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Weekly Key Event Recap: September 19-23, 2011

Tyler Durden's picture




 

Submitted by Rodrigo Serrano of Rational Capitalist Speculator

Weekly Bull/Bear Recap: September 19-23, 2011

Bull

+ The Conference Board reported that the economy will continue to grow for the rest of the year.  The company’s Leading Indicators Index posted a 0.3% gain in August vs. expectations for a 0.1% gain, while July was revised upward.  The American Association of Railroads reports that railroad shipments just hit their highest levels in 3 years.  Certainly these indicators aren’t pointing to recession.        

+ The BuildFax Residential Remodeling Index just hit a new high in July.  Increased permits point to increasing demand for home improvement.  While the housing market may be struggling, this index points to increasing activity under the hood.  Additionally, the AIA Architectural Billings Index unexpectedly rose above the 50 mark in August, and points to increasing design and construction activity for commercial real estate projects in the months ahead. 

+ In a sign of confidence in the future, United Technologies just executed the largest all-cash industrial deal ever with its purchase of aircraft-component maker Goodrich.  The rise of China will certainly unleash massive demand, which will fuel economies around the world.  The time to buy long-term companies who stand to benefit from this paradigm shift is now.  (I hold no position these companies)    

+ While China’s flash PMI came in somewhat weak, it’s important to point out that it hasn’t fallen out of bed by any means.  Their economy has withstood Eurozone woes and slowing U.S. economic growth.  Export dependency has declined.  Moreover, the Conference Board also published its Leading and Coincident Indicators for China.  The results did not disappoint and are collectively another nail in the coffin of the hard-landing thesis of the bears.  Couple that with the fact that inflation has peaked, marking an end to the tightening cycle, and you have a scenario where investors are likely to be surprised in the coming months.  China will continue to provide end-demand for the global economy.   

+ While the probability of Greece defaulting remains elevated, it would be an orderly default if it did happen.  The country will remain with the Euro.  ”Concerns over the risk of a break-up of the euro zone are greatly exaggerated.”  The ECB will continue to intervene to ensure liquidity and lower bond yields for countries such as Italy and Spain.  The organization is also proactively working to make life easier for the region’s banks by easing collateral requirements.  Additionally, progress is being made on passing the new EFSF measures, which would equip the fund with expanded powers (such as the use of leverage = increase its firepower).  The G-20 vows to stem the crisis through coordinated action.  There’s little chance of governments letting any important financial institution fail.  This is a fantastic buying opportunity for the long-term investor or baby boomer — S&P 500 yield is now higher than the 10- Yr Treasury yield. 

+ Existing-Home Sales jumped 7.7% and blew past forecasts for a 1.4% rise due to falling home prices and lower interest rates.  ”Favorable affordability conditions and rising rates are underlying motivations,” Lawrence Yun, chief NAR economist.  Increased home prices will support prices for the regular consumer’s largest asset.  Furthermore Permits showed an uptick and will help the construction sector in the months ahead.  

Bear

- The Fed initiates Operation Twist, but markets are unimpressed as the Dow plunges more than 6% to end the week following the announcement - its worst week since October 2008.  This week’s major reversal marks a major turning point in our financial and economic odyssey.  The emperor has been disrobed; he has no clothes.  Furthermore, it’s quietly shaping up to be April all over again in Congress.    

- “Housing remains in the doldrums”, sings the broken record.  Without housing, an economic recovery will remain elusive.  Investors are beginning to lose confidence in banks’ mark-to-fantasy price quotes; moral hazard is coming home to roost.   

- When housing acts as an anchor, consumption and confidence will sputter.  The all-important holiday shopping season isn’t looking so hot based on preliminary reports.  

- Arrrg!!!  In a sign of bailout fatigue, the Pirate Party (no joke) just made a bigger political statement than Merkel’s own ally, the Free Democrats (FD).  The FD accounted for less than 5% of the vote, which disqualifies them from picking up seats in the election.  Investor confidence declines to the lowest in 2 1/2 yrs.  Meanwhile, Greece continues to get squeezed.  At what point will the populace rise up and revolt? The breaking point may be near.  Continued austerity will not solve the problem.  Italy (and its banks) are downgraded by Standard & Poors, sending Italy’s 10-yr yield to dangerously high levels…again.  The ECB acknowledged that it loaned out $500 Million to an unidentified bank (not a sign of health, to put it mildly).  And for some gasoline on the fire, Eurozone PMIs fall under the 50 level for the first time since July 2009 (no Jackson Hole this time to save the day).    

- The IMF cuts its global growth estimate.  Rio Tinto and FedEx throw cold water on bullish hopium.  Protectionism is making a comeback: a chippy China lashes out at Europe; the US files an official complaint against China’s chicken tariffs; Brazil institutes 30% tariffs on cars. Meanwhile, England ponders printing more funny money as prospects have dimmed, while inflation is rising —stagflation anyone?  Japan’s exports under-perform expectations, signaling weakening global demand.

- The Philly Fed released its “State Coincident Indexes” for August, used to measure economic activity on a state by state basis.  This index shows a national economy entering stall speed.  It remains vulnerable to an exogenous shock…..such as the Eurozone.

 

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Sat, 09/24/2011 - 11:04 | 1705059 Oh regional Indian
Oh regional Indian's picture

Last week was the week that had as part of it, Spetember 21, Mabon, Day of descent into darkness, Autumnal Equinox.....the start of Fall. 

Enough said, no "logical" explanations required. Larger forces and all that sort of a thing...

ORI

Troy Davis

Uppers and Downers

Sat, 09/24/2011 - 11:15 | 1705079 Careless Whisper
Careless Whisper's picture

The Careless Whisper Saturday Morning Report

 

 

Wall Street Bankers Have Counter-Protest With Champagne Toast Outside Federal Reserve

http://gothamist.com/2011/09/23/anti-occupy_wall_street_champagne_t.php

Retirees Nest Eggs Gone Due To Low Interest Rates That Benefit Banks

http://www.sun-sentinel.com/business/fl-seniors-low-interest-rates-20110...

Retirees Sell Their Burial Plots To Raise Cash

http://www.sun-sentinel.com/fl-cemetery-plot-sellers-20110921,0,7972391....

Amazon Makes Deal With Cali To Lobby Congress For National Sales Tax On Internet

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/09/24/BAKJ1L8RA0.DTL

Law & Order:Internal Affairs - Investigation Of NYC Cop For Ties To Gang Leads To 17 Indictments - Of NYC Cops

http://www.nypost.com/p/news/local/bronx/tix_fix_cops_indicted_C43zNOXzY...

Entire Town In China Real Estate Ponzi Scheme Collapses; Reporters "Escorted" 200 Miles Out Of Town

http://www.telegraph.co.uk/news/worldnews/asia/china/8783588/BMW-town-cr...

Nissan Posts Instructional Video How To Use Power Windows

http://www.youtube.com/watch?v=2dUnrAOqcgo

Conservative Congresswoman Leads By Example On Family Values; Supports Transgender Son; Co-sponsor Legislation

http://www.miamiherald.com/2011/09/23/2421851/experience-as-mom-shapes-r...

11 More Dead Bodies Dumped In Mexico As Gangs Reap Huge Profits From Keeping Drugs Illegal

http://www.cbsnews.com/stories/2011/09/23/501364/main20111062.shtml

Banker Jumps: Hits Pavement Near Front Door; Run On Korean Banks

http://business.asiaone.com/Business/News/Story/A1Story20110923-301115.html

 

 

 

 

 

Sat, 09/24/2011 - 12:25 | 1705254 Cursive
Cursive's picture

@Careless Whisper

I really enjoy these.  Got a good laugh at the Nissan instruction video.  Could you talk to TD about posting these as a contributor?

 

ETA:  Loved these headlines, too:

 

US Treasury Secretary Tim Geithner said European leaders need to do more to prevent financial chaos in Europe.  Geithner sounds alarm on Europe 

 

Groupon says sales half earlier figure, loses COO

Mortgage rates drop to once unthinkable lows at less than 4% 

Sat, 09/24/2011 - 13:22 | 1705429 Careless Whisper
Careless Whisper's picture

Thanks for the compliment. I just do these posts for fun. I try and post under the Front-running column during the week because it's about the day's news. I often miss that post and end up posting under the latest one. My post is then off topic and people get pissed but I don't mean any disrespect. I noticed that sometimes I'm ahead of the curve on some of my stories as I've seen a few of them on Drudge a day or two later. At first I thought the Nissan video that I linked to was a spoof, but I guess the peeps at Nissan think Americans are really stupid. Here's a video of a car stunt show featuring Ford Fiesta's which most likely was sponsored by Ford, but at least they promote the coolness of the cars. I get the feeling that the Japanese car companies have lost their way.

http://www.streetfire.net/video/crazy-ford-fiestas-awesome-stunt-show_22...

 

Sun, 09/25/2011 - 07:19 | 1707055 ISEEIT
ISEEIT's picture

Think Americans are really stupid? Uh, and who is our President again? Better stated as have detirmined that Americans are really stupid.

Sun, 09/25/2011 - 17:53 | 1708598 Jack Napier
Jack Napier's picture

What's stupid is believing that elected officials are actually elected by the people. Sure the bummer administration lied its way into office duping most of the idiots, but there have been plenty of issues with electronic voting machines, recounts, peoples' votes being excluded. Even if it were legit, we get false choices. Even Ron Paul has ties to the masonic order. Bush and Kerry, both bonesmen. How many are Trilateral Commission, CFR, Bilderberg? It just goes on. Stop blaming people and start educating them.

Sat, 09/24/2011 - 12:11 | 1705236 snowball777
snowball777's picture

Re the death penalty and 33rd parallel: it's called the pigeon hole principle...throw a rock and you'll hit a country that kills.

As for Cumbre Viejo, all I see is a ward against bad luck...like a 2000ft tall megatsunami that wipes out DC, NY, and London. Okay maybe that wouldn't be sooo bad.

Sun, 09/25/2011 - 08:21 | 1707107 Kobe Beef
Kobe Beef's picture

Was there some memo sent out from Neo-Marxist Headquarters that said "Throw a Hissy Fit over Troy Davis" this week?

Thumbs down to Neo-Marxist claptrap. "No logical explanations", indeed.

Sat, 09/24/2011 - 11:11 | 1705068 flacon
flacon's picture

I just came back from a yard sale. I gave them a piece of colourful paper (with the inscription "$20" on it) and they gave me 4 beer glasses and a CD of Sting's best songs - AND they gave me two more pieces of paper and some pieces of base metal (most likely zinc and steel) as what they call "change" - and I get to keep the zinc and steel. I made out like a bandit!

 

They said the exchange was fair - ONE DOLLAR and FIFTY CENTS (of their nothing money) in exchange for actual goods! 

 

WHAT A STEAL! 

Sat, 09/24/2011 - 11:25 | 1705093 hp12c
hp12c's picture

Once upon a time you actually got real silver and copper for change...now that was the real deal...

Sat, 09/24/2011 - 12:55 | 1705351 disabledvet
disabledvet's picture

i'm still tryin to figure out what was worse: the war or the peace? we did win, right? anywho...
http://www.youtube.com/watch?v=4VHKpGJX29s&feature=player_detailpage

Sat, 09/24/2011 - 11:35 | 1705096 Mac1492
Mac1492's picture

well i went to this place last night where naked 20 year old girls took their clothes off for those same colorful pieces of paper and they even danced on my lap and pretended to like me in an effort to obtain more pieces of paper...... its's amazing what people will do to get their hands on those colorful pieces of paper

Sat, 09/24/2011 - 11:40 | 1705135 snowball777
snowball777's picture

Later that night, they gave the colorful pieces of paper to someone else in exchange for chemicals they could have made themselves, if they weren't spending so much time trying to get paper from you.

The guys with the chemicals gave the pieces of paper to someone else in exchange for something called a 'gat', presumably so that other people wouldn't take their paper and chemicals.

The guys with the gats gave the pieces of paper to someone else in exchange for ammunition, presumably so the guys they sold the gats to didn't come back and take their paper and gats.

The guys with the ammunition gave the pieces of paper to a coin dealer in exchange for some bullion, presumably because someone else would give them more pieces of paper for it later.

The coin dealer gave the colorful pieces of paper to a bank, in exchange for changing the number on a computer.

The bank used the number on the computer to pretend to give out 40x that number of colorful pieces of paper to people who wanted to open a strip joint, coin shop, and gun shop.

People must really hate those pieces of paper they keep giving away.

Sat, 09/24/2011 - 11:43 | 1705152 malice
malice's picture

Can we have some Hyperstagflation please and get this over with?

Sat, 09/24/2011 - 11:47 | 1705166 ivars
ivars's picture

Look at silver now. Went below 30 USD briefly. Funny. Even lower than postbubble minimum. And slightly above our old postbubble buying target at 28 USD. Who could know it would have been worth waiting so long.

Reminder of the old story about silver and prediction graph of March 13:

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...

Interestingly, silver price has returned briefly? to 25-32 USD corridor which was predicted in this March prediction chart to be the range for silver in Q4 2011.

So did gold follow the May 4th forecast chart almost to the point, with bubble placed quite correctly:

 

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...

 

Fall to 1600 was included there.

Easy to see from the charts rhat nothing too exciting will happen to silver or gold during 2011-H1 2012

 

 

Sat, 09/24/2011 - 15:24 | 1705782 Lord Koos
Lord Koos's picture

Another top-calling troll.  While you may be right about silver, I'm pretty sure gold is going to be very exciting in the the next few months and I'm literally betting on it. Gold hasn't dipped below its ten-year bull run trend line, and none of the fundamentals have changed.  

Sat, 09/24/2011 - 13:02 | 1705373 RSloane
RSloane's picture

The only thing I'm feeling bullish about is the new detergent I bought. Everything else is looking fairly bleak.

Sat, 09/24/2011 - 14:53 | 1705715 Lmo Mutton
Lmo Mutton's picture

I think that is a Disney world show.

Sat, 09/24/2011 - 16:54 | 1705947 Lord Koos
Lord Koos's picture

"...gold had an even more profound collapse..."

 

Spare us the hyperbole for once. Its not a "profound collapse" -- it didn't even break the long term trendline.  Gold returned to where it was two months ago.  The S&P retraced to last November.

Sat, 09/24/2011 - 21:15 | 1706424 Dugald
Dugald's picture

Banker jumps, hits pavement...splat!

Too much to ask that this becomes Contagious???

Sat, 09/24/2011 - 23:32 | 1706625 Zero Govt
Zero Govt's picture

ZH i'm shocked the greatest quote of the week, possibly decade, is not included in the above News mash: 

Wall Street Journal (online today): The world economy is in the "second slowdown of this recovery," and more needs to be done about the European debt crisis, US Treasury Secretary Timothy Geithner said at the meeting of the IMF.

Yes, Tiny Tim is halucinating there was a "recovery", that the first slowdown actually sped up at some point AND that we're in a second slowdown which is just a blip on that recovery (that never happened!)

Tiny Tim needs to be carted off to the Funny Farm (like right now)... I cannot believe the US Govt lets this muppet (pathalogical liar) represent them or talk (bullshit) on an international stage so regularly

 

Sun, 09/25/2011 - 12:14 | 1707621 MFL8240
MFL8240's picture

Silly to comment on manipulated fraud and thai is what happened in the metals markets with Gold and Silver.  What do the gansters have in mind this week?  Who knows and who cares, Gold will rise as will Silver because these scumbags have lost control over the economy.  One moths housing sales are not even worth mentioning when you have 3 years are chaos and more in front of you.

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