Latest Posts
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Finance 0
Mind The Gaps
About a month ago former Fed head, Richard Fisher, came out andconfirmed the idea that the FOMC’s quantitative easing policies over the past seven years have pushed prices of risk assets, including stocks, beyond what would otherwise be supported by their fundamentals. There are a few ways to visualize this. The first comes from Dr. Ed Yardeni who tracks a fundamental indicator shown below. Notice the yawning gap between the S&P 500 Index and the major economic fundamentals. We can also just look at the index versus its components’ earnings. Here’s another gap: This chart is a gift to anyone with common sense. Have a nice day... -
Finance 0
December 2015 Trade Data Continues To Show Weakness
A quick recap to the trade data released today continues to paint a relatively dismal picture of global trade. The unadjusted three month rolling average value of exports and imports decelerated. Many care about the trade balance which degraded. Import goods growth has positive implications historically to the economy – and the seasonally adjusted goods and services imports were reported up month-over-month. Econintersect analysis shows unadjusted goods (not including services) growth deceleration of 3.8 % month-over-month (unadjusted data) – down 7.8 % year-over-year (up 0.4% year-over-year inflation adjusted). The rate of g... -
Finance 0
Getting Ugly
It’s getting ugly for my core market health indicators. My measures of market quality, trend, and strength are all in oversold territory. During bull markets, oversold conditions generally result in a resumption of an uptrend. Unfortunately, I suspect we’re at the beginning of a long term bear market so oversold conditions should now result in more price destruction before a rally can ensue. Here are a few charts that suggest we’re likely resuming the down trend. First is a point and figure chart of the S&P 500 Index (SPX). It now has a bearish reversal during an intermediate term down trend. Next is a weekly chart of SPX El... -
Finance 0
Full Wages
Despite the disappointing headline Establishment Survey estimate, those inclined to believe the payroll report as an overall economic narrative had two fallback issues. U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but surging wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm. The first was the unemployment rate as it supposedly projected the economy at or tantalizingly close to full employment. The fact that even the mainstream conversation has turned more toward recession in 2016 than additional FOMC “rate hike... -
Finance 0
Oil Jumps As US Rig Count Plunges Most Since April
After weeks of modest declines, the US Oil Rig Count plunged by 31 to 467 this week – the biggest drop since April 2015 led by a 19 drop in Texas. Total rig count crashed 48 to 571. The reaction, though muted, was a jump in crude prices. *BAKER HUGHES OIL RIG COUNT FALLS 31 THIS WK TO 467 *U.S. TOTAL RIG COUNT DOWN 48 TO 571 A big plunge – tracking lagged crude perfectly… Led by Texas in absolute terms – but every region is accelerating in the last 6 months… For now, as Bloomberg reports, production has not budged. After a year of low oil prices, only 0.1 percent of global production has been curtaile... -
Finance 0
Fed Nonsense And Error Bars
Today’s news was the Employment number. I am not going to talk a lot about the number, since the January jobs number is one of those releases where the seasonal adjustments totally swamp the actual data, and so it has even wider-than-normal error bars. I will discuss error bars more in a moment, but first here is something I do want to point out about the Employment figure. Average Hourly Earnings are now clearly rising. The latest year-on-year number was 2.5%, well above consensus estimates, and last month’s release was revised to 2.7%. So now, the chart of wage growth looks like this. Of course, I always point out that wages fol... -
Finance 0
Illusory Economic Recovery Supported By Hot Money
Is this economic recovery real? Well if you base your observations on how far the Dow has risen since the financial crisis of 2008-2009 and on the B.S statistics the BLS puts out, the answer would be a yes. However, if you do just a little cursory digging, you will spot that this economic recovery is nothing but a grand illusion. The following factors clearly prove that this recovery is not real. Copper A leading indicator is in a death spiral so all must not be well. It is trading at multi-year low. If the economic recovery were real copper would be trending upwards. The Baltic Dry Index Another leading indicator appears to be locked in a ra... -
Finance 0
Tyson Foods Soars To 52-Week High After Raising FY16 Profit Outlook
Shares of Tyson Foods (TSN) are rallying after the company’s first quarter earnings per share topped analysts’ consensus estimates. The company also raised its profit outlook for fiscal year 2016. WHAT’S NEW: Prior to the market open this morning, Tyson Foods reported Q1 adjusted EPS of $1.15, easily topping analyst’s consensus estimates of 89c. However, the company’s Q1 revenue of $9.15B missed analysts’ estimates of $10.07B, and the company noted that average sales prices decreased in the quarter due in part to higher domestic availability of fed cattle and live hog supplies. Tyson also noted that feed co... -
Finance 0
4 Global ETFs To Outperform In Q1
Global growth is certainly edgy at this moment with the main culprits being the Chinese economic slowdown, commodity market rout and its adverse impact on emerging markets and obviously the relentless tension in the energy sector. The World Bank and the International Monetary Fund (IMF) also lowered their outlook on global growth. The World Bank expects the global economy to grow 2.9% in 2016, down from the forecast of 3.3% it made in June while IMF projected world economic growth at 3.4% in 2016 and 3.6% in 2017, down 0.2 percentage point for each year from the estimates given last October. IMF slashed global growth forecasts thrice in l... -
Finance 0
The Bear Is At The Door, Part 1: Momentum Stocks Getting Crushed
One of the common transitions that bull markets go through as they age and die is a narrowing of leadership. As formerly strong sectors begin to stall out, investors shift into whatever is still looking good — that is, whatever still has upward momentum. Eventually capital becomes concentrated in just a few names. Then those stocks roll over and the game ends. This time around Big Tech was the final category of momentum play, and it ended up attracting astounding amounts of money from both the usual suspects like hedge funds and some new suckers like the Central Bank of Switzerland, now a major holder of Apple shares. But now Big Tech has l...
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