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Weekly Bull/Bear Recap: Jan. 28-Feb. 1, 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

U.S. Economic Activity is beginning to reaccelerate:

+  The global economy is set to reaccelerate in the coming months according to JP Morgan’s Global Manufacturing PMI, led by a reacceleration in China (due to domestic demand) and firming U.S. activity.  Improvement in these countries is spilling over into Europe…

+  …Germany’s Markit Manufacturing PMI is now just a smidgen below 50, which delineates between contraction and expansion, at 49.8 (an 11-month high).  Furthermore, Consumer climate, reported by the Gesellschaft für Konsumforschung (Gfk) group, reveals an improving state of confidence.  Perhaps this is due to a recovering job market.  Meanwhile, while still contracting, the majority of country-specific PMIs (Spain, Italy, Hungary, and Czech Republic) indicate the worse is over of the region’s recession.  The improvement in the global economy can also be seen in Brazil, where the unemployment rate has fallen to a record low.

image

(Source: Markit Economics

 

Bear

- Investors have piled into bullish bets (but earnings have flatlined since Q2 2011), economists all agree that the economy is poised to expand, the VIX is at 2007 levels before the crisis struck, and the bears are capitulating.  All are signs of extreme complacency in the face of festering bearish macro trends……  

image

(Weekly Readings —— Solid Line = 32-week average)

- …..and why are investors giddy?  Because stocks keep on rising.  But smart investors know to use REAL, not Nominal gains to correctly value wealth.  “Zimbabwe’s stock market was the best performer this decade — but your entire portfolio now buys you 3 eggs.” — Kyle Bass

- The U.S. Economy is extremely vulnerable and is on the cusp of recession: 

  • Bull are doused with a bucket of cold water as 4th quarter U.S. GDPprints negative for the first time since Q2 2009.  The negative print is a crystal clear indication of how weak and vulnerable this recovery is.  Curtailing government expenditures, higher taxes, and rising gas prices as the summer approaches will be too much for the economy to bear.
  • U.S. Consumer confidence, as per the Conference Board Consumer Confidence survey, plunges again in January, erasing all of 2012’s gains.  Furthermore, the Bloomberg Consumer Comfort Index falls for the fourth straight week.  Weekly sales metrics, such as Goldman ICSCand Redbook, reveal weakening consumption trends.  This ongoing trend casts a cloud over the direction of consumer spending as worries over reduced incomes due to the expiring 2-yr payroll tax holiday ferment.
  • The Household Survey, embedded beneath the widely touted headline jobs number this morning, has not confirmed the improving job market for the third successive month.  
  • The FOMC meeting reveals that Fed officials are worried about a stalling economy (confirmed by Q4 numbers) as well as creeping disinflation.  Monetary policy is powerless to arrest continued sluggish in the economy; worse, as investors appreciate the negative impact of reduced consumer incomes, there will be a crisis of confidence.  ”Don’t Fight the Fed” will be a maxim of the past.  

- Europe’s troubles lurk in the background, receiving very little press.  The budget scandal in Spain is quietly picking steam and Retail Sales in the country fell for the 30th consecutive month in December.  Spanish 10-yr borrowing costs advance roughly 5% this week.  Looking at a 3-month view, we now see a higher high.  Meanwhile, car sales throughout the periphery remain in a distinguishable downtrend and retail sales throughout the region signal consumer retrenchment.  Moreover, Italian Consumer Confidence slumps to a 17-yr low and Business Confidence unexpectedly falls.

- If China has really bottomed and is on the brink of a sustainable recovery, try telling that to the Australians.  Straya’s mining-based economy is signaling a red flag for global recovery enthusiasts.

 

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Fri, 02/01/2013 - 16:58 | 3207459 Lohn Jocke
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BULLISH

Fri, 02/01/2013 - 17:04 | 3207474 Lohn Jocke
Lohn Jocke's picture

Funny, to a dyslexic such as myself there is no distinction between "Bullish" and "Bullshit".

Fri, 02/01/2013 - 18:49 | 3207742 bobthehorse
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The market is really killing it rght now.

I'm not invested.

I'm too chickenshit.

http://angrysinner.blogspot.kr/2013/02/yesterday-i-used-my-phillips-air-fryer.html

Fri, 02/01/2013 - 17:00 | 3207463 AccreditedEYE
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Dear Dan Loeb:  Pls put on an enormous short position on the Russell 2000.. Thx! Very Truly Yours, AccreditedEYE

Fri, 02/01/2013 - 16:59 | 3207465 CaptainSpaulding
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BTFTop

Fri, 02/01/2013 - 17:00 | 3207468 Iam Yue2
Iam Yue2's picture

Not to forget the psychological traps of denial; resistance and blockage; not to mention the pathological tendancy to trade with the herd.

This time it's different.

Fri, 02/01/2013 - 17:05 | 3207476 ebworthen
ebworthen's picture

Three eggs, hmmm, will have to be Sunday, Wednesday, and Friday breakfast.

FED and Wall Street generational bubble part two.

Buy some hens.

Fri, 02/01/2013 - 17:07 | 3207481 LongSoupLine
LongSoupLine's picture

Bulls: Fucking ball sack Fed printing cocksuckers

Bears: Forced to cover their logic and reason based short positions only adding to the fucking madness.

 

Fuck you Bernanke and all you fucking shit eating scrotum suckers whom support and are complicit in this fucking middle class rape fest.  Fuckers, fuck off assholes.

Fri, 02/01/2013 - 17:07 | 3207483 thismarketisrigged
thismarketisrigged's picture

omgd, i really want to kill most of the ppl on cnbs. that bitch stephanie link, everyday touting how great things r, there r no negatives, uh i really want to bitch slap that girl.

 

what i would do for a 50 plus percent market crash, itd be priceless just for the fuckers to go into panic 

Fri, 02/01/2013 - 17:14 | 3207506 Archetype
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You and me both brother...

Fri, 02/01/2013 - 17:09 | 3207488 Dr. Engali
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The bulls prancing around on CNBC look as giddy as a tranny in a gay pride parade.

Stupid bitch just said we are in a housing boom.

Fri, 02/01/2013 - 17:10 | 3207494 tip e. canoe
tip e. canoe's picture

pride goeth before the fall

Fri, 02/01/2013 - 17:14 | 3207508 digitlman
digitlman's picture

wow

Fri, 02/01/2013 - 17:09 | 3207492 q99x2
q99x2's picture

Markets up and sun is out and I'm a going jogging.

Fri, 02/01/2013 - 17:10 | 3207496 thismarketisrigged
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bill gross is coming up on cnbs, he actually has a clue and maybe he can speak reality to the ppl on that network. 

Fri, 02/01/2013 - 17:14 | 3207503 Archetype
Archetype's picture

WOOOW! Do you guys ever watch CNBS this time of the day in the week? (not that you ever would watch CNBS but anyway). They are so bullish they are all about to overdose on coke at the same time end upp laying in a pile on the floor shuving rolls of 100 dollar bills up each others asses. This is actually interesting in a wierd socail anthropology kind of way.

Fri, 02/01/2013 - 17:15 | 3207511 fiftybagger
Fri, 02/01/2013 - 23:22 | 3208439 JonNadler
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I just want to spend more time with  the family after a great career or wonderful achievemnets

Fri, 02/01/2013 - 17:18 | 3207514 HellZero
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This should simply say Bulls: pomo Monday , Tuesday, Friday Bears: no pomo Wednesday, Thursday. As the (once cool) robottrader used to say "wash, rinse, repeat"

Fri, 02/01/2013 - 17:28 | 3207545 JustObserving
JustObserving's picture

Weekly Bull/Bear Recap

WTF are bears?  They have been extinct for a while as Ben has printed $3.6 trillion and is now printing $85 billion a month.  In the interest of accuracy, Tyler, it is a bull/more-bull recap nowadays.

 

Fri, 02/01/2013 - 17:36 | 3207568 max2205
max2205's picture

Best market the govt can buy!

 

Fri, 02/01/2013 - 17:44 | 3207597 max2205
max2205's picture

All those bullish reports are massaged and earnings are fucking lies

In the meantime stay long till we bresk the 4 week ema

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