Weekly Bull/Bear Recap: December 26-30, 2011

Tyler Durden's picture

Submitted by Rodrigo Serrano of Rational Capitalist Speculator,


+ U.S. manufacturing continues to show signs of steady growth.  The economy isn’t headed towards recession.  The Chicago ISM reports that its PMI report fell a smidgen, from a 7-month high to 62.5.  Order Backlogs are at their strongest level since April and will keep activity elevated in the region.  Meanwhile, the Richmond Manufacturing Index indicates stabilization, particularly in New Orders.  Need more evidence?  Take a look at the most recent ATA Truck Tonnage Index (released Dec. 21), and Rail Traffic Report.  

+ The Housing Market is the gift that keeps on giving.  Pending Home Sales rise a better than expected 7.3% MoM vs. expectations of a 1.5% rise.  The metric is at its highest level in more than a year.  This increased activity is occurring during the historically weak winter season.  Housing demand has clearly stabilized and a steadily growing construction sector will produce the jobs needed to breathe new vigor into the recovery (i.e. a positive feedback loop).  The Spider Homebuilding ETF (XHB) is hovering near 5-month highs and has broken above its 200-day moving average.  

+ Demand for Italian paper improves.  6-month bills are issued to strong demand.  The issue yields 3.25%, down from double that rate in late November.  10-yr BTPs price at a yield of 6.98%, which is much lower than the 7.56% level an issue priced in late November.  U.S. stocks markets took the results in stride.  Italy has clearly moved back from the precipice.  Monti confirms this view.   

+ U.S. consumer confidence continues its firm recovery.  The Conference Board reports that its survey of consumer confidence rose nearly 10 points, continuing a remarkable 2-month 23.6 increase.  The report cites an improving job market.  These results mirror recent improvement in Gallup’s poll of consumer confidence and last week’s University of Michigan’s survey result.  Meanwhile, the National Restaurant Association reports that its Performance Index rose to 100.6; “Restaurant operators reported their strongest net positive same-store sales results in more than four years, while customer traffic levels also grew in November.”  Hotels finish 2011 in strong fashion.  

+ The U.S. Treasury does not label China a currency manipulator and will calm fears of an imminent bout of protectionism in the months ahead.  


- The Eurozone situation continues to deteriorate.  The Euro sold off strongly on Wednesday, breaking a slight upward trend line, and hitting its lowest level in more than a year vs. the U.S. Dollar and its lowest level against the Japanese Yen in a decade.  Italy successfully sells long-term debt; but, yields rise approaching the auction and after the result.  Hungary, straight up, experiences a failed auction and passes a law that undermines IMF and EU attempts to bailout the country.  Liquidity injections by the ECB are proving futile; there is no confidence or trust.  Spanish Retail Sales in November crater 7.2% YoY after a 7.1% YoY fall in October, the metric’s 17th consecutive drop.  The country’s Economic Minister states that recession has arrived; yet, Deputy Prime Minister Saenz states that additional austerity will be implemented because the country’s budget deficit will exceed its target (sounds like a debt trap to me).  Meanwhile, Italian Business Confidence falls to 92.5 from 94.1, a 2-year low.  French unemployment hits a 12-yr high.  One of Merkel’s 5 economic advisors doesn’t dismiss the possibility of a Eurozone breakup in 2012, while the German Constitutional Court says that it would be “a mistake to pursue a United States of Europe.”

- HSBC publishes its final Chinese Manufacturing PMI result.  It is worse than the preliminary estimate of 49.0, at 48.7.  This compares with a reading of 47.7 in November and marks the second straight month of contraction.  ”Company inventories of finished goods rose for the first time in 17 months as new business wasn’t enough to offset production, according to HSBC.”  

- Japan reports an ugly set of economic numbers.  Retail Sales for November fall 2.3% YoY and was much worse than expectations for a 0.1% gain.  This translated to an equally ugly Household Spending YoY print of -3.2%.  Meanwhile, Industrial Production falls 2.6%, again, worse than the 0.7% decrease expected by economists.  

- Behind all the hoopla of stabilized demand and a statistical bounce off multi-decade lows in construction, the housing double-dip is sure to become reality early next year (it’s actually already in a double-dip if looking at the SA index).  The NSA S&P Case Shiller Home Price Index of 20 cities drops 3.4% YoY, its 13th consecutive YoY decline.

- Goldman Sachs declares that BRIC economic growth has peaked.  Emerging markets will not save the globe from recession.

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PicassoInActions's picture

what will be first trading day in 2012? Bullish?

Some1 call S&P and ask them to hurry up with europe

Snakeeyes's picture

Here is my year in review. Look closely at the housing numbers. They stink.


maxw3st's picture

I wasn't aware of any housing recovery that we could be "double dipping" from. Seems to me the only ones that have recovered from the housing debacle are the banks. The banks got bailed out with freshly printed $, so there really hasn't been a true recovery there either. IMHO history will record this period as the great depression of 2008-2013.

adr's picture

Great Depression of 2008-2013? More like 2008-the dawn of the new age after the Great Purge. The depression won't end until every Fortune 500 CEO's head is rolled down the street.

slewie the pi-rat's picture



  1. the US housing market continues to improve
  2. demand for italian paper is improving
  3. ^these^ are what's ^bullish^, BiCheZ!
  4. we are freaking doomed!


adr's picture

You do know that when a bank owned home is sold to the government it is recorded as a sale, right? That pretty much takes care of the massive YoY Nov increase. Banks are unloading record ammounts of property to the government. The shadow inventory of homes has never been greater. If I take two blocks within the area of my home, there are four vacant properties. They are all owned by the government and not listed for sale in any directory. One home has been vacant for five years and would take more that it is worth to bring back to livable condition. Two went up for auction this past fall and failed to find a buyer. The next month the homes were listed as sold to the feds from the bank that forclosed. That doesn't even count the six other homes for sale on my block alone that haven't even had a single bid all year. BUT NO HOUSING IS RECOVERING.

YesWeKahn's picture

The bull arguments are worthless. The real bull (or cow) is Bernanke.

ACP's picture

Money printing trumps fundamentals bitchez!