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Weekly Bull/Bear Recap: July 11-15, 2011

Tyler Durden's picture




 

From Rodrigo Serrano of RCS Investments

Weekly Bull/Bear Recap: July 11-15, 2011

Bull

+ Earnings reports are coming in and have been encouraging thus far. Google shines blowing past Wall Street’s expectations on higher online advertising demand. Citigroup reports much better than expected earnings on improved investment-banking performance as did JP Morgan.  Mattel’s results also make the case
for a strong corporate picture.  Improved corporate guidance over the
second half of the year, coupled with low valuations of 12-13x using
2011 earnings will stoke investor enthusiasm in the second half of the
year.  (I do not own nor am I shorting any of these companies). 

+ Jobless claims fall further, from 427K to 405K,
and proves that their recent rise  was due to transitory factors. They
will continue their path downward and lead to better labor market
conditions in the second half of the year. This will help consumption in
the months ahead and confirm 2011 earning estimates.

+ Chinese economic data comes in better than expected.
Consumption and industrial production, critical factors for the global
recovery, both exceed expectations. China isn’t headed for a
hard-landing and global economic activity will remain buoyed by
continued growth in demand from the communist nation.

+ Executives see a rebound in the second half of the year.  Large mergers such as BHP Billiton’s acquisition of Petrohawk Energy Corp and Icahn’s bid for Clorox show that growth opportunities are seen as the global recovery progresses. (Don’t own or short these companies)    

+ Consumer metrics for July have started off on the right foot. Goldman ICSC and Redbook
gauges both show strengthening consumer trends on a YoY basis. Markets
are quite gloomy with many thinking that the economy is about to fall
into recession. Not from the looks of consumer demand!

+ The UCLA Meridian Pulse of Commerce Index, a leading indicator of manufacturing activity, rebounded by 1%
after falling the prior two months. This indicates that the
manufacturing sector isn’t falling out of bed. Economic activity remains
in growth mode. Furthermore the Empire Manufacturing Survey, while
negative for the second month in a row, is showing more signs
that the recent soft patch is just that, a soft patch. Future
expectations rose almost 10 pts to 32.2, while the future employment
index crossed into positive territory once again.

+ While retail sales for June might have seemed weak, a look under the hood shows encouraging trends and a June YoY performance that is the highest since 2005.

+ Slowly but surely, housing is healing and the market is smelling the bottom for this all-important
sector.  Lower foreclosures —> less supply of houses —>
stabilized housing prices —> improved consumer confidence —>
higher spending.     

Bear

- Empire State Manufacturing Index notches its second consecutive negative reading.  Average workweek, New Orders, and Backlogs are in negative territory.  Meanwhile Industrial Production for June rose only 0.2%,
less than expected. To exacerbate the miss, most of the gains were due
to the volatile utilities component. What happened to the transitory
nature of this soft patch bulls?

- The bulls keep denying it, but it’s the same story. GDP estimates keep getting slashed. Small business, the engine of job creation isn’t showing recovery, in fact the readings are recessionary.

- University of Michigan Consumer Sentiment for the first half of July implodes to 63.8 from 71.5 at the end of June.  Can Main Street have some of that hopium that analysts and managers are sniffing?   

- The US is warned …(twice!)
that it may get its credit rating slashed should politicians fail to
resolve the current budget impasse.  Some predict that this will
trigger closer scrutiny of the US from bond vigilantes.  Interest rates
would rise as treasury bonds sell off strongly. 

- The Eurozone sovereign debt woes are officially back. This time we got the two big kahunas front and center: Spain and Italy (lets throw Ireland and Greece in there for good measure).  Can Eurozone officials pull another rabbit out of the hat?  Citigroup hopes so.

- Bernanke is a little gun shy
now about opening the monetary spigot again.  Why wouldn’t he be?  Oil
was less than a $1.00 away from hitting $100 again just on speculation
that he might turn the faucet back on!  Also, the latest inflation
numbers show an ominous rise
in Core CPI and makes the case for inflation becoming more entrenched
in the economy.  Any further printing at this point would
be destabilizing for the consumer.  The Fed isn’t coming to the rescue right away this time.      

- Chinese inflation in June comes in at 6.4% on a YoY basis, at the top end of expectations. Social discontent is becoming more pervasive
throughout the country and puts officials in a very difficult
situation. Meanwhile, their economy is showing more signs of slowing as imports came in soft, which resulted in a larger than expected trade surplus.

- The housing market remains moribund as MBA purchase applications, a leading indicator of housing demand, hasn’t shown any signs of rebounding.  The consumer’s largest asset looks to experience further price declines.  QE hasn’t done much for this asset class.

 

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Fri, 07/15/2011 - 17:02 | 1460926 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

I stopped reading when i saw the word "transitory".

This never-ending bullsh*t makes me sick.

See it for what it is. This is a totalitarian regime. The 'markets' are acting currently exactly how they'd act under a fascist government. They are not markets in any way, shape or form. They are a propaganda tool.

The U.S. government are the biggest evil on the planet today.

Fri, 07/15/2011 - 17:16 | 1460966 knukles
knukles's picture

Well, not all bullshit is permanent. 

Fri, 07/15/2011 - 17:47 | 1461032 Vic Vinegar
Vic Vinegar's picture

With these repetitive posts you almost seem like a real robot at this point man...you can't stay sick forever by this bullshit.

If this is a totalitarian regime, then all you can do is look for Ukranian escorts...or at least a lower grade of escort :-)

Fri, 07/15/2011 - 17:54 | 1461046 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Spoken like a true U.S. citizen.

The U.S. government is the most evil entity on the planet at present, followed by the U.S. citizenry who have allowed it to exist and flourish.

Fri, 07/15/2011 - 18:03 | 1461070 Vic Vinegar
Vic Vinegar's picture

Not only that, but a U.S. citizen who enjoys watching "Big Brother".  Man, I love that they brought back Jeff & Jordan along with Brachel this year.  Something tells me Evil Dick is going to be back before the year is out...

Before I leave on this beautiful Friday, here is a quote for you dude.  Do with it what you will:

The longer I live, the more I realize the impact of attitude on life.

Attitude, to me, is more important than facts. It is more important than the past, the education, the money, than circumstances, than failure, than successes, than what other people think or say or do.

It is more important than appearance, giftedness or skill. It will make or break a company... a church... a home.

The remarkable thing is we have a choice everyday regarding the attitude we will embrace for that day. We cannot change our past... we cannot change the fact that people will act in a certain way. We cannot change the inevitable.

The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% of how I react to it. And so it is with you... we are in charge of our Attitudes.

~ Chuck Swindoll

 

Fri, 07/15/2011 - 18:17 | 1461087 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Yeah, that's the solution to living under pure evil... listen to a man of religion.

Listen, if there was a god and he was good, would they let such an obvious evil like the U.S. exist a day long than it need to? Any god that let's this cancerous country do what it does in this world daily, kill, maim, monetary enslavement, lie, steal, etc on a scale never seen before in history is not a god i want to know, and the opinions of his foot soldiers i have no time for, purely on a credibility level.

Fri, 07/15/2011 - 18:30 | 1461107 Jack Napier
Jack Napier's picture

A couple things. First off, the US gov has been hijacked by central bankers, specifically the Rothschilds through the use of the Basel BIS, the Federal Reserve, and illuministic corporations such as JP Morgan and Citibank. The government is not evil. It is weapon being wielded.

Second, if God were to interfere with any person's free will to prevent evil, it would need to be done unilaterally, and there would be no such thing as good and evil, love and hate, or freedom of choice. We would all be robots incapable of being individuals.

Sat, 07/16/2011 - 09:14 | 1461920 Are you kidding
Are you kidding's picture

Second, if God were to interfere with any person's free will to prevent evil, it would need to be done unilaterally, and there would be no such thing as good and evil, love and hate, or freedom of choice. We would all be robots incapable of being individuals.

 

WTF man...you're ALREADY a robot...blindly following "God's rules".

Fri, 07/15/2011 - 19:25 | 1461193 JW n FL
JW n FL's picture

http://www.youtube.com/watch?v=tWfDm_bqwUU

 

Did Positive Thinking Wreck the Economy? - Barbara Ehrenreich

Fri, 07/15/2011 - 20:11 | 1461283 Village Idiot
Village Idiot's picture

Shout out to JW and the rest of you old timers.  Pinot Noir and pals...and a nice roast of beast.

Sat, 07/16/2011 - 00:43 | 1461686 Elliott Eldrich
Elliott Eldrich's picture

Winner, "Unfortunate Metaphor of the Week." - "Slowly but surely, housing is healing and the market is smelling the bottom for this all-important sector."

Fri, 07/15/2011 - 17:38 | 1461008 RobotTrader
RobotTrader's picture

Bears have tried repeatedly to bust under 1300 over and over again to no avail.

With the absolute worst news flow I've seen since early 2009, and they still can't close the deal.

They need to slam it next week, otherwise its going to be a long summer for the bears and a killer summer for the PigMen at The Hamptons the rest of the year.

Fri, 07/15/2011 - 19:43 | 1461232 Mitchman
Mitchman's picture

Well said!

Fri, 07/15/2011 - 17:56 | 1461049 slewie the pi-rat
slewie the pi-rat's picture

the glass is 3/4 empty.  just wait till some big hairy ursa-beast w/cubs wants a nice, long, cool drink...

Fri, 07/15/2011 - 17:59 | 1461059 Zero Govt
Zero Govt's picture

Let's see how long the financial community can live in LaLa Land with small business, consumers, US GDP, property, healthcare, States and the US Govt itself in absolute shit state shall we?

The countdown to collapse is ticking loudly, only delusion (unrealistic confidence) stands between S&P 1300 and S&P 900 ...so suck on that hopium a little longer as a stampede to the exits for a breath of fresh air is long overdue

Fri, 07/15/2011 - 18:41 | 1461119 cosmictrainwreck
cosmictrainwreck's picture

of course, that's what should happen..... (and might) but I'll wager 25 cnts those diabolical mofo's run that bitch to the moon Mon-Tue, at least, so they can cash out big - just a guess...

Fri, 07/15/2011 - 18:56 | 1461142 trampstamp
trampstamp's picture

It was range bound really the last few days on the futures. That's the way the option spreaders like it. They sell the shit out of puts and calls options on futures and keep it at bay during expiration week. just another day at the office. Next week we'll see where it wants to go.

Fri, 07/15/2011 - 22:16 | 1461488 ThirdCoastSurfer
ThirdCoastSurfer's picture

Anyone else notice that the FDIC's failed bank bill for July is now over $700 million? 

After a lot of small bank failures pushed the 2011 total to 48, July has now added 7 more, among them some big hitters like 1st Chicago at an estimated cost of $284.3 million and Colorado Capital at $283.8m. Throw in One Georgia and High Trust for $110.4m and you get a big total from a cross region mix. 

Sat, 07/16/2011 - 01:12 | 1461712 slewie the pi-rat
slewie the pi-rat's picture

hey, thanks

we've picked the low-hanging fruit?  georgia and high.  all right!

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