Source: ESignal
Monday, April 27, 2009
Thursday, April 23, 2009
Market Notes as of close 23 Apr
Dollar open gap lower- Pullback to Demand- Consolidation- Value Area Lower
USO open and consolidation around settlement- Value Area Sideways
SPY/IWM open gap lower- "Buying Tail"/Rejection of Lower area- Consolidation @ previous Supply followed by liquidation in closing range- Value Area Higher
10Yr Bond PreMkt down auction- Continued down auction @ US open- Value Area Lower
Monday, April 20, 2009
Economic Week in Review 18 Apr
- Producer Price Index headline number for March fell largely due to a drop in energy prices. Food also declined. The core rate rose. Additionally, Consumer Price Index headline number also declined while the core number held steady.
- March retail sales dropped much more than expected. This drop occurred across the spectrum of consumer goods.
- Treasury International Capital (TIC) showed a significant improvement in net foreign purchases of long term US securities, most notably, from the US' two biggest debt holders, China and Japan. Foreign demand for treasuries, corporate bonds, and agency paper increased.
- Industrial Production declined much more than expected for March matching the February decline. This decline is due to a drop in demand in the US and the decline in oil and gas drilling profitability.
- Housing Starts for March surprised to the downside posting a significant decline. There continues to be an excess of unsold home supply.
- Jobless claims reflected a decline in initial claims although the results were significantly affected by adjustments.
- Consumer Sentiment rose reflecting some expectation by some consumers of a stabilization in economic conditions.
- Upcoming reports for Apr 20-24 include jobless claims, exisiting & new home sales, and durable goods
Thursday, April 16, 2009
Market Notes as of close 15 Apr
Dollar open gap above settlement- Pullback to breakout level- Consolidation- Value Area Higher
USO open consolidation @ settlement- Value Area Lower
SPY/IWM open within settlement- Failed breakdown attempt- Consolidation range rotation to the high (bullish)- Value Area Lower
10Yr Bond early consolidation- Shakeout of weak longs- Continuation within trend- Value Area Higher
Sunday, April 12, 2009
Market Notes as of close 10 Apr
Dollar open near settlement- up auction/breakout through consolidation range- consolidation above previous suppl- potential breakout- Value Area Higher
USO open gap above settlement- consolidation@/near supply (30.31)- Closing Range up auction settle @ high- Value Area Higher
SPY/IWM open gap to overhead supply- consolidation- closing range auction to highs- Value Area Higher
10Yr Bond down auction toward longer term demand (121)- Value Area Lower
Weekend News 11 Apr- Fighting Recklessness with Recklessness
John Hussman of Hussman Funds noted the following below in an excellent, recent market commentary:
click title for article
Saturday, April 11, 2009
Weekend News 11 Apr- Legerdemain, Sunshine, and Lollipops
Source: Unknown
The above graph is a little dose of reality that I thought telling during a week where Wells Fargo is trumpeting the wonders of their quarterly earnings and the Wall Street Cheerleaders bang on their "buy buy buy" drum. The graph was included in the excellent, weekly newsletter from John Mauldin. So, in the context of earnings seasons, let's remember a couple of key points. The earnings projections are based on operating earnings not as-reported earnings. In short, operating earnings are earnings before interest and negative stuff. As-reported earnings are the numbers actually reported for tax purposes. For some ridiculous reason, banks are projected to account for all the rebound in Q4.
As the graph above shows, mortgage resets have declined in 2009, but next comes the wave of so-called Alt-As and Option ARMs in 2010- 2011. Different surveys say different things, but it remains a fact that foreclosures will continue to increase which only dumps more supply onto a market all ready overwhelmed with supply and very few qualified buyers. How willing will the banks be to unload more inventory of homes as prices continue to decline? Delinquencies on home equity loans are on the rise, unemployment is likely to continue to rise, consumer and small business credit is being contracted and eliminated outright in some instances, and commercial mortgages are the next real killing field in the aftermath of this real estate bubble.
The 10 biggest banks in the US hold $327.6 Billion in commercial mortgages. Commercial property loans in default or foreclosure increased 43% in the Q1. Consumer spending as we have come to know it in recent years (fueled by borrowed money on unaffordable homes) is gone. American household debt remains near all-time highs. Savings rates are increasing and likely to continue to do so. That creates a problem for an economy whose GDP is based on 70% consumer spending. No consumer spending- no increasing corporate earnings- no matter what infrastructure schemes the Government concocts.
Now to the fun part- The largest tax increase in history in 2010 thanks to Obama and Congress and the continued devaluing of our purchasing power (the Dollar) by their unrelenting money printing.
Bloomberg noted this week that analysts overestimated bank profits for at least six consecutive quarters. So, I wonder where the proposed 74% increase in financial profits the analysts (other than Meredith Whitney) are calling for in Q4 will come from? Magic Beans??
Economic Week in Review 11 Apr
- A fairly light week in terms of economic releases due to the holiday and the beginning of US earnings season
- EIA Petroleum report another increase in crude inventory of 1.7 million barrels for the week. In spite of multi-year surplus levels, it was noted that gasoline prices are rising largely due to effect of the large surplus' effect on refinery activity (larger supply decreases refinery output) and in spite of short term strength in the Dollar.
- Bank of England (BOE) left key interest rate unchanged at .5%.
- The US trade deficit fell unexpectedly as a result from a steep decline in US import demand reflecting a significant decline in spending among US consumers and businesses.
- Jobless claims report reflected mixed results. The initial (new) claims declined but continuing claims rose to a record level.
- Treasury Budget reflected a much higher than expected deficit at 192.3 Billion for March. The deficit now stands at 956.8 Billion (double the deficit at this time last year) half way through the fiscal year. This is the evidence that the Government is convinced that the solution to a spending and debt crises is to SPEND MORE, PRINT MORE, and CREATE MORE DEBT.
- The upcoming week's economic calendar is quite active including key reports PPI, Retail Sales, CPI, TIC (Treasury International Capital), Industrial Production, Housing Market Index, Housing Starts, Jobless Claims, and Consumer Sentiment. China's Q1 economic growth data 16 April.
Thursday, April 9, 2009
Market Notes as of close 08 Apr
Dollar open and consolidation around settlement- a pullback to demand and buy response then occurred- Value Area Higher
USO open gap below settlement @/near 28- shakeout of weak longs on inventory news followed by uptrend- Consolidation above settlement- Value Area Higher
SPY/IWM open above settlement-pullback to settlement met with a consolidation and a buy response- Close near high in upper half of distribution (bullish)- Value Area Higher
10Yr Bond encounters a small uptrend- Value Area Higher
*Holiday shortened week with low volume- profiles to be posted after close today*
Tuesday, April 7, 2009
Market Notes as of close 06 Apr
Dollar open near settlement- up auction to consolidation range high- breakout w/pullback & consolidation- potential to fill up-gap overhead- Value Area Higher
USO gap lower beneath consolidation range low- uptick to settlement met w/sell response- potential to fill down gap below- Value Area Lower
SPY/IWM gap below settlement- consolidation in lower portion of consolidation range- potential breakdown- Value Area Lower
10Yr Bond down auction to previous demand near 121- Value Area Lower
tech issue with text on this entry
Sunday, April 5, 2009
Market Notes as of close 03 Apr
Dollar consolidation and Value developed under gap lower- Closing Range and Settlement in lower half of distribution (bearish)- Value Area Sideways
USO consolidation and Value developed above gap- Closing Range and Settlement in upper half of distribution (bullish)- upside breakout/range extension potential- Value Area Higher
SPY/IWM consolidation and low volume Friday- Closing Range and Settlement into the high- Value Area Sideways
10Yr Bond down auction to demand- development of 121-126 range- Value Area Lower
*Earnings Season begins Tuesday- According to Bespoke Investment Group, since mid 2001,
SP 500 performance during earnings season is a cumulative -26.66% while SP 500 performance during non-earnings periods is a cumulative 2.87%. Statistically, those who are buying in the coming weeks are at best late to the party in all probability*
Friday, April 3, 2009
Weekend News 04 Apr- Fiat Money and Hyper Inflation
Hungary 1946- Postwar Hyperinflation-
Banknotes worthless (unless you might want to use them in the bathroom)
Bill Fleckenstein in his weekly MSN Money column on 23 March posted the following comment:
"In a social democracy with a fiat currency, all roads lead to inflation. Many people have been confused because they thought that it meant every negative outcome would lead to inflation directly, but that isn't the case. It's the response to the problems that leads to the inflation (and currency debasement). We are attempting to print our way to prosperity. That can't be done any more than we could speculate our way to prosperity during the stock bubble or borrow our way to prosperity in the real-estate/credit bubble. Got gold?"
click title for excellent article from Thorsten Polleit and Mises Institute on hyperinflation
Economic Week in Review 04 Apr
- Case-Schiller Home Price Index data showed steepening rates of contraction this week both in the short term and year-on-year basis. Housing prices are still declining.
- Consumer Confidence stabilized at the bottom but indicated that future buying plans are eroding further. There was easing in the pessimism over the future in the jobs market.
- ISM Manufacturing Index shows that new orders for durable goods improved. This data will build speculation that the worst of the recession may have all ready occurred or be occurring.
- EIA Petroleum report showed another rise in crude oil stock of 2.8 million barrels. Inventories are now at 3 year highs and on the demand side gasoline demand appears to be declining. Demand for energy remains weak.
- The European Central Bank cut its key interest rate by 25 basis points to 1.25% which was less than the consensus 50 basis points expectation. No new nonstandard monetary policy was announced.
- Jobless Claims reflected the largest losses yet in March. Both first time and continuing claims moved up sharply higher.
- Friday's Employment situation report reflected widespread job losses in March while February numbers remained unrevised and January revision showed an increase in job losses.
- The unemployment rate is currently the highest since November 1983. Job losses have remained over 600,000 for the last four consecutive months. So, no jobs- no income- no spending, where do the corporate earnings for the S&P come from to drive equities higher?? For better or worse, 70% of our GDP is based on consumer spending.
*Earnings Season begins Tuesday with Alcoa earnings. Bespoke Investment Group notes that since mid 2001, SP 500 performance during earnings season is a cumulative -26.66% while SP 500 performance during non-earnings season is a cumulative 2.87%*
Thursday, April 2, 2009
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