Posts filed under “Data Analysis”

Soft Landing Continues to Fade

The market can stay irrational longer than you can stay solvent.
-John Maynard Keynes (1883 – 1946)


Yesterday, I received the following question: "Why aren’t you short yet?"

The short answer is, "No manager can afford to be too early on the short side. You can be long and wrong; you can even afford to be in cash and wrong; but short and wrong is fatal."

The more complete answer is simply this: The markets have been banking on a soft landing; As the recent economic data points have shown, this is an increasingly unlikely outcome. Consioder the following:

Durable Goods Orders: A key barometer of business CapEx equipment spending - decreased by 0.5% in August. Durables were downwardly revised to 2.7% in July. This confirms prior reports indicating slowing growth in the manufacturing sector. ISM index slipped 54.5,  in August from 54.7 in July. The Philly Fed reported a -0.4 reading of its business conditions index. Economists had expected 15.0;

Mortgage Apps  Despite rates sliding to multi month lows, mortgage apps were soft.

New Homes Sales: We looked at the New Home Sales data last year,
and found them unreliable — they are based on statements from
Builders; A more accurate basis is to use a moving average, and to
ignore wild swings beyond the margin of error.

Existing Homes Sales: Existing home sales, at 6 X the size of the new home sales, continue to slide as sales units slow, inventories rise and prices fall.

Consumer Revolving Debt: As HELOCs and Mortgage refis fade, we see revolving credit increase.  That’s right, the US consumer has maintained their consumption by taking on more debt;   

Business CapEx Spending:  See Durable Goods

The market’s short term technicals do support the run for the highs; We have an excessive short interest, as well as generally gloomy sentiment readings.

But that peak is unlikely to be very sustainable.

Durable-Goods Orders Declined Unexpectedly in August by 0.5%
WSJ, September 27, 2006 9:16 a.m.

Category: Data Analysis, Economy, Real Estate

Real Estate Sales Slump Generating Ugly Press

Category: Consumer Spending, Data Analysis, Economy, Real Estate, Retail

Internal Strength of Market

Category: Data Analysis, Economy, Investing, Markets, Technical Analysis

Breadth and Volume, improving but . . .

Category: Data Analysis, Markets, Trading

What is Wealth, part II

Yesterday’s NYT had an article about wealth that fell into several of the usual traps of this discussion. To his credit, David Leonhardt looked at a few aspects of the question. He did not manage to avoid two of the major traps when it comes to this discussion — the two sided nature of any…Read More

Category: Data Analysis, Economy, Psychology

The Illusory World of Economic Forecasting

Category: Data Analysis, Economy

What’s Really Propping Up The Economy?

Category: Data Analysis, Economy, Employment

Housing by the Numbers

Category: Data Analysis, Economy, Psychology, Real Estate

CPI & the Soft Landing

Category: Commodities, Data Analysis, Economy, Energy

A Closer Look at Housing “Deceleration”

Category: Data Analysis, Economy, Markets, Real Estate, Technical Analysis