Signs of Life Behind the Bad News
By Barry Ritholtz - January 5th, 2009, 11:15AM
Some vital signs are improving
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Signs of Life Behind the Bad News
Macro Notes
Consumer Credit continues downward trendPeter Boockvar
Consumer Credit outstanding fell $14.8b in Sept seasonally adjusted, almost $5b more than expected and marks the 11th month in the past 12 of declines. At $2.456T outstanding, it is 4.9% below the record high in July '08. After a flat reading in Aug, (didn't fall b/c of the CARS program), non revolving debt outstanding fell by $4.9B. Revolving (mostly credit cards) balances outstanding fell by $9.9B. To fully put into perspective today's data, look at the current level of consumer credit (doesn't include mortgages, the biggest chunk of consumer credit) relative to GDP. As of Q3, it totaled 17.2%...
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January 5th, 2009 at 1:22 pm
This is real simple. The market can fool some of the people some of the time, but the forward PE on the SPX has risen to 22 based on most recent 2009 earnings estimates.
I’ll take the short side of that bet with global manufacturing of just about any durable good falling off of a cliff. Not only are there no sales, there are going to be massive inventory writedowns, unless of course the Fed decides that inventories should not be written off. Even then, people of average intelligence will figure out what’s really going on.
No earnings. No capitulation.
No sustained rally.
Look out below.
January 6th, 2009 at 9:59 am
There might be a rally if the Fed and the Obama administration manage to devalue the dollar but such ‘gains’ are useless to those that want to see an increase in their purchasing power. I won’t take the long or short side of the general equities and prefer to have exposure to the precious metals and commodities that have sound fundamentals behind them.