This page has been archived and commenting is disabled.

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

Tyler Durden's picture




 

Submitted by Rodrigo Serrano of Rational Capitalist Speculator

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

Bull

 

+ Progress continues to be made on the Eurozone front.  Merkel is successful in rounding up her coalition and passing legislation to expand the EFSF’s firepower from 250 to 440 Billion Euros.  Despite fears of decreasing political will, we see that Eurozone officials are united in passing the proper reforms to eliminate this headwind.  Political Will remains solid as the Euro experiment is of extreme economic importance to Germany.  

 

+ Jobless Claims plunge by 37,000 down to 391,000.  The job market is better than many expect.  Looking at unadjusted claims, we can see a clear falling YoY trend.  There’s nothing to suggest that firings have increased and that the job market is deteriorating, in fact, past revisions show that it was stronger than expected.  

 

+ While the headline for Durable Goods Orders seemed weak, a look under the hood shows that the damage wasn’t as bad.  Business investment, a good measure of private spending, actually rose for the month.  ”Most of the decline was centered on autos and large defense products excluding aircraft, but those orders often swing sharply from one month to the next, and they are not viewed as good indicators of future trends.” 

 

+ Another example of the resilient manufacturing sector comes from the Chicago PMI index which showed strengthening in September.  This is important in that this reading is post the financial shock in August due to increasing Eurozone sovereign debt worries.  It clearly shows a manufacturing sector that is stronger than most think and is able to absorb these shocks.

 

+ Record-low mortgage rates are sparking a large refi wave.  Re-financing into lower rates will result in more discretionary income to support consumption.        

 

Bear

 

- The Eurozone situation isn’t getting better, it’s actually getting worse.  The suspense among politicians and the investment community just to pass an enhanced version of the EFSF (see bullish tidbit) doesn’t bode well when “reading between the lines”.  Political will is weaker than the bulls think.  The market already wants more in the form of a “leveraged EFSF”.  Germany, on the other hand, has staunchly opposed these measures, while its Constitutional Court warned that such action would result in a ceding of German sovereignty.  A new constitution, adopted by a national referendum, is required to pass additional legislation.  Meanwhile, Greece tension continues to rise and Germany wants harsher debt write-downs, chaos continues to reign supreme.  

 

- A crisis of confidence, caused by the Eurozone sovereign debt woes, is critically injuring the global recovery.  Copper fell roughly 3% and broke an important support.  Economic confidence in the Eurozone dropped to an almost two year low.  German retail sales plunge 2.9% in August, the largest one month drop in 4 years—while inflation unexpectedly rises —I’d hate to be the ECB right now.   

 

- Main Street indicators continue to flash red as the University of Michigan Consumer Sentiment survey records only a modest bounce (up to 59.4) in September from a near 3 year low of 55.7 in August, while the Bloomberg Consumer Comfort survey just posted its second lowest reading….ever.  

 

-  Incomes in the U.S economy dropped for the first time in 2 years.  The all-important “salaries and wages” metric, considered an essential measure for consumer spending, fell 0.2%.  Real consumer spending (spending adjusted for inflation) was flat and the savings rate falls to November 2009 levels, down to 4.5%.  The largest segment in the U.S economy has now stalled.  Recession is knocking at the door.  

 

- Obama is toast.  Republicans have him right where they want him.  Stimulus will not pass as deadlock will dominate.  The Fed’s the only game in town, and few believe that monetary stimulus will help move the needle on the economy.  There is no safety net for equity markets.  

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 09/30/2011 - 23:05 | 1728155 caerus
caerus's picture

short WYNN too

Sat, 10/01/2011 - 08:36 | 1728545 covert
covert's picture

the bear is in da house. keep preparing for the bull market, it's coming.

http://expose2.wordpress.com

 

Sat, 10/01/2011 - 00:14 | 1728254 bmwm395
bmwm395's picture

Bookmarked the site. Ill keep an eye on it. Thanks

Fri, 09/30/2011 - 23:19 | 1728176 winter is coming
winter is coming's picture

winter is coming

Fri, 09/30/2011 - 23:29 | 1728189 Let them eat iPads
Let them eat iPads's picture

"It's evening in America."

~Ronald Reagan's evil, ketchup-hating twin~

Sat, 10/01/2011 - 07:26 | 1728477 Nom de Guerre
Nom de Guerre's picture

What would the American equivalent be to "Taking the Black"?

Sat, 10/01/2011 - 09:30 | 1728644 Nate H
Nate H's picture

Amish

Fri, 09/30/2011 - 23:22 | 1728179 Grand Supercycle
Grand Supercycle's picture

S&P500 updated chart at blog shows price converging towards apex.

It should drop out of triangle and resumption of downtrend.

http://stockmarket618.wordpress.com

http://twitter.com/grandsupercycle

Fri, 09/30/2011 - 23:26 | 1728185 Spitzer
Spitzer's picture

Euro reserve currency bitchez

http://freegoldobserver.blogspot.com/

Fri, 09/30/2011 - 23:30 | 1728192 Roi
Roi's picture

The Fed’s the only game in town, and few believe that monetary stimulus will help move the needle on the economy.  There is no safety net for equity markets.

 

But people would actually put their trust in goverment stimulus?

Fri, 09/30/2011 - 23:42 | 1728208 AldousHuxley
AldousHuxley's picture

the money is in non-profit colleges now bitches:

http://www.tellus.org/publications/files/issue-brief-exec-comp-201109.pdf

Ronald Eastman Prof., Geography $191,103

Kenneth G. Condon Former VP, Financial Affairs; Treasurer $2,336,150
Jeffrey H. Spiegel Prof./Physician $1,282,130
Timothy E. Foster Prof./Physician $1,072,930
Robert A. Brown President $1,043,292
James M. Becker Prof./Physician $1,027,231

 

Name
Lawrence H Summers
Leonard A Schlesinger
Stuart Altman
John Deutch
John J Neuhauser
Stephen P Bradley
Kenneth G Condon
Susan Hockfield
Robert A Brown
Theresa Stone
School
Harvard
Babson
Brandeis
MIT
BC
Harvard
BU
MIT
BU
MIT
School Compensation
$648,825
$323,618
$287,114
$380,520
$643,040
$628,412
$2,336,150
$940,227
$1,043,292
$594,059
Corporate/Other Boards
DE Shaw, BlueCross BlueShield
Massachusetts, Reliance-Maker
Chambers, Roubini Global Economics,
various speaking engagements
BJ's Wholesale Club Inc; Intimate
Brands Inc.
Lincare Holdings Inc
Citigroup, Raytheon, Cheniere Energy,
Cummins Inc
Saint Michael's College (President),
Columbia Funds
Ciena Corporation, I2 Technologies Inc
Insmed Inc
General Electric
DuPont
Progress Energy
Total Compensation
$8,613,574
$4,754,985
$2,081,730
$828,895
$1,078,736
$1,042,545
$2,590,650
$1,190,987
$1,281,413
$818,173

 

$4,155,275
$1,186,030
Harvard
BU
MIT
BC
Tufts
Northeastern
Brandeis
Wellesley
Holy Cross
Berklee
Williams
Babson
WPI
Bentley
Amherst
Smith
Olin
Mt. Holyoke
Lesley
Clark
$753,149
$732,477
$511,051
$508,598
$481,597
$439,139
$434,773
$424,180
$395,040
$373,415
$369,203
$368,518
$308,153
$291,520
$267,025
$253,093
$240,629
$226,566

Sat, 10/01/2011 - 00:07 | 1728228 Village Idiot
Village Idiot's picture

25 year vet in mortgage financing.  Rates were down for all of one day on the FED annoucement.  I'm sure they will settle, but the issue isn't rates...it's values, qualifying, etc.  As mortage rates go, to date, twist has been a bust.  Twist in relation to mortgage rates will help at the margins at best imo.

One obsrvation...my clients are looking at banking their savings, or using it to offset decreasing income.  The big drops have already been refinanced in.

Sat, 10/01/2011 - 00:02 | 1728234 New American Re...
New American Revolution's picture

Great article, excellent summary, this is the kind of stuff I like to see via Zero Hedge, good show Tyler.

Sat, 10/01/2011 - 10:50 | 1728824 Smiddywesson
Smiddywesson's picture

I like the bullish vs. bearish format.

Sat, 10/01/2011 - 00:23 | 1728274 zorba THE GREEK
zorba THE GREEK's picture

First off, all signs are pointing to Germany dropping out of the EZ and shoring up its banks against Greek and other EZ nation defaults.

The 190 billion Euro increase in the EFSF is chump change for bailing out Europe. The durable goods orders were weak even though they

 were pumped up with channel stuffing by auto makers. Take out all the BS data and things are a lot worse than Obama & company

want you to believe. We have hit the wall, in other words TS has HTF. 

Sat, 10/01/2011 - 00:56 | 1728303 caerus
caerus's picture

as above, so below

http://vimeo.com/5255919

Sat, 10/01/2011 - 01:13 | 1728317 Village Idiot
Village Idiot's picture

One thng you can say about Califorbnia...legalized marijuana.  Which went nicely, thank you.

Sat, 10/01/2011 - 01:18 | 1728323 Village Idiot
Village Idiot's picture

lets get a naked tit or ass avatar going...it's Friday.

Sat, 10/01/2011 - 01:21 | 1728324 Village Idiot
Village Idiot's picture

preferably of a woman. 

Sat, 10/01/2011 - 01:24 | 1728327 Village Idiot
Village Idiot's picture

How about that gold?

Sat, 10/01/2011 - 01:31 | 1728331 Village Idiot
Village Idiot's picture

Who is this...Village Idiot?

Sat, 10/01/2011 - 01:51 | 1728335 Vic Vinegar
Vic Vinegar's picture

If you are getting shitfaced or existential (same difference in the end) tonight, take a look at this puppy:

http://www.bbc.co.uk/news/technology-15118751

Why would the BBC produce this segment?  I thought the tv was in "don't ask/don't tell" mode when it came to consipriacy theories. 

This stuck out as a real sign of weakness when it comes to the MSM.  BBC didn't need to bring this up but they did.  !Que interesante!

Sat, 10/01/2011 - 02:04 | 1728343 Village Idiot
Village Idiot's picture

I watched about 90 seconds and I came up with this...

"We are the world, we are the children..."

- Michael Jackson

 

Existentialism?

Sat, 10/01/2011 - 02:04 | 1728345 caerus
caerus's picture

pearl jam's playing mother...

Sat, 10/01/2011 - 02:12 | 1728352 Village Idiot
Village Idiot's picture

What would happen if we had, say, two generations of an extensial learning curriculum based around being a good human being on a national scale?  Call me crazy?  Would it work? Upotpia?

Sat, 10/01/2011 - 13:17 | 1728353 Hacksaw
Hacksaw's picture

Anyone interested in getting the money out of elections go sign the petition for this constitutional amandment.

"No person, corporation or business entity of any type, domestic or foreign, shall be allowed to contribute money, directly or indirectly, to any candidate for Federal office or to contribute money on behalf of or opposed to any type of campaign for Federal office. Notwithstanding any other provision of law, campaign contributions to candidates for Federal office shall not constitute speech of any kind as guaranteed by the U.S. Constitution or any amendment to the U.S. Constitution. Congress shall set forth a federal holiday for the purposes of voting for candidates for Federal office."

http://www.getmoneyout.com/

Sat, 10/01/2011 - 02:18 | 1728355 Village Idiot
Village Idiot's picture

deleted

Sat, 10/01/2011 - 10:25 | 1728765 s2man
s2man's picture

I agree

Sat, 10/01/2011 - 02:36 | 1728365 Civil Shepard
Civil Shepard's picture

I'm devasted tonite (seeing my Q3 results).  I was getting close to reclaiming my 2007 balances but this quarter, pushed me back huge.   I have a carefully studied and allocated portfolio...  50% s/t fixed and 50% equities like Hussman, DFA and Greenspring.  I truly felt hedged and defensive.  Yet, here I sit, about to finish whats left in my bottle of Crown.  Devasted.   I feel this way and my losses are less than half of the S&P benchmark, which makes my wonder....

What are the masses gonna do when they see their statements?    This economy has to collapse...   The backs of too many  have been broken by greed, manipulators, and the lack of leadership and enforcement.  

Those in power, and who dare to think they have control, have no idea at what they're looking at here.

Sat, 10/01/2011 - 03:45 | 1728382 Hansel
Hansel's picture

I have a hard time believing this post is real.

Sat, 10/01/2011 - 10:30 | 1728781 s2man
s2man's picture

Yeah.  I was back in the green before 2010. 

Sat, 10/01/2011 - 04:16 | 1728392 RoadKill
RoadKill's picture

I know I will get laughed off this board for this, but put down the bottle and go bottom fishing.

IMO Q4 will be a good Q and we will break out of this range to the upside as people realize that we aren't in, or going into, a recession. No growth or slightly negative real growth for 1q - maybe. But not the kind of recession that causes EPS to fall 20% - which is what has to happen to make this market fairly valued.

If you look around you will find good companies that are down 50% in the last 3 months. Some of these companies never got above 50% of their 2008 levels in the 1st place. So now they are trading at or near March 2009 levels. Better yet, with the elevated VIX you can sell puts at -20% strike and get 10% of the strike in premium. So companies that are down 50% in 3 months, 75% from 2008 and you buy the
30% down from here.

Like I said the SHTF crowd will ridicule, but I went 100% cash June 30 and have been playing the range for the last 3 months - short/long/short/long. I'm up 20% for the year (after being down 5% in H1 because Im cautious). And yesterday I backed up the truck to 65% net long, which goes to 80% if my puts get exercised.

No one knows what Next week brings. If it's lower it will be capitulation and I buy more. But odds are I'n your favor if you pick the right stocks here. World isn't ending.

Sat, 10/01/2011 - 07:33 | 1728482 Motley Fool
Motley Fool's picture

My sympathies.

Sat, 10/01/2011 - 11:44 | 1728945 technovelist
technovelist's picture

That's funny, I'm not having the same problem.

Maybe that's because I'm mostly in the "barbarous relic"?

Sat, 10/01/2011 - 04:33 | 1728398 drwillia
Sat, 10/01/2011 - 06:32 | 1728438 ivars
ivars's picture

Further thoughts on Bancor de facto in H2 2012:

I started this Idea here:

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2860#p34267

Could not resist to expand it here-oil jumped 3 times when nixon nixed gold standard, why can not silver or other commodities jump 3 times when USA reserve currency status is out of the window? Total inflation will probably be less than 300%, though who knows?  

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2860#p34329

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2860#p34330

Sat, 10/01/2011 - 07:26 | 1728476 Nom de Guerre
Nom de Guerre's picture

.

Sat, 10/01/2011 - 10:26 | 1728767 andypavlovic
andypavlovic's picture

My advice to all, is to drink heavily.

Sat, 10/01/2011 - 10:53 | 1728832 s2man
s2man's picture

Andy, you make me salivate, just thinking about it.

Do NOT follow this link or you will be banned from the site!