Weekly Bull/Bear Recap: Feb. 11-15, 2013

Tyler Durden's picture

Submitted by Rodrigo Serrano of Rational Capitalist Speculator

Weekly Bull/Bear Recap: Feb. 11-15, 2013

Weekly Market Performance

->) S&P 500: -0.1%

->) Dow Industrial Average: -0.2%

->) Nasdaq: -0.1%

Markets on Watch

->) FTSE MIB (Italy):  -0.8%;  ->) 10-yr BTP Yield: -3.8%

->) IBEX 35 (Spain): -0.3%;  ->) 10-yr Obligaciones Yield: -3.5%



+  Obama’s State of the Union Speech (SOTU) will inspire confidence throughout the middle class.  Improvements in infrastructure and education, as well as retraining the labor force to compete in today’s dynamic global economy, are sound economic policies that will reignite the American competitive spirit and consequently the economy.  Meanwhile, the U.S. energy boom quietly proceeds.  

+ The U.S. job market continues to heal as per high-frequency indicators such as Weekly Jobless Claims.  The 4-week average for New Jobless Claims is near its lowest level of the recovery.  Firms are confident in the outlook and are not cutting staff.  

+ U.S. housing data continues to look up, according to individual city figures.  Additionally, commercial real estate price trends show improvement.   

+ Consumer confidence in the U.S., which had been a growing thorn for the bulls, is finally starting to turn.  University of Michigan’s Consumer Sentiment survey rises to its highest reading in 3 months with a preliminary February reading of 76.3 vs. a final January reading of 73.8.  Bloomberg’s Consumer Comfort Index is carving out a bottom, printing its highest reading in a month.  Improving confidence is percolating to weekly sales metrics.  Redbook reports that consumption in February has started off on a strong note.  Growing confidence is also finding its way into financial markets.  

+  While January U.S. Industrial Production came in negative, the result came after two very strong months and shouldn’t heighten concern of a reversal of fortune for the sector.  Moreover, other indicators point to stabilization and possibly the beginnings of a new inventory-build.  The New York Empire Manufacturing survey, prints its first positive number in more than half a year in February.  Within the report, confidence in improving future conditions remains constructive.

+  Internationally, G-7 officials affirm their commitment to “market-determined” exchange rates.  Major governments understand that weakening their respective currencies will disadvantage their trading partners.  Cooler heads will prevail.  Meanwhile, financial conditions in the Eurozone have clearly improved.  Along with an overall pace of slower contraction in the EMU, the worse has likely passed.  Stabilization is developing.  



- Yes Obama’s speech had great ideas on boosting economic growth, if you believe that more government intrusion into the private sector (by picking winners and losers) and higher taxes are sound policies.  Overall, political paralysis looks set to continue; nothing will get done.   

- From a valuation and earnings perspective, U.S. risk markets are significantly overbought.  Additionally, buybacks (usually financed by debt) have in the past represented turning points in equity returns.  Furthermore, BofA’s proprietary sentiment indicator is screaming “sell.”  All this is taking place, while the sequester budget cuts are close to becoming reality.

- Redbook’s report of strong February U.S. consumption growth isn’t confirmed by Walmart’s “sales disaster” in February.  Higher payroll taxes and rising gas prices will be too much for the consumer to bear in the coming months.  Furthermore, oil looks set to continue its rise (pressuring gas prices higher), when looking at recent   developments in the Middle East.

- Small Business, the engine of job creation in America, remains in a multi-year slump, notching a feeble 88.9 in January vs. 88.0.  The average during recovery/expansion is roughly 97.  Without this important cohort of the American economy, job creation will remain tepid.

- Fed officials lack confidence in implementing policy.  Large disparity of opinions among Fed Presidents is detrimental to investor confidence and implies a lack of Fed control of current economic and financial conditions.  San Fran Fed’s Janet Yellen (Bernanke’s right hand dove) and St. Louis Fed’s James Bullard further convince investors that easy monetary policy is here to stay.  Meanwhile, Esther George of the Kansas City Fed, Richmond Fed’s Jeffrey Lacker, and Philly Fed’s Charles Plosser all caution of market disruptions once the Fed is obligated to tighten monetary policy, thereby limiting the Fed’s ability to unwind monetary largesse and risking longer-term inflation.  Sandra Pianalto of the Cleveland Fed believes the FOMC should elect to reduce their scheduled purchases through year-end. 

- The ugly European data continues: French, German, and Italian (remember that they have elections coming up) Q4 GDPs all print below expectations; meanwhile, Spanish Industrial New Orders for January print worse than expected at -3.1%.  Worse, Europe is supposed to be restructuring its economy, with Germany becoming more of an importer; the latest German Trade data is disappointing in this respect.  In the U.K. a disappointing January Retail Sales report (4th consecutive decline) fans fears of a triple-dip recession. 

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nobusiness's picture

How have European financial conditions improved and at the same time we have Ugly European Economic data????


Oh, that's right everyone can just print, print, print and financials will show growth in sales even though it is all price inflation.



t_kAyk's picture

O/T, don't know if anyone has linked this yet...


"Four people were sentenced to death on charges of corruption on earth and disrupting the country's economic system,"




JustObserving's picture

Thanks for the fluff.  Let's get to real bull/bear facts:

Bull - the Fed has printed $3.6 trillion and has done Operation Twist and continues to print $85 billion a month.

Bear - the Fed pretends that it will end QE sometime soon.

disabledvet's picture

health care costs are soaring. that's your number one "bull bear debate." is the University system in the USA bankrupt? Certainly of students as "there will only be 40,000 kids enrolling in law school this year." this is a shockingly low number and part of our ongoing Great Recession. (plus actual pay has dropped by 20% for new hires. incredible. indeed the ABA has now required their accredited schools to report that actual types/pay of jobs their students are receiving upon graduation and not just "job placement rates.") maintain your discipline folks and never lose sight of your risk profile via asset mix (letting your emotions rule YOU is your number one rookie mistake. get the best NUMBERS you can rely on--economic growth figures (nil) income figures (negative) the fact that "no one from the Government is issuing any but the most basic economic reports publicly"...these are all signs "the check is about to bounce.") the Fed by stating an "inflationary vision" is telling you default is a real risk here (instead of saying nothing which is what they have always said.) Investing for yield and "long only gold" is a tell that this could be a toppy market since "the market invests for return and return only" and you should too. with yields this low for this long and there is EXTRAORDINARY risk built into this market ("return of capital" risk) and you gotta have yourself on the lookout for VERY fundamental (as in obvious) problems...as well as associating yourself with people who are on the lookout for such things. (i hope i've been a good guide to all you folks out there. 'twas my training as they say.) Zero Hedge may quickly become the only place for actual financial if not any journalism soon...so obviously "by finding your way here you've found yourself one of the few watering holes for the preserving and making of money" let alone reporting the news. in my opinion all other sources of news should be eliminated from the buying equation. "if it ain't on your computer it ain't worth watching." good luck this coming week...especially the longs. "their activity helps drive our economy forward" and i'm still long individual names.

fomcy's picture

Shanghai Gold Exchange closing price for AU 9999 $1612/oz


We going to open $30 higher and short will burn covering.. Game over.

1 Troy oz = 31.1034768 grams


1USD = 6.24 Chinese Yuan

Closing price 323.48 Yuan/gr

JustObserving's picture

$24 premium for gold in Shanghai:

“You can be absolutely sure, Eric, that the bullion banks are short covering into this supply.  Their footprints are all over it.  I mean the premiums in Shanghai this morning were over $24 an ounce for gold.  We’re (trading) $1,608 (for gold) in Shanghai.  The paper market longs have been tricked into selling.  Obviously the managed money and the specs are now being tricked into short selling.  Who do you think is on the long side of those trades?


nobusiness's picture

Price is going up because the guys on Gold Rush didn't hit the "mother load" so excess supply fears have been averted.

Rustysilver's picture

Tyler, you missed the most important recap of the week:

"Germany's development minister has suggested food tainted with horsemeat should be distributed to the poor.

Dirk Niebel said he supported the proposal by a member of the governing CDU party, and concluded: "We can't just throw away good food.""


Michelle's picture

Even the fear of inflation won't drive Baby Boomers to buy more stuff as they pretty much have everything they need. Food, energy, and healthcare are bought on an as-needed basis and this type of inflation is a growth deterrent.

The younger generation has little desire to form families and buy homes, wants freedom instead. Attitudes are changing.

The biggest misnomer is that central banks can always rescue the financial markets. Buying the dip based on this misnomer is getting riskier IMO.