The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

I haven’t addressed the recent market action in some time. Here are some recent thoughts:

• The S&P 500 has been stuck in a range the past 3 months between 1,000-1150; The next major resistance will be at the flattish 200-day moving average of 1113.

• NYSE new highs have improved; new lows are evaporating; NYSE cumulative breadth is close to making a new all-time high;

• The percentage of US indexes above their 200-day moving average has also improved

• John Roque notes that the DJIA, Nasdaq, Dow Transports, Dow Utilities, S&P 600 and S&P 400 all have upward-sloping 200-day moving averages. He adds “In short, major downside market action usually does not occur with indexes either above/supported by upward-sloping 200-day moving averages.”

FusionIQ ‘s institutional commentary can be found here: Market Continues Oversold Rally; Seasonal Trends Hold.

The Case-Shiller Index printed this morning, so a bit of chart/table porn is in order.

Below is a 20-in-1 look at the Composite 20 (both the chart and the table are NSA):

19 of the 20 metro areas showed sequential gains for the month, the only laggard being Las Vegas.

Here’s a nostalgic city-by-city look back at the two year period that defined the peak of the bubble, and where we stand now.  Interestingly, Boston was the first city to peak, in September 2005.  Charlotte brought up the rear, peaking two years later in August 2007.

(Please click through the image for clarity.)

The July Consumer Confidence # was a touch below expectations at 50.4 vs 51, down from 54.3 in June and at a 5 week low. Most of the drop from June was in the Expectations part which fell by 6 pts while the Present Situation fell by .7 pt. Those that said jobs were Plentiful were unch at 4.3, the lowest since Mar. Those that said jobs were Hard to Get rose 2.3 pts to the highest since Mar, thus both point to a still sluggish labor market. Those that said business conditions were ‘good’ rose a touch but those that said it’s ‘bad’ rose to a 4 month high with the balance ‘normal’. Without the home buying tax credit, those that plan to buy a home fell .1 pt at 1.9 to the lowest since Dec ’09 when it reached the lowest level since ’64 at 1.7. Those that plan to buy an auto rose .4 pt to 4.5 but remains below the yr ago level of 4.8. One yr inflation expectations fell .2% of a pt to 4.9%, the lowest since Mar ’07. Bottom line with the Confidence data and after seeing earnings from many US multinationals, there is a clear distinction between those businesses that have overseas exposure and those that are more US centric as well as a US consumer that is still dealing with a tough labor market, too much debt, a lower home price and less access to credit.

The S&P/CaseShiller home price index of 20 cities rose .47% m/o/m SA and 4.61% y/o/y, above expectations but there may be some lingering impact in the calculation of pricing from the tax credit that expired on Apr 30th but where closings don’t need to be done until Sept 30th. The non SA increase was 1.27% m/o/m where 19 of the 20 cities saw gains with Las Vegas the only one that didn’t. On a y/o/y basis, 13 of the 20 had gains led by San Francisco and San Diego with the biggest decliner again Las Vegas. Bottom line, because of the influence of the tax credit where the closing of a contract signed before the Apr 30th expiration has to be completed by Sept 30th, it will be a few months before we get clean pricing data. The industry has had a clear downturn over the past few months since Apr 30th and it will be only employment and income growth that will put individuals in a better position to take advantage of low prices and mortgage rates.

FusionIQ US Market Review July 26 2010

Terrific visualization from Information is Beautiful showing a treemap of different government spending that helps contextualize what $1B large is.

Please note how the size of the Bailouts overwhelm everything else — Defense, education, wars, entitlements, etc:

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Spreadsheet here

Watch the full episode. See more Need To Know.

European markets continue to show their comfort with the results of the bank stress test. Spain sold 3 month and 6 month bills at yields well below a month ago and even Hungary (no part of stress test but in IMF spat) sold more 3 month bills than expected. Yields are down across the board in southern Europe with Spanish yields in particular at 2 month lows and Greek 5 yr CDS near 2 month lows. The iTRAXX financial CDS is down another 7 bps to 111 bps, a 3 month low. UBS and DB both reported earnings better than expected, German Aug consumer confidence rose to the highest since Nov ’09 and the Euro is above 1.30 vs the US$ in response. EU LIBOR and Euribor though both rose. India joined Australia, Canada, Taiwan, South Korea, Thailand and Malaysia in removing accommodation as they raised their reverse repo rate by 50 bps, 25 more than expected and said “the dominant concern that has shaped the monetary policy stance in this review is high inflation.”

We interrupt the George Bush reputation rehabilitation tour for this brief reminder:

“For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different.

The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation’s growth.

It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism — there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.”

Just in case you forgot: By nearly any conceivable measure, the George W. Bush administration (2000-08) economic performance was the worst of any President since Hoover.

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Source:
Aughts were a lost decade for U.S. economy, workers
Neil Irwin
Washington Post, January 2, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/01/AR2010010101196_pf.html

This past year or so, I have been in several dozen airports:

Austin TX
Bangor, ME
Boston, MA
Chicago Midway, IL
Chicago O’Hare, IL
Detroit MI
Ft. Lauderdale, FL
Cleveland, OH
Denver, CO
Dallas, TX
JFK New York
Houston,TX
Indianapolis, IN
LaGuardia, New York
Los Angeles, CA
Miami, FL
Orlando, FL
Philadelphia, PA
San Francisco, CA
San Jose, CA
Washington, DC

Aruba
Berlin, Germany
Grand Cayman
Montreal CA
Toronto CA
Vancouver, BC Canada

Amongst others.

I can honestly that I have been in no shittier airport, in or out of America, than JFK. Getting to the drop off or pick up points, the delays to get checked luggage, the distance to the gates, pretty much aspect of any interaction travelers have with the site — are examples of horrific engineering designs.

I understand that most of JFK was built before the Wright Brothers actually flew at Kitty Hawk, and that means there are some legacy issues. It is probably unfair to assume the design team consisted of several retarded howler monkeys and a pile of old bricks. It just seems that way.

Some of you might say Newark is the worst in America, but Newark Airport, not surprisingly, is located in Newark. It does not disappoint: It is precisely the sort of shithole you would imagine you would find there.

On the other hand, you would imagine — or at least hope — that America’s premiere city’s premiere airport should be a sparkling entry into the country. Instead, it is increasingly emblematic of America’s despondent decline into disheveled disrepair.

You might expect that in a place like Detroit — except they have a really nice airport.

Amusing, via Cuddly Cyborg: