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Financial Market Commentary From Asbury Research
An extended look at recent economic data and its impact on financial markets courtesy of Asbury Research. Summary: "Inflationary pressures at the consumer level -- although just a touch higher than the FOMC's central tendency for 2010 -- are benign and well below their 20-year averages for YOY change. However, inflation at the producer level spiked up in July -- to almost double its 20-year average for YOY change -- and appears vulnerable to rising even further in the months ahead. In addition, Wall Street is currently hovering at quarterly extremes in its expectations for little to no upcoming inflation which, as a contrary indicator, has actually led significant increases in benchmark US interest rates. Accordingly, we would view a continuation of the July rise in the YOY change in headline PPI, and/or widening in the 10-Year TIPS breakeven spread -- both which appear likely in the months ahead -- as indirect indications of both an upcoming bottom in benchmark US interest rates and an upcoming rise in US equity prices."
In-Depth Look at the Major Financial Markets
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Hindenburg Omen #4 or #5
$NYLOW : 148
$NYHGH : 78
WSJ shows 90 highs & 150 lows but either way it qualifies. What about the 10-week condition?
I don't know, I think it might be a red-herring personally.
http://en.wikipedia.org/wiki/Hindenburg_Omen
In the conclusions they talk about back fitting, I wonder what happens if you remove that requirement.
./shrug, the hard part of the HO to satisfy is 2.2% > Highs, 2.2% Lows > highs, the 10 week moving average is easy.
Rev. Thomas, do you think that the algo's could stuff bids this way to set up head fake? Clear to me that they have the $$$ and could push up the bondie and preferreds and high dividend guys while pulling down the weak sisters?
They have the power. Any thoughts?
- Ned
Also the 12 week moving average is still positive.
“Inflationary pressures at the consumer level are benign… inflation at the producer level spiked up in July” – Asbury Research
As John Williams on ShadowStats writes, "Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? The problem lies in biased and often-manipulated government reporting. Here’s the picture: July Annual Consumer Inflation: 1.2% (CPI-U), 8.6% (SGS)
From latest subscribers newletters (emphasis mine):
Fed Gives Early Signal It Will Debase Currency to Prevent Systemic Collapse and/or Great Deflation. Those predicting deflation have reasons to do so, but I believe they are missing the nature of the U.S. government and central bank. To have a great deflation (in terms of consumer prices for goods and services), there needs to be some form of systemic collapse that helps to implode the money supply. …
The nature of the Fed and the federal government is to prevent systemic collapse. A collapse is unthinkable; it would mean a complete failure by the Fed and the federal government in their primary functions. Accordingly, irrespective of political or election-year niceties, the Fed and the federal government will spend or create whatever further money is needed to forestall systemic collapse. Faced with devil’s choices — a hyperinflation also leads to systemic collapse — the course of action selected likely will be the one that buys the most time (printing money and hyperinflation). …
Alternative Consumer Inflation Measures. Adjusted to pre-Clinton (1990) methodology, annual CPI inflation was roughly 4.5% … in July 2010, versus 4.3% in June, while the SGS-Alternate Consumer Inflation Measure, which reverses gimmicked changes to official CPI reporting methodologies back to 1980, was about 8.6% (8.57% for those using the extra digit) in July, versus 8.4% in June.
Annual PPI Inflation Rose to 4.2% in July …
Unadjusted and year-to-year, July’s annual PPI inflation rose to 4.2%, up from an annual inflation rate of 2.8% reported for June.
On a monthly basis, seasonally-adjusted July intermediate goods fell by 0.4% (down by 0.9% in June), with July crude goods rising by 2.7% (down by 2.4% in June). Year-to-year inflation in July intermediate goods was up by 6.4%, the same as in June, with July annual inflation in crude goods up by 20.5% (up by 13.3% in June).
Week Ahead. Given the unfolding reality of a weaker economy (or re-intensifying downturn) and more serious inflation problems than generally are expected by the financial markets, risks to reporting will tend towards higher-than-expected inflation and weaker-than-expected economic reporting in the months ahead. Increasingly, that is being seen in economic reporting net of prior-period revisions.
Nope on this one. All the GDP "growth" we have this year is from government stimulus(G), per the CBO, and pretty much run its course. Cisco has said the are seeing weakening in business spending (I) for IT, in the one area that should be strong. Well the consumer (C) spent their refinance savings or non payment of such to the point that retailers are beginning to see the slowdown.
So if C+I+G = GDP, and none of the three is going up, there is no growth, there is no inflation except in a few commodities tied to Chinese demand, and interest rates are not going up more than brief oversold rallies.
Not happening..
In the research I've done for my own trades, I believe we're going to have a retrace back up for the next few days before getting another juicy shorting opportunity.
My longer-term model suggests lower monthly closes in the works, which is why I'm biased toward the downside.
As of this writing, Nikkei is slightly lower at 8,840.73 -4.66 (-0.05%) and EURUSD at 1.2654, slightly above the 4pm EST print of 1.2649. AUDJPY is at 74.86, also slightly above the 4pm EST print of 74.72
Even with a early smackdown from Unemployment Claims, think we're greening up temporarily this week.
I'll be watching those indexes and options...
Say hello to "Japanamerica"...
If I saw any hint of inflation, I'd be throwing down like a frat brat at a serority party! However I do thinl necessary items i.e. staples and food can inflate while big ticket items i.e. autos, appliances etc. deflate in what appears to be perpituity.
Hope Vodka, club soda and limes stay reasonably priced...!
Gee -producer prices up and pricing power non-existent (for most products). Sounds like a profit margin squeeze so they are bullish on stocks -idiots. No employment growth - final demand growth around 1%. Give me a break.
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