From a subscriber who is a massive market and economic geek (I mean, seemingly insatiable in the things he digs up), comes this MoM change on various economic indicators. This comes by way of @dv_dend
The ECB having announced and then implemented at least some kind of QE plan, the entire economist community has adjusted their economic projections upward in uniform, flocking fashion. They haven’t had to make much of an adjustment because they never downgraded economic expectations much to begin with. That is why almost every news story about the economy (and not just in Europe) includes some grammatical derivation of “unexpected” usually right in the opening paragraph.
German factory orders unexpectedly fell for a second month in February in a sign Europe’s largest economy is still prone to risks.
If that isn’t representative from Bloomberg, here’s another opening from Bloomberg also discussing German factory orders:
You see the humor of it all.
Policy makers’ shear predictability (good cops and bad cops always at the ready, with market events dictating which ones eat the mic at any given time. Or if you prefer the little clown car analogy, they drive to center ring, honk honk honk… and out they spill doing tricks and feats of daring do at every sensitive juncture when the market needs a little relief.
The hyper intense preoccupation the market (a collection of millions of decision makers and black boxes) has for the buttoned down eggheads, and its responses to each and every predictable Jawbone does not help people keep a handle on rational market management, but it is entertaining for now as long as you’re not positioned incorrectly (like long or short, ha ha ha).
It’s stupidly comical in the way it continues so predictably with people apparently still taking it seriously. Well, the mainstream media do, anyway. I guess they are not really people.
Dow down 100, ‘Fed may delay rate hike’ story gains steam, Dow up a 100. What’s the diff? At some point this skittish silliness is going to end and the market will choose a direction.
Here is what is actually happening. We are in a long and slow (and I mean slooooow) process of witnessing the zenith of confidence in the Fed (Peak Fed) as one day, even the dimmest, most sycophantic market participant is going to cotton on to the fact that these people are no more knowledgeable or in control than the rest of us (they just have a bigger bag and more tricks). Peak Fed → Confidence drains → Market gets about its business.
It’ll take patience though; sort of like how the ‘Peak Oil’ promotion took a long time to play out. By the way, consider ‘Peak Fed‘ as a © ™ of Biiwii.com. It’s a great theme, and it is happening in my opinion, right here and now. Best of all, it’s got very distinct investment themes going forward.
Last week over at NFTRH.com we noted that GDP was lame, Corporate Profits were in decline and well, this was just not gonna be good for anyone. It’s just plain bad chicken!
That is my style of less than serious economic discussion. From FactSet however, comes a more serious style of economic discussion.
“For Q1 2015, 85 companies in the S&P 500 have issued negative EPS guidance and 16 companies have issued positive EPS guidance. If 16 is the final number of companies issuing positive EPS guidance for the quarter, it will mark the lowest number since Q1 2006. The number of companies issuing negative EPS guidance for Q1 2015 is above the trailing five-year average (76), but slightly below the trailing one-year average (87) for a quarter.”
Read the whole article linked above. It’s pretty short.
So we have declining corporate profits and guidance and we have a steadily easing ISM per this post at NFTRH.com. What we also have is a preferred plan that is creeping forward inch by mind numbingly deliberate inch.
The continued disappointment of economic data is starting to weigh, but only as concerns might be directed toward Q1. Despite all projections for a sharp rebound after January’s dreariness, February figures continue on the downside and now March indications are not much better. The latest is the ISM Chicago Business Barometer (formerly Chicago PMI) which remained in significant contraction for a second straight month in March. That would tend to suggest warmer weather is not yet equating; expectations remain undeterred.
No one indicator should be considered in a vacuum, especially one that is the ratio of a substance that has unique supply/demand fundamentals (Palladium) vs. one that is stable (Gold). But here it is anyway, the Pall-Gold ratio as we have used for a long while in NFTRH. Why? Because for whatever reasons, it has been in line with economic cycles.
Here’s the weekly chart we usually use, showing a volatile series of spikes and drops. The indication is still economic trend up, but as noted in NFTRH 336 “If this volatility keeps up it is going to turn the moving averages down and put a red arrow there.”
We also noted that nominal PALL is on the verge of entering a bear market, to join its big bro, Platinum.
Here is what Palladium is doing vs. Gold (roughly) today (PALL-GLD)…
Okay so remember, it is just an indicator made up of two discrete items. But it is also an indicator that tends to be in line with economic up and economic down cycles.
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).
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!