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 Dow Sends Buy Signal That’s Worked Since 1921:
Dow Sends Buy Signal That’s Worked Since 1921: Chart of the Day
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By Eric Martin and Michael Patterson
July 29 (Bloomberg) -- The Dow Jones Industrial Average is sending a buy signal that has foreshadowed gains of 18 percent during the past nine decades.
The 30-stock gauge climbed to more than 10 percent above its mean level from the previous 200 days, rebounding from 34 percent below the so-called 200-day moving average in November, according to data compiled by Bloomberg. Eighteen of the last 21 times the Dow rallied from at least 10 percent below the 200-day level to 10 percent above, it posted gains during the next 12 months, Bloomberg data since 1921 show.
The CHART OF THE DAY tracks the difference between the Dow’s last price and its 200-day average since 1989. The lower panel displays the measure’s price, along with the buy signals it sent near the start of rallies in 1991, 1999 and 2003.
“This rally, while it will have its fits and starts, is the beginning of a new trend, not just a bounce,” said Michael Williams, managing director of New York-based Genesis Asset Management, which oversees about $2 billion. “It is a significant opportunity.”
The Dow posted an average advance of 18 percent during the 12-month period following buy signals since 1921, Bloomberg data show. In the six-month period, there were 17 advances for an average gain of 8.2 percent. In three months, it climbed 18 times, averaging an increase of 5.7 percent.
(To save a copy of the chart, click here.)
Returns by the Dow Jones Industrial Average 12, 6 and 3
months after the buy signal.
Buy Signal 12 Months 6 Months 3 Months
June 11, 2003 13.36% 8.98% 3.01%
Jan 8, 1999 19.49% 15.38% 5.75%
March 5, 1991 9.05% 1.21% 1.11%
Jan 27, 1989 10.18% 13.46% 4.14%
Sept. 3, 1982 31.38% 23.02% 11.67%
July 18, 1980 3.78% 5.34% 3.48%
Aug. 9, 1978 -3.74% -7.76% -9.83%
March 7, 1975 26.43% 8.63% 9.11%
Dec. 7, 1970 4.73% 12.75% 9.69%
May 8, 1967 1.02% -6.60% 1.41%
Jan. 25, 1963 15.20% 1.18% 5.68%
July 24, 1958 33.51% 19.91% 8.53%
Dec. 13, 1949 16.26% 15.04% 3.15%
Nov. 6, 1942 16.66% 18.21% 8.29%
Sept. 11, 1939 -16.61% -4.49% -5.20%
July 6, 1938 -3.05% 10.95% 7.49%
Feb. 18, 1935 43.10% 19.09% 8.06%
Apr. 19, 1933 54.47% 23.53% 51.63%
Aug. 29, 1932 37.72% -31.68% -21.87%
Aug. 18, 1924 35.82% 14.36% 5.46%
Dec. 12, 1921 21.89% 12.53% 8.12%
Average 17.65% 8.24% 5.66%
To contact the reporters on this story: Eric Martin in New York at emartin21@bloomberg.net; Michael Patterson in London at mpatterson10@bloomberg.net.
Dow Sends Buy Signal That?s Worked Since 1921: Chart of the Day - Bloomberg.com
WEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
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Technically, This Market has Legs
Technically, This Market has Legs
Published: Thursday, 30 Jul 2009 | 8:54 AM ET Text Size
Posted by Adam Daniele, CNBC Market Analyst
On Friday, July 24th, the S&P 500’s [.SPX 986.75 11.60 (+1.19%) ] 100-day moving average overtook its 200-day moving average, an event known to Wall Street technicians as a Golden Cross (a shorter-term average crossing a longer-term one, from below to above). A month ago, we saw another major Golden Cross, when the 50-day average moved above the 200-day average.
Historically for the S&P 500, there has been plenty of growth left in the market even after these events occur. The average 3-month gain after its 50-day moving average crosses its 100-day moving average is 2.7% while the average 6-month gain is 4.3%, with the index trading to the upside 61% and 67% of the time over the respective periods. The average 3-month gain after its 50-day moving average crosses its 200-day moving average is 9.3% while the average 6-month gain is 16.5%, with the index up 69% of the time for both periods. The average 3-month gain after the S&P 500’s 100-day moving average crosses its 200-day moving average is 1.8% while the average 6-month gain is 6.7%, with the index positive 64% and 67% of the time over the respective periods.
As of yesterday’s close, 75% of the S&P 500 companies had 50-day moving averages that were above their 200-day moving averages. The spread between the two was an average of 8.9% of the 200-day moving average. Genworth Financial [GNW 7.11 0.45 (+6.76%) ], Ford Motor Co. [F 7.39 0.27 (+3.79%) ], Office Depot [ODP 4.51 0.06 (+1.35%) ], XL Capital [XL 13.66 -0.09 (-0.65%) ], Tenet Healthcare [THC 4.24 0.19 (+4.69%) ], AK Steel Holding [AKS 18.56 0.42 (+2.32%) ] and Wyndham Worldwide Corp [WYN 13.75 0.74 (+5.69%) ] are leading the way, with 50-day moving averages that are more than 50% higher than their respective 200-day moving averages. Of course, many of these are trading off such low prices, thereby inflating the differential. A low denominator helps.
On the other hand, Eastman Kodak [EK 2.94 -0.34 (-10.37%) ], Citigroup [C 3.14 -0.08 (-2.48%) ], Marshall & Ilsley [MI 6.11 0.60 (+10.89%) ] and Regions Financial [RF 4.23 0.34 (+8.74%) ] all have 50-day moving averages that are more than 30% lower than their respective 200-day moving averages.
Additionally, 88% of the S&P 500 companies have 50-day moving averages that are above their 100-day moving averages and 61% have 100-day moving averages that are above their 200-day moving averages.
Comments? Send them to bythenumbers@cnbc.com
bythenumbers.cnbc.com
Technically, This Market has Legs - CNBC By The Numbers - CNBC.com
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Welp, looks like the gumpies are going to round 2 on the DOW
Greenspan Says 2.5% Growth Possible in Third Quarter (Update1)
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By Steve Matthews
Aug. 2 (Bloomberg) -- The most severe recession in at least five decades may be ending and growth may resume at a rate faster than most economists foresee, former Federal Reserve Chairman Alan Greenspan said.
“We may very well have 2.5 percent in the current quarter,” Greenspan said in an interview today on ABC’s “This Week” program. “The reason is there has been such an extraordinarily high rate of inventory liquidation that the production levels are well under consumption.”
The U.S. economy contracted at a better-than-forecast 1 percent annual pace in the second quarter, the Commerce Department reported July 31. Stabilization of housing markets and consumer spending, a lessening of financial turmoil and increased government spending all suggest the longest recession since the 1930s may be close to ending.
“I’m short-term optimistic, but with many caveats,” the former Fed chairman said. Housing markets have “stabilized temporarily” though it is “possible” the economy might relapse if there is a further slide in home prices of more than about 5 percent.
‘Close to Stabilization’
“I don’t think it’s going to happen, but I do think it is possible that we could get a second wave down,” he said. “But the important issue is that if we don’t, and I think the probability is that we won’t, that we are close to stabilization.”
Economic growth will average 1 percent in the current quarter, according to a Bloomberg News survey of economists in July.
“I’m pretty sure we’ve already seen the bottom,” Greenspan said. “In fact, if you look at the weekly production figures for various different industries, it’s clear that we’ve turned, perhaps in the middle of last month, the middle of July.”
He predicted “the unemployment rate is going to continue to rise, but more slowly than it’s been. We’ll continue to have job loss, but that’s slowing as well.”
Fed Chairman Ben S. Bernanke projected a week ago the U.S. unemployment rate will top 10 percent, up from 9.5 percent in June, even as the economy recovers. Growth of about 1 percent is likely in the second half of the year, Bernanke said at a town- hall-style meeting.
Extended Jobless Benefits
U.S. Treasury Timothy Geithner, in a separate interview on ABC, agreed that the recession may be ending, while adding the U.S. unemployment rate may not peak until the second half of 2010. That could possibly prompt another extension in unemployment benefits, he said.
“I think that is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year,” Geithner said.
“There are signs the recession is easing,” Geithner said. It is “not clear yet” how strong growth will be.
Greenspan said he sees “a very significant improvement in the financial system,” Greenspan said. “And it’s been the financial system where the problems have been. Collapse, I think, is now off the table.”
Banks and financial institutions have reported more than $1.5 trillion in credit losses and writedowns worldwide since the global credit crisis began. Many of those losses stemmed from mortgage-related investments that declined with the collapse in the housing market.
Narrowed Spreads
The so-called Libor-OIS spread, a gauge of bank reluctance to lend, has narrowed to 28 basis points from 364 basis points on Oct. 10. Greenspan said in June 2008 that he wouldn’t consider credit markets back to “normal” until the Libor-OIS spread narrowed to 25 basis points.
Lawmakers and some economists have blamed Greenspan for helping to cause the financial crisis with lax oversight of the housing boom and derivatives markets, and by keeping interest rates too low in 2003 and 2004.
Greenspan has responded that a surge in growth in China and other emerging markets led to an excess of savings that pushed global long-term interest rates down between early 2000 and 2005, contributing to the housing boom. In congressional testimony last October, he conceded his free-market ideology shunning regulation was flawed, adding he was “partially” wrong in opposing regulation of derivatives.
To contact the reporter on this story: Steve Matthews in Nashville at smatthews@bloomberg.net
Last Updated: August 2, 2009 14:46 EDT
Greenspan Says 2.5% Growth Possible in Third Quarter (Update1) - Bloomberg.com
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Interesting concepts LOL
Markets can be wrong and the price is not always right
By Richard Thaler
Published: August 4 2009 19:29 | Last updated: August 4 2009 19:29
I recently had the pleasure of reading Justin Fox’s new book The Myth of the Rational Market . It offers an engaging history of the research that has come to be called the “efficient market hypothesis”. It is similar in style to the classic by the late Peter Bernstein, Against the Gods. All the quotes in this column are taken from it. The book was mostly written before the financial crisis. However, it is natural to ask if the experiences over the last year should change our view of the EMH.
It helps to start with a quick review of rational finance. Modern finance began in the 1950s when many of the great economists of the second half of the 20th century began their careers. The previous generation of economists, such as John Maynard Keynes, were less formal in their writing and less tied to rationality as their underlying tool. This is no accident. As economics began to stress mathematical models, economists found that the simplest models to solve were those that assumed everyone in the economy was rational. This is similar to doing physics without bothering with the messy bits caused by friction. Modern finance followed this trend.
From the starting point of rational investors came the idea of the efficient market hypothesis, a theory first elucidated by my colleague and golfing buddy Gene Fama. The EMH has two components that I call “The Price is Right” and “No Free Lunch”. The price is right principle says asset prices will, to use Mr Fama’s words “fully reflect” available information, and thus “provide accurate signals for resource allocation”. The no free lunch principle is that market prices are impossible to predict and so it is hard for any investor to beat the market after taking risk into account.
For many years the EMH was “taken as a fact of life” by economists, as Michael Jensen, a Harvard professor, put it, but the evidence for the price is right component was always hard to assess. Some economists took the fact that prices were unpredictable to infer that prices were in fact “right”. However, as early as 1984 Robert Shiller, the economist, correctly and boldly called this “one of the most remarkable errors in the history of economic thought”. The reason this is an error is that prices can be unpredictable and still wrong; the difference between the random walk fluctuations of correct asset prices and the unpredictable wanderings of a drunk are not discernable.
Tests of this component of EMH are made difficult by what Mr Fama calls the “joint hypothesis problem”. Simply put, it is hard to reject the claim that prices are right unless you have a theory of how prices are supposed to behave. However, the joint hypothesis problem can be avoided in a few special cases. For example, stock market observers – as early as Benjamin Graham in the 1930s – noted the odd fact that the prices of closed-end mutual funds (whose funds are traded on stock exchanges rather than redeemed for cash) are often different from the value of the shares they own. This violates the basic building block of finance – the law of one price – and does not depend on any pricing model. During the technology bubble other violations of this law were observed. When 3Com, the technology company, spun off its Palm unit, only 5 per cent of the Palm shares were sold; the rest went to 3Com shareholders. Each shareholder got 1.5 shares of Palm. It does not take an economist to see that in a rational world the price of 3Com would have to be greater than 1.5 times the share of Palm, but for months this simple bit of arithmetic was violated. The stock market put a negative value on the shares of 3Com, less its interest in Palm. Really.
Compared to the price is right component, the no free lunch aspect of the EMH has fared better. Mr Jensen’s doctoral thesis published in 1968 set the right tone when he found that, as a group, mutual fund managers could not outperform the market. There have been dozens of studies since then, but the basic conclusion is the same. Although there are some anomalies, the market seems hard to beat. That does not prevent people from trying. For years people predicted fees paid to money managers would fall as investors switched to index funds or cheaper passive strategies, but instead assets were directed to hedge funds that charge very high fees.
Now, a year into the crisis, where has it left the advocates of the EMH? First, some good news. If anything, our respect for the no free lunch component should have risen. The reason is related to the joint hypothesis problem. Many investment strategies that seemed to be beating the market were not doing so once the true measure of risk was considered. Even Alan Greenspan, the former Federal Reserve chairman, has admitted that investors were fooled about the risks of mortgage-backed securities.
The bad news for EMH lovers is that the price is right component is in more trouble than ever. Fischer Black (of Black-Scholes fame) once defined a market as efficient if its prices were “within a factor of two of value” and he opined that by this (rather loose) definition “almost all markets are efficient almost all the time”. Sadly Black died in 1996 but had he lived to see the technology bubble and the bubbles in housing and mortgages he might have amended his standard to a factor of three. Of course, no one can prove that any of these markets were bubbles. But the price of real estate in places such as Phoenix and Las Vegas seemed like bubbles at the time. This does not mean it was possible to make money from this insight. Lunches are still not free. Shorting internet stocks or Las Vegas real estate two years before the peak was a good recipe for bankruptcy, and no one has yet found a way to predict the end of a bubble.
What lessons should we draw from this? On the free lunch component there are two. The first is that many investments have risks that are more correlated than they appear. The second is that high returns based on high leverage may be a mirage. One would think rational investors would have learnt this from the fall of Long Term Capital Management, when both problems were evident, but the lure of seemingly high returns is hard to resist. On the price is right, if we include the earlier bubble in Japanese real estate, we have now had three enormous price distortions in recent memory. They led to misallocations of resources measured in the trillions and, in the latest bubble, a global credit meltdown. If asset prices could be relied upon to always be “right”, then these bubbles would not occur. But they have, so what are we to do?
While imperfect, financial markets are still the best way to allocate capital. Even so, knowing that prices can be wrong suggests that governments could usefully adopt automatic stabilising activity, such as linking the down-payment for mortgages to a measure of real estate frothiness or ensuring that bank reserve requirements are set dynamically according to market conditions. After all, the market price is not always right.
The writer is a professor of economics and behavioural science at the University of Chicago Booth School of Business and the co-author of Nudge
FT.com / Comment / Opinion - Markets can be wrong and the price is not always right
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Japan, Australia Stock Futures Rise on U.S. Rate
Japan, Australia Stock Futures Rise on U.S. Rate (Correct)
By Masaki Kondo
(Corrects foreign-exchange effect in sixth paragraph.)
Aug. 13 (Bloomberg) -- Japan’s and Australia’s stock futures rose after the U.S. Federal Reserve said it will keep the benchmark rate low, the dollar strengthened versus the yen and oil prices advanced for the first time in five days.
U.S.-traded securities of Toyota Motor Corp., the world’s biggest automaker, climbed 1.5 percent from the Tokyo close. Those of Mitsubishi Corp., a Japanese trading company that gets more than a third of its sales from commodities, advanced 1.1 percent. Securities of Santos Ltd., Australia’s No. 3 oil and gas producer, gained 1.7 percent from the Sydney close.
“The Fed’s commitment to a low interest rate eased concern higher borrowing costs will hamper the U.S. economic recovery,” said Mitsushige Akino, who oversees the equivalent of $624 million at Ichiyoshi Investment Management Co. in Tokyo. “The mid- to long-term outlook remains hazy and we’re close to the ceiling of this range-bound market, so investors prefer to do nothing but observe the situation.”
Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 10,520 in Chicago, 0.8 percent higher than 10,440 in Osaka. Australia’s S&P/ASX 200 Index futures contract due in September rose 1.2 percent, its biggest gain in a week. New Zealand’s NZX 50 Index added 1.3 percent to 3,118.71 in Wellington.
In New York, the Standard & Poor’s 500 Index rebounded 1.2 percent yesterday from its biggest decline in a month the day before. The Fed said yesterday the benchmark interest rate will stay “exceptionally low” for an “extended period” and said the recession is easing. The Fed’s Open Market Committee left the rate between zero and 0.25 percent after their two-day meeting.
Weakening Yen
The yen depreciated to as much as 96.23 from 95.51 at the 3 p.m. close of Tokyo stock trading. A weaker domestic currency increases the value of overseas sales at Japanese companies when repatriated.
Crude oil added 1 percent in New York yesterday, breaking its four-day losing streak. Copper jumped 3.2 percent.
Vietnam Railways Corp. will use Japan’s bullet-train technology for a planned $56 billion link connecting Hanoi and Ho Chi Minh City, the Nikkei newspaper reported, citing an interview with Chief Executive Officer Nguyen Huu Bang. The Vietnamese government aims to build the line in sections and start running high-speed trains by 2020, the report said.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
Last Updated: August 12, 2009 21:30 EDT
Japan, Australia Stock Futures Rise on U.S. Rate (Correct) - Bloomberg.com
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Paulson Hedge Fund Buys Banks, Boosts Gold Stocks
Paulson Hedge Fund Buys Banks, Boosts Gold Stocks (Update1)
By Saijel Kishan
Aug. 12 (Bloomberg) -- Paulson & Co., the hedge-fund firm run by billionaire John Paulson, bought Bank of America Corp. and Goldman Sachs Group Inc. stock in the second quarter, while adding to stakes in gold companies.
Paulson bought 168 million shares of Charlotte, North Carolina-based Bank of America valued at $2.2 billion as of June 30, according to a filing today with the U.S. Securities and Exchange Commission. It was his biggest new purchase in the second quarter and made him the bank’s fourth-largest owner.
Paulson, 53, also bought 2 million shares of New York-based Goldman Sachs in the period.
Paulson, who manages about $29 billion, last year started the Paulson Recovery fund to invest in financial firms hurt by mortgage writedowns. This year he boosted investments in gold companies to help mitigate potential inflation as governments around the world increase spending to stimulate their recession- bound economies. Gold has gained 7.7 percent this year.
Stefan Prelog, a spokesman for New York-based Paulson, declined to comment on the filing.
Bank of America gained more than 3.3 percent after the close of official trading to $16.46 as of 6:30 p.m. The stock had jumped 94 percent in the second quarter as concern the government would take an ownership stake eased amid signs of an improving economy.
Fund Gains
Paulson earned an estimated $2.5 billion last year, according to Institutional Investor’s Alpha Magazine. His Credit Opportunities Fund soared almost sixfold in 2007 on bets that subprime mortgages would plummet. Last year, his flagship fund returned 37 percent, compared with a loss of 19 percent for hedge funds on average.
Paulson became the largest holder of Johannesburg-based gold producer AngloGold Ashanti Ltd. after buying 40 million shares to end the quarter with a 12 percent stake. He also increased his stake in Johannesburg-based Gold Fields Ltd., becoming the third-largest owner of its U.S.-listed shares.
Paulson reduced his stake in Market Vectors Gold Miners ETF, a fund that mirrors moves in the Amex Gold Miners Index, after selling 11 million shares. He owned a 5.3 percent stake in the fund in the second quarter valued at $227 million, down from 15 percent in the first three months of the year.
Money managers who oversee more than $100 million in equities must file a Form 13F within 45 days of each quarter’s end to list their U.S.-traded stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.
To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net;
Last Updated: August 12, 2009 18:33 EDT
Paulson Hedge Fund Buys Banks, Boosts Gold Stocks (Update1) - Bloomberg.com
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Fed says economy is leveling out
Fed says economy is leveling out
Wed Aug 12, 2009 10:27pm EDT
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By Mark Felsenthal and Alister Bull
WASHINGTON (Reuters) - The Federal Reserve said on Wednesday the U.S. economy was showing signs of leveling out two years after the onset of the deepest financial crisis in decades and it moved to phase out one emergency measure.
The U.S. central bank also kept its benchmark short-term interest rate steady near zero and said it would likely stay there for an extended period to guide the way to recovery.
The Fed made its clearest statement to date that it sees the recession nearing an end and that shattered financial markets are healing.
OH OK Bernake, I will sleep real good tonight, LMAO, Gumpies at it again, HOLD THE MARKET UP BOYSSSSSSSSSSSSS
"Information since the Federal Open Market Committee met in June suggests economic activity is leveling out," the Fed said, referring to its policy-setting panel. "Conditions in financial markets have improved in recent weeks."
It is the first time since August 2008 that the committee's statement has not characterized the economy as contracting, weakening, or slowing.
Many peg the onset of the crisis to French bank BNP Paribas' move in August 2007 to freeze funds because of problems with U.S. subprime mortgages. In the months that followed, the U.S. economy toppled into the most damaging financial crisis and painful recession in decades, and the economic malaise spread around the world.
"They see the worst with the economy is behind us but they don't want to jump the gun and pull back quickly," said Craig Thomas, a senior economist at PNC Financial Services in Pittsburgh.
The Fed cautioned that the economy remains fragile as employers continue to cut jobs and businesses trim investment.
U.S. Treasury prices fell after the Fed statement in apparent disappointment that the Fed did not increase the amount of debt that it plans to buy but subsequently regained some ground.
However, major U.S. stock indexes flirted with 10-month highs and the U.S. dollar rose against the yen.
The Fed cut interest rates to a range of between zero and 0.25 percent in December and pumped hundreds of billions of dollars into financial markets to stimulate economic activity in aggressive efforts to thwart the recession.
President Barack Obama's ability to implement his health care and environmental reforms partly depend on his administration's ability to turn the economy around with a controversial $787-billion economic stimulus package.
The recession has seen tax revenues fall and spending rise, leading to a record federal budget deficit expected to top $1.84 trillion in the current fiscal year.
Fed Chairman Ben Bernanke's own renomination hopes for a second term have a lot riding on his ability to restore growth and jobs after the Fed's role in controversial financial rescues and after questions about why the Fed did not spot the gathering storm earlier and take steps to prevent it.
Recent reports imply that the economy may be coming out of its swoon and that job losses, which have topped 6 million since the recession began in December 2007, may be moderating. Continued...
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Fed says economy is leveling out | Reuters
Last edited by captnemoo; 08-12-2009 at 10:53 PM.
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HAAA Took the words right out of ma mouth
by D.O.D.
on Wed, 08/12/2009 - 15:19
#34435
yeah, sweet, don't mean to sound like a $ick or nuthin', but the chart says the economy is ***ked, its $hit's all retarded, and Bernanke talks like a fag...
by Apocalypse Now
on Wed, 08/12/2009 - 16:42
#34598
Millions watch ticker symbols with random price digit movements, transfixed like kittens following a laser light trying to capture the promising bright glow, with the hope they can somehow figure out the variables that drive it and capture profit. The kittens will never capture the light, no matter how quick & hard they try, and the same goes for the ticker trackers fighting against the financial brokerage houses.
Something wicked this way comes, and it's called the great credit & derivative deflation depression.
by Apocalypse Now
on Wed, 08/12/2009 - 16:17
#34571
Stylish outfit, your captain hat must barely fit under the paper bag.
The new tea party must focus on two new additional taxes they want to bring in - the health care tax and a carbon cap & trade tax.
Both are being sold as important for our very survival and the survival of the planet. Simpletons actually believe this, so messages need to be crafted to reach the lowest common denominator (think idiocracy).
Your personal income is your freedom, keeping only 39% hardly seems fair and infringes upon individual liberty. We should be pro-small-government acknowledging that these are the same people that pay $300 for a hammer, they have incredible waste and provide pork spending to their friends - that's inefficient. With examples like the V.A., the post office, and the D.M.V. who wants a health care program that administratively fits that description?
Some of these initiatives are designed to buy votes from the less fortunate, but it is extremely short sighted since they are structurally removing any incentive for people to work. That's what you are seeing today - a revolt in housing with people mailing in the keys and a massive reduction in spending because of a lack of trust/confidence.
reply
I like this guy/girl lol
by Kaiser Soze
on Wed, 08/12/2009 - 16:53
#34615
I don't think anything short of a major company failure/bankruptcy, dollar collapse, or another serious financial crisis is going to abruptly turn this market downward. I am as bearish as anyone, but the bottom line is that with the Fed continuing to pump money into equities and banks, the MSM cheering the rally on, bad news being spun as good news and the major banks knowing they have a bullet proof backstop, the market will continue to rise. It is the slow inflating of another bubble, and like Mark Twain said, "history may not repeat itself, but it sure rhymes". Even Roubini is now starting to back off a lot of his earlier remarks. He no longer refers to this as a "bear market rally". I think even he is surprised by how much the goverment's efforts have manipulated this market.
Closing Market Summary | zero hedge
Last edited by captnemoo; 08-12-2009 at 11:42 PM.
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Small improvements expected in the data
Small improvements expected in the data
Manufacturing has momentum, but consumers are still
WASHINGTON (MarketWatch) -- Consistent with the idea that the economy is leveling out and perhaps growing slowly, much of the economic data to be released in the coming week should show small improvements, economists said.
The data on the weekly calendar cover the gamut of the economy, from manufacturing to housing to the consumer. The most positive news is likely to come from the factory sector, which seems to be gaining some momentum as the inventory cycle turns favorable. The news on housing is also expected to be better than the month before. See Economic Calendar.
Consumers, however, are still the weak link. Consumer confidence, spending and incomes are getting better only slowly.
Manufacturing
If you're a bull, the best news is likely to come on Wednesday with the durable goods report. Economists surveyed by MarketWatch are looking for orders for big-ticket items, such as airplanes and washing machines, to rise 4% in July after a 2.2% decline in June. It would be the biggest monthly increase since December 2007, the month the recession began. Since then, orders have tumbled 29%.
Transportation orders should lead the way. Boeing Co. /quotes/comstock/13*!ba/quotes/nls/ba (BA 45.87, +1.13, +2.53%) had its best month since August 2008. Motor vehicle orders should also rise smartly, but not primarily because of the cash-for-clunkers program.
The increase in autos and parts orders is mostly a reflection of how low auto production had sunk, as General Motors and Chrysler went through bankruptcy and other automakers cut back on production until their inventories cleared out. In June, orders for motor vehicles and parts fell to a 16-year low.
Now, the automakers have resumed a steadier pace of production. They should get an additional pop in orders in August from the clunkers program, said economists for Wells Fargo Securities.
Orders for capital equipment excluding defense and aircraft have risen two months in a row, but were still down 22% year-over-year through June. These so-called core orders are the best monthly indicator of business investment in equipment, which plunged 21% in the past year, the largest decline since World War II.
"We expect some retreat in core capital goods orders" in July, wrote Peter D'Antonio, an economist for Citigroup Global Markets. "We expect rising orders only after the consumer sector turns around in earnest."
Consumers
The consumer isn't turning around yet, economists said. Consumer sentiment gauges are likely to show small improvements in August, they said, while consumer spending remains sluggish, despite the cash-for-clunkers subsidy for new cars.
The Conference Board's consumer confidence index is expected to inch higher to 48.0 in August from 46.6 in July, our survey of economists says. The University of Michigan index, meanwhile, is expected to rise to 64.5 from 63.2 in early August.
Consumers are getting a lift from rising stock prices, offsetting some of the downer stemming from the ongoing job destruction. Labor markets may be improving slightly, but it's having only a minor impact on confidence numbers. Fewer people are being laid off, but finding a new job remains challenging. Many more people are likely to lose their unemployment benefits in coming months, which should put a damper on the confidence surveys in the fall.
"The historically low level of consumer confidence will keep a tight rein on discretionary purchases," said economists for Wells Fargo.
Consumer spending is expected to rise 0.3% in July, with some of that increase coming from the clunkers program. Incomes are expected to rise 0.2%, the survey says.
"Outside of autos, spending likely declined for most goods," said Michelle Meyer, an economist for Barclays Capital.
"The worst is likely over for the U.S. consumer, but we expect real personal consumption to remain weak for some time to come," wrote Meny Grauman, an economist for CIBC World Markets.
Income growth from wages and salaries "probably was stagnant, but after eight consecutive months of decline, this is an improvement," said Citigroup's D'Antonio.
Housing
Sales of new single-family homes probably rose about 2% in July, the fourth straight increase, our survey says. The consensus forecast for a seasonally adjusted annual sales rate of 395,000 would be the highest since October.
"We believe the trend in new home sales is higher," said Barclays' Meyer. "Housing conditions are favorable with low mortgage rates, deep discounts and an improving economic outlook."
The two major home price indexes will be released in the coming week as well. Prices in the Case-Shiller fell in May at the slowest rate in more than two years, and June could be a repeat, said Meyer. However, the long-term trend is still for lower prices, she said.
The Federal Housing Finance Agency index should fall about 0.4% in the second quarter, Meyer said.
Rex Nutting is Washington bureau chief of MarketWatch
Small improvements expected in the data - MarketWatch
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China Construction Bank Gains on Better-Than-Estimated Profit
By Bloomberg News
Aug. 24 (Bloomberg) -- China Construction Bank Corp., the nation’s second largest, rose in Hong Kong trading after posting first-half profit that beat analysts’ estimates.
The stock gained 2.9 percent to HK$6.01 as of 10:02 a.m. Hong Kong-listed shares of Construction Bank have risen 41 percent this year, compared with a 43 percent gain on the Hang Seng Index.
Beijing-based Construction Bank, part-owned by Bank of America Corp., said on late Aug. 21 that first-half profit fell 4.9 percent to 55.8 billion yuan ($8.2 billion). That beat the 52.9 billion yuan median estimate of seven analysts surveyed by Bloomberg News as fee income increased and operating costs and bad-loan provisions declined.
JPMorgan Chase & Co. raised its earnings estimate on Construction Bank by 7 percent for 2009, reflecting “a combination of higher fee growth as well as more optimistic asset quality forecasts,” analysts led by Samuel Chen wrote in a note yesterday.
Construction Bank joined rivals including Industrial & Commercial Bank of China Ltd. in posting better-than-estimated results last week after extending record credit as the economy recovered. ICBC, the world’s largest bank by market value, on Aug. 20 said first-half net income climbed 2.9 percent to 66.4 billion yuan as lending surged and provisions for bad loans dropped.
Construction Bank, battling lower lending margins and concerned about the risk of rising defaults, extended 708.5 billion yuan of new loans in the first half and plans to reduce that by 70 percent to about 200 billion yuan in the second half to avoid a surge in bad debt, President Zhang Jianguo said in an Aug. 7 interview.
Chinese banks handed out a record $1.1 trillion of new loans in the first half to support the nation’s $585 billion economic stimulus package. New loans may total 11 trillion yuan in 2009, BNP Paribas SA estimated last month.
For Related News and Information: China Construction Bank’s Earnings: 939 HK FA16 Stories on China Banks: TNI CHINA BNK Banking industry debt and equity monitor: BANK Relative value comparison: 939 HK RVC Top Finance News: FTOP
Last Updated: August 23, 2009 22:30 EDT
China Construction Bank Gains on Better-Than-Estimated Profit - Bloomberg.com
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