Posts filed under “Cycles”
Good Thursday morning.
We woke up in the states to see Futures under pressure, but off their worst levels of the morning. Following a day of 1-2% losses in Asia, European bourses gave up less than 1%, losing 50-75bps.
US stocks are looking to open lower, as the bears make another attempt at some downward pressure. It has thus far been a losing battle. These days, opening indications and actual closing prices are two very different animals.
In the face of massive liquidity of QE2, there remains a firm bid beneath this market. So far, losses have been modest to miniscule, with selling pressure well contained. M&A, share buybacks, anything but disappointing earnings are an excuse to put on the rally caps. Even dips are an excuse to buy. (We are running 53% cash on specifc name selling, not overall market calls).
The bears are bloody but unbowed — they know a correction is imminent. But the bulls have heard this line for nigh on two years, and yet still the market still powers higher. The Dow, S&P and Nasdaq are all at multi-year highs. There is a different between being early — a matter of days or weeks — and wrong. So far, the bears have been wrong.
Eventually, the grizzlies must be fed. They have their champions, including various Fed Hawks, who are terrified of an inflationary spiral. Lacker, Plosser and Fisher may be mortal enemies of price instability, but they are friends of Yogi and Boo-Boo and Baloo, well known amongst ursines for their opposition to easy money. And easy money is a bull’s best friend.
Even the most ardent bull knows that this too, will pass. The bears will have their day, before their next bout of hibernation.
The 64 trillion question: When?
One of the knocks on last year’s earnings was that it was cost cutting was driving profitibility — not organic revenue growth. The recovery could not turn into an expansion, we were told, without solid revenue gains. Earnings may have surpassed Wall Street expectations for seven straight quarters, but sales have trailed forecasts since 2008….Read More
Is it Really Different this Time? A Cyclical Perspective Is it Really Different this Time? A Cyclical Perspective
> Lakshman Achuthan discusses ECRI. He is not an economist. But all he hass done for 20 years is study recessions and recoveries. At ECRI, they make economic forecasts based on our leading indexes, none of it is based on the regressions, correlations or econometric models that drive most of the forecasts you hear about….Read More
I frequently discuss the 1966-1982 market cycle, with its cyclical bull and bear markets within the broader context of a longer secular bear market.
Ron Griess (of The Chart Store) has taken it this a step further, looking at ALL of the longer secular markets going back to 1927, including the cyclical markets occurring within those broader cycles.
Its fascinating stuff:
Awesome chartporn from the Atlantic showing the changes in the US wrought by the credit crisis and Great Recession: > click for truly ginormous chart > Source: What a difference two years makes Timothy Lavin January February 2011 http://www.theatlantic.com/magazine/archive/2011/01/how-the-recession-changed-us/8347/
We’ve taken many longer term looks at the markets (See, for example, this, this, this or this) but the following chart from UBS Technical Analyst Peter Lee really tickled my fancy: > click for larger graphic > Source: 2011 Technical Market Outlook Peter Lee – Chief Technical Strategist Wealth Management Research December 2010
The National Federation of Independent Business (NFIB) released its Small Business Economic Trends Report (SBET) [.pdf], and the news was an improvement over the prior month: The National Federation of Independent Business Index of Small Business Optimism rose 1.5 points in November rising to 93.2, the highest reading since December 2007, and the fourth consecutive…Read More
The Fed released its report on consumer credit, and it comes as no surprise that revolving credit eased for the 26th consecutive month as consumers continue to shed credit — either by paying it down or, in some cases, walking away from it. From a high of $973.6 billion in August 2008, revolving credit has…Read More
The Bureau of Labor Statistics just released its most recent Job Openings and Labor Turnover (JOLTS) data, and the number of job openings increased to 3.4 million (from 3.0 million last month; it was a gain of +351k openings, to be precise). Consequently, the number of unemployed per job opening has declined from 6.25 (Oct. 2009,…Read More
I have been a fan of Felix Zulauf’s approach to investing for many years. The longstanding Barron’s roundtable member is a straight shooter, with a superlative track record. That was why I was thrilled to do an extensive interview with this Summer (Interview, Transcript). Felix is advising on a new fund (Disclosure: We are investors…Read More