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June Philly Fed Business Outlook: -16.6 vs. an expected 0 (consensus range -3.0 to 4.0) and...

  • Thursday, June 21, 2012, 10:02 AM ET
    June Philly Fed Business Outlook: -16.6 vs. an expected 0 (consensus range -3.0 to 4.0) and May's -5.8. Overall declines indicated as general activity, new orders, shipments, average work hours were all negative.
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This news story has 19 comments:

  •  
    Now that was a miss!

    Do they pull these consensus numbers out of a hat?
    21 Jun 2012, 10:07 AM Reply Like
  •  
    Be creative . . . now how can we find a way to blame this on Bush???
    21 Jun 2012, 10:09 AM Reply Like
  •  
    You don't have to be creative at all for that.
    21 Jun 2012, 12:52 PM Reply Like
  •  
    Not everything is politics. Unless you watch Fox or Kudlow. There are other forces in the world.
    21 Jun 2012, 01:22 PM Reply Like
  •  
    To Obama everything is politics. Unless that is you watch CNN or MSNBC, and then of course not everything is politics.
    21 Jun 2012, 03:37 PM Reply Like
  •  
    Existing home sales down in.. June.. Not good.

    New all time low mtg rates in.. June. Not good.

    Let me guess, my house just got cheaper...

    Yep.
    21 Jun 2012, 10:09 AM Reply Like
  •  
    The market is down after twist although twist is the necessary first step towards more QE. I tyhink QE is still on the way.
    21 Jun 2012, 10:16 AM Reply Like
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    TWIST/ QE explained: Some stats-- the Fed has manufactured about 2T dollars out of thin air. M1/M3 money supply are about $1.4T and about $7T. On the $2T the Fed is giving about 0.25% to banks if they don't lend out the money, and it counts under Basil II as 0% risk (i.e., it does not force banks to raise their capital ratio more) so the upshot is banks get "free money" and no risk if they keep this money unlent. Of course nobody is really asking to borrow money now but that could change. Now consider this: what if the Fed stops paying 25 basis points interest to banks and they lend out this money? It will increase M3 by 28%. That might be inflationary?
    21 Jun 2012, 02:30 PM Reply Like
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    Please correct me if I'm wrong. Twist is the Fed buying government bonds to interest rates low. But the real reason is the government would go bankrupt if they let the market decide interest rates. QE is the Fed buying "assets". What does that mean? Stocks? That would create a stock market bubble in my book. I think QE/Twist is designed to put the depression in slow motion.
    21 Jun 2012, 02:49 PM Reply Like
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    Simple explanation: Twist is playing with the yield curve, to flatten it a bit now and make it steeper in the future, supposedly this is good for planning. QE is printing money, supposedly to stimulate spending based on Keynesian money illusion. Either way you, the taxpayer, will have to pay for it later.
    22 Jun 2012, 12:17 AM Reply Like
  •  
    No QE for a month, it already had its twist yesterday, Mr. Market is grounded.
    21 Jun 2012, 10:29 AM Reply Like
  •  
    Cf. John Hussman's latest commentary: "Our analysis suggests that the U.S. has entered a new recession."

    See: http://bit.ly/MCy1Mt
    21 Jun 2012, 12:08 PM Reply Like
  •  
    No shirt Shirlock! You could have seen this coming a mile away. Rational bubbles only for those mo-mo players who think they can get out before the music stops--few of those around (or maybe they exited yesterday).
    21 Jun 2012, 02:33 PM Reply Like
  •  
    Something is missing in our thinking...I think. Recall these dates: Oct.1929, April 1980, Jan. 2000, Nov. 2007. All of these dates are at the top of the then markets and euphoria was rampant in either stocks or real estate or both. Everyone interested in these markets was scrambling to buy at almost any price. My point; unbridled optimism seems to be present at most major tops and for the life of me I see no run away optimism today. I am using this time to assess which sectors and subsequent stocks will profit most by the universal (Britain, US, Europe, China) influx of cash to their banking systems and I will enter when the Euro (FXE) and basic metals (XLB) find a solid bottom.....not far in time from now.
    21 Jun 2012, 12:46 PM Reply Like
  •  
    This optimism was present just a few months ago though. Remember the hype for the FB ipo?

    That being said, I do agree with you that valuations in March 2012 were nowhere near that of the other periods you mentioned, but keep in mind that during those periods, few were talking about how irrational valuations had become. Valuation does not exist in a vacuum, it exists in conjunction with economic growth expectations. As economic growth expectations are clearly attenuated now as compared to March 2000, it would follow that what would be considered an abnormally high P/E ratio now would be much lower than that of the year 2000 when 5% US GDP growth was a reality. Over time, stock market volume and average P/E ratios have done nothing but fall, so in my opinion, a 14 P/E ratio is too high for the market. I believe we will easily see a sub-10 P/E ratio on the market at the next market trough.

    Considering EPS on the S&P 500 is at an all-time high of around 100, if we get a mild recession that takes EPS down to let's say 80, and we slap a 10x multiple on that, that gets us to 800 on the S&P 500. When we think about it from that angle, you can see why the market is so concerned, although personally I believe we will rally from here before falling again, because the present pullback is based solely on failing confidence in political leadership, not actual earnings contraction.
    21 Jun 2012, 10:29 PM Reply Like
  •  
    AT,
    Good points, but the earnings contractions did start showing up in Q1 for some of the S&P companies. That is, when comparing the actual Q1/11 vs. Q1/12. But the usual buy side "earnings beat" nonsense was still the MSM drumbeat anyway. Just remember AA for example, but there were also many others.

    With the dollar strengthening now and worldwide economic weakness accelerating, it seems almost inconceivable that coming quarter will not show earnings declines. One wonders if the big multi-nationals will not at some point (like Q4/08) toss in the towel and book every conceivable loss and negative they can conjure up to "cleanse the negatives" and set the stage for future out performance? If so, there could be some very large drops in earnings reported. Maybe Q4/12 and Q1/13 will be the mirror repeat of 08/09. Would certainly not be surprised to see S&P 800 again.
    22 Jun 2012, 12:17 AM Reply Like
  •  
    The global recession has already begun. All the money from all the CBs will not reverse this recession. S&P 500 will be well below 1000 by Xmas.
    21 Jun 2012, 12:49 PM Reply Like
  •  
    Agreed. The market is coming to terms with the fact that a recession is starting in the U.S. The cyclical bear market in stocks that will accompany the economic contraction is well underway:

    http://seekingalpha.co...
    21 Jun 2012, 08:44 PM Reply Like
  •  
    If one has access to a 20 year chart of the S&P 500 they will recognize what chartists refer to as a "W", in the making. Myself I am not a chartist, but nor do I exclude any proven theory just because I'm not proficient at the concept. I have noticed what chartists say about at "W" is correct...they are fatal to a rally at a top and in the inverse are equally fatal to a sell-off. Whether hourly, daily, weekly or on a 20 year scale, they are prophetically correct. On close inspection at the top of 2000 and of 2007, one will discern that each top takes six months to form and each has a numerical maximum. On your chart, if possible, add an exponential 7 moving average, a simple 7 moving average and a simple 13 moving average. The similarity of convergence of these moving averages is all telling, the "last" addition being this August, is not complete yet, but has many similar properties as this top completes the last leg of the "W". Thus at the end of this month, should it (S&P 500) reach 1450/1440, but fail to close above this area, could clearly foreshadow the coming few years.
    12 Aug 2012, 01:05 AM Reply Like
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