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Guest Post: A Bull/Bear Weekly Recap
Submitted by RCS Investments
Bullish News
Treasuries --> As expected, the household sector is increasing its exposure to treasuries which make up less than 5% of the household balance sheet.
All that "dry powder" that everyone is talking about, is not making
its way back to equities folks. Households have endured to massive
bubbles in a span of roughly 10 yrs and cannot be messing around with
their retirement.
All that "dry powder" that everyone is talking about, is not making
its way back to equities folks. Households have endured to massive
bubbles in a span of roughly 10 yrs and cannot be messing around with
their retirement.
US Dollar --> The
DXY has been strengthening (particularly against the Euro and the
Pound). Continued sovereign debt problems will only ensure that this
trend continues, no matter how much it doesn't make sense considering
our high debt levels. But it is still considered the currency of
choice in times of risk aversion, that is for sure.
DXY has been strengthening (particularly against the Euro and the
Pound). Continued sovereign debt problems will only ensure that this
trend continues, no matter how much it doesn't make sense considering
our high debt levels. But it is still considered the currency of
choice in times of risk aversion, that is for sure.
Equities
(Technicals/Financials/Transports) --> Stocks continue to rise lead
by the most unusual leader, the financials. the streaks are amazing
and makes it perhaps the most impressive part of this whole rally.
(Technicals/Financials/Transports) --> Stocks continue to rise lead
by the most unusual leader, the financials. the streaks are amazing
and makes it perhaps the most impressive part of this whole rally.
The Consumer: Consumer Credit increased, as did retail sales. Is the Consumer coming back?
Bearish News
China bad noises are starting to be more frequent.
Leading indicators are either weakening or pointing down (ECRI, Conference Board)
High debt levels continue and the deleveraging process is not complete as per the Fund of Flows report.
Jobless claims remain frustratingly elevated. By this metric, we are still seeing job losses.
While
Transports are making new highs, we are seeing cautious commentary on
the recovery by FedEx. I think that's pretty important.
Transports are making new highs, we are seeing cautious commentary on
the recovery by FedEx. I think that's pretty important.
General Thoughts
Green Shoots for the Republican Party? (h/t Mich's Global Economic Trend Analysis)
It's official,
Angela Merkel's political life is now on the line. The idea of savers
and financially prudent citizens of Germany bailing out a profligate
sovereign entity (NO the EU is not a political union) seems ludicrous
even to an outsider. The German electorate must be furious. Moral
hazard continues and investors feel almost assured that this will be
the solution for every other country that's next inline (UK, Spain,
Portugal, Austria, Eastern Europe), until it isn't.
Angela Merkel's political life is now on the line. The idea of savers
and financially prudent citizens of Germany bailing out a profligate
sovereign entity (NO the EU is not a political union) seems ludicrous
even to an outsider. The German electorate must be furious. Moral
hazard continues and investors feel almost assured that this will be
the solution for every other country that's next inline (UK, Spain,
Portugal, Austria, Eastern Europe), until it isn't.
Tying in
with the Bearish news above, the news coming out of China is very
concerning in my view. Inflation seems to be heating up and may force
officials to raise rates. If they choose not to, inflation will
accelarate, affecting food and energy prices which are important to the
rural population. However, raising them will bring about additional
headwinds for the export sector as well as increase the possibility of
popping a potential bubble (shades of US. Which will officials choose?
Technical Observations (All charts courtesy of Freestockcharts.com -- Fantastic site)
Internals
of the rally are mixed, but with a bullish tilt. The transports and
the financials (BKX only, not XLF) broke through their highs as did
numerous other indicies like the NASDAQ and the Russell 3000. We would
only need the dow to break through to confirm that the rally is alive
and well under the Dow Theory (is that a bearish pennant I see?).
However, the recent rally has been marked by low volume and high
complacency and signals red flags.
of the rally are mixed, but with a bullish tilt. The transports and
the financials (BKX only, not XLF) broke through their highs as did
numerous other indicies like the NASDAQ and the Russell 3000. We would
only need the dow to break through to confirm that the rally is alive
and well under the Dow Theory (is that a bearish pennant I see?).
However, the recent rally has been marked by low volume and high
complacency and signals red flags.
(Dow; Daily)
On
the global recovery front, AUD/USD, a measure of risk taking (and
strength in China) in my view, is at the top end of its trading range
which it hasn't been able to break out of. EWA is looking toppish.
the global recovery front, AUD/USD, a measure of risk taking (and
strength in China) in my view, is at the top end of its trading range
which it hasn't been able to break out of. EWA is looking toppish.
(AUD/USD Daily)
(EWA Daily)
Credit not confirming recent highs.
(Investment Grade LQD Daily)
(Investment Grade LQD Daily)
(High Yield HYG Daily)
Although
it's not very clear from the chart. It does serve to signify that
performance in gold has been closely correlated with TIPS, expectations
of inflation. Is deflation starting to win out now that the stimulus
is being withdrawn?
it's not very clear from the chart. It does serve to signify that
performance in gold has been closely correlated with TIPS, expectations
of inflation. Is deflation starting to win out now that the stimulus
is being withdrawn?
Have a great weekend
Disclosure: Short Emerging Markets
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Doelarr removed from xross today. To be buried next week on Wednesday.
Very Interesting.
The legendary market analyst Charles Biderman, who is the foremost expert on market liquidity, recently concluded an exhaustive study on why the market is rocketing higher on poor fundamentals. His conclusion: the government is covertly and illegally buying shares. I agree 100%. When the empty-suit mutual fund managers and the neanderthal, nuckle-dragging momentum traders like Barry Ritholz, realize this, the market is going to crash.
I lost a lot of respect for Ritholz on this issue. There was a debate on his blog and Ritholz's response about the Fed equity market involvement was "prove it"
What the fuck.....every organization in the USA is subject to audit.....except the Fed. If an organization refuses to be audited, it is impossible to "prove it". If an organization is not audited and claims to be telling the truth, you've gotta be a phucking moron to believe said organization.
if it quacks like a duck, and water rolls of its back like a duck, if its got big orange feet like a duck, it's probably and most likely a phucking duck.
the Fed is buying the equity market both directly and indirectly. eventually history will uncover this matter.
just like history uncovered 9/11 right?
Until it isn't.
The Retail Sales today was totally skewed by the seasonal adjustment. The nonseasonally adjusted retail sales number was a NEGATIVE 1.6%. The seasonal adjustment is heavily influenced by what happened one year ago. In the case of Retail Sales, the number went from +1.5% for Jan09 to -0.9% in Feb09. Therefore, in 2010, the seasonal factors try to "smooth out" February by bumping it up. Also, take a look at Census Bureau web-site and see from what businesses they did not have retail sales data. Those businesses include new car dealers (it's hard to see how they had a good month with the lousy weather on the East Coast), clothing stores, warehouse stores, appliance stores, etc.
more of the methamphetamine fueled propaganda machine in its increasingly desperate attempt to contain declining social mood.
bank sell side analysts and those people whom cnbc dot com calls "strategists" in panic and manic mode to attempt further common equity prices to unload shares before the next leg down begins. coming soon to a theatre near you.
I just think this chart tells a huge story about the current consumer behavior. This couod be the crack we're looking for,a GDP dump.
http://www.businessinsider.com/chart-of-the-day-consumer-metrics-index-2...
I've been hearing that the market is about to crash since April of 2009 at this blog.
While I think that if it happens at all, it will happen on Monday, but what do you REALLY think that the odds of that are?
The only reason why Consumer Credit surprisingly increased was because of an huge increase in student loans. Credit card debt was lower, mortgage debt was lower, and so was auto loans. An increase in student loan debt is hardly bullish. It indicates that either 1. families have exhausted their savings and now must borrow to pay the college bill, and/or 2. people have given up on the job hunt and gone back to school.
ding.ding.ding.
actually, i would say both, not "either".
....wonder how well the student loan payback is going for those that have taken them out over the past 10 years...........
nm
As warned about earlier, the bullish basing has resulted in a EURO and EUROYEN rally.
http://www.zerohedge.com/forum/market-outlook-0
Only a head fake. The Yen is going to the North Pole and the Euro is going to the South Pole. They just dosi-doed at the Equator. Soon the journeys will continue.
You bought the run; it is a PA. The RB is set to block, the WR is in single coverage, and the QB has a cannon.
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