Equity Week in Review and Preview of the Upcoming Week/Month

Last week, I wrote the following about the market:There are two ways to look at the current market situation.1.) The QQQs are making the first advance through important technical territory, to be soon followed by the other averages.2.) The QQQs are rallying on average specific information, and the lack of confirmation from any of the other averages...

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Weekend Diversion: Fire and Ice

- by New Deal democratShowing you that I'm not just a nerd for economic data, I'm a nerd for all data, here are two items from opposite sides of the geological spectrum.First, fire: Hawaii's Kilauea volcano is one of the most awesome things I've ever seen. For years, it was spewing lava that ran in tubes down to the ocean - that is, until early...

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Weekly Indicators: "Those who cannot see must feel" Edition

- by New Deal democratWithout doubt, the rear view mirror news of a steep reduction in first Quarter GDP to a puny +0.4%, and the below expectations +1.3% 2nd quarter GDP, was the biggest item of the week. Durable goods and consumer confidence also fell - and durable goods had been expected to increase. Both of these are components of the LEI. Meanwhile the Case Shiller index was mixed, with month over month increases, but a deepening decrease in the March - May period. And then there is the utter lunacy in Washington, still continuing as...

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Jimmy Hoover Obama

- by New Deal democratThere is little to do by way of economic analysis this week, because everything depends on the timing and extent of Washington idiocy.As to which, as I type this Friday morning, it appears that we can confidently put to rest two assertions:(1) this is all Kabuki and ultimately rational actors will prevail. Wrong. If this were just kabuki, it would have ended as soon as Wall Street called their servants in Washington and told them to make a deal. Instead, already we are paying a price in the markets and with the ratings agencies...

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Second Quarter GDP +1.3%; First Quarter Revised Down To .4%

From the BEA:Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.3 percent in the second quarter of 2011, (that is, from the first quarter to the second quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.4 percent.Let's stop right there. First quarter GDP was originally reported at 1.8%, which has now been revised down by over 1.5%. That's a huge revision...

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Friday Dollar Analysis

Last week, I wrote the following about the dollar:Ideally, we'd see the dollar in a relief rally sometime over the next week or so to provide confirmation of the downside break-out. This is when I'd go short.The dollar has been consolidating in a triangle pattern for the last few months. Last week, it broke to the downside. The ideal trade in...

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Playing Politics With People's Lives - Republicans Fail

With 96 hours left to raise the debt ceiling, and in a sense save the world economy, the Republican Party has failed to gain sufficient internal consensus to support its plan that was scheduled to be put before Congress yesterday.The leader of the Republicans in the House of Representatives, John Boehner, has lost his political credibility as he failed to persuade the Tea Party faction to support him.As such, the vote and plan have been abandoned and the markets have continued to fall.Proof, if ever it were needed, that the politicians care more...

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The Greek Tragdey - The Irony!

Spanish government debt has been put on review for downgrade by Moody's.For why?It seems that the Greek bailout has increased risks for lenders to Spain.Oh the iro...

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Prof. Geoffrey Moore on Leading Indicators from 1854-1938

- by New Deal democratBoth academic economists like Prof. Brad DeLong, and lay observers have voiced skepticism, even "alarm," that economic indicators developed from post-WW2 inflationary recessions, usually brought about by Fed tightening, are applicable to deflationary scenarios brought about by asset and credit contraction like the present. ...

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Playing Poltics With People's Lives

US politicians on Capitol Hill continue to play politics with people's lives, and as yet refuse to agree to raise the debt ceiling.Ideology may give comfort to those who live and breath politics. However, the rest of the world needs a real job in order to feed and cloth itself. The damage being done to the world economy by the intransigence of the Prima Donna's on Capitol Hill is putting the livelihoods of millions at risk.Irrespective of whether or not the debt ceiling is raised in time to avoid default, none of those involved in this disgrace...

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In Response to Professor Thoma

Professor Mark Thoma over at Economists View is asking an interesting question:When I was trying to figure out if there was a housing bubble or not, the academic economists I had come to trust said no, the fundamentals explain this. Sometimes this was backed by econometric analysis. But many people outside of academics, or at least a few, said there was a bubble. This was often backed by logic, intuition, and simple charts rather than sophisticated econometrics based upon theoretical constructs. For the most part, I dismissed the people...

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Thursday Oil Market Analysis

Last week, I wrote the following about the oil market:Give the fundamental supply/demand situation, I still expect prices to be moving higher. But right now, we're seeing the standard issues of prices moving through a large number of technical resistance levels on their move higher, which is to be expected given the chart.After selling off about...

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We Must Destroy the Economy to Save It

After thinking about NDDs position yesterday, I want to go on record as saying I agree with him.A situation that should have gone off without a hitch has now demonstrated the US Congress is an utter joke, completely unable to govern: The debt ceiling debate should have been a non-starter -- a simple voice vote in the House where everybody realized voting for the increase was in the nation's financial self-interest. Instead, we've seen the most ridicules ideas rise to the top of the political debate.There is no leadership: Boehner has no control...

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Debt Ceiling Debacle Must Reads

The Effect of A Downgrade on All Levels of the EconomyHow a Downgrade Will Effect ConsumersThree Signs that Investors are Getting AntsyBoehner Faces RebellionI love the smell of stupidity in the morning. It smells like .... Washingt...

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The British Gas Price Fix Offer

In the wake of the rather paltry £2.5M fine levied by Ofgem against British Gas failing consumers who complain (British Gas made operating profits of £585M for the first half of 2010).Watch out for the nice little rip off they tried on my dear old mum recently.British Gas offer to fix your prices until 2013.Good offer?No....you have to pay an extra 5% on top of their new standard tariffs if you wish to fix.Also, "oddly enough", there is no mention of what happens if prices fall (even if that is unlikely). It seems the hapless customers lock themselves...

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Playing Politics With People's Lives - The People Fight Back

I am pleased to see that the American people have woken up to the fact that the politicians on Capitol Hill have let them down.The switchboard at Congress almost crashed as Americans voiced their anger at the stalemate in Washington over raising the country's $14.3 trillion debt ceiling. The vote on raising the debt ceiling has been postponed until Thursday.The message to the politicians is simple, don't play politics with people's liv...

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Wednesday Commodity Round-Up

Today, I want to take a look at copper, as this chart is giving me hope for the next few months.First, note that from the beginning of February to roughly the end of June, copper was in a downward sloping pennant pattern, eventually finding support around the 200 day EMA -- the line the generally separates bull and bear markets. Since than, copper...

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Thought for the day

- by New Deal democrat"Diejenigen, die nicht sehen können, müssen sich fühlen."Translation: "Those who cannot see, must feel." - my old German grandmot...

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YoY Housing price declines lessen further in July

- by New Deal democratHousing Tracker's final report of asking prices in 54 metropolitan areas is in, and it shows that the YoY rate of declines continues to lessen, although at much less brisk a pace than the first half of this year. Asking prices were -4.4% less YoY in June, and -4.2% less YoY in July. Here's the updated chart: ;Month2007 2008 2009 2010 2011 January ----7.5%-11.5%-5.8%-8.7%February ----7.8%-12.0% -5.2%-8.4%March ----8.3% -10.9%-5.0%-7.3%April -2.7% -8.6%-9.6%-5.0%-6.8%May -3.5% -9.1% -8.1%-5.0%-5.6%June -5.0%-9.8%-7.0%-5.0%-4.4%July...

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A further, heretical, thought on the debt debate: Bring on the Default!

- by New Deal democratI just wanted to add a brief, and totally out of the box, comment to Bonddad's last post.Allowing the US to default, even temporarily, on its debts, would have horrible reverberations to our, and the world's economy, possibly sending us right back into economic contraction, and would increase the interest on all of our debts for years to come.Making cuts to Social Security and Medicare, and imposing a strait-jacket of fiscal austerity, would have horrible reverberations for our economy and the welfare of 90% of our citizens,...

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Thoughts on The Debt Debate

1.) Of all the debates we could be going through at this point, this is the dumbest possible. The last two employment reports have been terrible prints, consumer spending is slowing and manufacturing is also showing weakness. All that leaves is government spending to help the economy along. And now we're going to slow that down, too.2.) Obama is actually leading. This has been a pleasant surprise. For the last two weeks, he's been using the bully pulpit pretty effectively. Of course, it would have been nice if he'd been doing this for the...

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Playing Politics With People's Lives -The Columbian Stand-off

Sadly, for those of us who live in the real world, the politicians in the US have so far failed to reach any form of agreement wrt raising the debt ceiling.Partisan hatreds and ideology are driving this protracted Columbian stand-off, whilst the economic well being of real people who have to earn a living in the real world is being held hostage by the antics of those on Capitol Hill.he risk of a US default is increasing, as talks between President Obama and Boehner (the leading Republican in Congress) collapsed acrimoniously. Needless to say, the...

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Treasury Tuesdays

I wrote the following about the market last week:The treasury market is still caught between conflicting trends. On one hand, the US is the "least dirty shirt in the hamper," meaning it is still considered a safe haven play in relation to the goings on in Europe. But there are big problems at home, especially as the debt ceiling drama plays out....

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What DeLong Said

From Brad DelongBut Wall Street is not all that matters. A lot of small businessmen and women out here in what you people in Washington sometimes call "flyover country" are and have for some time been (a) desperately anxious about the shortage of demand, (b) somewhat anxious about instability in the tax code, and (c) slightly anxious about what their health-insurance options will be come 2014. Now they are very anxious about (d) the prospect of what they call "a U.S. government bankruptcy" on August 3, 2011. If the people I talk to are in...

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Service Spending Taking A Big Hit

Last week, I noted that PCEs were lower during this expansion than the last two. Today, let's take a more detailed look into PCEs to see where the drop in spending is taking place.The YOY percentage change in durable gods is strikingly strong. While some of the increase is a reaction to the negative reading during the recession, the recent readings...

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Economic Week in Review

Last week was pretty light on economic news. However, we did get some numbers.Consumer spending: there was no news in this area of the economy.Manufacturing: The Philly Fed manufacturing index increased from -7.7 to 3.2 -- a reading of barely positive. The new orders and activity component were also reported at around a reading of "0" indicating a weak overall picture.Housing: Housing starts jumped 14.6%, but the general trend of the housing market is still sideways. We need at least a few more months of data to confirm this is a new trend and...

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Playing Politics With People's Lives

The markets are beginning to realise that, thanks to the intransigence of the politicians, the US may well default on its debts. The opening sessions in all major countries this week saw falls in their key indexes.Sadly, the politicians are more concerned with playing politics with people's lives rather than raising the country's $14.3 trillion debt ceiling.Some cynics are of the view that the chaos caused (and flight to gold - today it touched an all time high of $1,622.49 per ounce) by the ongoing impasse in raising the debt ceiling is benefiting...

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Equity Week in Review and Preview of the Upcoming Week/Month

Last week, I wrote the following about the markets:With all three major ETFs, I'd use the 200 day EMA as a lower support target. I'd place upside resistance for the SPYs at 137, the QQQs at 59 and the IWMs at 86.5 - although I don't expect any of the averages to hit those levels soon. For now, the markets are still waiting out the EU situation...

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Weekly Indicators: economic cross-currents edition

- by New Deal democratThis was a sparse week for monthly data. Housing permits and starts both increased to near 12 month highs. Partly as a result, the Leading Economic Indicators for June were reported up .3, and May was revised to up .8. This appears to take a near-term economic contraction off the table (idiocy in Washington permitting).The high-frequency weekly indicators rebounded. Let's take the opportunity to review their recent trends, because there are interesting, but mixed, currents in employment, housing, sales, and money supply:Employment...

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How The Debt Debate Is Hurting the Economy

From Slate:This Northern Virginia consulting firm, for instance, has recommended that companies "collect any fees owed your company by the government as soon as contractually possible, just in case" and "anticipate delayed program starts (for the limited number of new programs), and delayed acquisitions for upcoming solicitations." If the Federal Reserve is doing contingency planning for a potential default, shouldn't you be too? Wall Street is also preparing for the possibility that the government might miss its deadline. According to a New...

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Lack of Demand Is Big Problem

Above is a chart of the percentage change from a year ago in real personal consumption expenditures. Notice that the current pace of YOY percentage change is directly analogous to the 2001-2003 period -- a time of very slow growth where we again heard the phrase jobless recovery. It was also during this time that the Fed kept interest rates very...

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Greece To Default

The markets have been, for the moment, calmed by the EU bailout "plan" that kicks the can of systemic failures of Europe further down the road.However, the fact that Greece will default and the fact that the wealthier nations in Europe (ie Germany) will have to pay more to prop up Greece has not gone down well with the taxpayers.Germany's largest taxpayers lobby (Germany’s League of Taxpayers) is not happy, and says that the decision reveals "negligence" toward taxpayers' interests and an unacceptable lack of accountability for indebted statesReiner...

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Friday Dollar Analysis

Last week, I wrote the following about the dollar:All the EMAs are in a tight bunch, indicating a lack of overall direction from the market. This means last weeks break-out was a false break-out, and we're left waiting to see that happens.The dollar has been consolidating for the last few months in a classic triangle consolidation pattern. The...

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Apple Stoers and pent-up housing demand

- by New Deal democratI got nothing at the moment, but here are two more items well worth reading:1. BirdAbroad spots an Apple Stoer. No, that isn't a typo. Chinese counterfeiting is being taken to a whole new level.2. Karl Smith at Modeled Behavior discusses pent up housing demand. When the turnaround happens, it is likely to be very sha...

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Thursday Reads

The GOPs Fuzzy Math.Is Consumer Spending the Problem?Debt Ceiling Debate Already Hurting Consumer SentimentWhy Employers Are Slow to Fill JobsGas Prices Are Still HighConsumer Sentiment and Oil PricesAll Recoveries Are Now JoblessPay particular attention to consumer issu...

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The EU Hail Mary

The EU's Hail Mary (wrt "solving" the Euro crisis) has been leaked by the Telegraph.Key elements:1 More money will be thrown at Greece.2 "We call on the IMF to contribute to the financing of the new Greek programme in line with current practices." The IMF are far from guaranteed to support this.3 Lower interest rates and extended maturities means default.4...

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The Dow Jones Bond Average and pre-WW2 recessions

- by New Deal democratThis continues my look at potential leading indicators as they may apply to pre-WW2 deflationary recessions. I have already looked at BAA bonds, housing starts, commodity prices, the stock market, the yield curve, and money supply. Today I will look at bond prices generally.Laksham Achuthan of ECRI is on record saying that their index does not make use of the yield curve. On the other hand, they may make use of information from the bond market. One little-known source of this information that goes back at least to the 1890s...

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Foresight

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Thursday Oil Market Analysis

Last week, I wrote the following about the oil market:Overall, prices are moving about how I thought they would after the sell-off. Remember -- there is a tremendous amount of resistance to move through right now which takes time. However, I still see prices moving higher for the next month or so.This is in addition to the fact I see the supply/demand...

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The Last Chance Saloon

The European experiment and the US economy both face zero hour.This morning Germany and France claim to have reached a common position on a second bailout of Greece. However, unsurprisingly, no details have been released.Notwithstanding the economic viability/credibility of this "accord", European leaders are holding a crisis summit today in Brussels in the vain hope that a solution that will save the Euro experiment will be found.Meanwhile, across the Atlantic, as the politicians on Capitol Hill hold the US and world economy to ransom whilst they...

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More on Food Inflation

Earlier today, I noted that fundamental supply and demand issues are keeping food prices high. That got me thinking about the actual price index of some food groups, so I want to the St. Louis Fed and found these charts:The YOY percentage change in cereals and grains has been pretty steady for the last 20 years except for a massive spike right before...

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