No Housing Bear Signal

By Tom McClellan

No Bear Market Signal Yet From Housing

US New Home Sales versus DJIA
March 26, 2015

Before each of the really ugly bear markets of the past 30 years, there has been an important signal from housing data well ahead of time.  We do not have such a signal now, and so that portends more upside in the months ahead for stock prices.

In fact, the past 3 months have seen a pretty substantial upsurge, especially in the Northeast and South regions of the USA as tracked by the Census Department.  That takes the seasonally adjusted annual rate of new home sales to its highest level since February 2008.  Generally speaking, seeing this home sales data make higher highs has been good news for the long-term path of stock prices.  It is when the two diverge that problems start to develop.

Continue reading No Housing Bear Signal

Durable Goods Take Feb.

By Alhambra Investment Partners

Durable Goods Take February Too

So far the economic retrenchment has persisted into February, outlasting any significant January weather. The latest worrisome figures came in the form of durable goods and especially capital goods. The former is another peg in the consumption side while the latter is one of the few glimpses of wealth creation (if far from a complete one). Both sides, demand and supply, have had a rough run under the “rising dollar.” Like retail sales, it is clear that the economy is no longer just sputtering along and is now poised precariously.

Shipments of product are not moving very quickly at all but the pace of new orders has seriously slackened which does not suggest this is a “transitory” development. New orders for durable goods ex transportation have been below 1% year-over-year in both January and February; while new orders for capital goods non-defense non-aircraft were flat in both months (February was actually slightly negative).

Continue reading Durable Goods Take Feb.

Currencies

By INO.com

currenciesThe June Dollar was lower overnight as it extends the decline off March’s high. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. If June extends this month’s decline, the 25% retracement level of the 2014-2015-rally crossing at 95.62 is the next downside target. Closes above the 10-day moving average crossing at 98.58 would confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 98.58. Second resistance is March’s high crossing at 99.30. First support is the 25% retracement level of the 2014-2015-rally crossing at 95.62. Second support is the late- February low crossing at 94.53.

Continue reading Currencies

This Morning’s NFTRH Update on US Markets

nftrhYou could say it was cutting it close, but NFTRH has been in caution/cash raising/profit taking mode on the most recent up swing in the markets.  That is because I have committed to a view that will not invest (or go long-term bearish for that matter) until I get new, low risk trends across the markets.

So it has been swing trading, making sure to take the majority of profits and limit losses where applicable.  Because I am not nearly convinced that the market does not have an upside blow off in its future prior to the bull’s flame out, short positions have been worked the same way; take profits and limit losses.  For years I have felt the market is being driven berserk by those clown car shows.  That is not investment worthy.

Anyway, I am not the genius to tell subscribers what is going to happen and when, but I am the market participant who is going to tell them what I think and why I think it.

This morning’s subscriber update is opened to the public (I know, it’s not a heck of a lot of good now for people caught by the market’s hard down, but there is still value in it because it shows some signs I did not care for (while the SPX was still positive) and felt subscribers should know.

I think NFTRH is the best all around market service that I know of.  Maybe not the most number crunchy, technical (well, it can get technical, sure) or bold (predictions are for gurus).  But it is always on the job and it has kept its subscribers in position to succeed from its earliest days.

First we took advantage of the deflationary hysteria in 2008 to the tune of massive gains owing to the inflation we anticipated (I still recall using my late friend Jonathan’s classic line in an early NFTRH… “it’s inflation all the way, baby!”), then in protecting ourselves from the precious metals bear and most recently in interpreting the ‘Canary in the Coal Mine’ (Semiconductor Equipment sector) as bullish for manufacturing and the economy, and thus bearish for gold no matter how vigorously PM boosters waved their pom poms.

Subscribe to NFTRH before the price increases this year.  You’ll be glad you did, assuming you are not a casino patron, momo addicted wise guy looking for a wise guy of even more epic proportions to give you paint by number instructions as if you are an automaton incapable of rational and independent thought.

Okay, now the promo is getting silly; but you get the picture.  A weekly report and dynamic in-week updates that together are always fine tuning multiple markets in service to surviving and thriving during the interim trends but waiting ever so patiently for the next big trends.  Oh, they’re coming.

US Dollar Updated

By Biiwii

A real time view of the US dollar index by daily chart.  Today the trend line support was just about hit.  Lateral support resides at 94-95.  RSI is not over sold, but it has dropped to and through levels where it bounced in the past.  This is actually a negative on balance now that it is below 50 and is in a deeper correction than any since the rally started last spring and summer.

usd

Here is a longer view that includes the rally’s beginning.  Notice how the major trend line (as opposed to the short-term one above) intersects the lateral support cluster.  That is what we’d call some nice confluence and I’d expect that pending interim bounces, Uncle Buck can make its way down there.  But it remains bullish on a bigger picture.

usd2

 

Expensive Copper

By Steve Saville

Considering the overall commodity backdrop, the recent sharp rebounds in base metal prices and the copper price in particular are both interesting and incongruous.

Under the heading “Copper Bottom” in a TSI commentary a few days ago I discussed last week’s upward reversals in the copper price and the Industrial Metals Index (GYX). I assumed, at the time, that last week’s price gains were partly due to the risk that supply would be disrupted by the blockade of Freeport’s massive Grasberg copper mine in Indonesia, and therefore that the removal of this risk at the end of last week would result in some of the price gains being given back this week. Strangely, however, the copper price spiked higher at the beginning of this week and briefly challenged the bottom of the major $2.90-$3.00 resistance range before pulling back to the high-$2.70s (a few cents above last week’s closing level). It seems that games are being played by large-scale participants in this market.

I plan to write some more about copper later this week at TSI, but at this time I wanted to point out that the bearish participants in the copper market have relative valuation on their side. As illustrated by the following charts, the copper price is presently at a multi-decade high relative to the CRB Index and at its highest level since 1998 relative to oil.

copper

Post-CPI

By Michael Ashton

Summary of my Post-CPI Tweets

Below you can find a recap and extension of my post-CPI tweets. You can follow me @inflation_guy or sign up for email updates to my occasional articles here. Investors with interests in this area be sure to stop by Enduring Investments.

  • core CPI +0.157%, so it just barely rounded to +0.2%. Still an upside surprise. Y/Y rose to 1.69%, rounding to 1.7%.
  • y/y headline now +0.0%. It will probably still dip back negative until the gasoline crash is done, but this messes up the “deflation meme”
  • (Although the deflation meme was always a crock since core is 1.7% and rising, and median is higher).
  • Core ex-housing +0.78%. Still weak.
  • Core services +2.5%. Core goods -0.5%, which is actually a mild acceleration. So the rise in core actually came from the goods side.
  • Accelerating major cats: Apparel, Transp. Decel: Food/Bev, Housing, Med care, Recreation, Other. Unch: Educ/Comm. But lots of asterisks.
  • Shelter component of housing rose back to 3% (2.98%) y/y; was just fuels & utilities dragging down housing.
  • Primary rents: +3.54% y/y, a new high. Owners’ Equiv Rent: 2.69%, just off the highs.
  • In Medical Care, Medicinal Drugs 4.13% from 4.16%, but pro services +1.47 from +1.71 and hospital services 3.28% from 4.08%.
  • In Education and Communication: Education decelerated to 3.5% from 3.7%; Communication accel to -2.2% from -2.3%.
  • 10y breakevens +3bps. Funny how mild surprises (Fed, CPI) just run roughshod over the shorts who are convinced deflation is destiny.
  • No big $ reaction. FX guys can’t decide if CPI bullish (Fed maybe changes mind and goes hawkish!) or bearish (inflation hurts curncy).
  • Here’s my take: Fed isn’t going to be hawkish. Maybe ever. So this should be a negative for the USD.

Continue reading Post-CPI

Googling Ruth Porat

By Biiwii

Sometimes we don’t know why a chart is doing what it is doing.  All I knew was that GOOGL was making a nice chart pattern, so it was noted as an NFTRH+ trade setup.

Having sold the initial run, I bought it back on the drop to a secondary buying area, as noted in NFTRH.  Today we are treated to some hype about Morgan Stanley’s high powered CFO trading her Manhattan view for Mountain View.  Ruth Porat joins the team.

Not to make light of it.  It’s probably a nice move for Google.  But the stock is moving on it and in that regard it is hype.  So I may decide to sell.  Since you don’t pay me to make decisions for you I’ll not publicly make that decision.  NFTRH subscribers who may have taken these trades are profitable and they are grown men and women who can make their own decisions as to what profit is acceptable as well.

The target of 590 remains, but I often sell below targets.  It’s just how I do it.

googl

CPI Ticks Up

By Biiwii

Up by .2% the BLS reports this morning…

Consumer Price Index Summary

Here is the graphical view of recent CPI history…

cpi

The US dollar has been correcting and over at NFTRH.com we showed some support parameters for Uncle Buck.

Also, as noted in the precious metals update for subscribers this morning, silver is making a move vs. gold and this will be a key indicator on whether or not a good old fashioned ‘inflation trade’ can get going.  It has not triggered a signal yet, but it is flirting.

The thing is, there has been a nice deflationary pull coming out of Europe and Asia that has played into the US Goldilocks scenario (strong US currency, strong stock markets and tamped down prices within the economy).  Europe is inflating its asset markets (i.e. trying like hell to boost prices)… Europe Fights Lower Prices.

[edit] Also see Euro Area PMI’s Continue Upward just posted at NFTRH.com.

Now, prices may be becoming an issue within the US economy as the global situation eases (literally).

What Home Sellers Know That Economists Don’t

By Alhambra Investment Partners

There really isn’t much to say about the housing market in the US right now except that economists clearly don’t know what to do with it. Having signed up wholeheartedly for the “booming” economy, or at least the narrative thereof, flagging sales in both new homes and resales doesn’t compute. Instead of recognizing why that may be, especially as it relates to the clear, obvious and unambiguous monetary influence in it all, the best they can come up with is something like this:

Lawrence Yun, NAR chief economist, says although February sales showed modest improvement, there’s been some stagnation in the market in recent months. “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,” he said. “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”

I’m at a total loss to understand what that statement actually means in anything like a real economic circumstance. According to basic supply and demand, “strong price growth” should not in any way be a constraint upon supply of houses for sale; quite the opposite. Mr. Yun takes this to an extreme whereby he actually supposes that lack of supply is restraining buyers!

Continue reading What Home Sellers Know That Economists Don’t

Peak Fed

By Biiwii

clowncar

While we’re on the subject of Mr. Bullard, the opening segment from this week’s NFTRH (#335) had a little fun with the Fed.  Serious multi-market and economic analysis came later, but sometimes you just need to shake your head in awe and wonder.

Peak Fed

The Fed is important because millions of market participants believe it is important and a critical mass of people are under the illusion that its policies have put the “Great Recession” in the past and laid a path for a sustainably good economy going forward.  In short, confidence in the Fed has never been more pervasive as it reaps the reward (the respect and confidence of the majority) for a job well done.

Never mind for now that previous Fed policy is what fomented the “Great Recession” (i.e. a near liquidation of the system) and the supposed remedy has been similar but more intensive policy using official credit as opposed to commercial credit as the stimulant.

Through this cycle I have watched Gold Bugs that used to rail against “Helicopter Ben” fade to black, the Bond Vigilantes who would short the long bond (including one over exposed Vigilante, formerly of PIMCO) get their hats handed to them and the general backdrop of distrust and revilement toward the Fed simply get erased somehow.

It’s as if a majority of market participants are little more than black boxes with certain coding for certain cycles.  Today the code might look something like this…

<style=”subservient”>

<caption>Sit quietly and we will control all that you see and hear</caption>

Continue reading Peak Fed