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Guest Post: Bull/Bear Weekly Recap
Submitted by Uformula of RCS Investments
Bullish
Retail Sales reports (ISCS and Redbook) show continued gains in sales.
March
store sales figures came in strong. This should help corporate profits
and thus a bullish equity and economic backdrop. The consumer is
making a return.
Confidence
is slowly beginning to creep its way back as the Gallup Poll and ABC
consumer confidence reports are beginning to show an uptrend.
Inventories
are beginning to rise as businesses look to play catch up to demand.
I/S ratio falls to record low, suggesting that further increases in
inventories will lead to improved employment and thus more spending
power. The virtuous cycle may be underway.
Bearish
While spending has improved, confidence remains fragile and increases in consumption may not live up to market expectations.
Weekly
Jobless Claim unexpectedly rose 18,000 to 460,000 from previous
revised figure of 442,000. This indicator still points to job losses
or at best minimal job gains. To put this in perspective, todays levels
are around the maximum levels for the 1990 and 2002 recessions.
Jobless Claim unexpectedly rose 18,000 to 460,000 from previous
revised figure of 442,000. This indicator still points to job losses
or at best minimal job gains. To put this in perspective, todays levels
are around the maximum levels for the 1990 and 2002 recessions.
Greece continues unresolved and is worsening. Could this be the one off small event that sets in motion a whole new crisis?
Thoughts
We
are now seeing oil prices sitting just under $90. With a 9%+
unemployment rate this seems almost ludicrous (this may be a great time
to dollar cost average into shorting commodities). These are the
results of trying to reflate our way out. Stagflation is soon to
become a factor if commodity prices continue to creep higher, which
they will if we continue to get stronger reports until consumption
begins to falter and margins get squeezed due to high gas/commodity
prices. ISM reports are showing this dynamic is in play. (Note:
Commodities in Short Supply sections)
are now seeing oil prices sitting just under $90. With a 9%+
unemployment rate this seems almost ludicrous (this may be a great time
to dollar cost average into shorting commodities). These are the
results of trying to reflate our way out. Stagflation is soon to
become a factor if commodity prices continue to creep higher, which
they will if we continue to get stronger reports until consumption
begins to falter and margins get squeezed due to high gas/commodity
prices. ISM reports are showing this dynamic is in play. (Note:
Commodities in Short Supply sections)
Good Summary of Ricardian Equivalence playing a role in our future growth - (FT)
The
political landscape is turning into a pressure cooker. An important
pair of special elections are coming up that could spell trouble for
the Democrats. A negative outcome would most surely stall any momentum
the administration had from the passage of the health bill while
further sap political will in case a crisis develops again. The "Moral
Hazard Chickens" may come home to roost. Meanwhile a showdown with
China looms and the administration is up against a wall. Label China a
manipulator and protectionism will follow, hold off (give China time
and space for them to move) and risk continued political bashing from
scared congressmen who might lose their jobs at the mid-term elections.
political landscape is turning into a pressure cooker. An important
pair of special elections are coming up that could spell trouble for
the Democrats. A negative outcome would most surely stall any momentum
the administration had from the passage of the health bill while
further sap political will in case a crisis develops again. The "Moral
Hazard Chickens" may come home to roost. Meanwhile a showdown with
China looms and the administration is up against a wall. Label China a
manipulator and protectionism will follow, hold off (give China time
and space for them to move) and risk continued political bashing from
scared congressmen who might lose their jobs at the mid-term elections.
http://www.politico.com/news/stories/0410/35458_Page2.html http://www.politico.com/news/stories/0410/35536.html
http://www.politico.com/news/stories/0410/35578.htmlGiven
that the market has rallied extensively, could we be in store for a
“sell on the news” event when Q1 reporting season comes around? What
I’ll be looking at are reactions to the first batch of earnings once
they come around. Also we are beginning to approach the Quarters where
analyst expectations begin to diverge from what I believe will happen.
Their’s are high and thus I believe economic reports will once again
matter in the near future (0-3 months). Jobs reports will become very
very important.
"And that’s why you don’t bluff". 0 for 2 on the “bazooka in the pocket” strategy.This Fits in nicely with my Interest Rate/Treasury Thesis Point - (WSJ)
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Earnings will beat. And...we'll get the same hedge to keep expectations lower - "While we have seen conditions improve, we're still not out of the woods..."
How long will this strategy work? My guess, by the time everyone figures it out, SPX will be sitting neatly around 1300.
Bearish:
Consumer Credit
Prior: $5B
Consensus: 0.0B
Actual: -11B
Well the rebound for consumer credit lasted only one month. Consumer credit fell a steep $11.5 billion in February, sinking hopes that January's increase would mark the end of the steepest consumer credit contraction on record. A $5.6 billion upward revision to January, to plus $10.6 billion, does take some of the sting out of February's contraction as do preliminary indications for strong retail sales in March. But February's data are bleak, showing a $9.5 billion contraction for revolving credit and a $2.0 billion contraction for nonrevolving credit. Tight credit standards together with the consumer's mood to save are not helping the economic recovery. Stocks showed little initial reaction to the report.
" Label China a manipulator and protectionism will follow, hold off (give China time and space for them to move) and risk continued political bashing from scared congressmen who might lose their jobs at the mid-term elections. "
Oh, they're going to lose their "Jobs". That's a given. But, is that going to be enough? Unfortunatly, Unhapply, I don't think this will be enough to turn the tide. You're going DOWN. And there's nothing you or I can DO about it.
Is there a credible third party who has the solutions?
We can always reley on HOPE. (HA! Good Luck on that)
And there's another Pipe dream.
China's $7.24B March trade deficit 1st in 6 years China reports $7.24 billion trade deficit in March as imports surge, first in almost 6 yearshttp://finance.yahoo.com/news/Chinas-724B-March-trade-apf-195908372.html...
Please tell me how much leverage Geithner, Schumer, etc now have to force China to revalue its currency upwards. Of course these could be propaganda numbers out of the very reliable Chinese Ministry of Propaganda.
A little off topic: I watch Squawk Box on CNBC (yeah, I know but I can't watch the Weather Channel for more than 10 minutes) in the morning while exercising and eating breakfast. Where is Joe Kernen? Not that I like him, but what?
DOW / SP500 daily chart gives bullish signals as of Friday 9 April. Weekly chart still trends up but continues to warn of an overextended bear market rally.
http://www.zerohedge.com/forum/latest-market-outlook-0
http://i39.tinypic.com/34y4k6t.png
http://www.msnbc.msn.com/id/21134540/vp/36285393#36341238
Hilarius. Do not forget this video next month