Monday, June 29, 2009

Halftime Again

So much to talk about, nowhere near enough time. I wanted to talk about the slow death of the bear market rally due to lack of interest, my "smoke 'em if you've got 'em" trade, and so much more. Oh well. Maybe Wednesday.












Sunday, June 28, 2009

Follow through or failure?

I'm watching a lot of stocks as well as the major indexes right now. The tea leaves are mixed, but it's looking to me like we might be lurching toward a continued summer rally. The next couple of days will probably seal the deal - either up for awhile or a continued grinding in this range. The funny thing is that there's no real support for it in the economy that I can see. But since when has the market demanded logic?

The good news is that we're used to market corrections in the Fall. At least it will be familiar.

Wednesday, June 24, 2009

A quick minute or two on the consumer












Less bad = good? Nah.

So the Federal Reserve just left interest rates (Fed Funds) exceptionally low, saying that "substantial resource slack" will keep costs low thus inflation will remain subdued for some time. They expect that the exceptional efforts that they are taking/making on behalf of the markets to purchase mortgage back securities remain necessary.

Bottom line, the consumer is still in a world of hurt and won't be bouncing back anytime soon.

We really need to figure out what the new normal is going to look like. I'm fairly certain that we're overvaluing stocks expecting growth that isn't going to be there to validate these multiples.

Wednesday, June 17, 2009

Today on the Fast Money Halftime Report...












Spin Central

So yesterday our fearless leader (Obama, in case that statement sparked a rousing round of "Who?") said “Wall Street seems to maybe have a short memory about how close we were to the abyss than I would have expected.”

It was just March 13th that I was complaining because of all the economic cheerleading by the administration. Bernanke was on 60 minutes that week. Obama was telling us we were going to get through this. Summers flapped his lips too.

I'm a cynic when it comes to politicians anyway. But I can't help but think that maybe, just maybe, the administration doesn't want the market to do well now because they haven't 'saved' it yet. And if they don't save us, will we vote for them next year?

Monday, June 15, 2009

The market rebound... all done

It's just me chatting about what I'm seeing these day. If you read often, you'll know what I'm going to say before I say it.












Saturday, June 13, 2009

Heads they win, tails we lose

Anyone, please tell me where I'm wrong in the following analysis. I'd love to be proven stupid in this case.

I'm having a hard time imagining a scenario in which the American consumer doesn't get hosed even worse than their current not-so-pretty predicament. The dollar has been weak. The US govt can either let that continue or work to bring about a stronger dollar.

What makes a stronger dollar? The dollar has to be a more attractive investment ... which translates rather simply to higher interest rates. Hmmm, higher interest rates would slow (stop?) home buyers in their tracks, harm the already over-extended consumer with higher debt payments, and slow the rumored-to-be-happening-but-I'm-not-seeing-it-here economic recovery as companies think twice (or three times) before borrowing funds... assuming the banks will lend money in the first place. That would be bad.

Of course, choice number two would be to leave the dollar weak. But if that's the government's choice, it comes with its own set of problems. A weak dollar means that we will most likely have trouble selling those lovely government obligations that are keeping our collective heads above water right now. Because oil is denominated in dollars no matter where it is traded, you can count on higher oil prices. The sheiks in the Middle East will still want to maintain their lives in the style to which they have become accustom, even if that now costs 5 barrels of dollar-denominated oil per hour instead of the previous 3 barrels. A weak dollar also means that goods imported from overseas cost more - price inflation on pretty much everything sold in American stores. These things would also be bad.

In either case the consumer gets violated, but at least with a stronger dollar we have the chance to sell more bonds and further enslave our children's children whilst avoiding immediate bankruptcy.

Anyone want to bet on scenario #1 being the final outcome? I just don't see how it won't be.

I had just hoped to be kissed first.

Thursday, June 11, 2009

Data data everywhere and quite a lot to think

Interesting conundrums coming from this morning's retail sales and unemployment numbers. The two are closely linked - if you don't have a job, you can't spend money.

So on the unemployment front, jobless claims were better than expected but still came in at 601,000 new claims. Let's put that into perspective: if all those newly unemployed folks were in Alaska, the state would have an 87% unemployment rate.

Continuing unemployment claims, the number of those people who have been unemployed for awhile, has now climbed to 6.8 million people. Once again, putting that into perspective: the population of the state of Washington is 6.5 million people. The continuing claims, then, could be visualized by taking the entire population of the state of Washington and adding half of the Alaskans.

I understand those two states are way over on the left coast and not top of mind for many people other than those of us who live there, but even if you live in NYC, you have to admit that it is a lot of people who aren't going to be spending money.

So what's up with the retail sales numbers then? The headline number came in up 0.5% as expected. But... that's a month over month number, meaning that May sales were a little bit better than April sales. But May 2009 sales were 9.6% BELOW May 2008 sales. And the biggest sales increases came from gasoline and building materials. If you own a car, you know that gas prices are up recently, so that shouldn't be a shock.

What's the explanation for the building materials results? Lumber prices were up 8.4% for the month of May, so that's a big part of it. Buying a foreclosure? You can bet that the previous evictees didn't leave the place in pristine condition. Plus, if you are going to be spending more time in your home, you spruce it up. Those little niggling items on the Honey-Do lists are often a cheap way to spend the weekend.

It seems to me that commodities might have driven more of the retail sales numbers than some sort of a magical rebound by the consumer. And given May comp store sales results and my mall walks over the past few weeks, I can tell you that the consumer isn't spending like they have money... they're spending like every dollar in their pockets might be their last.

I'm not feeling giddy about any of this. But if you are, more power to you.

Sunday, June 7, 2009

Clarity

For something new, I thought I'd start today's blathering with a clarification of sorts. My last two posts have been of me sharing my opinion on CNBC and Bloomberg television. However, I *did* previously say that I didn't recommend watching financial news. Let me clarify: obviously, I believe in the financial press or I wouldn't be appearing on there. But I talk daily to folks who alternate between freaked out and thrilled by what they're hearing on television. They get wound-up because don't know what to believe and they hear conflicting information all day long. If you like watching financial television, by all means watch (especially when I'm on!) But if you're getting bothered by stuff, remember that your friendly local investment professional is there to answer questions and give advice. Better yet, they should know your personal situation and relate the current news to your life.

The other bit of clarity that I want to share today is that going down less is NOT the same as going up. Apparently this is hard for some folks who like grazing on green shoots to grasp. Take Friday's data, for example: unemployment came in 0.2% worse than expected at 9.4%, the worst reading in 25 years. So what's the market do? It stays flat. Why? Because of the good news in the unemployment data. What good news you ask? Well, we "only" lost 345k jobs last month. Party on! Yeah, I know we were expecting to have lost over 500k jobs, and that the April numbers were adjusted upward ("only" lost 504k instead of the original 539k.) And yeah, I know that the market trades on expectations, but PEOPLE this is still bad. Bad bad bad. Yucky even. And don't get me started on the housing market. Instead, read the Alan Abelson column in this week's Barron's. You might want to make sure you don't read it over lunch if you have a sensitive stomach.

Saturday, June 6, 2009

Thursday, June 4, 2009