Friday, December 7, 2012

Stocks Rise On Most Bad News

Even Germany slides toward recession, but the Dow is up 72 points at this moment, shortly before the market closes.

Hiring Intentions Plunge

And as if that wasn't enough bad news, this from economist Mish Shedlock:

Consumer Confidence Crashes

Jobs Boom to Jobs Bust

After an initial burst of elation and a short rally in stocks, the market has gone bust, as the devil is still in the details. The details aren't pretty!

First the headline from WSJ:

Then the reaction. I bought initially, but then liquidated my position (profitably) once the market began to decline sharply. The jobs boom quickly became a jobs bust.
Here's why:
1) Job quality was poor -- The jobs created were low-wage jobs in hospitality, waste management, retail, and restaurants.
Zero Hedge:
"In light of the composition of today's NFP pickup, driven by retail, waste and administrative and hospitality and leisure, all low-wage jobs, even as Construction jobs posted their first decline in many months on the "housing recovery" and on Hurricane Sandy rebuilding, we refreshed the chart showing that there is a quality not just quantity component to the jobs number. Sadly, the quality, in the form of Y/Y change of average hourly earnings, continues to be non-existent."
2) Geriatric Jobs - Jobs were created for workers over the age of 55, but for workers below that age, there was a decline.
from Zero Hedge:
"What the granular data shows is that instead of a 146K gain in November, there was actually a drop of 114K jobs when broken down by worker "vintage." But where it gets simply stupid, is that of the 4 age group buckets (16-19, 20-24, 25-54, and 55-69), the biggest gainer continued to be America geriatric work force, which added 177 jobs. As for that key segment of the workforce, the 25-54? Jobs here declined by a whopping 359K in November. And this is good news?

Bill Gross tweeted:
"Gross: Equity market rallies b/c 200,000+ workers stop looking for jobs & the U-Rate hits 7.7%. Be careful, Europe in recession, US slowing.
 What was initially perceived as good news, wasn't!

Bond Bubble to Burst?

from WSJ:

More warning signs to be ignored by Wall St and central bankers.

Wednesday, December 5, 2012

Debt Ceiling Reality Sends Stocks Plunging

Market Takes Leg Lower As Treasury Supports Use Of "McConnell Provision" For Debt Ceiling

As the Fiscal Cliff discussions get progressively more acrimonious, more people are being reminded that the debt ceiling, which the US will breached in a few days, is just as important, and just as much at an impasse. Which is why the Treasury just opined on the issue, by openly supporting the "McConnell Provision" and in doing so may have made any future Cliff/Ceiling discussions more difficult as the US has effectively invoked the nuclear option, aka a Presidential Veto to effectively elimiante the debt ceiling, something which will antagonize the GOP to such an extent any potential Fiscal Cliff deal may become unfeasible. The market is hardly happy that the already record polarity in Congress is about to get even worse as a result of this hardline stance, and just took another big leg lower.

Bad Boy ADP Sends Stocks Tumbling

Stocks went red after being higher throughout the night following ADP's disappointing jobs report this morning.

Last night at a very odd hour, for the second week in a row, stocks ramped up at an hour when most Americans were asleep. But stocks just went red following news that jobs are beginning to reflect a higher probability of an oncoming recession.

Monday, December 3, 2012

Hussman: Leading Indicators Universally Bad

John Hussman summarizes quite well the scale and breadth of economic decline in recent months:

"With industrial production, capacity utilization, real disposable income, real personal consumption, real sales retail and food service sales, and real manufacturing and trade sales uniformly declining in their latest reports, coincident economic indicators – having generally peaked in July – are now following through on the weakness that we’ve persistently observed in leading economic measures. We continue to believe that the U.S. economy joined a global economic downturn during the third quarter of this year.
"While we use a broad range of signal extraction and noise-reduction methods in our own work, the economic data in recent months has required less and less sophisticated analysis, as many of the most reliable leading economic measures have turned clearly lower (e.g. Philly Fed Index, Chicago Fed National Activity Index, and the new orders and order backlog components of numerous regional and national Federal Reserve and purchasing managers surveys)." -- John Hussman, PhD. Dec. 4, 2012

US Manufacturing, Employment Contract. Stocks (Finally) Follow!

It's not just manufacturing, either. Employment has begun to contract as well!

And stocks have finally given in and followed the trend lower:

Manufacturing Disappointment Brings Reality Back to Stocks

Today's Headlines

Wall St is dismissing this news, expecting that there will be a compromise, despite that the two sides are miles apart!

Before above headlines:
After above headlines:
Stocks are still significantly higher! Go figure!