Weekly Bull/Bear Recap: June 20-24, 2011

Tyler Durden's picture

Submitted by Rodrigo Serrano of Rational Capitalist Speculator

Weekly Bull/Bear Recap: June 20-24, 2011


+ The US Gov’t is taking action and is attacking the greatest threat to consumer spending today.  Falling gas prices, over
the course of the summer, will positively catapult consumer confidence
heading into the second half of the year.  With this week’s leg lower in
oil, expect their continued fall to be a growing tailwind for consumer

+ Home prices are showing signs of firming as the FHFA House Price Index rises 0.8% in April.  This along with lower gas prices will give life to the consumer in Q3.

+ Durable Goods Orders, ex-trans, more than made up for last month’s loss of -0.4% (revised from -1.4%), rising 0.6% for the month of May
The economy is stronger than many people think.  The
Japanese earthquake profoundly disrupted global supply chains,
while higher gas prices somewhat deterred consumers.  Those headwinds
are in the rearview mirror.  Improvement in economic indicators will be a
theme in the next couple of months. 

+ Greece’s gov’t survives the Confidence Vote.  The EU and IMF approve
the country’s austerity plan.  This sets the stage for additional aid
in the coming months.  Approval of this aid will eliminate a large
uncertainty from the business climate, confidence will return, and will
set the stage for a second half rebound in global economic growth. 

+ The Yuan continues to strengthen
against the dollar and is a necessary step for the global economic
re-balancing to take place.  Chinese officials understand that the ball
is in their court and are taking action.


- Jobless Claims show a weak labor market.  As long as they’re weak, don’t count on consumer confidence making a strong comeback anytime soon.  A weak labor market leading to subdued confidence = weak consumption = weak labor market.  A negative feedback loop plagues the US economy.   

- We’re deep into the home-buying season, but from the looks for the data, you’d think we were smack in the middle of winter.  Existing home-sales fall 3.8% in May (to a 6 month low), while months supply rose to 9.3 months from 9.  New home sales, which are undeniably more important to the economy, also fared poorly. 

- The global recovery is stalling.  According to the recently released HSBC Flash Purchasing Manager’s Index, China is only 0.1 pts from outright contraction.  With another interest rate hike around the corner,
the engine of the global recovery may shut down quickly.   Meanwhile
the Eurozone, in addition to its sovereign debt woes, is dealing with an
abrupt slowing in economic growth. 

- The Architectural Billings Index, a leading indicator for commercial real estate construction is turning back down and mirrors many other economic indicators over the past month.  Are we really in just a soft patch?  We’ll find out shortly.

- Protectionism: Coming soon to a news headline near you.

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Libertarians for Prosperity's picture

Weekly recap June 20-24:  Gold has proven, yet again, not to be a safe haven. Silver ain't lookin' too good, either.

Libertardians for Prosperity

Spirit Of Truth's picture

While you all are arguing amongst yourselves about the nuances of deflation, amongst the bearish developments not noticed is that there's something going on between Turkey and Syria that seems potentially explosive:


Fedophile's picture

S&P down 7% since peak on April 29

GLD down 4% since peak on April 29

Debt Rolling's picture

While "Libertarians for prosperity" is a troll, he does have a good point.

At least until now, gold has moved in perfect tandem with stocks (Risk On/Risk Off), and it does not seem to be a "safe heaven" braving deflationary forces. Which is logic: credit destruction brings net destruction of money, poorer people and thus lower prices. 

If Greece were to default, the immediate reaction of gold would be a multi-digit drop. Gold should not be marketed as the ultimate "safe heaven" (which to my mind, doesn't exist, every situation is different), because it is not true: it is a safe heaven in relation to government fiat paper devaluation only. 

Yes, deflationary events are often a harbinger of monetary devaluations to come, because governments are very tempted to act (and in fact, they always act) ; but until the uncertainty is dissipated, gold would perform very poorly in this environment. 

bigelkhorn's picture

Great stuff as usual. I think it is interesting what has happened in the last week, Greece problems, Bernanke admiting US is crappy, and oil problems too. A crazy week, I am guessing there is a bigger move coming on the market. Been following this guy for a while, his trading advice is killer and is very accurate.... latest video - http://www.youtube.com/watch?v=xKP90DrpfzQ

sitenine's picture

Negative rate of return on the 1 month bill deserves bearish honorable mention.

Boston's picture

At this rate of collapse, the 5 year will have a negative yield in a few months! 

max2205's picture

And the stealth run on Money market funds due to PIGG exposure through ECU bank exposure. ie. Prime funds exposed to 50% Yankee bonds.

Fuck for 0% yield you think vanguard could take that exposure to zero.

buzzsaw99's picture

W was a master at timely oil price manipulation. The market is tighter these days but by golly Owebama is giving it his best shot. Twist the bank's arm, release the spr hounds, bomb godaffy into the stone age. Why don't people LEAVE BRITNEY ALONE??!!



Pure Evil's picture

Harden the Fuck Up, MoFo!

savagegoose's picture

dont run in the gruel line, you'll spill your gruel.

delivered's picture

A couple of thoughts. First, desperation is really becoming apparent. The SHIBOR activity this week in China is not healthy (even if the rate comes back down, the volatility is a killer). Greece's situation is a complete joke and for a country this small, relayed only a fraction of the type of panic in the financial community that a larger country such as Italy or Greece will create. MENA is a complete mess which everyone must realize is most likely at just the infancy stage of changing political, cultural, and social systems (at least a 20 year process if not longer). In the US, Big Ben basically stated earlier this week he doesn't know what to do (or how to create jobs and real growth), oil reserves are released for no other purpose than to act as a stimulate to the economy, and the US's global military interests and strategies appear to have almost no direction.

Second, the flight into the USD, tbills (with some of the shorter rates at a negative yield), and tbonds (10 year now under 3%) is occurring (risk off) but may be the greatest pump and dump in the history of the world. With risk off the pump is on and funding future US debt issuance's, at least for the short term, should not be a problem. As for the dump, well let's just say that the big holders including China, Russia, the Middle East, Japan, and others have never been provided a better window to dump excessive US holdings back to the original issuers or unsuspecting parties (in exchange for real assets). And when this is over, and the flight to so called "quality" is over and everyone realizes they've been duped into buying US debt/USDs, the exit from US holdings will be one of the most remarkable financial events ever witnessed.

As for gold, I'm actually stunned it has held up this well with only a 4% drop. In the past, gold could always be counted on to correct at least 10% if not 20% but this time, its holding $1,500 an ounce/USD so what its telling me is that it has more global strength than people realize. Each crisis appears to be cracking the fiat currencies a little more which in turn is forcing capital into hard assets and not paper. Sure, pound the oil market from time to time, work PMs down, and change the rules with trading Ag products, all strategies to impact prices lower but only in the short term as in the long-term, the policies and strategies being used will only create a more violent price discovery when they wear off.

delivered's picture

Disregard my reference to Italy and Greece as it should have read Italy and Spain.

Greeny's picture

What is your problem? If this is so f*cking "SURE" thing, then sell your Gold, Silver, House and just short Entire Market: DIA, QQQ, RUT, whatever you see. It surely should do better (By your own definition), than f* Gold since 100% of this board readers are praying for collapse and calling triple digit S&P and "IF" that's the case, Silver will be again below $20/oz Not a single time Silver move appositive of the Markets Do you wanna recall Silver price when S&P was under 1000? Keep thinking, bobos.. Like you gonna escape collapse,

holding few sticks of white metal,

idiots.. And don't BS people about shortage of physical... Nobody

buying that crap anymore.. So, if you going to see s&P under 1000

I'll be buying Silver Eagles at $15/piece. Sounds good to me.

jmc8888's picture

Labeling China a currency manipulator is NOT protectionism.  China is also NOT a currency manipulator.  We're not going anywhere useful if dipshits forget that.

Protectionism (among other measures) is tariffs, which is something we did right for ~200 years. Free trade is bankster driven, bankster profiting, and bankster approved.   

Labeling China a currency manipulator is just stupid, and dangerous.  All for no reason, other than some dogma belief to 'free trade' and the sycophant reason to continue it and put our stinky shit smelling finger at someone else for blame.  WE CHOOSE NOT TO PROTECT OURSELVES.  That's on US. 

If you are concerned that with slave labor, few environmental controls (no not green shit, I'm saying pure toxic crap in your water and a particulate count around a million), totaliarian control, etc - that your manufacturing isn't able to compete, all bankster and corporate approved, then you have something we used 200 years to effectively combat British East India Company Free Trade policies (because free trade has been a dogma for hundreds of years), and that's tariffs. 

Not that fucking hard to see how the U.S., and all other manufacturers built up their economy, even China.  They used fucking tariffs.  America would have been shit without it, and guess what, we're shit now because we abandoned it.  Go figure.  Not fucking hard the countries that still have manufactures STILL EMPLOY tariffs.  Go fucking figure.

THAT is protectionsim.  (and it works...hence the name)  What doesn't work is the free trade bankster dogma used for the past 40 years in a revival of dead ghosts that were dead wrong the first time around.

This is COMPLETELY different than labeling China a currency manipulator.  Gee I drowned because no air is underwater? No.  You drowned because you didn't come up for air. Know the fucking difference.

One way is the thinking of labeling China a currency manipulator, the other way is realizing that tariffs are the appropriate response to what we need on a macro level because its what we need and any country needs to have manufacturing in ones country, not because of anything about China doing something wrong.  I'll let people decide which is which.  It isn't fucking hard. (or apparently it is since so many people in this country suck the syphilitic cock of free trade that has destroyed us [along with other destructors working in harmony with said factor])

No, it is not the same thing.  China SHOULD be pegged to the dollar, as all currencies should be pegged to each other...that's called a FIXED exchange rate system.  (and obviously generational changes occur, but it is still considered FIXED).  Let's not buy ANY dogma okay.


bakken's picture

Glass-Steagal was actually some of the best financial legislation we have ever had.  I just considered it good sense and for years it kept the USA out of Bankster instigated problems.

I surely don't consider supporting Glass-Steagal  "DOGMATISM".  Why in HELL should the US government insure banking trade activities?

bakken's picture

YES!>>>>Free trade is the tool of the plutocracy and it can eaily destroy native industry.  This country is an object lesson in the destructiveness of doctrinaire free trade.  German wages are higher than US wages, and benefits are better.  Why do they still have a large industrial base and ours continues to wither and atrophy?  Germans are nationalistic, they protect their nation [Notice some German bank are already nationalized and they will nationalize the rest if a Greek ollapse occurs]. 

The USA..???  It protects its plutocrats not the country and NO, those are not identical.  Plutocrat capital is stateless essentially, no respecter of anything, especially not in defense of its "home" country.

Plutocrats are treacheropus and a Fifth Column everywhere in the world.  Yes, in China too.

Greeny's picture

Check this out how tech locomotive doing against

Silver or Gold

Here is your AAPL worthless shares 5 Years compare to Gold/Silver


Mallenet's picture

I live in an 'emerging' market, world top 10 tourism growth, economy. I was a first 'consultant', I am not even standing now: I will not publish what banks and funds owe me - what is the point (I will never be paid regardless: legal fees are a killer, and they know it).

So the bankers earn bonus by not paying what they owe, and believe me - this is their business plan!

I have a different approach to 'collective' investment and the bankers want to hang me for being honest - without them!

They have no chance - the world has changed and proper people are light years ahead of any bankster.

I am not advocating or promoting: just saying - never trust any bank.

Goldtoothchimp09's picture

sharing this with my ZH brethren -- stock market is ready to implode!  Based on my Elliott Wave setup.



bakken's picture

Sorry, my calculations do not agree.  Do not plunge recklessly, recalculate!

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