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Weekly Bull/Bear Recap: July 25-29, 2011

Tyler Durden's picture




 

Submitted by Rational Capitalist Speculator

Weekly Bull/Bear Recap: July 25-29, 2011

Bull

+ Jobless Claims fall more than expected as companies can’t lay off any further.  They are lean and posed to hire in the second half of the year as the global economy rebounds. 

+ Emerging market economies will act as an ongoing support to the bull market as earnings growth is increasingly focused on the development of the new global consumer.  Plenty of companies have pointed to growth in Asia as the impetus for their out-performance.

+ Another sign emerges pointing to the transitory nature of the current soft-patch as the Dallas Fed Manufacturing Index notches a reading of -2 vs. -17.5 the month prior.  New Orders vroomed back to +16 from +6.4.  Need another?  Check out the latest “Truck Tonnage Report” from the American Trucking Association.  This all important barometer of the US recovery shows that manufacturing remains moving forward.  

+ Credit is loosening.  The Federal Reserve Bank of St. Louis just reported a spike in commercial bank credit issuance for the week ending 7/13.   

+ The Case-Schiller Index shows a stabilization in home prices.  This will help consumer sentiment.  Furthermore, here’s an interesting economic indicator, which portrays increased home-buyer interest.  From the looks of Pending Home Sales, buyer activity is increasing.   

+ The US economy may be slowing, but it’s not headed into another recession.  The ECRI leading indicator has stabilized at a growth rate of 2.0% for the week ending 7/22/11, from a reading of 1.6% the prior week.

Bear

- The Chicago Fed National Activity Index (CFNAI) points to continued economic weakness as its 3 month average moved from -0.31 to -0.6 in June.  It is now only a smigen away from the important -0.7 reading.  “When the CFNAI-MA3 value moves below –0.70 following a period of economic expansion, there is an increasing likelihood that a recession has begun.”

- The CFNAI reading is also supported by the Q2 GDP report which showed a US economy perilously close to contraction, coming in at 1.3% (below estimates of 1.6%).  Q1 was revised down to a gain of only 0.4% from 1.3%.  The economy is extremely vulnerable right now.  Any exogenous shock (US default anyone?  or maybe the Eurozone again?) could tip it into recession.  ”Leading Economists”, making $100K x ?, are wrong again.  Why can’t they simply look at consumer confidence indicators, which have been falling most of the year?  It’s Main Street who really drives economic growth, not Wall Street.  

-  Santander gives investors the jitters as it reports much larger than expected protection insurance to be paid, denting profits.  Should Spanish financial conditions continue to worsen, the bailout package may not be enough to calm investor’s nerves.  Take a look at Spain’s 10-yr yield; it’s barely budged since the Eurozone bailout package was announced.  Same goes for Italy.  

- Durable Goods Orders disappoint with an “unexpected” decline of more than 2% in June.  What was the beacon of the US recovery looks to be stalling.  With consumer spending still weak, a fall in factory activity would further weaken an already very vulnerable economy.  The bulls should be praying for no exogenous shock as it would most certainly tip the apple cart.  

- The housing recovery talk is completely uncalled for.  Mortgage applications fall 3.8% and marks the 3rd consecutive fall for this leading indicator.  High joblessness will keep demand muted for the foreseeable future.  Meanwhile, you have New Home Sales posting an “unexpected” miss.

 

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Sat, 07/30/2011 - 11:09 | 1507647 duncecap rack
duncecap rack's picture

Bear . Congress seems to be deadlocked in debt ceiling talks.

Sat, 07/30/2011 - 11:12 | 1507656 qqqqtrader
qqqqtrader's picture

Truck Tonnage Report is up because they're delivering all those unemployment checks!

Sat, 07/30/2011 - 11:32 | 1507683 PaperBugsBurn
PaperBugsBurn's picture

Nah, truck tonnage is up because that top .01% is living high on the hog and maybe some exports.

I was reading a Krugman (Khazar) blog entry at the fascist NYTimes and the most recommended comment was, "Only stupid people buy gold".

Can't wait.

Sat, 07/30/2011 - 12:27 | 1507774 Grand Supercycle
Grand Supercycle's picture

S&P500 monthly chart shows a series of broadening patterns - aka megaphone wedges.

The three broadening formations reveal an unstable market where buyers and sellers battle for control...

http://stockmarket618.wordpress.com

Sat, 07/30/2011 - 15:23 | 1508030 Use of Weapons
Use of Weapons's picture

Looks like many are de-stressing over the weekend.

When I saw this, I thought that the BoE was making a dramatic advert for ZH...

Physical catastrophes alert us to the costs of ignoring these events, of normalising deviance.  There is nothing normal about recent deviations in financial markets. The race to zero may have contributed to those abnormalities, adding liquidity during a monsoon and absorbing it during a drought. This fattens tail risk.  Understanding and correcting those tail events is a systemic issue.  It may call for new rules of the road for
trading.  Grit in the wheels, like grit on the roads, could help forestall the next crash.

http://www.bankofengland.co.uk/publications/speeches/2011/speech509.pdf

Turns out there's more interest here:

http://www.ted.com/talks/kevin_slavin_how_algorithms_shape_our_world.html

And here:

  • 67 percent believe that rogue algorithms are inescapable. That number rises to as much as 78 percent in the US. Those who use third-party solutions to monitor their trade reconciliation process feel strongly about this, with 72 percent responding that rogue algorithms are unpreventable.
  • 51 percent believe compliance with reforms will provide a competitive advantage and 19 percent view it as a way to avoid litigation.
  • 60 percent of respondents in the UK believe that reforms are happening too quickly, compared to 46 percent in the US.
  • Those with third party transaction monitoring solutions worry less about the speed of reforms and are not as likely to feel the need for regulators to check all algorithms. They are also less likely to predict a decrease in trade volume as a result of shifting regulations

Those with bespoke monitoring systems are more likely to think that the volume of transactions will decrease as a direct result of new regulations. 45% report this, whereas just 32% of those using third party software say the same.

http://ctt.marketwire.com/?release=767029&id=418432&type=1&url=http%3a%2...

 

Fair warning to US peeps - your ISP is now (a hair bredth's away) legally bound to track you for 18 months (astute people will realise that the link provided has an interesting link within it - Africa has skipped the laptop entirely; statistically, certain parts of Africa have a higher #phone density / user than the West - partly due to cross network charges)

http://www.computerworlduganda.com/articles/2011/05/26/new-us-bill-requi...

A more reliable source, along with lots of information / links on staying under that radar, can be found here - https://www.eff.org/deeplinks/2011/07/house-committee-approves-bill-mand...

 

Note: those who are film buffs will know that Skynet struck after we tried to switch it off... and should realise that "the race to zero" is actually...

What is the concept behind the contest ?

The event involves contestants being given a sample set of malicious programs to modify and upload through the contest portal. The portal passes the modified samples through a number of antivirus engines and determines if the sample is a known threat. The first team or individual to pass their sample past all antivirus engines undetected wins that round. Each round increases in complexity as the contest progresses.

http://www.racetozero.net/concept.html

 

Meanwhile the hippies in San Fran business district make their own take on "The Race to Zero" (I presume to 0% carbon emissions, which is a scientifically impossible goal if you employ people who, like, breathe)

http://www.archdaily.com/151796/video-the-race-to-zero/

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

 

So.. will HFTs, Hackers or Hippies win the race to zero?

 

 

 

 

(apologies to Tyler, who will know all of this already - he is well mentioned by Nanex, which is where the BoE speech caught my eye. I've also not done a search, so might be reposting links / story...)

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