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Weekly Bull/Bear Recap: Jan. 21-25, 2013

Tyler Durden's picture




 

From Rodrigo Serrano of 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

+ Existing home sales may have underperformed the consensus forecast, but for good reason.  A lack of homes for sale (supply), particularly at the low-value end, was the culprit.  This development will help maintain upward momentum in home prices throughout 2013.  Moreover, New Home Sales may have printed a negative MoM growth-rate, but this was due to a huge upward revision in November and doesn’t deter the bigger picture of continued growth for the sector in 2013.  Overall, inventory levels remain very lean.  Higher home prices will result in a positive wealth effect for consumers and help support consumption.  Furthermore, low inventory levels will act as an incentive for homebuilders to hire, buttressing economic activity.

+ The U.S. job market is clearly on the mend from the looks of the jobless-claims data.  At roughly 352K, the 4-week average is now at its lowest level in almost 5 years.  This development is a harbinger for a solid January payrolls report, due in a week from today.  

+ The bears’ strongest point, a stalling manufacturing sector, isn’t confirmed at all by Markit’s latest preliminary PMI reading.  For January, the overall index rose from 54 to 56.1, a 10-month high.  Furthermore leading indicators in the report, such as New Orders, point to further expansion in the months ahead.  

+ The world’s largest economic bloc, the European Union, is clearly stabilizing.  Germany’s manufacturing PMI rises to the highest in almost a year, while consumer confidence in the European region expands for the second month in a row.  Both reports are for January.  Meanwhile, the ZEW Center for European Economic Research reports that investor confidence in Germany skyrocketed 24.6 pts, hitting a level not seen in more than 2.5 years (same story for Euro-area confidence).  Finally on the financial front, investors are giving the thumbs up at recent reforms in Spain and Portugal; both countries issue bonds to strong demand —- meanwhile, many banks that participated in the LTRO at the zenith of the crisis, are now repaying their loans quicker than expected, a sign of confidence that the worse is over.  

+ China continues to surprise to the upside.  The country’s manufacturing PMI, released by HSBC, hits a 2-year high in January.  Furthermore, Copper is about to break out of its multi-year triangle to the upside (see 3-yr view).  

+ The Conference Board’s U.S. leading indicator points to strengthening economic growth in the months ahead, rising 0.5% in December. “Housing, which has long been a drag, has turned into a positive for growth and will help improve consumer balance sheets and strengthen consumption,” says Conference Board economist Kenneth Goldstein.  

 

Bear

- Manufacturing has stalled and is looking to contract soon, as the Federal Reserve Bank of Richmond reports that its manufacturing index slumped to a 6-month low in January.  This report follows news of weakness in the sector from the New York and Philly Federal Reserve Banks.  Housing, which now only accounts for only 3% of U.S. GDP economy will not be able to pick up the slack (manufacturing accounts for 12% according to the National Association of Manufacturers)…  

- …furthermore consumption, which accounts for roughly 70% of the economy is set to shift down a gear as consumers hunker down as they face an expiring 2-year payroll tax holiday.  Bloomberg’s Consumer Comfort, which confirms recent falls in the University of Michigan and Conference Board consumer confidence surveys, falls to a 3-month low.   

- Complacency reigns in Euroland as Draghi states that the darkest times have passed.  Are we really out of the woods?  Investors are ignoring worrisome developments.  Spanish unemployment hits a record high while stories of corruption within the country’s government swirl about, creating political uncertainty at the flashpoint of the debt crisis.  Meanwhile in France, Europe’s second largest economy, recession is knocking on the door and could result in another flashpoint.

- From a technical perspective, stocks are very overbought at these levels.  Now is not the time to make risk-on bets as the S&P 500 also approaches multi-year resistance and many macro risks remain lurking in the background.

image  

—(Source Bespoke Investment Group)

- Common sense says that constant intervention and warping of financial markets by central banks will inevitably come back to haunt investors and the global economy.  Warnings grow of a credit bubble as rampant central bank intervention has masked the true cost of money.  The subsequent adjustment will undoubtably be painful.

 

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Fri, 01/25/2013 - 18:42 | 3186788 tooriskytoinvest
tooriskytoinvest's picture

The Endgame Is Being Played Out: World 'Plunges Into Currency War', Economy Underperforming Again, US Banks Shaken By Biggest Deposit Withdrawals Since 9/11... The Collapse Will Begin!

http://investmentwatchblog.com/the-endgame-is-being-played-out-banks-are-now-shutting-down-more-branches-than-they-open-world-plunges-into-currency-war-oil-set-to-super-spike-63-us-banks-shaken-by-biggest-deposit-withdrawal/

Fri, 01/25/2013 - 19:18 | 3186866 Randall Cabot
Randall Cabot's picture

"The U.S. job market is clearly on the mend from the looks of the jobless-claims data."

Are you fucking serious?

Fri, 01/25/2013 - 19:34 | 3186890 NotApplicable
NotApplicable's picture

Unbiasedly so!

Mon, 01/28/2013 - 09:50 | 3191017 Muppet of the U...
Muppet of the Universe's picture

the sky is falling, the sky IS FALLING!  SELL THE S&P!!!! 

2 months later...

GODDAMNIT!

http://www.youtube.com/watch?v=gSaH1yaRkzI&list=PL1766AE15B0D5E361

Learn, understand, and think critically, or be left in the wastebin.

EVOLVE, COMPETE, OR DIE.

Fri, 01/25/2013 - 19:24 | 3186872 NotApplicable
NotApplicable's picture

You know, it's hard to take someone seriously when they harbor these delusions.

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.

There is simply no such thing as an unbiased opinion, as ALL opinions are influenced by the perspective (bias) of their holder. What this attitude absolutely guarantees, beyond a shadow of a doubt, is that the three biases mentioned are contained within the opinion.

One can try as they will to minimize bias via self-critiquing, but only a fool would state they've eliminated it.

Yet, I see supposedly educated people make this error, again, and again, and again.

True objectivity is nothing but an opinion without an opinion. If anyone ever figures out how to pull this off, let me know, cuz I wanna have my mind blown by its magic.

Sat, 01/26/2013 - 01:06 | 3187347 Lore
Lore's picture

I agree. The intro is quaint. It reminds me of an old friend who travelled around North America after graduation and came home to announce, with great candor: "[Our alma mater] is the only place where people speak English without an accent." :-)

Fri, 01/25/2013 - 18:47 | 3186793 CPL
CPL's picture

Almost time for TZA...almost.

Fri, 01/25/2013 - 19:47 | 3186917 Massholio
Massholio's picture

yes…yes! I was thinking that all day today, almost pulled the trigger!

Fri, 01/25/2013 - 22:08 | 3187139 CPL
CPL's picture

Trench signal.  Everytime the market shits the bed and drops 10+ points.  Tempting but I'm staying as far back from that shit heap market as I have to right now.

Fri, 01/25/2013 - 18:48 | 3186796 Yen Cross
Yen Cross's picture

It's tough to "Recap" when system is gamed!   Fed has record Amt. of securites. The Fed cant even sell "twisted" 2-3 year notes?

  The FUCKING German 10YEAR BUND was up (5 ) basis points?, on Thursday? Am I dumb?

Fri, 01/25/2013 - 18:52 | 3186804 kill switch
kill switch's picture

Fuck it,,,let's go back in history where the rage against this bullshit was real!!!

 

http://www.youtube.com/watch?v=q3SjqGfe-yM

Fri, 01/25/2013 - 18:55 | 3186811 francis_sawyer
francis_sawyer's picture

I wshinking more like this...

~~~

http://www.youtube.com/watch?v=E2fLyZfaaZs

Fri, 01/25/2013 - 19:15 | 3186853 Randall Cabot
Randall Cabot's picture

If she was any more enraged she'd fall asleep

Fri, 01/25/2013 - 19:37 | 3186869 kill switch
kill switch's picture

Understand  we are manipulated<<<<

 

http://www.youtube.com/watch?v=clnozSXyF4k

Fri, 01/25/2013 - 19:33 | 3186887 NotApplicable
NotApplicable's picture

None of that shit was any more real than OWS or any other astro-turf grass-root movement.

All of it emanated from Rockefeller think tanks in an effort to divide and conquer.

Things that are real? Why is the beer distributor suddenly having difficulty obtainig my keg of ale, when I've never once had an issue over the last five years? It's only 100 miles away, two hours down the interstate. Did someone's margins get too thin to survive?

Are the Dark Ages back already?

Fri, 01/25/2013 - 19:39 | 3186903 kill switch
kill switch's picture

Fascinating

Fri, 01/25/2013 - 18:55 | 3186812 davhay
davhay's picture

GEITHNER IS A FUCKHEAD!!!!!!

Fri, 01/25/2013 - 19:04 | 3186829 DowTheorist
DowTheorist's picture

While technical, I'd add another bull argument to the list:

As per the "classical"/Rhea Dow Theory, the market is in a primary bull market since January 18. Such primary bull markets have lasted ca. 2 years on average. Thus, we are not talking of a tradable rally but of a real "bull" market. The Schannep's version of the Dow Theory flashed earlier, on January 2, the primary bull market signal. Here are the details:

 

http://www.dowtheoryinvestment.com/2013/01/dow-theory-update-for-jan-18-...

Sat, 01/26/2013 - 01:53 | 3187393 Joe moneybags
Joe moneybags's picture

The DOW Theory?  are you FKM?  Here's a system that doesn't give a buy signal until the move is 2/3 complete, or a sell signal until the move is about half-way complete.  So, that gets you in at a level about equal to the level where it takes you out!  But the good part, is you get to wait, oh, about 3 years and 10 months to get a buy signal, so you have plenty of time to do better things than follow the market.

Fri, 01/25/2013 - 19:03 | 3186830 realtick
Fri, 01/25/2013 - 19:05 | 3186833 Yen Cross
Yen Cross's picture

 Thank God for " Trim Tabs"

 Junks appreciated

Fri, 01/25/2013 - 19:13 | 3186846 LongSoupLine
LongSoupLine's picture

Here's the recap...

Bears: fucked up the ass and squeezed by Bernanke's huge ink filled balls.

Bulls: lemming fucktards whom are direct recipients of Bernanke's middle class ass fucking show.

Fuck you Geithner, choke on fucking cake at your going away party you fuck.

Fri, 01/25/2013 - 19:38 | 3186902 NotApplicable
NotApplicable's picture

Funny you should mention "fucking cake," as I'm envisioning him sticking his dick in it, as he's very proud of himself.

Question is, who licks it clean? Sorkin, perhaps?

Fri, 01/25/2013 - 19:42 | 3186907 Sudden Debt
Sudden Debt's picture

Anybody noticed the 2 spikes in gold at six? About 2% difference jumps for a few minutes before beaten down again.

Let's hope they shoot back up on monday.

Fri, 01/25/2013 - 21:13 | 3187039 Pike Bishop
Pike Bishop's picture

There remains little which can convince me we won't get royally fucked for the shenanigans of the past 4+ years. Yet, If I learned anything from 1998-2008, majorly insane shit can take place for years before the bill presents itself.Then we find a way to wallpaper over the bill.

So it is refreshing to at least attempt to put all of the pieces on the table. Particularly when my skepticism is raging, due to a market extreme.

Right now this equity market looks exactly like a bull run. It's difficult to catch anything long-side and volume/ICI-numbers is showing that chasing is starting in full bloom. The logical conclusion to this is a top-end prop then blow-down. Although a Mayan event would be in order, the Central Banks' idiot shit has proven it is definitely bend-don't-break in nature.

I think the crucial determinant of where this is all headed is the spectacular timeliness of Geithner leaving on the Day The Market Hit 1500 and being headed for WS luxury and not jail. As this marks a solid vote for the long-time fucked-up Belief Systems which have gotten us here, it guarantees the continuation of same. In the sense, that many escapes are likely in order, free of culpability for the Jenga-like monstrosity created.

So it's good to hear the Bull-side. In some oblique way it helps to explain what we see.

That way when everything turns to shit, we'll be able to look back fondly on the "Good Times" and try to emulate the wonderful thinking of Timmeh Geithner.

I hope it is apparent that reality is too fucked-up for me to bear, and I am joining in with folks who were smart enough to embrace denial early-on and just enjoy the time before the Great Reset.

Whether it comes next week, or ten years from now.

Long live Jaime Dimon.

and Holy Shit where's the Tylenol.

Fri, 01/25/2013 - 22:54 | 3187217 Hohum
Hohum's picture

Non-seasonally adjusted claims are up year over year the last two weeks.  That's not bullish, Mr. Serrano!

Sat, 01/26/2013 - 09:39 | 3187537 Crispy
Crispy's picture

These graphs mean nothing. And the financial data is just post event water cooler gossip.

According to the "indicator" Dec 2011 read 80%+ running the highest over the period and the SPY was trading 122.78 on a monthly close. They never went lower and today is at 150.25, making a 22.3% gain. If they were "overbought" 22.3% lower I cant wait to see where they go next...

Zero Hedge:you folks are better than this voodoo bullshit. No need for pink slime filler please.

Sun, 01/27/2013 - 10:47 | 3188997 orangegeek
orangegeek's picture

Love this hourly chart of the SP500.  Incremental pushes up following a nice 45 degree line.

 

It's been inching up for three weeks.

 

http://bullandbearmash.com/chart/sp500-hourly-continues-incremental-moves/

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