Posts filed under “Think Tank”

China, China, China

Six months after China became the 3rd biggest economy in the world (and now the most important country in the world right now IMO), trading in Yuan continues to grow and it has major implications for the US$ looking out long term but the process will be slow and steady rather than anything abrupt. Today Hong Kong and China announced an agreement to settle trade between the two in Yuan in transactions beginning in July. A PBOC Governor said China’s FX reserve policy is “always quite stable,” implying that the US$ will still remain the reserve currency for a while but the Yuan will grow in stature. Chinese stocks rose to a one year high for a 4th day ahead of two key manufacturing PMI #’s tomorrow. Copper is at a two week high. Euro region economic confidence rose to the highest since Nov coming in two points more than expected. Weak economic data weighed on Japan. US Payrolls on Thursday cap a busy week for economic data beginning tomorrow.

Peter Boockvar

Managing Director

Equity Strategist

Miller Tabak + Co.

Office: 212-370-0346

Category: MacroNotes

Words from the (investment) Wise June 28, 2009

Words from the (investment) wise for the week that was (June 22 – 28, 2009)

“Words from the Wise” this week comes to you in a shortened format as I do not have access to my normal research resources while on the road in Europe (also see my post “Gone A.W.O.L. – to Slovenia and Switzerland“). Although very little commentary is provided, a full dose of excerpts from interesting news items and quotes from market commentators is included.

While investors’ hopes of an economic recovery might have got ahead of reality, the cartoonists continually reminded us of worrisome issues …

28-06-09-01

Source: Signe Wilkinson, Philadelphia Daily News, dist. by The Washington Post Writers Group
The past week’s performance of the major asset classes is summarized by the chart below – a mixed bag so to speak.

28-06-09-02

Source: StockCharts.com

A summary of the movements of major stock markets for the past week, as well as various other measurement periods, is given below. Although many indices saw little change, some short-term swings occurred in between.

Click here or on the table below for a larger image.

28-06-09-03

Stock market returns for the week ranged from top performers Côte d’Ivoire (+7.5%), Hong Kong (+3.8%), Taiwan (+3.5%), Argentina (+3.3%) and Bangladesh (+3.0%), to Ghana (-12.7%), Egypt (-11.1%), Nigeria (-10.7%), Cyprus (-6.6%) and the United Arab Emirates (-6.1%) at the other end of the scale. (Click here to access a complete list of global stock market movements, as supplied by Emerginvest.)

John Nyaradi (Wall Street Sector Selector) reports that as far as exchange-traded funds (ETFs) are concerned, the leaders for the week included iShares MSCI Taiwan Index (EWT) (+6.6%), Market Vectors Gold Miners (GDX) (+5.9%) and iShares MSCI Hong Kong (EWH) (+4.4%). On the other side of the performance spectrum, laggards were centered in the energy sector, including United States Gasoline (UGA) (-5.9%) and iShares Dow Jones US Oil and Gas Exploration (IEO) (-5.2%).

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Category: Think Tank

The End of the Recession?

The End of the Recession? June 26, 2009
By John Mauldin

The End of the Recession?

The New Normal Is Still In Our Future

The Hidden Problem Within Unemployment Data

Was Income Really Up?

Tulsa, London, and The Baltics

Last week we began a series on data abuse, about how various commentators twist and torture data to make it say what they want, or fail to look at the details underneath the headlines. Predictably, there is a lot of fodder this week as we forge ahead into this ripe territory. The headlines screamed that US income data went up unexpectedly. Green shoots were everywhere. But if you look at the actual data, you find something much different. And, I keep hearing the insistent refrain that the market is telling us that the recovery is around the corner. Well, the recovery may be, but can the market really tell us that? I have about 25 windows open in my computer, with tons of misleading data. Let’s see how much we can cover in this week’s letter.

But first, I want to focus your quick attention on a new “Conversation” I will have next Monday. (For those readers who are new, I have a subscription service where I hold conversations with friends on a variety of current topics. I am gratified that it’s getting rave reviews.)

I have been writing about the New Normal of late, and for my next Conversation I have invited two of the sharpest analysts I know to talk about what the New Normal will look like.What levels do we get to? What does the world economy look like? What will the path to recovery look like? And so on! David Rosenberg, former chief economist for Merrill Lynch, one of the few mainstream analysts who got it
right (now with Gluskin Sheff in Toronto) and the brilliant Michael Lewitt of Harch Capital  Management, someone who was writing about the credit crisis long before it happened, are both deep thinkers, and both have strong ideas about how our future will unfold. I can’t wait to get them at the same table and see if we can flesh out a few concrete ideas.

And if you subscribe today, you also can get the recently released and widely praised Conversation I did with Donald Coxe and Gary Shilling on commodities and where those markets are going. That ended up as a very powerful debate, and one from which listeners said they really came away with meaty ideas.

You can subscribe now at $109 (using code JM70), before we raise the price when we add a new quarterly Conversation service with good friend and head of Stratfor, George Friedman. He gets back from Australia this week, and we will schedule a meeting soon!

And now to funny-looking data.

Where to begin? There are so many targets of opportunity!

The End of the Recession?

I walked into the office yesterday evening and there was someone on CNBC talking about how the 50-day moving average of the S&P 500 rising above the 200-day moving average was telling us the market was getting ready to rise and the recovery had started. I listened to his babbling for another 2-3 minutes and couldn’t take it anymore (and no, it was not my friend Larry Kudlow, who is a lot more balanced than whoever was on.)

We keep getting told that the market is telling us “something,” usually that the recession is going to end. For some reason, people keep repeating the bromide that the market looks out about 6 months. To that I politely say, rubbish.

Riddle me this, Batman. Did the market see the recession in October of 2007? We were already in recession and the S&P 500 (see below) was making new highs! Where was the market prescience? Did it see the 25%+ drop in January of this year? And I could go back and cite scores of examples where the market “missed” the future turning points over the past ten decades.

What about the shibboleth that the market turns up 6 months before the end of a recession? Sometimes that is true. But does it mean anything? The same people who said it meant something last December and January are saying it means something now. But now it’s June and the recovery is not here, so maybe the market wasn’t telling us something in January after all.

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Category: Economy, Think Tank

Volume

Consolidated volume of NYSE stocks is on track to be the slowest since Jan 2nd. With the completion of the Russell rebalancing by days end, volume will likely get a late day lift but Friday in the summer is clearly here and also coincides with another drop in the VIX to the lowest since Sept…Read More

Category: MacroNotes

King Report: Monster Q2 Russell Rebalancing

> Despite an unexpected increase in both Initial Jobless Claims and Continuing Claims stocks, bonds and commodities soared on Thursday…Please note that Street shills and their fin media accomplices tout a single decline in either jobless claim component as a sign that the bottom is in and recovery has commenced. But when jobless claims decline,…Read More

Category: Bailouts, Federal Reserve, Think Tank

Inflation expectations

While the CRB index is flat on the week, the implied inflation rate in the 10 yr TIPS has fallen 22 bps this week to 1.71%, the lowest since May 20th. It also coincides with the conventional 10 yr bond yield falling to the lowest since May 25th on the heels of the three solid…Read More

Category: MacroNotes

U of Michigan confidence

The final June UoM confidence # rose to 70.8 from the initial reading and forecast of 69 and up from 68.7 in May. It is now at the highest level since Feb ’08 but the gain from the preliminary # was all in the Outlook component which rose to 69.2 from 65.4 (preliminary June #)…Read More

Category: MacroNotes

Income/Spending/Savings Rate

May Personal Income rose 1.4%, well above expectations of a .3% gain and April was revised up by .2% with the influence being “the increased government social benefit payments associated with the” stimulus plan. Disposable income as a result rose 1.6% BUT ex these special factors, disposable income rose just .2% as wages and salary’s…Read More

Category: MacroNotes

Bernanke Dodges Bullet; Markets Celebrate

Good Evening: As Thursday dawned, market participants were a little on edge. Yesterday’s FOMC statement was found a bit wanting by most investors, leaving them concerned about not only the Fed’s exit strategy from Quantitative Easing but also Chairman Bernanke’s exit strategy for a successful escape during today’s Congressional hearings on the BAC-MER deal. Those…Read More

Category: Markets, Think Tank

7 yr note auction

The $27b 7 yr note auction and last of the week was solid (as were the prior two this week) as the yield was about 1-2 bps below where the when issued was priced right before and the bid to cover of 2.82 was the highest since they were reintroduced in Feb and above the…Read More

Category: MacroNotes