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Weekly Bull/Bear Recap: Nov. 26-30, 2012

Tyler Durden's picture




 

Via Rational Capitalist Speculator,

This objective report concisely summarizes important macro events over the past week.  It is not geared to push an agenda.  Impartiality is necessary to avoid costly psychological traps, which all investors are prone to, such as confirmation, conservatism, and endowment biases.  

Bull

+  China continues to show signs of stabilization and will surprise investors with resilient growth next year.  Improving growth propects are already percolating throughout the region.  

+ Contrary to bearish pessimism of disunity in Europe, it’s important to understand that actions speak louder than words.  Bickering amongst Europe’s leaders is how things get done there.  An agreement to ease the terms on emergency aid to Greece as well as stated commitments to apply “further measures and assistance” signals that Europe is slowly taking care of business.  Steps are being taken to unite the region.  Sovereign yields in Spain and Italy are falling as a result, indicating financial and economic stabilization.  

+  The bears point at weakening consumer confidence has a harbinger of weak holiday sales.  Not so says weekly sales metrics from Redbook and the International Council of Shopping Centers, which show a successful start to the holiday shopping season.  The National Retail Federation says that this year’s Black Friday weekend was the busiest ever.  Meanwhile, Cyber Monday sales rise 30% from a year ago.    

+ Resilient consumers are buoyed by the positive wealth effect of rising home prices.  They have bottomed and falling inventory levels (due to increased buying activity) will ensure that positive trends in prices will continue.  Housing is now a major driver of the recovery.

+ The U.S. understands that it cannot rock the boat with regards to China’s economic restructuring.  Patience will be practiced and the U.S.’s strategy will focus on continued diplomatic pressure, instead of myopically labeling China a currency manipulator thereby raising the risk of protectionism.  As the global economy restructures, companies will increasingly find the U.S. as a great place to establish manufacturing operations.  

Bear

- Words mean little in Washington.  After weeks of announcing their embrace of cooperation in the face of the fiscal cliff, both Democrats and Republicans are starting to play a game of chicken as it approaches.  Business investment has drastically slowed, manifesting itself in stalling economic growth along with falling revenue growth.  The 3-month average reading for the Chicago Fed’s National Activity Index has fallen to the lowest since 2009 and is negatively affecting the job market.  Increasing downside risks are clearly being ignored; complacency is the order of the day.  

- The Shanghai Composite in China closes under 2,000 for the first time since the dark days of 2009, clearly not a bullish signal for those forecasting a pick up in growth.  Check out the country’s most popular “nail house” .  

- Economic activity in Europe remains in the doldrums and is a clear threat to global growth.  Italian consumer confidence sinks from 86.2 to 84.8 in November.  Continued weakness in the country’s economy will be a consistent tailwind for anti-austerity/anti-Europe Beppe Grillo’s 5-Star movement, creating political uncertainty in a country currently off of investors’ radars.  In Spain, an overhaul of the country’s financial system will lead to even more job loss.  In France, political meddling in the economy will lead to inefficiencies.  Greece is turning into a “slummy country” before our eyes.  And finally, rumblings from Britain may indicate a desire to exit the EU.      

Geopolitics will be a consistent wildcard in the coming months, resulting in continued uncertainty and reduced investment/growth.  Ehud Barak’s retirement could open the door to a more aggressive defense minister, which is particularly concerning given Israel’s current predicament with Iran.  Meanwhile, Turkey has requested NATO involvement, which could create a flashpoint between UN Security Council members. Meanwhile, tensions are simmering in Egypt.  And finally in North Korea, rumors of another missile test are disseminating.   

- The U.S. housing market is not poised for a rebound.  At best, it will be a very slow recovery, contributing a feeble tailwind for the economy.  New Home Sales for October fell and last month’s result was revised sharply lower.  Meanwhile, mortgage applications are signaling further tepid growth at best. 

 

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Fri, 11/30/2012 - 16:55 | 3024908 ebworthen
ebworthen's picture

It's more bullshit versus bearshit at this point.

From my perspective the "bull" arguments are a steaming crock of shit.

The "bear" arguments are a real male Grizzly, full of spring fever, thick coat, 1,000+ lbs., sharp claws and teeth.

Fri, 11/30/2012 - 17:39 | 3025090 icanhasbailout
icanhasbailout's picture

Long term, I know how this ends, with the bear kicking the bull in the balls until it starts singing soprano

Fri, 11/30/2012 - 16:58 | 3024935 e-man
e-man's picture

- Words mean little in Washington

Apparently, numbers don't mean anything in Washington either.

Fri, 11/30/2012 - 17:01 | 3024954 Joe moneybags
Joe moneybags's picture

Not mentioned in the bullish list is the effect of QEternity and ZIRP, which will keep the drunken party going for several more years.  Tough shit, savers and bears.

Fri, 11/30/2012 - 17:06 | 3024958 cougar_w
cougar_w's picture

Jesus H. Christ! Did you guys see that sell-off on the Dow in the final seconds? 60M shares moved in like 15 seconds, on a 90M day. What the actual fuck was that about?

Fri, 11/30/2012 - 17:14 | 3024994 Darkness
Darkness's picture

Favorite post all week, moral of the story: 

 

BEAR the fuck DOWN

Fri, 11/30/2012 - 17:17 | 3025009 adr
adr's picture

yay the Bull Bear schizophrenia post is back!!!

 

China is expanding, no China is contracting.

Housing has bottomed, no housing isn't poised for a rebound.

Traffic at retailers is up, but people aren't spending.

 

WHHHHEEEEEEEEEEE!!!!!!

I get to see real hard data. The real hard data is terrible. The self reported bullshit metrics are for the purpose of goosing stocks, there is no other purpose.

One day I really screwed up my sister's numbers at the store she worked at. I brought my son in and he kept pushing his stroller over the threshold. It made it look like an extra 200 people came in the store that day for the highest foot traffic of any day so far that year. Sales per customer were of course the lowest they had ever been. The DM was furious that she sold so little considering how many people came in the store. When she explained what happened the DM was furious she allowed my son to be in the store. I got the number of the DM and reamed her a new asshole considering I bought $60 worth of stuff from the store that day, which I immediately returned.

The point. Store reported metrics like foot traffic, comps, and even sales themselves are complete fabrications by accountants trying to make sure their stock options are worth more. If you believe Zumiez actually sells 1% of what they claim, you must be holding a Krugman coffee mug.

Fri, 11/30/2012 - 17:21 | 3025022 Bastiat009
Bastiat009's picture

As long as increasing home price is seen as a positive in a world where more and more people are out of work, I will be suspicious. Why on earth do people believe that low prices are so bad???

Fri, 11/30/2012 - 18:13 | 3025189 alangreedspank
alangreedspank's picture

They don't. It is just greed run amok. When someone is in the market to buy, they want low prices. When they are in the market to sell, to want high prices.

There's no problem with greed per say. This impulse forces people to strike deals which generates prices. But these people want government to help reach their goals of greedy impulses which ends up fucking up everything.

Fri, 11/30/2012 - 17:23 | 3025030 buzzsaw99
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