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GaltMachine

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  • The S&P 500 Today Versus The 2007 Peak [View article]
    "While the Federal Reserve had begun its first cuts of the Fed Funds rate one month prior to the S&P 500 making its high, it had only been reduced to 4.75%. With the 10-year at 4.67%, the market was pricing in additional cuts as growth was expected to slow."

    On a million bucks you could have generated $45-50,000 in income virtually "risk-free" in most online savings accounts. Now you are lucky if you get $2k - now that's a pay cut!

    When will they declare victory in the "War On Savers"?
    Sep 21, 2012. 09:45 AM | 13 Likes Like |Link to Comment
  • Initial Jobless Claims: -3K to 382K vs. -9K consensus. Continuing claims -32K to 3.27M[View news story]
    bbro,

    How does the declining size of the labor force impact this metric?

    I imagine that historically speaking we have had a growing labor force especially during the expansion phase of the cycle which is supposed to be where we are today.

    Something about the fact that the unemployment rate is falling because of NILF is troubling. What do you think?
    Sep 20, 2012. 11:34 AM | 1 Like Like |Link to Comment
  • The size of the PBOC's balance sheet is shrinking ... rapidly. Far from being a conscious decision to tighten monetary policy, the shrinkage has more to with capital flows. To fix the price of the yuan, the PBOC is forced to print as money flows into the country, but must sell securities as capital reverses. The policy means the PBOC has a very large stimulus bullet in its chamber - letting the yuan go. [View news story]
    "- letting the yuan go."

    Sounds like this is the real rationale for the FED's QEnfinity - a currency war. They are putting a lot of pressure on them so that they can force up the value of the Yuan.

    We'll see who wins. I suspect that Joe Sixpack ends up losing in the end.
    Sep 20, 2012. 10:53 AM | 1 Like Like |Link to Comment
  • Aug. Leading Indicators: Leading Index -0.1% vs. flat expected, +0.5% prior. Coincident Index +0.1% vs. +0.3% prior. Lagging Index +0.2% vs. 0.3% prior. [View news story]
    "The Conference Board LEI for the U.S. has been essentially unchanged since March of this year, while The Conference Board CEI has been rising slowly. As a result, the six-month growth rate for both indexes has slowed sharply. Taken together, the current behavior of the composite indexes and their components suggests that the economic expansion will continue in the near term, but the pace will remain slow."

    "The Conference Board Leading Economic Index® (LEI) for the U.S. declined 0.1 percent in August to 95.7 (2004 = 100), following a 0.5 percent increase in July, and a 0.5 percent decline in June.

    Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI has declined in three of the last six months. While its six-month growth rate has slowed substantially, it still remains in growth territory due to positive contributions from the financial components including stock prices, yield spread and the Leading Credit Index. Over the last several months, the U.S. LEI seems to be fluctuating around a flat trend, while strengths and weaknesses among its components remain balanced. Meanwhile, the coincident economic index, a measure of current economic activity, edged up in August. The strengths among the coincident indicators have become less widespread, with three out of four components advancing over the past six months.”
    Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI has declined in three of the last six months. While its six-month growth rate has slowed substantially, it still remains in growth territory due to positive contributions from the financial components including stock prices, yield spread and the Leading Credit Index. Over the last several months, the U.S. LEI seems to be fluctuating around a flat trend, while strengths and weaknesses among its components remain balanced. Meanwhile, the coincident economic index, a measure of current economic activity, edged up in August. The strengths among the coincident indicators have become less widespread, with three out of four components advancing over the past six months.”
    Sep 20, 2012. 10:25 AM | Likes Like |Link to Comment
  • Initial Jobless Claims: -3K to 382K vs. -9K consensus. Continuing claims -32K to 3.27M[View news story]
    Of course the prior week was revised up so when this one's revised up again next week it will be even worse.

    Anyway, the last 6 weeks have a decided upward bias especially on the 4 week average so definitely a relative weakening - this next job's report should be interesting.
    Sep 20, 2012. 08:38 AM | 3 Likes Like |Link to Comment
  • Norfolk Southern (NSC) lowers its Q3 earnings outlook due to declines in certain markets and lower revenues from fuel surcharges. NSC expects decreased coal and merchandise shipments, offset in part by growth in intermodal volumes, to reduce revenues by ~$120M Q/Q. NSC -5.8% AH, other rails also move lower: CSX -4.8%, KSU -3.5%, UNP -2%[View news story]
    Fedex, CAT, and now one of the major rails - this is looking like an earnings season that will disappoint.
    Sep 19, 2012. 05:20 PM | Likes Like |Link to Comment
  • Counterevidence Supporting A Positive Demographic Impact For Stocks [View article]
    robert,

    Click on the link from my post above. I think you will find it informative and it will provide you with a rationale and framework to understand your excellent observation.

    Demographics is destiny.
    Sep 19, 2012. 04:42 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: High Hopes For Housing [View article]
    dancing,

    Here is a link to the discussion of the chart on Doug Short's website.

    http://bit.ly/MwKxls
    http://bit.ly/T3CLV9
    "Real Personal Income Less Transfer Payments
    This data series is computed as by taking Personal Income (PI) less Personal Current Transfer Receipts (PCTR) and deflated using the Personal Consumption Expenditure Price Index (PCEPI). I've chained the data to the latest price index value."
    Sep 19, 2012. 09:38 AM | 1 Like Like |Link to Comment
  • Redbook Chain Store Sales: +2.4% Y/Y vs. +2.7% last week. The decline in sales was due to weakness in apparel and back to school season. The report expects store sales gain of 1.9% M/M. [View news story]
    Matches the ICSC report in trend. y/y pretty flat after inflation for both.
    Sep 18, 2012. 12:58 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: High Hopes For Housing [View article]
    Jeff,

    "Meanwhile, the ECRI story continues to change. The latest variation is that the data will eventually be revised lower to show that we are already in recession."

    The link to the article where they describe their position is here:

    http://bit.ly/SHRXXM

    I don't understand this obstinacy of not believing that data can be revised. Just look at the recent revisions to GDP - we had a quarter that was originally reported at 3% plus revised down to 0.08%.

    If they are right the data will be revised down, that's a fact. If they are wrong it won't.

    "Think back to four years ago in 2008, a couple of days before the Lehman failure. Looking at the data in hand, you would see GDP growth at about 1% in Q1 and 3% in Q2. More specifically, Q2 GDP growth had just been revised up on August 28 from 1.9% to 3.3%, sparking a 212-point Dow rally that day. But what data supports our recession call? We just discussed what GDP had looked like four years ago. Please note that for each of those two quarters GDP growth has since been revised down by two to three percentage points. Those are huge revisions.

    Likewise, GDP growth prints for each of the first two quarters of the two prior recessions were revised by about two to four percentage points. The takeaway is that, in the early stages of recession, the data are almost always revised down, and the revisions tend to be quite substantial near business cycle turning points.

    Knowing this, how should we feel about the current GDP estimates that average less than a 2% pace for the first half of 2012, i.e., weaker than first-half GDP growth looked four years ago? Please remember, by that time, in September 2008, the economy had already spent nine months in recession. "
    Sep 18, 2012. 09:47 AM | 3 Likes Like |Link to Comment
  • ICSC Retail Store Sales: -2.5% W/W, vs. +1.0% last week. +2.1% Y/Y, vs. +3.4% last week. Weather led to decrease in sales. The report expects store sales gain of 3-4% y/y. [View news story]
    bbro,

    You normally like to comment on this. This one seems very weak. I wonder why.

    They are blaming the weather (too wet, too dry, too hot, too smelly, too humid, too snowy) in September. I believe that's a first.
    Sep 18, 2012. 08:59 AM | Likes Like |Link to Comment
  • Sep. Empire State Survey: Manufacturing -10.41 vs. -2.0 expected, -5.85 prior. [View news story]
    Caladesi,

    Here is what I said last week about this laughable justification:

    "So apparently the genius forecasters that come up with these consensus numbers which are supposed to be based upon the whole universe of data, missed the fact that there was a hurricane last month when they came up with their original forecast?

    Really. Come on."

    Even if a portion, 0.3% was correct, that still leaves a very weak report.
    Sep 17, 2012. 01:28 PM | 2 Likes Like |Link to Comment
  • Is Joe Sixpack Better Off Today? [View article]
    John,

    This is why the fact that we still don't have tort reform is such an outrage. Trial lawyers are way too powerful as a group in their ability to influence policy. They sure get great value from their lobbying dollars.

    All those wasted precautionary tests that are done so that the Dr. who doesn't want to do them won't be sued for negligence is a scandal. Fear of lawsuits leads to some perverse behaviors resulting from the negative incentives that have been created.

    I feel for those who are injured but which is the greater injury to the public welfare?

    No easy answers but it should have been addressed.
    Sep 17, 2012. 01:24 PM | Likes Like |Link to Comment
  • Sep. Empire State Survey: Manufacturing -10.41 vs. -2.0 expected, -5.85 prior. [View news story]
    http://bit.ly/O8VgFC
    "WASHINGTON - U.S. industrial production fell in August by the largest amount in more than three years as factories produced fewer cars and other manufactured goods and Hurricane Isaac triggered shutdowns along the Gulf Coast.

    Industrial production dropped 1.2 percent last month compared to July, the Federal Reserve said Friday. It was the biggest setback since a 1.7 percent decline in March 2009 when the country was in recession.
    Manufacturing output, the most important component of industrial production, fell 0.7 percent, led by a 4 percent drop in output at auto plants."

    http://seekingalpha.co...
    "Friday, September 14, 9:28 AM The 1.2% dive in industrial production is the biggest decline since the depths of the financial crisis, though 0.3% of the fall is being attributed to Hurricane Isaac."

    No spin. Just the data. Interpret it as you wish.
    Sep 17, 2012. 12:08 PM | 1 Like Like |Link to Comment
  • Counterevidence Supporting A Positive Demographic Impact For Stocks [View article]
    Funny Tobias Levkovich reaches exactly the opposite conclusion of the master of demographic research Harry Dent (his market calls have no bearing on his research).

    The age period cited below and the conclusion is utter BS and self-serving nonsense without a shred of proof to back it up.

    "Below is a graph of the population of the 35-39 age cohort on the left axis and a logarithmic scale of the S&P 500 (and its predecessor indices) on the right index. The children of the Baby Boomer generation are beginning to ramp up their retirement savings years as they enter the beginning of their peak earning years in their mid-30s. "

    These are the spending and debt years and not the saving years. The saving years begin after age 47 according to the real demographic research.

    John Mauldin has a transcription of one of Harry's recent speeches at his website and gives you a basic intro into his "spending wave" research.

    http://bit.ly/OxuXTS

    "For one, there is the most powerful economic force on Earth: demographics. More specifically, the power of the number 46. You see, that's the age at which the average household peaks in spending.
    When the average kid is born, the average parent is 28. They buy their first home when they're 31… after they had those kids. When the kids age into nasty teenagers, the parents buy a bigger house so they can have space. They do this between the ages of 37 and 42. Their mortgage debt peaks at age 41. And like I said, their spending peaks at around 46."
    Sep 17, 2012. 11:54 AM | Likes Like |Link to Comment
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