Economic Data Points
1. From the American Association of Railroad's weekly report on rail traffic: Lumber shipments were up by 19.8% vs. the same week last year (+12.2% YTD), petroleum products by 44.4% (+40.2% YTD), and motor vehicles and equipment by 19.2% (+21.4%). Conclusion: Housing, oil, and cars are booming.
2. Mortgage rates are starting to head up, they increased for the third straight week to the highest levels since early July (3.62% for the 30-year fixed rate and 2.88% for the 15-year). The 10-year treasury yield is the highest since May at 1.80%.
3. From yesterday's CPI report: Natural gas prices have fallen by 12.7% over the last year, saving consumers millions, if not billions, of dollars.
4. From today's Census report on construction: Building permits increased in July by 29.5% compared to a year ago, reaching the highest level since August 2008, almost four years ago.
5. The Bloomberg U.S. Financial Conditions Index is at the highest level in more than a year.
6. The S&P Volatility Index ("fear index") was at the lowest level this week since July 2007, more than five years ago.
62 Comments:
1. From the American Association of Railroad's weekly report on rail traffic: Lumber shipments were up by 19.8% vs. the same week last year (+12.2% YTD), petroleum products by 44.4% (+40.2% YTD), and motor vehicles and equipment by 19.2% (+21.4%). Conclusion: Housing, oil, and cars are booming.
Sorry but I have learned to be skeptical of most of the data that is being reported. For example, the Not Seasonally Adjusted retail sales data in July showed a declined by 0.9% but after adjustments we got a surprise that drove the market and the dollar higher for the day. The problem is that the typical adjustment subtracts from the NSA number but for the first time ever the 2012 seasonal adjustment added a pretty large number to the actual sales data.
2. Mortgage rates are starting to head up, they increased for the third straight week to the highest levels since early July (3.62% for the 30-year fixed rate and 2.88% for the 15-year). The 10-year treasury yield is the highest since May at 1.80%.
These seem to be problems for the housing and bond markets. The main reason why hosing has stopped collapsing are low interest, little money down loans. And if the bond yields decline the debt servicing costs explode and the US gets to be Greece a few months sooner than expected.
3. From yesterday's CPI report: Natural gas prices have fallen by 12.7% over the last year, saving consumers millions, if not billions, of dollars.
But from other reports we find the number of gas rigs going down, write-offs of shale assets by producing companies, and a lot of negative cash flow as producers destroy capital by selling below the cost of production.
4. From today's Census report on construction: Building permits increased in July by 29.5% compared to a year ago, reaching the highest level since August 2008, almost four years ago.
So? The employment picture is still bleak, many people are sitting in homes that are worth less than their mortgages, and possible headwinds include a rising interest rate and/or a weak economy. With more and more banks getting out of the building loan business the smaller players are likely to be driven out of business. While this may be good for cash rich larger builders it is not very good for the near term prospects of the industry.
6. The S&P Volatility Index ("fear index") was at the lowest level this week since July 2007, more than five years ago.
That means complacency and a possible signal for trouble.
Why the Fed is "fighting inflation" when inflation is dead is beyond understanding.
The bank of Japan has been fighting inflation for 20 years, and they won too. Only the economy lost.
The long-term chart of the S&P 500 shows a spectacular bull market from 1982-00:
http://stockcharts.com/freecharts/historical/spx1960.html
Since 2000, the market has generally been flat, although there were two cyclical bull markets, within the structural bear market.
The chart also shows a structural bear market from 1965-82.
We're likely near the end of the current cyclical bull market (perhaps, a bearish head & shoulders pattern).
It's uncertain how high and when the market will top, in part, because many investors re-positioned their portfolios, over the past few months, in anticipation of a market crash.
However, it's possible, there will be a huge sell-off in Sep and Oct, and perhaps the end of the cyclical bull market.
The 1982-00 bull market was driven, in part, by the emergence of new firms, in the Information Revolution, and technology spreading throughout the economy, including into old industries, which helped facilitate revenue and profit growth.
The building permits is a good sign for the economy.
Housing permits leads housing construction. If permits are rising, it suggests housing construction will rise as well. Housing construction leads the economy (plus, the economy has never entered a recession with housing construction rising). Since housing construction is rising, it suggests the economy will continue to improve. Based on the historical relationship between housing construction and the overall economy, this is confirming what the other leading indicators are suggesting: ongoing improvement in the US economy through at least the end of 2012.
PeakTrader said...
We're likely near the end of the current cyclical bull market (perhaps, a bearish head & shoulders pattern).
It's uncertain how high and when the market will top, in part, because many investors re-positioned their portfolios, over the past few months, in anticipation of a market crash.
However, it's possible, there will be a huge sell-off in Sep and Oct, and perhaps the end of the cyclical bull market.
Thank God for people like Peak so that people who understand the markets can take the other side of the trade. My only hope is that Peak doesn't manage other people's money as well.....that would be a shame.
Peak, let me ask you a question, if as you say, many investors have re-positioned thier portfolios for a market crash, who is left to actually sell stocks so that the market crashes in sept.-oct.?
For example, the Not Seasonally Adjusted retail sales data in July showed a declined by 0.9%
Retail Sales typically decline in July from June. In fact, this 0.9% is just about historically normal.
Using the NSA data, and smoothing it using a 12MMT, we see that consumer spending (excl autos and gasoline) is tied with the November 2007 pre-recession peak.
Also using NSA data, we see that July 2012 is 1.8% above July 2011. Quarterly Sales are 2.6% above last year. Annual Sales are 2.5% above last year. Furthermore, these rates of growth are rising.
Not really sure what you are seeing as bad news in this data here.
The AAR data are measured in carloads of oil, lumber, cars, etc. and are not seasonally adjusted. The weekly traffic volumes are compared to the same week a year earlier, and the YTD measures are compared to the previous year.
I forgot to mention one obvious point. If shipping up and down the Mississippi is becoming a problem due to lower water levels I would expect that the railways will see increased shipments. As I have written many times, the data is very noisy and adjusted so much that it is hard to see what is going on in the general economy. Cherry picking certain series only serves to advance a narrative, not to uncover the truth.
Last 6 months YoY NSA retail sales, less CPI... the trend is pretty clear.
6.64%
3.61%
1.34%
5.35%
1.63%
2.00%
the trend is pretty clear
I must respectively disagree, Bart my friend. I'm not sure the trend is that clear.
The range in this period is from 6.6% to 1.3%. Average growth is 3.1% (give or take, I'm eyeballing it here). It just seems this is volatile, that's all. Hard to look at this data and say a clear trend is emerging. Considering the volatility of the data in this short data period, I'd say the only thing that is clear is growth is continuing, but its rate is unclear.
Volatility is my main problem with comparing the current year over the year-ago level. It's hard to say "yes, this trend is clear." That's all I am saying.
This is the chart of the S&P over the last few months. This shows a series of higher highs and higher lows. That is a condition of strength, not weakness. If what Peak said was true that "many investors re-positioned their portfolios, over the past few months, in anticipation of a market crash" then this graph would show weakness over the past few months.
In fact, volume has been extremely light over the last few months and we have had a stealth bull market, which indicates that there have been relatively few sellers.
http://stockcharts.com/h-sc/ui
Jon Murphy said...
I must respectively disagree, Bart my friend. I'm not sure the trend is that clear.
Different strokes for different folks, as my granpappy used to say.
1. From the American Association of Railroad's weekly report on rail traffic: Lumber shipments were up by 19.8% vs. the same week last year (+12.2% YTD), petroleum products by 44.4% (+40.2% YTD), and motor vehicles and equipment by 19.2% (+21.4%). Conclusion: Housing, oil, and cars are booming.
We ought to see another mostly false jump in rail soon, due to the barge traffic issues on the Mississippi.
My tracking of AAR shows total rail traffic as of the most recent week isn't even up 1% over the prior year.
Retail Sales typically decline in July from June. In fact, this 0.9% is just about historically normal.
The adjustment to 2011 has always been negative. This time around the retail numbers were adjusted upwards.
It seems to me that when the government does something to the data for the first time you can point to political goals rather than reality as the cause.
Not really sure what you are seeing as bad news in this data here.
Sales went down but were adjusted up. All previous periods sales were adjusted downwards because the summer period is usually better for retailers. I do not see a 'negative' here. I simply do not see the 'positive' that is being spun by the Wall Street promoters and by the government. Frankly, one or two data points do not get me excited one way or another, particularly when the data is not very accurate and heavily massaged to begin with. I do note that a 40% decline in sales taxes from the same month last year that was reported by California seems to be trouble but as I have noted, the inaccurate data may be revised.
What I look at is the general economic and political environment. If we look around we see record low rates being set by the Fed, loan guarantees for low downpayment home purchases, continued bailouts of the banking sector, growing unfunded liabilities, ongoing budget deficits, and uncertainty in the regulatory and tax environment. Yet, employment numbers are still terrible, the saving rate is low, and capital formation is negative. Romney is just as bad as Obama and neither candidate plans to cut spending at the federal level.
So you will excuse me if I don't believe the good news that you imagine seeing. We live in a world dominated by Keynesians and the Chicago School neo-Keynesians. It is one in which government meddles in every aspect of your economic life and in which the central planners have no more answers than the Soviet planners did. But in one respect things are worse. At least the Soviet planners had relatively free market prices coming from the market economies to use as reference points for their plans. We now live in a world where there is no reference market price because the central banks have conspired to manipulate sovereign bond markets and the currency exchange rates for quite some time. You may not see the problem yet and could be fooled again by nominal price increases driven by more liquidity injections by a desperate Fed. At best that only kicks the can down the road until after the election. At worst that is the catalyst that destroys the bond market.
The railroads aren't lying about lumber. If you doubt the railroad data, you can check lumber prices to verify it. CME lumber prices have gone over $300 in the past week, which is the first time since the spring of 2006, barring a very brief period during the spring of 2010 when the first time home buyer tax credit was in place.
BTW, rail shipments, especially intermodal, have NOTHING to do with water levels on the Missippippi. There is little to no intermodal traffic which normally gets transported on the Mississippi. Most intermodal traffic consists of east-west routes running from west and east coast ports to various points inland. The doom-and-gloom crowd's mere mention of this is pretty much proof they're desperately looking for a way to negatively spin any good economic data point.
Unknown said...
BTW, rail shipments, especially intermodal, have NOTHING to do with water levels on the Missippippi.
Pretty funny, especially about the misdirection towards intermodal... love the spin, and the obvious lack of knowledge.
Unknown said...
The railroads aren't lying about lumber.
Another fail. Lumber is a small percentage of total rail traffic.
The fact, which you so obviously and assiduously have avoided, is that my tracking of AAR shows total rail traffic as of the most recent week isn't even up 1% over the prior year.
I was referring to this:
"Lumber shipments were up by 19.8% vs. the same week last year (+12.2% YTD)"
As I said, the rail data vis-a-vis lumber are not lying. Both the rail data AND lumber spot prices are telling you lumber demand is going up.
As for the intermodal, carload-only traffic includes a lot of coal, grains and other commodities which have little to do with the state of the economy. Yes, some of those are transported on the Mississippi, and perhaps there's been some transfer of those to rail. So ignore carloads, and focus on intermodal, which tells you more about the state of the economy anyway. The intermodal data is up 3.6% y-o-y as of last week.
Of course intermodal is up on a relative basis - it's substantially cheaper.
Lumber is well under 7% of total rail traffic.
"n the U.S., 60 percent of grain, 22 percent of oil and natural gas and 20 percent of coal travels down the river. If the Mississippi River is closed to water traffic, these goods will need to be transported by truck or train – costing the U.S. an additional $300 million per day." (HT RW)
AAR shows total rail traffic as of the most recent week isn't even up 1% over the prior year.
The last 10 weeks isn't even up 2%, and the trends are down.
You just proved my point:
"In the U.S., 60 percent of grain, 22 percent of oil and natural gas and 20 percent of coal travels down the river."
Grain shipments have more to do with the weather and crop conditions as they do with economic conditions.
Coal shipments have more to do with the weather and/or natural gas substitution than they do with economic conditions.
Very little natural gas gets transported via water. Which leaves you with oil ... which is up 44.4% y-o-y as of last week. But that has more to do with increased domestic production than anything else.
So, pretty much nothing in that list tells you anything about economic conditions.
So to repeat, we're left with intermodal, which is up 3.6% as of last week. There could be some substitution of trucking to rail, but even truck freight volumes were up as of June and was up 3.2% y-o-y. So BOTH methods of transporting container cargo are up y-o-y by similar rates.
You lose.
The reason that carload shipments are down this year by -2.4% YTD reflects a -10.8% decline in grain (possibly drought related) and a -9.4% decline in coal YTD.
But that 9.4% decline in coal shipments is significant because last year coal was 44% of ALL carloads, and this year it's down to 41%.
If you take out coal and grain, carload shipments are up by +5.2% this year.
And my main points still stand:
1) Oil shipments are WAY up.
2) Lumber shipments are WAY up.
3) Vehicle shipments are WAY up.
Economic activity in those areas (oil, housing and cars) is MUCH higher this year than last year, based on rail shipments of those inputs (oil and lumber) and finished goods (cars).
The doom-and-gloom crowd is always desperately looking for a way to negatively spin any good economic data point.
I'm constantly fascinated by the psychology of committed pessimists, who seem addicted/committed to negative news, gloom and doom, and general pessimism about the economy, and possibly life in general? I wonder if this is even some kind of irrational, psychological disorder/addiction? Somebody has even refered to this as "pessimism porn," because of the apparent addictive nature of a gloom and doom outlook on life.
I somehow can't imagine that hard-core pessimists can ever really be happy or experience any joy in living, when they are obsessed with negativism, nit-picking and naysaying about the economy, and exhibit such an intolerance/resistance to anything positive or upbeat about the economy, and possibly life in general.
Further, what motivates a committed gloom and doom pessimist to spend hours daily in the comments section of a blog that emphasizes the positive, upbeat news to counteract the negative-slant of the mainstream media?
I can understand being a negative, gloom and doomer, but it would make more sense to lurk in the comment section of a negative-spin blog along with other pessimists, than to spend so much time in the comments section of a positive-spin blog??
Maybe that's part of the psychological disorder and addictive nature of a pessimist, that they only somehow feel "alive" when they are battling optimism/life?
"I'm constantly fascinated by the psychology of committed pessimists, who seem addicted/committed to negative news, gloom and doom, and general pessimism about the economy, and possibly life in general? I wonder if this is even some kind of irrational, psychological disorder/addiction?"
I've often thought the same thing. In my (quite extensive) experience debating gloom-and-doom types, I've learned there's usually some dominant paradigm in society they loathe, and they want nothing more than to see this paradigm collapse, even if it means large-scale suffering. It's typically an ideological thing. For example, a lot of the gloom-and-doom types these days come from Austrian economic believers or libertarians who simply cannot believe an economy could do even merely halfway decent with a dovish Fed and a Keynesian in the White House. They loathe the ideology in power so much, they're just *dying* for anything to bring it down. When some data comes by which seems to indicate the economy is at least shrugging off this ideology, they refuse to believe it. They would prefer the economy collapse and people suffer under this ideology, than to see the economy even merely muddle through and get by under this ideology. They're expecting and hoping for a collapse to vindicate their ideological bent, and when that collapse fails to occur when they thought it would, they just kick their can down the road and postpone the prediction for some other time in the future. Hyperinflation predictions are a great recent example of this.
Another category I've debated are the ones who hate modern civilization. They simply want and expect the whole paradigm of technological progress to come tumbling down. This is the most common form of doomerism you get in the peak oil crowd.
As for the debating-the-opponents aspect, that's one area I've done myself a lot. I don't think it's some sort of disorder - it's just more fun! Mutual admiration societies, while pleasant, can get boring. Personally, I derive a lot of satisfaction seeing the people who are waiting and hoping for bad things to happen get discouraged and frustrated when those bad things fail to happen. And I'm more than happy to be the first one to tell them their predictions of gloom-and-doom aren't occurring as they predicted. I actually think these people are borderline evil - anyone wishing bad things to happen is basically an evil person.
Unknown, thanks for those insightful comments, very interesting perspective.
"I'm constantly fascinated by the psychology of committed optimists, who seem addicted/committed to positive news, wonders and fabulousness and propaganda, and general optimism about the economy, and possibly life in general? I wonder if this is even some kind of irrational, psychological disorder/addiction?"
Corrected that for you, no thanks necessary.
Thanks for inadvertently (and again) proving my point about rail vs. river.
I doubt you7'll ever get it due to your insistence seeing everything as a Pollyana but:
AAR shows total rail traffic as of the most recent week isn't even up 1% over the prior year.
The last 10 weeks isn't even up 2%, and the trends are down.
"Thanks for inadvertently (and again) proving my point about rail vs. river."
In typical gloom-and-doomer fashion, I completely demolished your point, and yet somehow, you force yourself to completely miss it.
Mark J. Perry said...
The doom-and-gloom crowd is always desperately looking for a way to negatively spin any good economic data point.
I somehow can't imagine that hard-core pessimists can ever really be happy or experience any joy in living, when they are obsessed with negativism, nit-picking and naysaying about the economy, and exhibit such an intolerance/resistance to anything positive or upbeat about the economy, and possibly life in general.
You said it correctly - you can't imagine it. Your "ideology", for lack of a better word, does not allow you to see it.
Mostly I'm quite happy and have led a mostly happy life. Whether anyone believes it or not is not an issue or problem for me.
I receive emails every week thanking me greatly for having a site where facts are as clear as I can make them, and that have saved their rear ends from huge losses, and helped them understand what has really been going on.
The life satisfaction from those emails is almost literally unmeasurable.
I'm constantly fascinated by the psychology of committed pessimists, who seem addicted/committed to negative news, gloom and doom, and general pessimism about the economy, and possibly life in general? I wonder if this is even some kind of irrational, psychological disorder/addiction? Somebody has even refered to this as "pessimism porn," because of the apparent addictive nature of a gloom and doom outlook on life.
Further, what motivates a committed gloom and doom pessimist to spend hours daily in the comments section of a blog that emphasizes the positive, upbeat news to counteract the negative-slant of the mainstream media?
One of the purposes is to offset those who see optimism in virtually everything, when actual facts and conditions don't support it... the gigantic recent examples being the huge messes in the dot com bust, the housing bust, the world wide financial crisis, etc etc etc.
Most people got badly hurt by one or more of them due to very poor work on the part of the always optimistic or those with vested interests, etc. Vsted interests, poor education, "bad" ideoologies which don't reflect actual life etc. do actually exist.
Instead of being in relative Pollyanna mode, they could have looked and seen what other saw and perhaps saved much pain for many.
"I'm constantly fascinated by the psychology of committed optimists, who seem addicted/committed to positive news, wonders and fabulousness and propaganda, and general optimism about the economy, and possibly life in general? I wonder if this is even some kind of irrational, psychological disorder/addiction?"
Unlike you, optimists want good things to happen, on any terms, even ones they might not be fond of. People like you, on the other hand, refuse to believe anything good can happen, or is happening. You'd rather see people suffer, because it fulfills your ideological (pschological?) bent.
Even if the optimists are wrong, at least they aren't routing for bad things to occur. The same can't be said of the gloom-and-doom crowd.
In typical Pollyanna fashion, I completely demolished your point, and yet somehow, you force yourself to completely miss it.
AAR shows total rail traffic as of the most recent week isn't even up 1% over the prior year.
The last 10 weeks isn't even up 2%, and the trends are down.
LOL
"In typical Pollyanna fashion, I completely demolished your point"
No, you didn't. You included several categories of railroad loadings which say little or nothing about underlying economic conditions. It's convenient of you to claim the economy isn't getting better by including data which say little or nothing about the state of the economy. When I point out to you that these categories say little or nothing about underlying economic conditions, I demolished your central argument. But of course you simply ignore that and continue to repeat your erroneous claim.
As usual Unk, you have no clue of what my full range of opinions and knowledge of facts are and, even worse, haven't even read (or acknowledged) the many posts where I've expressed my sadness about what's ahead and hope that it doesn't happen.
Unlike you, I aim for being a realist, not an ostrich.
On the other side, you're completely and 100% predictable and can't possibly even grant the possibility of things not turning out as rosy as you "believe", and are very very likely amongst the huge majority who got screwed by dot com or the housing bust or the financial crises, etc. Perhaps all of the above.
You can't even acknowledge the actual facts about the AAR being down YoY - and it's so obvious to so many how you demolish yourself by ignoring the actual reality.
You have a major and serious problem seeing and recognizing reality, as proven by your whiny (proven wrong) assertions about how wonderful it all is. That is very dangerous to your health, wealth (if you have any). etc.
Now you can spin and spew some more about how you demolished me, when in truth, you've done it to yourself - again and as usual.
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See my new post. The only reason carloads are down YTD is the drop in coal shipments. Ex-coal rail traffic is up by 3% YTD.
"You can't even acknowledge the actual facts about the AAR being down YoY"
Still avoiding the point. Gee, I wonder why?
"Intermodal up 3.6% y-o-y."
This is the data point which is easily the most important, and is completely being ignored by you. So predictable, and proof that you aren't interested in good news.
"You can't even acknowledge the actual facts about the AAR being down YoY"
Still avoiding the point. Gee, I wonder why?
LOLOLOLOL!!!
AAR shows total rail traffic as of the most recent week isn't even up 1% over the prior year.
The last 10 weeks isn't even up 2%, and the trends are down.
The simple, unadorned and unspun facts... which are still "Unknown".
ROFL...
It's not convenient for you to acknowledge that intermodal is the best indicator of the underlying state of the economy, so you ignore it.
ooops Unk... forgot:
The simple, unadorned and unspun (and non cherry picked) facts... which are still "Unknown".
So predictable about always avoiding the trend issue, just like a good Pollyanna.
"Besides that, how did you like the play Mrs. Lincoln?"
*sigh*
It's not convenient for you to acknowledge that intermodal is the best indicator of the underlying state of the economy, so you ignore it.
Per Mark's newest post, it's also not convenient for you to acknowledge that carloads sans coal are up 3% y-o-y in addition to intermodal being up 3.6%, so you choose to ignore that as well.
I look forward to future posts referring to the AAR being up substantially, while ignoring low water & barge traffic issues.
Please don't disappoint me Unk, just like you haven't disappointed me about ignoring the trend and total traffic... and a myriad of other facts.
Thanks again Unk for continuing to cherry pick and ignore both total AAR traffic and the trend.
Incurable Pollyannas are so predictable.
Unknown said
a lot of the gloom-and-doom types these days come from Austrian economic believers or libertarians who simply cannot believe an economy could do even merely halfway decent with a dovish Fed and a Keynesian in the White House. They loathe the ideology in power so much, they're just *dying* for anything to bring it down. When some data comes by which seems to indicate the economy is at least shrugging off this ideology, they refuse to believe it. They would prefer the economy collapse and people suffer under this ideology, than to see the economy even merely muddle through and get by under this ideology. They're expecting and hoping for a collapse to vindicate their ideological bent, and when that collapse fails to occur when they thought it would, they just kick their can down the road and postpone the prediction for some other time in the future.
Unknown many of the posters here believe in limited government and free market capitalism. I can't speak for them but I am generally an optimistic person, as are most of the libertarians I know personally. My libertarian leanings come from a basic belief in people and in their ability to make their own decisions. I believe that freedom is what the average person has fought for throughout our history. As such, I think we should strive for as much personal freedom in our society as possible.
As for just *dying* for anything to bring it down, I believe in people and in the power of people through capitalism and free markets to overcome the current misguided policies coming from the White house and the Fed. That doesn't change the fact that those policies are harming our economy and prolonging the suffering of many in this country.
It seems to me that Libertarians need to be optimistic in order to support their beliefs, the pessimists who want more centralized control are the more likely gloom and doom types.
As for just *dying* for anything to bring it down, I believe in people and in the power of people through capitalism and free markets to overcome the current misguided policies coming from the White house and the Fed. That doesn't change the fact that those policies are harming our economy and prolonging the suffering of many in this country.
+1
And I'm very much NOT in favor of more centralized control or bigger governments or the fascism that we basically have currently, etc.
Thanks again bart for cherry-picking only the data you want to believe, and which fits your ideological bent.
You're so amusing Unk - when you know that you have lost and have been completely demolished, you prove it by reversing my own true statements and pretend that they're yours.
Normal Pollyanna Obsessive Compulsive Personality Disorder ( http://en.wikipedia.org/wiki/Obsessive-compulsive_personality_disorder ) behavior, as expected and predicted... as usual and again.
Please continue with the foot bullets as you continue down in flames.
There are libertarians who believe the ends are more important than the means, and there are libertarians who believe the means are more important than the ends. People like Mark are obviously satisfied to see at least some progress on the economy, even though he's made it clear he's not happy with the current powers in Washington and elsewhere. He's one who believes the ends are more important than the means; that is, if we get at least some progress on the economy in spite of political/ideological obstacles, then that's better than nothing.
But there are other libertarian and Austrian types (Zerohedge is a prime example) who simply refuse to believe that anything good can occur under the current ideological/political framework. They don't *want* things to get better under such a power scheme, likely because they despise the power scheme so much, they're afraid if it has even a modicum of success, then it'll stay in power. So people like this would rather things fail and people suffer, because their hatred/fear of the current power structure is *that* deep. To these people, the means are more important than the ends; they'd rather have a struggling economy under a power structure they're comfortable with, than have an economy doing well under a power structure they loathe.
You're so amusing bart - when you know that you have lost and have been completely demolished, you prove it by reversing my own true statements and pretend that they're yours.
Thanks for almost quoting me Unk, you may finally be beginning to understand who is virtually always correct, and a realist (hint for the dain bramaged - that would be me).
Please continue with the foot bullets as you continue down in flames, as ordered.
Givemefreedom asks: "if as you say, many investors have re-positioned thier portfolios for a market crash, who is left to actually sell stocks so that the market crashes in sept.-oct.?"
They've re-positioned their portfolios by shifting cash into Treasury bonds to hedge and shifting from cyclicals to consumer staples, for example.
They don't want to miss this rally. However, when the rally ends, there will be lots of selling.
They've re-positioned their portfolios by shifting cash into Treasury bonds to hedge and shifting from cyclicals to consumer staples, for example.
They don't want to miss this rally. However, when the rally ends, there will be lots of selling.
If everyone is in bonds I am assuming that you are also calling for a collapse in the bond market. After all, who would be left to buy more bonds when deficits are going to need to be financed for the next two decades?
In fact, volume has been extremely light over the last few months and we have had a stealth bull market, which indicates that there have been relatively few sellers.
While Peak is wrong on a number of issues, I do not think that he is too far off from his stock market predictions. While we could see the indices gamed until the election is over as Bernanke gets out the stealth helicopters and the financial system helps prevent the much needed readjustment there is foundation for a recovery. Many S&P companies get a fair amount of their profit from a contracting EU and depend on the underemployed American consumer. Those profits will head down and unless they can be replaced by an increase in spending caused by another liquidity injection stocks will be revalued to reflect the new reality.
Keep in mind that retail spending is down. Gasoline demand is down. Jet fuel demand is down. Employment is down. These point to a much bleaker picture than what Mark is painting.
But the good thing is that we can let time decide who is better at understanding how the economy works. Will it be Mark who has been a perpetual optimist for as long as I have been reading him. Or will it be the realists who refuse to accept the superficial and look at the data and logic for themselves. I am betting on the latter.
You don't have to risk much to hit it big.
I'm betting on a V with the bottom in Oct.
Of course, don't bet more than you can afford to lose.
VangelV said...
While Peak is wrong on a number of issues, I do not think that he is too far off from his stock market predictions.
Look again at his stock market prediction VangelV.
Peaktrader said
http://stockcharts.com/freecharts/historical/spx1960.html
We're likely near the end of the current cyclical bull market (perhaps, a bearish head & shoulders pattern).
He is using a weekly chart from 1961 to predict what is going to happen in the next 3 months. That makes no sense.
Then he claims a "bearish head and shoulders pattern" is forming on this chart that is an indication of a pending collapse. The only H&S that I see he could be talking about has a left shoulder of 1527, a head of 1561 and a right shoulder of 1408.
For Peak to be right, the S&P has to collapse to the low of 683 set in early 2009 just to satisfy the head and shoulders conditions. Actually the neckline is below 683 since you have to draw a line from 800 set in late 2002 to 683 in 2009 in order to get a neckling but we will take 683 for arguments sake.
At which point, if it is a head and shoulders signal and the neckline is now violated, the real collapse has to happen and now the real fun starts.
My understanding of head and shoulders is that the decline once the neckline is violated should be as much as the rise was from the neckline to the head (1561 points). Which means that we have to drop 878 points (1561-683) past the neckline at 683. That would an interesting trick for the market.
The more likely outcome is that 1408 is not the right shoulder. That the stealth bull market has lulled investors into thinking nothing is happening in the stock market and that all those people with money in bonds/tbills are in for a rude awakening when their miniscule yield is wiped out by a decline in bond price that will occur at the first hint that the market gets of a rate hike.
The bubble is in the bond market. The sums that have been invested are staggering and that money will flee at the first sign of danger. Much will find it's way to the stock market, which most people are currently underweight.
Just my 2 cents....
Givemefreedom, you've been making false assumptions based on my statements.
I've made few predictions on this site. However, they've all turned out correct, e.g. KBH, UNG, and USL.
Also, the long-term chart shows a head & shoulders pattern in the 1965-82 bear market, i.e. a head at 119.87, left shoulder 108.37, and right shoulder 107.46.
http://stockcharts.com/freecharts/historical/spx1960.html
The reason that carload shipments are down this year by -2.4% YTD reflects a -10.8% decline in grain (possibly drought related) and a -9.4% decline in coal YTD.
But that 9.4% decline in coal shipments is significant because last year coal was 44% of ALL carloads, and this year it's down to 41%.
If you take out coal and grain, carload shipments are up by +5.2% this year.
And my main points still stand:
1) Oil shipments are WAY up.
2) Lumber shipments are WAY up.
3) Vehicle shipments are WAY up.
Economic activity in those areas (oil, housing and cars) is MUCH higher this year than last year, based on rail shipments of those inputs (oil and lumber) and finished goods (cars).
Sorry Mark but demand for oil in the US is down. So is the demand for jet fuel and for gasoline. That suggests that the real economy in the US is not growing.
The higher train transport for oil is due to the shipments of shale liquids due to a lack of infrastructure. The higher lumber shipments have to do with a change in housing construction in the Orient and the greater demand for lumber exports. As for vehicle shipments, there is a problem with inventory build, particularly with GM, which looks like it will need another bailout in a year or two. The age of the vehicle fleet has been increasing and needs replacement of the very old vehicles that are very expensive to keep running. That is not a sign of strength but of weakness.
Of course, you will continue to see what you want to see and will cherry pick just those data points that support your narrative. Fortunately we have time to show us which view is correct. Let us see what happens at Jackson Hole, the next few Fed meetings, and after the election. If the economy is weak we will hear the Fed talk about another scheme to add support to it, the government try to bail out FHA, Fannnie, and Freddie, and try to help struggling industries by handouts and mandates. If you are right the jobless rates will start heading lower and we will see evidence of strong capital formation that is similar to what happens after your usual contraction. Considering that the contraction began more than half a decade ago there will be few excuses for the optimists.
Peak,
You were not using the 1965-82 time frame to predict what happens in the next few months.
Which head and shoulders formation were you talking about?
I'm constantly fascinated by the psychology of committed pessimists, who seem addicted/committed to negative news, gloom and doom, and general pessimism about the economy, and possibly life in general? I wonder if this is even some kind of irrational, psychological disorder/addiction? Somebody has even refered to this as "pessimism porn," because of the apparent addictive nature of a gloom and doom outlook on life.
I am fascinated by those people who look to noise to justify their unsupported optimism. This blog is full of postings about data points. The funny thing is that they concentrate on the positive while they ignore the negative points or the underlying data before the 'adjustments' changed the picture.
Since when is a supposedly pro-free-market economist positive about central bank money printing and government expansion?
Vangel:
Sorry Mark but demand for oil in the US is down. So is the demand for jet fuel and for gasoline. That suggests that the real economy in the US is not growing.
But not after the 'adjustments' are performed. The real data is meaningless to these people. All that matters is what the planners report and how Pravda/CNN/CNBC spins those reports. You need to listen to Kudlow.
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