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Guest Post: Bull/Bear Weekly Recap: Mar 14 - Mar 18

Tyler Durden's picture




 

Submitted by Rational Capitalist Speculator

Bull/Bear Weekly Recap: Mar 14 - Mar 18

Bull

+ The Conference Board released its US leading indicator
and it points to improvement in the economy in the months ahead.  8 of
the 10 factors that make up the final reading showed improvement.  The
recovery is poised to continue despite what the bears keep saying. 

+ The labor market is improving
as jobless claims fall by 16,000 to 385,000 while the 4 week average
falls by 7,000 to 386,250, the lowest level since July 2008.  The last
piece of the bullish thesis is finally falling into place.  Increased
job creation will create sustainable consumer demand and fuel the US
economy’s recovery.

+ The Philly Fed index for March moves to the highest reading since 1984
and points to a pick up in momentum for the manufacturing sector.  New
Orders soared, while unfilled orders and delivery times showed increased
activity.  Employment remains in positive territory as well.  This is
yet another signal that the recovery has legs. 

+ A deflationary scenario for the US economy is out the window as
headline CPI for February comes in at a hotter than expected +0.5% MoM
(+2.1% YoY — and within the Fed’s implied inflation target), while the
core measure rises by +0.2% MoM (1.1% YoY — and the highest since March
2010).  The US is not Japan.

+ OECD composite leading indicators show that the global recovery remains intact. Leading indicators in the US and Euro area show robust expansion
in the months ahead.  While China’s leading indicator showed a possible
moderate downturn there, the Conference Board released its
China-centric leading indicator which showed a rebound in January.  This will certainly help ease concerns that that country is headed for a sudden slowdown.   

+ Weekly retail metrics for the second week in March show that
positive YoY trends remain intact.  The recent spike in oil prices has
not deterred the American consumer.  Consumption trends remain healthy,
which is conducive to continued job growth.

—————————

Bear

- Japan’s earthquake paralyzes the country as major auto companies are forced to suspend operations
costing billions of dollars in lost production.  Potential damage to
global recovery may be significant, especially if there is a
catastrophic nuclear disaster. 

- While news in the Middle East has taken a back
seat recently (why wouldn’t it after what happened in Japan?), tensions
continue to simmer.  Saudi Arabia is sending troops to Bahrain to quell unrest in the tiny kingdom.  This course of action has certainly raised eyebrows and tensions between the US and Saudi Arabia are on the rise as well. Furthermore the US has changed its tune with regards to Libya.  We may see military conflict here.  Oil prices are likely to remain elevated.  

- Oil closes above $102 and will be a persist thorn on the side of
the bullish thesis.  The bulls keep pointing to leading indicators
signaling that the economy will rebound.  If the rebound continues to
gain strength, it will be met with ever increasing oil prices until there is demand destruction and the economic recovery short-circuits.   

- Housing remains in the doldrums as both Housing Starts and Permits declined
more than expected.  Permits slumped to a record low and the report
points to continued moribund activity in the housing market is exactly  what  I  expected in my bi-annual outlook.  Let’s not forget, housing has been an absolutely integral factor to US economic recoveries in the past. 

- Inflation is clearly evident at the producer level with PPI in
February far exceeding the consensus coming in at +1.6% vs. +0.7%
expected (+5.6% YoY).  Food prices at the finished level are increasing
at the fastest pace since 1974.  This report may prompt calls for the
Fed to end their QE policy, which would be a negative for financial
markets as investors have grown accustomed to the Bernanke Put.

- China continues to battle inflation.  The Chinese central bank has signaled that it will use interest rate increases as the primary tool to battle the monetary phenomenon.  Using this method may pop a real estate bubble and derail the global recovery.

 

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Fri, 03/18/2011 - 22:43 | 1074289 Robslob
Robslob's picture

Uh...gold or silver...everything else is dead.

Sat, 03/19/2011 - 09:46 | 1074945 maxcody
maxcody's picture

Fri, 03/18/2011 - 23:03 | 1074313 AmazingLarry
AmazingLarry's picture

Dumb. I want my 41 seconds back.

Fri, 03/18/2011 - 23:27 | 1074350 snowball777
snowball777's picture

Might I recommend the Evelyn Woodhead speed-reading course...

Sat, 03/19/2011 - 07:57 | 1074847 squexx
squexx's picture

You dated yourself, dude! I love the old Cheech and Chong (pre-movie) records from the 1970's. Los Cochinos album, I believe!

Fri, 03/18/2011 - 23:07 | 1074325 Id fight Gandhi
Id fight Gandhi's picture

Gonna be an ugly earnings season.

Great trading market. Sure threw those momos and permabullshits overboard.

Fri, 03/18/2011 - 23:38 | 1074368 JohnG
JohnG's picture

Reads as if the bull case is predicated on government lies.

Sat, 03/19/2011 - 00:08 | 1074415 10kby2k
10kby2k's picture

status quo----some alcoholics last 20 years, others 30 or 40

Sat, 03/19/2011 - 01:11 | 1074528 Bansters-in-my-...
Bansters-in-my- feces's picture

What a fucking waste of time.

Sat, 03/19/2011 - 07:29 | 1074540 Zero Govt
Zero Govt's picture

The recovery is poised to continue despite what the bears keep saying

What recovery? What are the Bulls smoking?? 

A deflationary scenario for the US economy is out the window... The US is not Japan.

No the US has even more powerful deflationary (collapsing debt) pressures building than Japan. Whichever (uncredited) source made this prediction should firstly be named and then second thrown out the window!

Sat, 03/19/2011 - 01:17 | 1074545 snowball777
snowball777's picture

So does a +2% CPI put the kibosh on QE3?

Or are we still game on since not a peep was made by the FOMC?

Sat, 03/19/2011 - 09:45 | 1074941 Frank Redner
Frank Redner's picture

Im very bullish on the markets and equities. Look on all what happend during the last 6 month and no selloff. Now it takes middle east + oil+ Japan quake + tsunami + nuclear disaster to bring markets down only 10%.

Im gradually buying from now until next month until im fully invested.

1550 S&P is almost a no brainer after all of this.

Who is doing the same? and % of oil exposure?

Sat, 03/19/2011 - 14:22 | 1075856 IWanaBRich
IWanaBRich's picture

I'm in your camp, Frank.  The market seems to be in a bubble, but there is no denying that the uptrend is very strong.  I pulled back some in March to give Portugal time to request aid and Cina to raise rate again ... but I don't those things will take the market down .... moving back in.

Sat, 03/19/2011 - 10:36 | 1074990 99er
Sat, 03/19/2011 - 11:10 | 1075015 John Law Lives
John Law Lives's picture

Unemployment rises in most US metropolitan areas in Jaunary:

http://finance.yahoo.com/news/Unemployment-rises-in-nearly-apf-133240478...

I guess that is bullish...

 

Sat, 03/19/2011 - 12:10 | 1075281 TexDenim
TexDenim's picture

I loved the "peace is at hand" announcement Friday morning from the Libyan foreign minister. ES spiked to 1287 -- and then promptly collapsed 10 handles. Volatility is my friend! Mean-reversion is as much a law of nature as gravity.

Sat, 03/19/2011 - 15:42 | 1076111 fastishplastic
fastishplastic's picture

 

tyler,

please, more on your last point above. currency wars shifted to another gear this week. all fed eyes on the effect of china's rate hiking. if the rate hikes "work" (who knows what that means exactly and how long the fed is willing to wait to find out) but if they work look for a race to the top in rate hikes. japan conspicuously late/absent to defend its currency. earthquake is a headline excuse for the japanese gov to pocket/repatriate a bunch of money. everyone wondering why?!? now?!? trichet promises rate hikes. "is the guy crazy?" well yes, but the reason is europe won't be caught out when the global liquidity sponge game starts. everyone and there pet red tibetan mastiff believes the world is flooded with dollars - true. this has govs and rich people rabid. gnp is the reason for the bernank's hubris, remember  he can stop inflation in the time it takes to produce an "original" fed statement. he "knows" he can win the repatriation war. more on currency wars please 

 

peace and love

 

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