Tuesday, June 23, 2009

More Withering Green Shoots; Good for Treasuries

Courtesy of Zero Hedge are two news items indicating that consumers aren't feeling in the pink or spending the green. To go along with the theory that there is a conspiracy to engender good feelings amongst the populace which will lead to a self-sustaining economic upturn, little publicity has accompanied these discordant data points. Each report is brief and worth a click-through.

First, Redbook:

US Retail Sales -4.4% First 3 Weeks June Vs May

Note: these sales are worse than estimates. Next, the ABC News Consumer Comfort Index, which is titled

US consumer confidence nears record low in latest week:

NEW YORK, June 23 (Reuters) -
ABC News on Tuesday released its weekly index on consumer confidence in the United States.

The Consumer Comfort Index fell in the latest report to -53 from -49 the prior week.

The index is now just one point above its all-time low of -54, which was reached in the week ended Jan. 25, 2009, and before that in the week ended Dec. 1, 2008.

Those surveyed were especially bearish on their personal finances, which number was greatly below that of 6 weeks earlier.

Not all news is below expectations. For example, chip-maker Marvell Technology raised its sales estimate for the current quarter. The stock went . . . down on the news.

More and more, it is looking like a rerun of the first recession of this decade. Stocks fell in the second half of 2000, 2001 and 2002. The green shoots and in fact the technical end of the recession in the fall of 2001 gave way to a near-double dip and stock market bottom in late 2002 into late Q1 of 2003. Mixed in with these average prices were new highs in the secondary indices by mid-2002. Let us see if the strongest companies can repeat that performance should the averages take another tumble.

Meanwhile, except for about the 2 months between mid-January and mid-March, gold has tracked the stock averages fairly closely (though with a stronger chart in general), and may well do so again.

Quietly, the stock that tracks the long Treasury bond, TLT, is up 6% in a short time after perhaps a record 6-month sell-off. We may be in the midst of a perfect storm for Treasuries: economy strong enough to allay fears of a default but weak enough to suck money out of riskier investments.

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