Mike Panzner sends along these 2 charts — and magazine covers — and wonders what they might mean:

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all data via Bloomberg

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The contrary read to the Newsweek piece is that the Recession isn’t over.

There is a sleight caveat with the Newsweek cover:  The author of the Newsweek piece is Dan Gross, who is no stranger to contrary indicators and/or bubbles. He wrote a few books (Popped! Why Bubbles Are Great for the Economy and Dumb Money) and has been pretty savvy about the current state of affairs.

Note the Asterisk on the inflating “Recession is Over.”  Its states “Good Luck Surviving the Recovery.”

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Click for full size Newsweek Cover

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Category: Contrary Indicators, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

41 Responses to “Magazine Cover Revisted”

  1. manhattanguy says:

    Yea I brought this up a few days ago. Too soon to make a statement like “Recession is over” when first time unemployment claims is still creeping up.

  2. beaufou says:

    I think the pin is about to burst the bubble manhattanguy.

  3. Wes Schott says:

    is that balloon inflating or deflating?

  4. owen b says:

    In my view the main reason Newsweek article is noteworthy is because it’s based on ECRI’s call.

    ECRI also saying home prices turning up.

    END OF HOME PRICE DOWNTURN IN SIGHT

    “With U.S. home values far below their boom-time highs, most observers are resigned to an indefinite downdraft in home prices. It is this uncertainty about the ultimate bottom in home prices that has converted so many mortgage-related derivatives into toxic assets. Yet, at long last, the end of the home price downturn is in sight.

    One key reason for the turnaround in the outlook is housing affordability, which is hovering around all-time highs. The current combination of drastically reduced home prices and very low mortgage rates has hardly ever been seen in living memory…

    Most importantly, the U.S. Leading Home Price Index (USLHPI), designed to predict cyclical turns in real home prices, has now been rising for five months… But a three P’s analysis (see chart below) of the level of the USLHPI reveals an even more promising picture… the recent upturn in the USLHPI is almost as pronounced as the median in comparable past cycles… it is almost as pervasive; and … it is just as persistent. The implication is clear: this is a genuine cyclical upturn in the level of the USLHPI. Such an upturn in the USLHPI amounts to a forecast of a cyclical upturn in the level of home prices this year…”

    http://www.businesscycle.com

  5. VennData says:

    Instead of polling ‘leading economists’ … savvy investors should poll ‘leading journalists’ and do the opposite.

  6. cvienne says:

    Interesting that the RECESSION being OVER declaration is illustrated by means of a fat inflated bubble with a threatening looking pin aimed squarely at it’s family jewels…

    Now put some Pinturicchio’s up on the screen and I’ll comment on those too…

  7. call me ahab says:

    that “home sweet home” cover kills me-

    reminds me of when Tom Brokaw would say on the evening news in 1999/2000- when the Nasdaq hit yet another high- “how high can it go”-

    and I was thinking that was the very thing that should make people rush to sell-

    people are so fucking stupid

  8. Mark Down says:

    Looks like those charts are moving today’s market… Charts win Charts win

  9. beaufou says:

    Barry,

    You posted a chart for only a few minutes yesterday morning,
    bogus or too early?

    ~~~

    BR: Dunno — which one?

  10. carlfutia says:

    I wrote a book on this subject which was just published by Wiley: “The Art of Contrarian Trading” – available on Amazon.com

    And I also commented on this Newsweek cover at http://www.TheArtOfContrarianTrading.blogspot.com.

    My take is a little different from Barry’s.

    Carl Futia

  11. Onlooker from Troy says:

    I think you’ve hit it on the head re: the Newsweek cover. I haven’t read the article but it’s apparent from the asterisked subtitle that Dan Gross is spot on here. As I have said, and keep emphasizing, yes the recession may be over and ECRI etc. may have called this little cyclical play correctly based on the inventory cycle, but will it really matter substantially to anybody? The market has clearly reacted to this, and yes the snorting bulls are right – for now. But it seems ever more clear that we’d be lucky just to do as well as we did back in ’02 after that much more modest rally based on the end of the recession.

    There’s a long road ahead.

    So the bottom line for me is that I do not think that this is a good example of a contrary indicator magazine cover. There will be better ones, although it may just presage the double dip. Hmmm.

    And remember the “Stocks are dead” (or something like that) cover that folks like to point out from ’80? That was a long way from there to the start of the new secular bull in ’82. If I remember that correctly. The point is that these things can take a while longer than we expect to play out.

  12. Dogfish says:

    I’m glad people on here are reading the subtitle and seeing the needle on the cover. Instead of some others that just see the big celebratory text on the balloon. It’s a bit of a Rorschach test in that regard.

  13. mdod says:

    Ah, this magazine cover is a deceptive hedge… There is a balloon on there AND a pin to pop it. This is Newsweek without any cajones trying to be cautiously optimistic. I say that it means the market has another 15-20% or so to go. We need Newsweek with a Balloon, but sans the pin, and maybe some streamers and noisemakers on the cover…

    D**n periodicals are trying to toy with our cover indicators. They are shrewd I tell you, shrewd.

  14. Onlooker from Troy says:

    I went to that Home Sweet Home article to read it again after many years to see how whacky it was. There is some balance in there, with cautionary notes about it being a bubble, etc. So it wasn’t a completely silly, fluff piece that was out of touch and pumping RE. It was rather nauseating to read though, and I only scanned it. The worst part was the propaganda from the NAR guy, of course.

  15. Onlooker from Troy says:

    mdod

    Yep, I think you’re right. The mainstream is actually getting smarter about these things lately and cautious about creating the classic contrary indicator cover. But I bet by the time this secular bear is over there will be another really good one that reflects the pounding that we’ll take over the next several years. Something like that “Death of Equities” cover. By the way I went for a search and found it. Twas a Business Week cover and was in ’79, not ’80.

  16. HCF says:

    I’m thinking that we’re getting a bit frothy here… I was watching Kudlow on CNBC today and the panel was basically composed of bulls and ultra-bulls. Did I miss something? Did the SEC impose an up-tick rule that says you can only sell a stock for a higher price than you bought it for? Has the law of gravity been repealed?

    HCF

  17. Instead of polling ‘leading economists’ … savvy investors should poll ‘leading journalists’ and do the opposite.

    Although I would probably like to take a poll to the heads of the lot of them, I’d get charged with assault for doing that. Throw a few lawyers and politicians in there and maybe you’ve got a deal

  18. call me ahab says:

    what makes me ill is the thought of Dennis Kneale and those other stooges at CNBC gloating tonight and talking about how the “recession is over” and that we’re in a “new bull market”-

    makes me cringe thinking about it

  19. ben22 says:

    @VennData,

    That’s what AAII survey is for.

  20. Mannwich says:

    @ahab: Then don’t watch. Based on this stat, looks many others are tuning out. I haven’t watched one CNBC program since Feb/March. Not a one……

    The bloodbath at GE’s propaganda station has reached critical levels: according to Nielsen, CNBC has lost 28% of viewers year over year, and 24% in the 25-54 age group category.

    http://www.zerohedge.com/article/cnbc-viewership-down-28

    No wonder why the corporate/Wall Street “green shoots” propaganda is full swing. They’re in full survival mode and they need to revive their ad revenues.

  21. yes, the U.S.-edition of those rags..

    more telling is what’s on their ‘International’-edition(s) covers v. the U.S. version.

    http://www.newsweek.com/id/30166

    see ‘clicky’ mid-down, left-side

    and/or:
    http://www.rawstory.com/news/2006/Newsweek_features_Losing_Afghanistan_in_international_0925.html

  22. Mannwich says:

    Me-thinks Sir Goldilocks’ show will soon be cancelled……stunning loss of viewers based on this report. Fast Money not doing much better.

    http://www.zerohedge.com/sites/default/files/images/Nielsen.jpg

  23. call me ahab says:

    mannwich-

    dude- I definitely don’t watch- but it still makes me shudder- because I know it is happening

  24. mdod says:

    Mannwich:

    What do all the codes mean? It looks like just about everything on CNBC is down; the bull market has been bad for business.

    If you could adjust for any general trend in TV viewership overall, I wonder if their ratings were higher in March of 2000 or March of 2009?

  25. Mannwich says:

    @mdod: Not sure. It could just be down due to summertime when people are busier, but I’m guessing they had really good ratings during the crisis peak but now people are losing interest and getting back to their lives (and not really getting more interested in the market, at least not J6P).

  26. Onlooker from Troy says:

    It’s hard to figure what the general public makes of this market run. On one hand you can see people getting excited and wanting back in, lured by the siren song of a market up by so much. I’m sure that those who’ve gone relatively unscathed (no job loss, etc.) are in that group.

    On the other hand you’ve got so many people going through some really tough times who have to just be feeling like this is just a kick in the head. Watching other folks celebrate their gains, the banks raking in profits, etc. The gap just widens. And this group is only growing, despite the glow on Wall St. It’s gut wrenching to think about.

  27. Onlooker from Troy says:

    ahab

    Agreed completely re: CNBC. There’s just no way I could stand to watch that gloating from those pompous jackasses. Not good for my blood pressure.

  28. jc says:

    Owen, Does “housing affordability” factor in job losses, pay cuts, furloughs & fear of losing a job?

    “Hey honey, the states increasing my furlough to 3 days per month, lets go buy a new home before the pay cut shows up in my W2″

    “Hey honey, more layoffs at work today but Kudlow says we’ve turned the corner on jobs & housing, lets make a bid on that place, we’ve got the 3% we need”

  29. Mannwich says:

    @Onlooker: Many of those people you speak of also don’t have any money in the market because they don’t have any money (outside of maybe their 401k), period.

  30. ben22 says:

    I watched Kudlow a day or two ago, just long enough to hear him say more than three times each:

    You gotta own the banks

    You can’t go wrong with the banks

  31. Onlooker from Troy says:

    Methinks that the ECRI is just seeing the little cyclical bounce in housing prices that we’re witnessing, but missing (or not looking for) the longer term trend which will resume downwards in the fall. Just as with the economy as a whole and the stock market. All due to the govt actions which just delay the inevitable and interfere with the proper clearing of markets, and just because that’s what markets do. They cycle, even in the midst of a longer term up or down trend.

  32. ben22 says:

    onlooker,

    it is just that, a mixed bad, for every person I work with that wants in the rally so bad, I’ve got another person that will come in scared straight about what is going on. While anecdotal, this is the underlying social mood I’m seeing with clients right now. I’d call it neutral, it should shift to negative again shortly when more of the optimistic crowd come to grips with reality while the non-optimists stay stuck in the same place throughout.

  33. Paul S says:

    Bush started it all with “Mission Accompished”

  34. owen b says:

    >Owen, Does “housing affordability” factor in job losses, pay cuts, furloughs & fear of losing a job?

    I don’t think it does, but I suspect their LHPI has employment, confidence related stuff in it (can’t say for sure because it’s proprietary).

    Did you look at the charts on http://www.businesscycle.com ?

  35. Andy T says:

    It seems like some of these magazine indicators are getting self-conscious about being ridiculed later on….I’m seeing more hedges on the front covers….

    Mannwich Says:
    July 30th, 2009 at 1:44 pm

    The bloodbath at GE’s propaganda station has reached critical levels: according to Nielsen, CNBC has lost 28% of viewers year over year, and 24% in the 25-54 age group category.

    http://www.zerohedge.com/article/cnbc-viewership-down-28

    No wonder why the corporate/Wall Street “green shoots” propaganda is full swing. They’re in full survival mode and they need to revive their ad revenues.
    ~~~~~~~~~~~~~~~~~

    LOVE, LOVE, LOVE THIS!!!!!

  36. Andy T says:

    It seems like some of these magazine indicators are getting self-conscious about being ridiculed later on….I’m seeing more hedges on the front covers….

    Mannwich Says:
    July 30th, 2009 at 1:44 pm

    The bloodbath at GE’s propaganda station has reached critical levels: according to Nielsen, CNBC has lost 28% of viewers year over year, and 24% in the 25-54 age group category.

    http://www.zerohedge.com/article/cnbc-viewership-down-28

    No wonder why the corporate/Wall Street “green shoots” propaganda is full swing. They’re in full survival mode and they need to revive their ad revenues.
    ~~~~~~~~~~~~~~~~~

    LOVE, LOVE, LOVE THIS!!!!!

  37. Andy T says:

    To continue on with the CNBC viewership down 28% info…

    This is fantastic….it tells me America might be waking up a bit….Several months ago I took the Pledge with Mannwich and others to tune out the bizzaro stuff we were witnessing….

    When Ratigan left, I no longer had one thing to watch on that wasteland of ideas and personalities….
    I see one of my favorite honeys Margaret Brennan left to Bloomberg…good for her!

    CNBC jumped the shark months ago….

  38. Andy T says:

    Andy Tabbo Says:
    March 5th, 2009 at 12:00 pm
    I think with the way they pumped up the Santelli “rant heard ’round the world” bullshit…and the general desperate attempt to create controversy on every segment, CNBC has “jumped the shark.” I’m guessing that CNBC ratings have no where to go but down.

    From Wikipedia:

    Jumping the shark is a colloquialism used by TV critics and fans to denote that point in a TV show or movie series’ history where the plot veers off into absurd story lines or out-of-the-ordinary characterizations, particularly for a show with falling ratings apparently becoming more desperate to draw viewers in. In the process of undergoing these changes, the TV or movie series loses its original appeal. Shows that have “jumped the shark” are typically deemed to have passed their peak.

  39. Dogfish says:

    in addendum to the above , “Jumping the Shark” specifically references an episode of Happy Days where Fonzie was waterskiing.

    Oh, happy days.

    Cramer held up surprising well in the ratings.

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