninger's latest post?

Good God: Revisions To Chart (Ponzi Ponzi Ponzi!)

Karl seems to be inching ever closer to that big revelation in the sky: We live in a fascist regime with a directed command (war-time) economy that controls a global empire. Such trappings as equities markets, public bond auctions, interest rates, Congressional "oversight", etc, are all window dressing for the power-elite's amusement.

Once you begin to understand the situation from their perspective, it's much easier to clearly see the rationale behind their actions. As KD notes, "all that for 2%?". Yes, Karl, all that (and more) for a measly 2%.

That's because 2% in & of itself is not that important; rather, it's the implication of the trends. And those are ... deflationary collapse. To expect those who control the world's largest economy & greatest military power to willingly give it up due to some legal niceties encapsulated in the Constitution is to gravely misunderstand and under-estimate the People's enemy.

israhole's picture

What do others here think about this guy's ideas? I've been conditioned all my life not to think about such things, but he seems to make a lot more sense than most, including fellas like Rense and especially alex "the shill" jones. 1.8million+ hits in less than two years, even after being banned in a country of supposed "free speech" tells me others are wondering about the same things:

http://incogman.net/07/2010/its-just-our-thing-man/                                                                                                                                                                            That is just a recent article, but I've seen many very interesting ones in the archives.

Let them all fail's picture

sounds like a very angry person who feels "non-whites" are taking over the country and whose arguments are presented in trash-talking rather than facts...Any points he has are ruined by his lack of factual backing and hostile writing style

israhole's picture

Thanks for the input.  I kept reading more of the archives, and my opinion is that a lot of it does make sense.  Either way, at least there is still some free speech, but is it just coincidence that Joe Lieberman is pushing to shut down the internet, and that all our wars are in the Middle East?

 

I don't hate Muslims for being Muslim, do you? And has anybody heard of this Hasbara manual that teaches how to influence public opinion regardless of facts?

 

Search Hasbara and get back to me.

zen0's picture

From what little I saw, he is doing well.

The idea of the melting pot was from a Jewish person who wanted a zionist homeland, exclusive to Jews. Seems hypocrytical on the surface, no? Google yourself silly...

I am not an anti-semite. I am a person who believes that Jews have been called to go to Israel and are required to do so. It is for the good of all mankind.

 

So go, already. (Let my people go..) Make my people go... coming to a theatre near you.......

israhole's picture

Thanks for sharing your thoughts on this topic, and I must say I agree with several.  How come Israel is so important to American jews, yet they won't move there.

Regardless of what one thinks of a particular site,  I've researched the topic and AIPAC is the most powerful lobby in the US, among many others with the same agenda of Israel first.  It just seems wrong that dual-citizens can hold ANY office in the US government or sensitive positions.  This has been on my mind for awhile now.

RabidLemming's picture

wow... well you successfully hi-jacked this thread. your comments have nothing to do with the above article.  your type of small minded bullshit belongs on the " Vanguard News Network".

FYI: I could give a rats ass about Israel or a Jewish homeland but we have much greater problems than a bunch of Zionist kids...



Getagrip's picture

With all the skewed (revised) government data, propaganda, and smiley faced feel good,  who knows what's real any more? All fiat based economies through history end with despot's, war, and genocide (do your research-true). Another big war is a coming. Scripture talks of Gog/ Megog (Russia) as a prelude to the final final Armageddon after a one world order (Government/currency/religion) is established (with George Soros as leader??). Truth comes from only what God has revealed. Stand by for more angst as this plays out. If you go short, you are betting against an entity with all the printing power in the world! God Bless..  

zen0's picture

Getagrip , Getagrip

Your analysis is crap. And Not Serious. You mock what you do not understand, when you should stand silent, in Awe.

 

israhole's picture

See, this is what I was talking about 'zen0'.

Why does one like the above attack a concerned citizen, and the name calling?

It's like a concerted effort to attack and subvert.  For example, I recently learned of software that Israel-firsters use, called "Megaphone".

It's purpose is to intentionally skew polls and public opinion to support Israel, no matter what crimes it commits. To me, it seems based on an evil premise.

 

The Hasbara manual and Megaphone software are two things worth googling, if you can still find them on the internet.  That leads me to another question.

Andrew Jackson once said he wanted to be remembered for "killing the bank" (and it's usury), and several months ago I found this quote readily (I think it was his epitaph), yet Wikipedia seems to be editing history fast than it happens!  I pulled up the Wiki page on him, and it's been scrubbed of this very important fact.  I can only ask why?

israhole's picture

This last question if for "let them fail".

Here's a quote that I wonder if you'd consider:

“The reader may wonder why newspapers never mention that Bolshevism is simply a Jewish conquest of Russia. The explanation is that the international news agencies on which papers rely for foreign news are controlled by Jews.”  – “All These Things,” A.N. Field; “The  Rulers of Russia,” Denis Fahey, p. 37

It's from the newest article, and I'll give you some time to read it before you get back to me:

http://incogman.net/07/2010/the-media-most-definitely-jewified/



zen0's picture

No matter how compelling the evidence, you cannot go there and remain credible. It is just the way of the world.

 

The Bible calls jews to go to Israel. The time is now. Those who do not go are not Torah Jews. These are fair game for ridicule and/or criticism if they still regard themselves as Jews.

israhole's picture

This site seems to have many intelligent people with deeper insight. I'm just asking questions in a supposedly free society.

 

How come one "cannot go there and remain credible"?  How would asking others' opinions discredit an individual?  To be honest, that's exactly why I'm inquiring.  Where did this pressure come from?

israhole's picture

Anyway, I appreciate the efforts to answer my questions.

 

Since this is mostly a financial site, and about the only truthful one at that, I'll just keep doing my own research and report back with what I discover.

 

I hope everybody has a great weekend!

israhole's picture

But doesn't Israel consider all jews to be Talmud jews just because of the bloodline?

I haven't read the whole Talmud, but what I did was pretty mean-spirited towards all non-jews.  Not sure what to make of it, but then I read what Menachim Begin said about non-jews and it's becoming clear.

 

If you want to discuss it, google Menachim Begin quotes.  The one that really shocked me was about how non-jews will lick jews' boots and be crushed like bugs, or something similar.

 

 

Hunch Trader's picture

Jews failed in Russia and Germany, but succeeded in America. Good for them, good for russians and germans, not so good for americans.

 

It is very enlightening to study the history, to understand today.

 

TraderTimm's picture

Regarding bull versus bear, got my money on the bear side. If you hear a loud hissing sound ending in a sloppy liquid thud, that will be my position knifing me in the gut if the market ramps up sharply next week.

Anyone short? And I mean that in an active trading sense, not whether you've put in some rebar and will be pouring concrete for a new grain silo at your bug-out spot in the country.

Still think we've got at least a short-term correction coming up...

 

Tic tock's picture

Being short is a state directly connected to whether Q.E. is implemented -  as it is the dollar is sliding of its own accord, which isn't great for being short. Plus, it's August, also not fantastic for being short... play with a hundred dollars, if you have it left, see if youcan build it to a thousand over August.

Also, it's wierd to bunch people together on the basis of a genetic category and then clim that this bleeds over into a superiority complex... there are just sections of the population, any population, who crave importance and this is how it turns out for them. In the most part people who feel like their either 'chosen' or something bizarre have a warped sense of mortality - in the scheme of things, we're all building blocks for what comes next. -saing that, we do such amazingly stupid things it's beyond me how man continues to manage to exist, anyway - I'm guessing there are more cynical string-pullers who just manipulate these people to destabilize those whom they would prefer to conquer. 

There's a word in the Islamic tradition for these people - who deliberately appear to be righteous but actually prefer to corrupt and to sow disharmony - muna'faqin. They pretend to be muslims but full-knowingly have evil designs. There's actually a lot of quite elegant thought and literature that was developed through the Islamic period, it's like all that colour and complexity has been reduced to stick figures in black and white. They same is true for the Jewish tradition, for a long time there were Islamic and Jewish scholars working at the same universities - it was only in the commercial centres where conversion becomes more akin to oppression. 

Trading wise, watch the falling dollar, the port backlog in Brazil and Ramadan ending, when sugar demand will abate, for an opportunity to short Sugar; it has a natural price, maybe just below 17 - there's a small surplus this year, month long supply issues, with the crop harvest finishing end of Sept. As always, watch the weather.