It's that time of the week. It's time to think about anything except the markets and the economy.We'll be back on Monday. Until th...
Friday, October 30, 2009
Weekly Indicators
This was a terrific week for past news about the economy, as GDP was reported to have increased 3.5% in the Third Quarter, which ends (reasonable)talk of the "Great Recession" and focuses on the strength and sustainability of the Expansion.Monthly reports for October were more mixed. New home sales unexpectedly declined, although within the range of...
Some Final Thought on GDP
While I was personally very happy withe the GDP numbers, perhaps the best source of entertainment was the reaction to them. Reaction fell into a few camps.1.) "I complain therefore I am". People -- a large percentage of whom argued for the stimulus and in some cases are arguing for more -- are now complaining that government spending was responsible for some of the growth. Here's a news flash: we're in the middle of a pure Keynsean period where the government is supposed to ameliorate the impact of the recession and help us get back to a period...
GDP, Part III -- Invictus' Take
The money shot of yesterday's surprisingly strong GDP print was this, in my opinion:"Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change."That addition -- 1.66 points -- can be found in BEA Table 1.2.2, on Line 15. Without Motor vehicle output -- Line 16 -- GDP would have come in at 1.88 percent.But let's look at the historical record, because it tells an interesting story.Going back to 1975 -- 139 quarters -- Motor vehicle output has averaged...
Brown's Clunking Fist Caused The Financial Meltdown
It would appear, from extracts of memoirs published about the dying days of Lehman Brothers, that aside from the US Administration pulling the plug on Lehman (the collapse of which then caused the meltdown of the global financial system) our dithering Prime Minister had a hand in it too.Seemingly Barclays was on the cusp of sealing the deal, subject to approval from the UK government.At the eleventh hour, out of the blue, Darling (having spoken to Brown) refused to give permission, despite being warned by the US that Lehman collapsing would cause...
Forex Fridays
The dollar is still very clearly in a downtrend. However at (A) we have a possible move through the trend line which would send prices higher. The vast majority of this chart is still very negative: prices are in a clear downtrend; the eMAs are negatively configured. While the 10 and 20 day EMAs have moved higher this is a preliminary move that...
Thursday, October 29, 2009
Today's Market
A.) Prices gapped higher at the open on strong volume. Prices then found support at the 10 minute EMA and moved higher.B.) Prices hit resistant at the 200 minute EMA and traded there for about an hour. They eventually moved through resistance.C.) Prices continued to find support at the 10, 20 and 50 minute EMAs for the remainder of the day.While...
GDP Up 3.5% Part II
Let's look at the GDP report from a different angle -- the percentage increase and what each component of GDP added to GDP growth.First, GDP increased 3.5%.Durable good sales added 1.01 of the 3.5% or 29% of the total increase. That number is the result of C4C. That number is also highly unusual -- meaning it is way out of the ordinary. The highest that number had been since the 4Q05 was .46 -- and that number was also out of the ordinary. Suffice it to saw we're not going to get a goose like that from this number again.Non-durable goods added...
GDP Up 3.5%
The long awaited report is out. I'm going to spend the rest of today (and probably some time tomorrow) on this. The GDP report provides a ton of incredibly useful information about the economy and what is going on. Let's start with the basics:The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.Here's...
Thursday Oil Market Round-Up
A and B.) Notice there are two upward sloping trend lines that emerge from the bottom earlier this year. The first one (A) has now become overhead resistance. The second one (B) is still in place.C.) Prices consolidated in a triangle consolidation formation. D.) Prices broke out of this formation three weeks agoE.) The RSI is not overbought right...
Eager To Repossess
The Financial Services Authority (FSA) has fined GMAC-RFC, a mortgage lender, £2.8M for mistreating customers who fell into arrears.GMAC-RFC also has to repay £7.7M, plus interest, to 46,000 borrowers. The FSA said that the company levied unfair charges on borrowers who fell into arrears with their repayments, and was too eager to repossess their customers' homes. GMAC-RFC, having been fined, is quoted by the BBC: "In hindsight, we fully accept that for certain fees our estimates of the costs were not proportionate to the additional administration...
Wednesday, October 28, 2009
Today's Market
The market is breaking down technically. Consider the following:A.) The DIAs have broken a long-term uptrend on increasing volume.A.) The QQQQs have broken an uptrend that lasted six months.B.) The QQQQs have broken to the downside with longer and stronger bars on increasing volume.A.) The IWMs formed a double topB.) The IWMs broke through long-term...
Transports Are Sending Bad Signals
I'm a big fan of Dow theory. It basically says that markets have to move in tandem. It makes intuitive sense as well. When the economy starts to grow, all sectors have to participate. Business has to move more stuff from point A to point B. As a result transport companies should see an increase in earnings. The logical outcome of this theory...
Wall St.'s Months of Joy Not Felt On Main St.
scroll down for the commodities chartsWall St. Journal (posted online Tuesday evening):Americans are growing increasingly pessimistic about the economy after a mild upswing of attitudes in September. But Republicans haven't been able to profit politically from the economic gloom, according to a new Wall Street Journal/NBC News poll.The survey found a country in a decidedly negative mood, nearly a year after the election of President Barack Obama. For the first time during the Obama presidency, a majority of Americans sees the country as being on...
When Economists Collide
-- INVICTUSThose who have followed anything I’ve written over the years over at Blah3, or more recently here at the Bonddad Blog, know that I have the utmost respect for former Merrill Lynch economist David Rosenberg (now of Toronto’s Gluskin Sheff). I think Rosie’s one of the best in the business, and has always called it as he’s seen it. To his great credit, he was always unwilling to simply toe the sell-side line and blow bullish smoke up everyone’s behind, despite often catching flak for his bearish posture. He was foretelling the story of...
Wednesday Commodities Round-Up
Click for a larger imageRegarding the copper marketA.) The 40-41 was a supply area for a month and a half; prices simply could not get over this level.B.) Starting at the beginning of October prices made another run at breaking through resistance.C.) Over the last week prices have moved through resistance. After moving through they stopped to consolidate...
Santander's Market Dominance
Santander, the Spanish banking group that owns Abbey, Alliance & Leicester and Bradford & Bingley, has announced a 58% rise in Sterling profits for the first 9 months of this year to £1.2BN.Abbey's gross lending of £19BN represented 20.5% of the UK market, although it is 37% less than last year.Santander is the eurozone's largest bank by market capitalisation.However, Bradford & Bingley is going to split its good and bad assets (its balance sheet being £50BN), and sell the good assets to private buyers, in order to pay off its £18.4BN...
Tuesday, October 27, 2009
Today's Market
Or more importantly is the rally now in trouble? When looking at the market it's very important to consider a variety of markets; only looking at one index like the S&P 500 just doesn't work. With that in mind, consider the following charts. As always, click on all for a larger image:A.) The SPYs have broken a long upward sloping trend line.A.)...
The Brighter Side of Defauts
From the WSJ:One of the biggest clouds on the economic horizon is the vast amount of debt U.S. households took on during the boom years. The Federal Reserve puts total household debt, including mortgage debt, at about $13.7 trillion, or 125% of annual after-tax income, a burden that many economists believe will take several years to pare down to what they see as a more sustainable level of 100%. During that "deleveraging" process, the logic goes, U.S. consumers -- whose spending makes up more than two-thirds of the U.S. economy and about one-fifth...
Case Shiller Shows Continued Improvement
From Bloomberg:Home prices in 20 U.S. cities rose in August for a third consecutive month, bolstering the case that an economic recovery is at hand.The S&P/Case-Shiller home-price index climbed 1 percent from the prior month on a seasonally adjusted basis after a 1.2 percent increase in July, the group said today in New York. From a year earlier,...
Trio Of Fed Reports
From the Chicago Federal Reserve:The Chicago Fed Midwest Manufacturing Index (CFMMI) increased 1.0% in September, to a seasonally adjusted level of 82.3 (2002 = 100). Revised data show the index rose 1.6% in August, to 81.6.Here is a graph of the index:Click for a larger image.This index isn't printing as strongly as other regional indexes, largely...
A Gnat's Piss On The Dung Heap of Debt
The government, in attempt to shut the stable door long after the horse has bolted, has come up with some proposals theoretically designed to force credit card companies to help customers reduce their debt.Card companies will be forced to allow customers to pay off their most expensive debts first, rather than pay off the cheaper debts and allow charges to accrue for higher interest debt. The minimum monthly repayment level would also be increased, to encourage people to pay off their debt faster. The government said: "Around one-third of people...
Treasury Tuesdays
A.) The IEFs are bounded by two trendlines right now.B.) There is a second upward trend that started at the beginning of August.C.) There is a third trend line that is providing support for prices.D.) Prices have moved through line C (mentioned just above).Note that EMAs are turning bearish.-- The 10 and 20 are moving lower.-- The 10 day EMA has moved...
Monday, October 26, 2009
Today's Market
Click for a larger image.A.) Prices moved higher at the open printing some strong candles. But the volume was weak.B.) After getting over the EMAs, prices couldn't maintain their momentum. As a result, they printed some weak bars.C.) Within the period of of 40 minutes the market saw an increase in volume and a strong downward movement. Notice the...
Regarding Banker's Pay
Last week we learned that the Federal government will limit pay at banking firms.This is a bad idea for two reasons.First, pay is not the federal government's business. Period. It smacks of a command economy like the economies that existed in the eastern block. Those economies were at best jokes. They did succeed in making everyone equal -- everyone eventually became poor. The US is based on a capitalist model where the market sets the rates. Period. But most importantly, this is a shareholder issue. For those of you who are unfamiliar...
A Response to "The growing case for a jobless recovery"
- by New Deal democratDavid Altig of the Atlanta Fed, who also blogs at Macroblog, wrote a long note describing "The Growing Case for a Jobless Recovery". It's only fair that I write about a take contrary to my own, and add some further comments:First, he notes that the Wall Street Journal reports that "Companies across the economy are holding off...
Banking Bonuses
The Conservative Shadow Chancellor, George Osborne, is calling on the government and the Financial Services Authority to ban large cash bonuses for retail bankers; he wants cash bonuses capped at £2K, with the rest of the bonus paid in the form of shares. The theory being that the £20BN saved could be lent to consumers and businesses.Fat chance!Osborne laid out his views at a Reuters, in Canary Wharf.The cap would only apply to High Street retail banks, and the investment arms of banks that also lend to consumers. All very well. However, the dilution...
Market Monday's
Click of all images for a larger imageThe SPYs still look good. Notice we are still printing a series of higher highs (B) and higher lows (A). Also note the price EMA relationship (C). Prices are above all the EMAs, the shorter EMAs are above the longer EMAs and all the EMAs are rising. Simply put, this is a bullish chart.However....Is the Russell...
Saturday, October 24, 2009
FSA Talking Nonsense
Hector Sants, CEO of the FSA, seems to have been talking nonsense when it comes to self certification mortgages.Ray Boulger of mortgage broker Charcols noted that Sants said on the BBC Today programme that, in the boom times, self cert mortgages were around half of those offered. "This claim is complete nonsense and it is very worrying that the FSA is trying to set policy on the basis of such a serious misunderstanding. It is true that about 50% of mortgages were 'income non-verified' - but only about 10% were self cert."It seems that Sants is...
Friday, October 23, 2009
Joining the Weimar and Beagle...
In the Invictus household...is this guy: Having a wife and two young kids, I was obviously overruled in my quest for an actual dog. You know, a manly dog. Having said that, this guy is already growing on me. Very sweet and lovable. It's all good. When he's fully grown, I think it's still safe to say that I've eaten bigger stea...
Weekly Indicators
There were some good and some bad signs out this week.Housing starts and permits were generally flat, but existing home sales increased. Inventory fell to 3.63 million, and months of supply decreased to 7.8 months. This is more evidence that the bottom in the housing market in terms of sales, but not prices, is in. Additionally, the September Leading Economic Indicators continued to point toward future strength.Initial jobless claims rose by 11,000 to 531,000 last week, from a revised 520,000 a week previously; however, the four-week moving...
Getting it wrong about Oil and the Dollar
by New Deal democratFrom CNBC to the big blogs to cocksure doomers, everybody "knows" that the price of Oil and the US Dollar are linked, right?Wrong.Professor Stephen Gordon of the Laval University, who blogs at Worthwhile Canadian Initiative, has periodically posted a graph that serves to debunk that claim. I asked him earlier this week if he could...
Copper Breaks Higher
A.) Copper had found extensive resistance in the ~40-41 price area. Prices tried to move through this area for about a month to no avail.B.) Prices moved higher on Wednesday on a strong volume surge. Note the momentum indicator is in a great place for the beginning of another move high...
Forex Fridays
Click for a larger imageThere are a few important points on the weekly chart.1.) Prices have been lower.2.) The relative strength of prices is currently very weak3.) There is little to no momentum4.) We wee a very bearish orientation -- all the EMAs are moving lower, the shorter EMAs are below the longer EMAs and prices are below all the EMAs.Click...
The Longest Recession on Record
Figures released this morning show that GDP fell by 0.4% in Q3, making this the longest recession on record.Pundits had been expecting, and Gordon "no more boom and bust" Brown had been hoping for, a small increase in GDP. Indeed the BBC "Ceefax" news this morning briefly reported that we had pulled out of recession (so much for reporting real news, real time!).Undaunted, Alistair Darling claimed that growth will return by the end of the year. However, his prediction was dismissed by others as being nonsense.Clearly the Bank of England will have...
Thursday, October 22, 2009
Today's Market
Click for a larger imageA.) Prices opened a bit lower; they were also below all the EMAs. Prices broke through the 10 and 20 minute EMA a little before 10 AM. B.) Prices moved along the 10 and 20 minute EMA until a little before 11:30 AM. Prices briefly fell through the 10 and 20 minute EMAs, but quickly moved higher through the 10, 20 and now 50...
China Growth Accelerates
From the NY Times:As much of the world continues to claw its way out of recession, China enjoyed another stretch of robust expansion in the third quarter, growing 8.9 percent from the previous year, according to government figures released on Thursday.The country’s faster growth was largely fueled by increased bank lending, generous government support...
Leading Economic Indicators up 6 months straight
by New Deal democratThe Conference Board reported this morning that the Index of Leading Economic Indicators was up 1.0%, its 6th straight advance. Since April the Index has improved 6.0%. It is now up 3.3% on a year-over-year basis."With the sixth consecutive increase, the LEI's six-month growth rate has improved to its highest pace since 1983," says...
