ABC's Consumer Comfort weekly poll (but based on a rolling 4 week average) is back to -47, a 5 week low and a level never seen from the poll's inception at the beginning of 2002 until May 2008.
Gallup's consumer polling shows a tad more personal optimism (feeling cheerful) but spending and hiring/not hiring statistics remain dismal.
So far, I suspect that the U. S. profit gains from domestic sources are mainly due to price increases and job cuts.
If oil prices do not go crazy on the upside, we are however likely in the past of the financial and economic cycle where all the money printing will go into sales increases due to volume as well as price increase. The ECRI has probably nailed it in predicting a yet lower baseline level of growth.
The country--and most of the world--simply needs to pay down debt.
Instead what is happening is that governmental deficits are being transmuted into private profit gains. It's a shell game that is leading to overall overvaluation of the private enterprises that are currently benefiting from this wealth transfer, and it is difficult to see why this existing trend will not continue tomorrow and then the next day. China bursting? Oil? War? Dirty nuke somewhere important?
And so this body of a stock market continues in motion while real people continue to experience depression-like circumstances.
Copyright (C) Long Lake LLC 2010
Showing posts with label ABC Consumer Comfort Index. Show all posts
Showing posts with label ABC Consumer Comfort Index. Show all posts
Wednesday, April 14, 2010
Wednesday, February 3, 2010
Real Consumer Economy Remains Depressed
Consumers remain stuck in a rut. The Discover(R) U. S. Spending Monitor rose from a depressed level in January.
The related linked graph demonstrates the "going-nowhere-fast" nature of the non-recovery in the real consumer economy.
These findings correlate with the continued miserable, near-trough levels of consumer spending and workers' observations of hiring or letting go at their companies at Gallup.com, with ABC's Consumer Comfort Index near its worst levels of the downturn as well.
Absent massive government and Federal Reserve intervention aka money-printing, there is no doubt that the consumer "recession" (depression) would be continuing.
Note that special stock market strength is found in Dollar Tree (DLTR) and slightly higher-end TJX, and in the generic drug company Teva (TEVA). Signs of the times.
Toll Brothers (TOL), a luxury homebuilder, is becalmed on the stock market, with earning estimates for the fiscal year ending fall 2011 steadily dropping and now not far above breakeven.
America has turned into a pretend economy.
Copyright (C) Long Lake LLC 2010
The related linked graph demonstrates the "going-nowhere-fast" nature of the non-recovery in the real consumer economy.
These findings correlate with the continued miserable, near-trough levels of consumer spending and workers' observations of hiring or letting go at their companies at Gallup.com, with ABC's Consumer Comfort Index near its worst levels of the downturn as well.
Absent massive government and Federal Reserve intervention aka money-printing, there is no doubt that the consumer "recession" (depression) would be continuing.
Note that special stock market strength is found in Dollar Tree (DLTR) and slightly higher-end TJX, and in the generic drug company Teva (TEVA). Signs of the times.
Toll Brothers (TOL), a luxury homebuilder, is becalmed on the stock market, with earning estimates for the fiscal year ending fall 2011 steadily dropping and now not far above breakeven.
America has turned into a pretend economy.
Copyright (C) Long Lake LLC 2010
Wednesday, January 13, 2010
Time for High Quality Stocks as Economic Pessimism Persists?
The ABC News Consumer Index was released yesterday, and showed a sharp drop in confidence, with noticeable declines in "buying climate" and personal finances.
The news release is in PDF format and cannot be cut and pasted to this blog. Please click on the link and examine the graph on page 3. The obvious pattern is that the pattern of consumer confidence from the immediate pre-recession year to the end of recession (or depression) is so far looking just like that of the first of America's so-called jobless recoveries in the early 1990s. We know how that story ended, with the employment and investment boom of the late '90s.
What are the chances that the economy and the public mood will soar throughout this decade as it did in the '90s?
The main differences between then and now are that then there was the victory over the USSR with the coda of a smashing victory over Saddam Hussein in a war paid for by creditor nations such as Japan and Saudi Arabia.
At home, there was the aftermath of the S&L mess, but public confidence had not been shaken as fundamentally as now.
Team Obama may be not only talking the deficit reduction talk, but if healthcare reform goes through as planned, there will be up-front taxes, and there may be taxes/fees on the financial industry following the bailout. Meanwhile, the yield curve is as wide in absolute terms as it was at the end of 1992. Treasury yields plummeted shortly thereafter and the stock market, which had moved up sharply from its 1990-91 bottom, didn't stop for years. So perhaps some gloom about Federal improvidence might lift at least a bit (we can hope, can't we?).
The Conference Board Leading Economic Indicator has now exceeded its prior high level of mid-2007. (ECRI's equivalent indicator has not set an all-time high but is at a post-downturn new high.) Dr. Goldstein of the Conference Board stated this month: "The indicators point to a bright new year."
Because my own immediate reaction to that statement is to doubt it, and as the confidence numbers show, I am hardly alone, it's important to recognize that circumstances do change. We have the S&P 500 roughly a quarter off its high while the leading indicators used by the Conference Board are at a record. Could undue pessimism be embedded in certain stocks?
I am thinking that this could well be so, considering the meager alternatives for financial assets.
High-quality stocks share in the abundant systemic risk, but so much hot money has flowed into the speculative stuff that was beaten down a year ago that it could be that the average stock goes down while the Chubbs, Tevas, TJXs, and Oracles of the world trend up a bit and perhaps more than a bit. Unlike Federal and municipal debt, and is more or less the case with gold, there is no new supply of stock in these enterprises hitting the market for now, so oversupply is not the issue. Overvalued though the overall stock market is by many fundamental criteria, cheap short money rates and supply-demand characteristics can add to reasonable P/E's and dividends equaling or exceeding returns on cash or 2-3 year money may make high quality equities good investment vehicles in the months and years ahead even if they are swimming with overvalued lower quality shares.
Those such as yours truly who compare the U. S. to Japan post-bubble bursting should note that Japan's stock market was at its peak more overvalued than ours at its peak and kept hitting what now look like frothy levels for many years thereafter.
Cash is trash, Uncle Sam is a beggar, double-dip and systemic fears (if indeed the downturn is even truly over) abound, China may explode or implode, etc., and high-quality stocks have grievously underperformed the market. And unlike gold they even pay you to hold them. Might this be their time in the sun?
As more and more of them break out to all-time price highs with reasonable to low P/E's and charts that show a strong base, the case for that grows, just as it did with gold last summer, which surged over 15% in almost no time after it exceeded its prior high price of 2008,
Copyright (C) Long Lake LLC 2010
The news release is in PDF format and cannot be cut and pasted to this blog. Please click on the link and examine the graph on page 3. The obvious pattern is that the pattern of consumer confidence from the immediate pre-recession year to the end of recession (or depression) is so far looking just like that of the first of America's so-called jobless recoveries in the early 1990s. We know how that story ended, with the employment and investment boom of the late '90s.
What are the chances that the economy and the public mood will soar throughout this decade as it did in the '90s?
The main differences between then and now are that then there was the victory over the USSR with the coda of a smashing victory over Saddam Hussein in a war paid for by creditor nations such as Japan and Saudi Arabia.
At home, there was the aftermath of the S&L mess, but public confidence had not been shaken as fundamentally as now.
Team Obama may be not only talking the deficit reduction talk, but if healthcare reform goes through as planned, there will be up-front taxes, and there may be taxes/fees on the financial industry following the bailout. Meanwhile, the yield curve is as wide in absolute terms as it was at the end of 1992. Treasury yields plummeted shortly thereafter and the stock market, which had moved up sharply from its 1990-91 bottom, didn't stop for years. So perhaps some gloom about Federal improvidence might lift at least a bit (we can hope, can't we?).
The Conference Board Leading Economic Indicator has now exceeded its prior high level of mid-2007. (ECRI's equivalent indicator has not set an all-time high but is at a post-downturn new high.) Dr. Goldstein of the Conference Board stated this month: "The indicators point to a bright new year."
Because my own immediate reaction to that statement is to doubt it, and as the confidence numbers show, I am hardly alone, it's important to recognize that circumstances do change. We have the S&P 500 roughly a quarter off its high while the leading indicators used by the Conference Board are at a record. Could undue pessimism be embedded in certain stocks?
I am thinking that this could well be so, considering the meager alternatives for financial assets.
High-quality stocks share in the abundant systemic risk, but so much hot money has flowed into the speculative stuff that was beaten down a year ago that it could be that the average stock goes down while the Chubbs, Tevas, TJXs, and Oracles of the world trend up a bit and perhaps more than a bit. Unlike Federal and municipal debt, and is more or less the case with gold, there is no new supply of stock in these enterprises hitting the market for now, so oversupply is not the issue. Overvalued though the overall stock market is by many fundamental criteria, cheap short money rates and supply-demand characteristics can add to reasonable P/E's and dividends equaling or exceeding returns on cash or 2-3 year money may make high quality equities good investment vehicles in the months and years ahead even if they are swimming with overvalued lower quality shares.
Those such as yours truly who compare the U. S. to Japan post-bubble bursting should note that Japan's stock market was at its peak more overvalued than ours at its peak and kept hitting what now look like frothy levels for many years thereafter.
Cash is trash, Uncle Sam is a beggar, double-dip and systemic fears (if indeed the downturn is even truly over) abound, China may explode or implode, etc., and high-quality stocks have grievously underperformed the market. And unlike gold they even pay you to hold them. Might this be their time in the sun?
As more and more of them break out to all-time price highs with reasonable to low P/E's and charts that show a strong base, the case for that grows, just as it did with gold last summer, which surged over 15% in almost no time after it exceeded its prior high price of 2008,
Copyright (C) Long Lake LLC 2010
Tuesday, October 20, 2009
Surveys of Real People Rather than of Economists Unfortunately Paints an Ugly Picture
The news from real people about the economy just refuses to turn upward in any consistent fashion, despite massive government spending that has to goose up the economic numbers. Apparently larger companies have such high profit margins and those that are international see growth prospects out of the U. S. as more exciting than here that they are currently unwilling to invest for growth; and smaller companies have difficult access to financing and even the ones that carry health insurance are confused about the future cost.
Today (Oct. 20) we had a sudden relapse in two of the Gallup.com poll numbers that I watch daily. The 3-day average index of job creation (hiring/letting go), collapsed after looking stronger the past week, to a dismal -2. This is the number which represents the % of employees seeing their company adding other employees minus the % seeing them shrinking the workforce. Thus, a negative number sees more shrinkage than adding. Zero is not anywhere close to labor force equilibrium, though. When the number was strongly positive--such +20, unemployment was increasing. After all, the workforce is increasing. No matter what massaging of the data the people at the Bureau of Labor Statistics do, the employment situation is miserable. Very likely it will get better, but you know that objectively, the economy is a lot stronger early on in recessions than it is early in significant recoveries.
The other Gallup data with movement in the wrong direction is the U. S. Economic Outlook. Improvement in this number correlated very closely with the stock market up-move in March. The % seeing the economy as worsening has jumped to 60% from a recent low of 50%. The amount seeing it as improving has fallen to 34% from a recent high of 43%.
Separately, the ABC News weekly report of a poll the Consumer Comfort Index came out today and was subtitled "Back in the Dead Zone". Also, click HERE to go straight to the charts.
Last week, I noted that the S&P 500 had finally filled the gap on the chart at 1100 from the major collapse early last October. This theme was picked up by at least one analyst who has had a superb track record the past two years. Given the failure of average people to see any real improvement in the economy essentially two years out from the peak of the economy (most people thought the U. S. was in recession or worse more than 2 years ago), and given the floundering of the recent leading stocks, we are now in a classic time for what is politely called consolidation of gains.
If you click HERE on the two-year chart of GE, you will see that the panic bottom notwithstanding, an obvious downtrend is in force. The rule is that trends continue until they do not. Click HERE, HERE and HERE for similar charts of BofA, Nokia and a 5-year chart) Ford. These are charts that accurately reflect the changing business fortunes of the companies.
Click HERE for the 2-year chart of the S&P 500 (or its ETF = SPY as you prefer). This is the best of the bunch but the 2, 5 and 10 year charts taken together show no trend. Given a dividend yield of 2%, who needs it?
On all of these, the eye can see the downtrend. For all of these, business prospects simply appear to be worse than they were perceived to be in the past. The naked eye can easily see the loss of inventor support revealed by the downtrends.
If you adjust either for gold or for two or ten-year Treasuries, the downtrends are steeper (though in fairness, Nokia pays a good dividend).
Marty Zweig popularized the term, "Don't fight the tape". He was correct.
Yes, I will bravely predict that the above surveys will show rampant optimism in the future. But for now, business conditions are compatible with stock averages much lower than they are now. Federal finances are compatible with interest rates ranging from Japan-style on the low end to much higher. That Team Obama is apparently now planning yet another stimulus package makes me withdraw any optimism for lower rates in the near-term. Things are far too fluid to guess, even forgetting market manipulation.
In the days ahead, we will discuss technical patterns and some fundamental thinking about different asset classes, including individual stocks that may be poised to outperform if past is prologue.
Copyright (C) Long Lake 2009
Today (Oct. 20) we had a sudden relapse in two of the Gallup.com poll numbers that I watch daily. The 3-day average index of job creation (hiring/letting go), collapsed after looking stronger the past week, to a dismal -2. This is the number which represents the % of employees seeing their company adding other employees minus the % seeing them shrinking the workforce. Thus, a negative number sees more shrinkage than adding. Zero is not anywhere close to labor force equilibrium, though. When the number was strongly positive--such +20, unemployment was increasing. After all, the workforce is increasing. No matter what massaging of the data the people at the Bureau of Labor Statistics do, the employment situation is miserable. Very likely it will get better, but you know that objectively, the economy is a lot stronger early on in recessions than it is early in significant recoveries.
The other Gallup data with movement in the wrong direction is the U. S. Economic Outlook. Improvement in this number correlated very closely with the stock market up-move in March. The % seeing the economy as worsening has jumped to 60% from a recent low of 50%. The amount seeing it as improving has fallen to 34% from a recent high of 43%.
Separately, the ABC News weekly report of a poll the Consumer Comfort Index came out today and was subtitled "Back in the Dead Zone". Also, click HERE to go straight to the charts.
Last week, I noted that the S&P 500 had finally filled the gap on the chart at 1100 from the major collapse early last October. This theme was picked up by at least one analyst who has had a superb track record the past two years. Given the failure of average people to see any real improvement in the economy essentially two years out from the peak of the economy (most people thought the U. S. was in recession or worse more than 2 years ago), and given the floundering of the recent leading stocks, we are now in a classic time for what is politely called consolidation of gains.
If you click HERE on the two-year chart of GE, you will see that the panic bottom notwithstanding, an obvious downtrend is in force. The rule is that trends continue until they do not. Click HERE, HERE and HERE for similar charts of BofA, Nokia and a 5-year chart) Ford. These are charts that accurately reflect the changing business fortunes of the companies.
Click HERE for the 2-year chart of the S&P 500 (or its ETF = SPY as you prefer). This is the best of the bunch but the 2, 5 and 10 year charts taken together show no trend. Given a dividend yield of 2%, who needs it?
On all of these, the eye can see the downtrend. For all of these, business prospects simply appear to be worse than they were perceived to be in the past. The naked eye can easily see the loss of inventor support revealed by the downtrends.
If you adjust either for gold or for two or ten-year Treasuries, the downtrends are steeper (though in fairness, Nokia pays a good dividend).
Marty Zweig popularized the term, "Don't fight the tape". He was correct.
Yes, I will bravely predict that the above surveys will show rampant optimism in the future. But for now, business conditions are compatible with stock averages much lower than they are now. Federal finances are compatible with interest rates ranging from Japan-style on the low end to much higher. That Team Obama is apparently now planning yet another stimulus package makes me withdraw any optimism for lower rates in the near-term. Things are far too fluid to guess, even forgetting market manipulation.
In the days ahead, we will discuss technical patterns and some fundamental thinking about different asset classes, including individual stocks that may be poised to outperform if past is prologue.
Copyright (C) Long Lake 2009
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.
Copyright (C) Long Lake LLC 2009
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.
Copyright (C) Long Lake LLC 2009
Subscribe to:
Posts (Atom)