Posts filed under “Think Tank”

morning note/As Axl Rose sang, Where do we go now?

As we begin a new month with
the S&P’s sitting 31% off its lows, here’s a quick view of the factors that
got us here to help give us clues about where we’re going. Slowing
deterioration in economic activity, with a modest bounceback in consumer
spending and a huge drawdown in inventories giving hope of a subsequent build, was the main catalyst for the rally with the capital market activity and
mortgage business boost to Q1 bank earnings also helping. Too, signs of life in China
helped the Asian region and those who export there and helped to create a healthy bid to commodities. But, what got us into this mess were falling home prices, delinquencies and the subsequent massive consumer deleveraging that may have changed the contribution of the US consumer to economic growth for many years to come. These big picture issues have shown no signs of reversing as the US savings rate is still less than half previous highs, household debt to income is near record highs and home inventories are still almost twice the historical average with home prices still falling. Thus, on pure fundamentals, we’ve seen a bear market suckers rally in banks and consumer discretionary IMO.

BUT, with my Cubs analogy of a few weeks ago, excess Fed money printing can
result in further nominal gains giving the appearance of health but at the cost
of inflation, therefore hard assets like commodities and anything dependent on them have seen their lows.

Category: MacroNotes

King Report: A New Bull ?

> Coming in Monday’s missive – Is this a new bull market? If so, or not, what is the evidence? Stay tuned. Same Bat-time, same Bat-channel. Is the recession ending? Looking at Continuing Jobless Claims, which hit a new record this week, (data series commenced in 1967) there is no sign of stabilization. In the…Read More

Category: Think Tank

Breakout Fails to Achieve Escape Velocity

Good Evening: After blasting off and reaching breakout altitudes this morning, U.S. stocks fell back to earth in the afternoon. That most of the major averages finished Thursday just about where Wednesday left off could easily be attributed to noise and random motion. But before we dismiss today’s action with a casual shrug, it may…Read More

Category: Markets, Think Tank

Chicago PMI

Joining the less bad party that other regional surveys have experienced, the April Chicago PMI was 5 pts better than expected at 40.1, up from 31.4 in March, which was the worst since 1980. 50 is the breakeven between expansion and contraction so we are still clearly in recession territory but the slowing pace of…Read More

Category: MacroNotes

Sell in May and go away: fact or fallacy?

Sell in May and go away: fact or fallacy? Where is the stock market heading? Has the rally that started in early March been exhausted? These are the key questions on all investors’ minds as financial markets remain caught between the frantic actions of central banks to get the cogs of the credit system and…Read More

Category: Technical Analysis, Think Tank

morning note/green shoots vs higher interest rates

Asian stocks powered higher overnight, especially in Taiwan which rose almost 7% after their govt said they will allow China to invest in their mfr’g co’s. Japan rose about 4% after March IP rose twice what was expected. The rally spilled over into Europe after some good earnings reports and UK consumer confidence rose to…Read More

Category: MacroNotes

Breakout?

Good Evening: U.S. stocks broke out of their mid April doldrums with authority today. With almost every major average setting post-March 6 highs, many investors are hoping this move signals stocks are trying to break out to the upside. The reasons behind today’s leap in equities are numerous enough to change the format of tonight’s…Read More

Category: Markets, Think Tank

FOMC/Battle Royale

With respect to quantitative easing, the FOMC decided to sit on their hands and let the purchase plan of $1.25 trillion MBS, agency debt of $200b and longer term treasuries of $300b stand as is and will continue the programs over the next few months. As a result, bond yields have busted out to the…Read More

Category: MacroNotes

7 year auction

After a 16 year lull, the Treasury auctioned off its 3rd 7 year note auction of the year, a total of $26b, $2b higher than March and $4b above Feb. With only two auctions to compare today’s to, the auction was ordinary as the yield was a touch above expectations, the bid to cover at…Read More

Category: MacroNotes

Speeches & Testimony Remarks by FDIC Chairman Sheila Bair to The Economic Club of New York; New York, New York April 27, 2009 Good afternoon everybody. I’m honored to be here this afternoon. I’m told it’s the first time in your distinguished, 102-year history that you’ve invited an FDIC chairman to speak. You’ve had presidents,…Read More

Category: Regulation, Think Tank