Positives

1) While toughness questioned and worst case not incorporated, EU stress test has less banks failing and smaller amount of money needed to be raised, so positive for now in terms of more info
2) German IFO, UK GDP, Euro zone mfr’g and service index, French biz/consumer confidence, Euro zone industrial orders all better than expected
3) Chinese stocks close at 4 1/2 week high, copper at 10 week high, CRB at 2 month high
4) US corporate earnings good so far
5) After falling for 35 straight days, Baltic Dry Index up 6 straight days
6) Brazil and Canada raised interest rates, better economy
7) Housing starts less than expected, we need less homes.

Negatives

1) Housing starts less than expected, impacts construction
2) Housing inventories continue to rise
3) NAHB builder survey falls to lowest since Apr ’09
4) Brazil and Canada raised interest rates, less liquidity
5) Bernanke says outlook uncertain
6) Bank earnings mediocre.

Category: Markets

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.

29 Responses to “Succinct summation of the week’s events”

  1. Dude, you need to get your own blog.

    You have things inside of you that would be much healthier to get out !

  2. Petey Wheatstraw says:

    Regardless of anything else, the big unwinding has still yet to begin in earnest. Lot’s of nasty stuff has been swept under the rug, and eventually, it will come out. The average American isn’t out of the woods, and is pissed that he isn’t.

  3. jonathanb says:

    More Succinct –

    Positives: The slowdown isn’t starting tomorrow. Let’s buys stocks.

    Negatives: The slowdown will come. And will there be enough room on the lifeboats?

  4. louis says:

    Absolutely, a lot of cocktail party talk about what to do with underwater assets.

  5. Casual Observer says:

    How is #7 a positive ?

  6. Cult of Reason says:

    Re: “EU stress test has less banks failing and smaller amount of money needed to be raised”

    Are you kidding? Do you really believe that stressing ONLY bank trading book bonds for potential losses (a small fraction, ~9-10%, of what the banks hold) can be considered positive?!? How about the rest ~90% of money losing toxic junk that was transferred and hidden on the “hold-to-maturity” books?
    ________________________________________________________________________________

    Re: “Euro zone industrial orders all better than expected”

    Yes, better than “expected” but still lower vs. prior months.

    ________________________________________________________________________________

    Re: “Brazil and Canada raised interest rates, better economy”

    Try higher INFLATION (CNBC spins “higher inflation” as “better economy” and you are repeating the same nonsense — “higher inflation” does not mean “better economy”)

    “Bank of Canada Governor Mark Carney said yesterday. The bank’s forecast anticipates a “gradual” rise in interest rates to keep inflation at that pace, Carney said.”

    “In making its decision, the committee considered that inflation risks have diminished since the previous meeting.” The statement added: “The current decision should help to diminish inflation risks even more.” (The bank raised the rate by only 50 basis points to 10.75%, smaller than a widely expected 75-point increase)
    ________________________________________________________________________________

    Re: Chinese stocks and copper

    Chinese stocks and copper are up this week on rumors (published in a Chinese newspaper) the government won’t curb bank loans (including informal secularization) to support real estate bubble growth. If these rumors turn out to be false, all the gains will evaporate fast as the real estate bubble in China will continue bursting.

    Read Fitch Report
    http://www.scribd.com/doc/34351417/Fitch-on-Chinese-Banks-7-2010

    Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they’ve lent to finance local government infrastructure projects.
    http://www.bloomberg.com/news/2010-07-23/china-banks-said-to-see-risks-in-23-of-1-1-trillion-public-project-loans.html
    ________________________________________________________________________________

    Re: Baltic Dry Index

    When the index was falling for 35 straight days, the bulls were dismissing it. Now that it is bouncing (dead cat bounce), the bulls are all over spinning it as a big positive.

    Actually, the small bounce in the Baltic Dry during this week is credited to Panamax and Supramax sub-indexes, tracking smaller vessels.

    The BCI sub-index (Baltic Cape Index), wich tracks the capesize vessels, the larger ones, used to carry all that iron ore and copper to China, is still falling.

    http://www.dryships.com/pages/report.asp

    ________________________________________________________________________________

    As far as the negatives, you forgot ECRI hitting negative 10.5 — ECRI in this territory 4 out of 5 times spells RECESSION.

    Unless you want us to believe “it’s different this time” ?

  7. Cult of Reason says:

    Addendum: the second quote was about Brazil (50 basis points to 10.75%, smaller than a widely expected 75-point increase)

  8. Cult of Reason says:

    Soft landing in China? Really?

    China Property Market Beginning Collapse That May Hit Banks, Rogoff Says

    “China’s property market is beginning a “collapse” that will hit the nation’s banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund.”
    http://www.bloomberg.com/news/2010-07-05/rogoff-says-china-property-market-starting-collapse-that-will-hit-banks.html
    ________________________________________________________________________________

    Ponzi “Shark Loans” Fuel China’s Housing Bubble; Home Sales Plunge 44% in Xiamen; Bubble Busts in Tianjin
    http://globaleconomicanalysis.blogspot.com/2010/07/ponzi-shark-loans-fuel-chinas-housing.html

  9. Mike in Nola says:

    Casual:
    #7 is a positive because each new home built just adds to the inventory overhang.

  10. Freestate says:

    We all know that we need very positive sentiment for the market to be able to stage a significant downward move. So I am happy if everyone uses European bank stress tests and positive European economic data to feel good about the U.S. economy while the ECRI WLI hits -10.5 and the Consumer Metrics Institute’s real time data shows totally slack consumer spending. The bond market – always far more accurate than the stock market – continues to tell the real story here: deflation, inadequate demand and lots of excess capacity.

  11. Cult of Reason says:

    Negatives #8

    Europe interbank liquidity is worst since August 2009 (EUR LIBOR continues rising this week)
    http://www.bloomberg.com/apps/quote?ticker=EE0003M:IND

    I doubt the laughable stress tests sham will help the liquidity. EU officials are bluffing. The banking and sovereign debt crisis in Europe are far from over.

  12. Well Barry, are you still holding on to your QID??

    ~~~

    BR: We are 40% long, 60% cash.

    The QID position was from some time ago — it first went on back in May.

  13. Dennis says:

    Why do people imagine that a professional asset management shop, especially one driven by technicals/quant/black box inputs, is still long ANYTHING from more than 10 minutes ago?

  14. mathman says:

    I see that business, as usual, misses the mark completely in that all these “signs” leave out the most fundamental aspect of the entire cycle: consumer demand. Corporate America (and elsewhere) have thrown the common person (the great mass of consumers) under the bus with stagnant wages for at least a decade, outsourcing jobs, terribly stressful working conditions, layoffs and dismissals – all in the never ending quest for “more profit.” Well, now we see that the driver of the system is tapped out and an entire class of workers is falling into poverty. Good luck with a recovery of any kind on that basis.

    Advertising constantly for consumers to buy junk that they don’t need, can’t afford, and which are in most cases poorly made (even toxic) won’t cut it any longer since the consumer is saddled with debt, must make ends meet with less and less income, and the prospects of “good paying jobs” are diminishing by the day. The government, bought and paid for by our “new” corporate citizens (and complete with corporate people as advisors and running the so-called watch-dog agencies) won’t do anything much to help -” hey here’s a hand out for some chump change, but when this runs out . . .” – when it was supposed to be (via the last faux election) all about green jobs/green tech and now could include working on the environment.

    Instead of working on mass transit, our decaying and underperforming electrical grid, cleaning up all the toxic crap corporations have dumped everywhere, and putting people to work so they can feel like they are contributing members of society, we instead are faced with people becoming ever more desperate and a collapsing society (diminished standard of living, vacant and non-maintained commercial and private real estate, local government coffers unable to support basic services, etc.).

    So whoopee when the effing stock market goes up (no one cares but the gamblers of which there are fewer due to all of the above). Until the government and businesses start sharing the wealth (and stop stealing it from the environment at “no cost”) we can expect it to continually get worse. The business model is flawed, the stock market is a casino, voting does absolutely nothing and the economic model the whole system is founded on is a complete joke (on the masses).

  15. Patrick Neid says:

    Who doesn’t know the bear case? Who doesn’t know how bad it was, it is and how bad it is going to be?

    And yet the market is still trading within 10% of its reaction high, some averages have jumped the 200 m.a. to the upside and others had false head and shoulder break downs. Crazier still we are having 90% days left and right.

    Whatever is coming, up or down, is going to be BIG. Everyone has their fundamental indicator. I watch IBM.

  16. lawyerguy says:

    unemployment benefits extension and its retroactive application should provide a small jolt in the short term. I’d be quite surprised to see Congress pass any further stimulus prior to the Nov elections. Expect large scale public sector layoffs over the next few months.

    I don’t see a recovery in the labor market at all. One tool I use is the DOL historical unemployment claims.

    http://www.ows.doleta.gov/unemploy/claims.asp

    I would say that nearly every blog/economist argues that the seasonally adjusted numbers are far more important than the non-seasonally adjusted. While I agree that there clearly are seasonal factors at work, I compare the raw numbers over the years and see a large non-seasonally adjusted increases in claims over comparable time periods. I understand our population is increasing, but with the labor participation rate this low, I see a a very sick labor market.

  17. ezduzit says:

    economic forecasts based on information released by the different governments makes is just plain shortsighted. the political spin on those releases is overwhelming. basically no politician, starting with obama, can be believed to tell the truth. the european stress test is just more proof.

    it is easy to find out how we are doing. while you’re at the supermarket, ask the checkout person ‘how are things going’? ask your neighbor about his/her job. ask anybody!. this is a far more scientific approach than listening to a bunch of professional liars. one thing is certain, the politicos have become a lot more adroit at obfuscating the facts.

  18. ezduzit says:

    should be

  19. plantseeds says:

    lawyerguy – i agree however i will add to…

    “unemployment benefits extension and its retroactive application should provide a small jolt in the short term.”

    while $300 – $600 / wk into the hands of folks whose backs are already against the wall will mean the world to the recipient, what will it mean to the macro environment? (maybe stave off some addtional foreclosures for the time being, but enough to register given the current logjam?)

    like with anything, to be successful you need good ideas, hard work, and most importantly you need long-range plan, or you can just be lucky. right now we have none of those. we have the expectation that things are going to somehow “get going again” ….. how? through the use of additional stimulus or “further policy actions as needed”?

    we have a horse and pony show going on in washington where decisions are made based on November elections and the pissing contests between those who carry the diseases of democrat and republican and their minions….how childish.

    what is the plan to get people employed and reduce the fed balance sheet?

    no one wants to come out and say it but the ONLY real plan I see is to try and get people and businesses to start borrowing and spending again without actually saying it…this time its about getting banks to start lending so… stop saving and stockpiling those shekels people. spend borrow and lend and worry about the rest later.

    good grief…and this is who we look to for solutions?

  20. Greg0658 says:

    mathman plantseeds – I hear this morning its Xmas in July with 7 days left …. I am about to celebrate 25 years in business and was looking around at how I’ve played the game .. turned labor into green paper then into stuff .. its a catch22 .. if we don’t consume theres no need for labor .. if we consume to much and don’t save for old age then your outta luck .. if you save the green ineffectively or because it gets obscounded your outta luck .. if you get to fat with stuff your outta luck … catch22 without balance … balance is outta style .. get yours while you can is in

    Genesis ~ Land Of Confusion
    http://www.youtube.com/watch?v=oepXF2B5NK4
    “to many people making to many problems”

    was looking around for a clarification of a tv tidbit heard yesterday .. 180T in world debt with no real plan to move forward with that anchor .. it was stated each world citizen has $30K to cover .. good luck getting that outta me ~ leave alone the 3 billion people gotta be worse off than me

  21. Darkness says:

    Canada raising interest rates is also a positive as a dampener on their ongoing bubble. Although, possibly too little too late. During my visit to Canada yesterday I got such a face full of Canadian superiority claptrap I’m wishing some pain on them today.

    The banking crisis kleptocracy bandaid is continuing to seep puss and noxious yellow goo over the economy. Big surprise there. Next time, Feds, do it right. bail out the sector, not the banks themselves. Jesus H on a popsicle-stained mortgage application . . .

  22. flipspiceland says:

    Benny didn’t say things are uncertain.

    What he really said is, “……things are UNUSUALLY uncertain….”.

    He attended the Greenspan School of Higher Confoundation.

  23. flipspiceland says:

    Oh, and you left out this one last hope for the proletariat to get a scintilla of justice:

    http://www.nypost.com/p/news/business/ken_paper_tiger_JPgEzDedviRqf85dkqG3jO

    Feinberg, yet another Wall Street shill.

  24. farmera1 says:

    Looks like the economic indicators just turned over.

    http://www.bullandbearwise.com/IndexHistoryChart.asp

  25. alberto_@_bp says:

    Advance-Decline line 10 week MA is above 40 week MA. Barry Ritholtz said after flash crash that he will be bulish when this event occurs. It did happened on Friday. Did not hear about his stance on market lately.

  26. kmckellop says:

    Robert Prechter Jr. predicted this back in April 2009. We must be nearing the final top in the Market.

    “Be Prepared: The advance will reignite some of the zaniness of 1999 and 2007, although speculation may feature some decidedly depressionistic undertones. We can envision, for instance, public offerings comprising disabled banks ‘toxic assets.’ ”

    http://www.elliottwave.com/freeupdates/archives/2010/04/06/IPO-Industry-Back-On-Solid-Ground-Bullpucky.aspx

  27. seneca says:

    This Friday, the BEA will report their preliminary estimate of Q2 GDP growth. Based on rail freight traffic, which has had “an 88% correlation” to GDP since 2000, the Q2 GDP grew at a 9.3% rate.

    Source:
    America Association of Railroads: “Rail Time Indicators,” p. 17 [pdf]
    http://www.aar.org/newsandevents/~/media/aar/railtimeindicators/2010-07-rti.ashx

    On the other hand, the Consumer Metrics Institute states: “If the BEA (through dumb luck) was accurately reflecting actual consumer demand, they would report a contracting 2nd quarter.”

    Source:
    “Consumer Metrics Institute: Home of Daily Consumer Leading Indicators”:
    http://www.consumerindexes.com/

    Graph: “Consumer Metric Institute’s Daily Growth Index vs BEA’s Quarterly GDP Over Past 4 Years”:
    http://www.consumerindexes.com/commentary_2010_dailygrowthindexvsgdp.png

    No wonder the stock market has been manic depressive of late: the economy is either overheating or comatose, depending on which conflicting indicator you use to size it up.