GDP, Philly Fed, Retail, Trannies
A quick review of some recent data points:
• Major retailers have dissappointed, either in revs, profits or forecasts: Wal-mart, Best Buy, Circuit City, etc.
• Transports, including FedEx, Yellow RoadWay, and Landstar, have all warned of reduced tonnage volume, profit pressure, and poor outlook.
• Dr. Copper, the metal with the PHD in economics, is now at 6 month lows.
• December Philly Fed survey consensus was +4.0, down from from 5.1 in November. It came in at a negative -4.3 (lowest since Apr '03's -6.8) New orders negative for a second month in a row, Backlogs plummeted;
• Economic growth in the U.S. slowed in the third quarter to a 2% annual rate, dragged down by the biggest decline in home building in 15 years.
• NAHB's index of builder confidence for sales of new, single-family homes slipped in December to near its lowest level in 15 years; The large inventory of unsold homes has not been reduced.
• New Home Building Permits, which foreshadow future activity, fell 3% in November from October and were 31.3% lower than a year earlier.
Is this what a soft landing looks like? (We think not)
The slow motion slow down continues . . .
UPDATE: December 23, 2006, 11:17am
Hey, wontcha look at that : Nouriel Roubini offered up a similar list:
Thursday, December 21, 2006 | 02:39 PM | Permalink
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» RIMM Shot! from The Learning Curve
Barry Ritholz, dedicatee of the 2007 Stock Trader's Almanac, on recent economic data points, asks "Is this what a soft landing looks like? (We think not)." Maybe it does, BR. A 2% GDP in the rear-view mirror is slower than we'd like, but... [Read More]
Tracked on Dec 21, 2006 7:00:19 PM
» Economic Data Points and Interpretation from A Dash of Insight
The issue facing investment managers is whether the economy is hitting what Dallas Fed President Richard Fisher calls cruising altitude and speed and we call The Glide Path (negatively cited by many as a soft landing) or whether there is [Read More]
Tracked on Dec 22, 2006 1:25:49 AM
Comments
After reading this I expect the market to surge ahead!!
Posted by: Mike M | Dec 21, 2006 2:52:43 PM
these are the best of times. why, just yesterday i watched larry kudlow declare it so. ipso, fatso.
Posted by: j d ess | Dec 21, 2006 3:19:56 PM
I think it would be interesting to read the "analysis" of the economic numbers in late 1994....Sounds familiar to me.
A little fear induced air pocket in here is just what the Dr ordered.
As Cramo says, SELLSELLSELL!!
Posted by: Fred | Dec 21, 2006 3:28:31 PM
ipso fatso?
now THATS entertainment!
Posted by: Barry Ritholtz | Dec 21, 2006 3:30:58 PM
I am very curious to see how the low end retailers do for Christmas. Companies like Wal-Mart, Target and Dollar General. I think what is going to happen is the low end is hurting and will eventually take the high end with them.
I find it really funny when somebody on CNBC talks about how good retail is because they were in Tiffany's and it was packed.
Posted by: GerryL | Dec 21, 2006 3:39:00 PM
"I think it would be interesting to read the "analysis" of the economic numbers in late 1994....Sounds familiar to me."
Sounds alien to me. Back in 1994, the housing sector was saying adios to it's recession; today this sector has just told the elevator man "basement, please". In 1994, foreclosures were close to their peak. Today, the ball is just starting to roll.
Posted by: winjr | Dec 21, 2006 3:40:52 PM
ipso fatso?
credit bart simpson
Posted by: j d ess | Dec 21, 2006 3:44:49 PM
Copper broke down through 300 yesterday and lumber has been in a steep decline since May. Two of the most widely used commodities when the economy is expanding are falling apart. Doesn't bode well for the economy in my opinion. Makes you wonder if Goldilocks is about to be eaten by the three bears.
Posted by: Gary | Dec 21, 2006 3:50:32 PM
By trannies do you mean transportation, or transsexuals? Because spending on sex-reassignment surgery isn't really as cyclical as shipping.
Posted by: Aaron | Dec 21, 2006 3:57:10 PM
Just a question I've been pondering: Can the "real" economy and the "finance" economy continue to live in separate worlds?
On the real front ...
The economic news looks grim. Growth is slowing. The yield curve has been inverted for months. Housing is in the dumps. Autos stink. Retail is struggling. yadda, yadda, yadda.
On the finance front ...
Stocks are at/near new highs, emerging markets are going crazy, yields on many kinds of high-risk debt are at or near record low spreads vs. U.S. Treasuries, and Goldman Sachs is handing out $10 million checks like candy.
Can this apparent divergence between the "real" economy and the "finance" economy continue? Or put another way, is the real economy about to rebound and improve, as the finance economy appears to be projecting? Or is the finance economy about to go kerflooey, bringing it in line with the real economy? Lots to ponder this holiday season, IMHO.
http://interestrateroundup.blogspot.com
Posted by: Mike_in_FL | Dec 21, 2006 4:03:04 PM
There is no doubt that the fed and other CB's are providing liquidity to "soften" the slowdown.
Posted by: James | Dec 21, 2006 4:19:53 PM
Soft landing! Soft landing! Soft landing! Oops, that concrete isn't so soft.
I love the proud 1994 crowd. Do they They understand anything of economics or cycles or the dislocations that cause market movements? For that, they will learn a lesson by giving me their money.
Does anyone know why the market blew north in 1995? Bueller? Bueller? Anyone? Well, I'll say six months or a year or whatever after I first posted it on here. A 40% drop in long rates. That was coupled with tremendous expansion of the homebuilding market. DOH!
Expecting that any time soon with homebuilding rates still a few trillion units above long term trend? Bueller? Bueller? Anyone?
Posted by: BDG123 | Dec 21, 2006 4:26:41 PM
we'll take out 1995 on the other side of this nice multi-generational double top
Posted by: scorpio | Dec 21, 2006 4:37:53 PM
Financing and finance/bank/broker stocks did well until early 2001, they were the last group to hit new highs and then turn down so I would asume this could happen again
There are many myths being shouted at CNBC, broker stocks leading the way is one of them, if I was a bull I would always prefer having semi stocks leading the way, at the moment semi's reached their 2 year cycle low earlier this year (that cycle is so obvious anyone can see it, look at KLAC 20 year back), despite semi's having hit this low they are lagging badly, not the best of reactions starting the new cycle
I bought the last semi cycle low in 2004, despite it's fenomenal trac record I did not try to buy that low this year
Posted by: Magnus | Dec 21, 2006 4:49:59 PM
I am watching Kudlow right now. Kudlow and another economist are talking about how the housing problem hasnt spilled over to other areas. How come economists are willing to admit that there is a long lag time in everything but housing?
Posted by: GerryL | Dec 21, 2006 5:11:03 PM
Magnus is exactly right. Part of topping is a run to financial assets. The semis made a lower lower and lower high. The trend in semis is DOWN.
Now, that said, I'd rather own megacap semis/semiequips than most of this other ridiculously priced stuff if someone held a gun to my head.
Posted by: BDG123 | Dec 21, 2006 5:13:15 PM
What was the metal with the PHD in economics saying when it hit speculative, multi-decade highs? You weren't talking about how that was an indicator of a strong, vibrant world economy with $4 copper, were you?
Talk about cherry-picking data. Whoa!
Posted by: Bill a.k.a. NO DooDahs | Dec 21, 2006 5:22:32 PM
Actually, I was: I discussed the Asian exapnsion, how the U.S. is now in competition with China for raw materials, and how commodity bull runs tend to make new all time highs -- and called for highs in all the base/Industrial metals: Aluminum, Copper, Steel, etc.
And in fact, that same historical approach -- new bull market should make new highs -- is why I remain bullish on the Precious metals, most of which have NOT made new highs: Gold, Silver, Platinum, etc.
See this:
http://bigpicture.typepad.com/comments/2005/10/wrong_on_inflat.html
Posted by: Barry Ritholtz | Dec 21, 2006 5:25:37 PM
Barry, read the question.
"You weren't talking about how that was an indicator of a strong, vibrant world economy with $4 copper, were you?"
You were talking about new highs in speculation, NOT about it showing economic strength. Throughout copper's bull run, "Dr. Copper," "the metal with the PHD," you were talking about a structurally weak economy. It's talking out of the side of your face to say copper's recent six-month low is a sign of a weak economy, when you didn't point to copper's multi-decade high as being a sign of the healthiest economy ever, which is should be if copper really was predictive (it isn't).
Good luck on the PMs. I kissed them goodbye earlier in 2006 ... nice ride, though.
~~~
BR No, I was talking about several factors:
1) Asia was booming, thanks primarily to China.
2) When I rec'd EWJ, it was about $6
3) All dollar denominated commodites rose in price, thanks to low rates/cheap money/increased money supply/weakening dollars.
4) Demand for Copper was also booming
please do me a favor, and use the Google search pn the site. This stuff is all old news, and you are out of sync with what's been said before -- years ago in some instances.
Posted by: Bill a.k.a. NO DooDahs | Dec 21, 2006 5:36:19 PM
Are Hank and Ben back from China yet? And what happened? Will we see a Chinese carry trade in 2007 to "stabilize" the SLOW decline of the dollah,ie,another crack in the reserve status of the dollah whereby US external debt has to be paid back in the local currency of origin of that debt?
Posted by: Teddy | Dec 21, 2006 5:50:16 PM
The economy is structurally weak. And, with real estate cratering (the only thing holding copper up along with speculative hedge funds), it's time for a dumper. $1 copper is economic growth. $4 copper is 400% higher than the highest high in the last one hundred years. If you think that is from economic growth, I still have that land in St Bernard Parish.
Oh, and btw, it is predictive. Is is highly correlated historically. Bill, if you are going to post, you need to get your ass in the game. Your critical commentary might be worthwhile if there was any fact behind it. Critical just to be critical is the worst of both worlds. You are an ass and you don't know what you are talking about. At least get one of them right.
Posted by: BDG123 | Dec 21, 2006 5:57:08 PM
Yet, the 7th year of a Presidential cycle has been a fantastic year for the stock market going all the way back to the Mayan Empire.
Everyone on the planet, plus a very large percentage of those from off-planet, expect some massive selling in the market once the 2006 Tax Year wraps up. What if...
Posted by: muckdog | Dec 21, 2006 6:16:14 PM
ahahaha...we have become so stupid pat buchanan is the only one speaking anything of sense...hahahaha...when pat buchanan is the only person that can actually tell you people what's going on, you are truly F'd! HAHAHAHAHAHA
Posted by: DD | Dec 21, 2006 6:28:34 PM
Everyone on the planet, plus a very large percentage of those from off-planet also knows about about the pres cycle in the market
If it has anything to do with how the government works, with dem taking over congress and senate I guess it is easy to suggest that the gov won't be able to do much "propping" to try and buy their next election
Posted by: Magnus | Dec 21, 2006 6:56:15 PM
Actually the sixth and seventh year of the decade show a high percentage where major tops were made in the markets. Some of the worst declines in history came after a year ending 6 or 7 top. Of the 15 largest bear market declines 8 of them occured when the market topped in a year ending in 6 or 7. Which is not to say that it will neccesarily unfold like that this time. However we do have quite a few indicators signalling a slowdown and any recession must start with a slowdown. So all in all I don't think I want to be buying like it's 1974 again. I'd rather be in cash and miss a little on the upside than risk being caught in vicious bear market. Sooner or later it is going to be like 1974 and I want to be ready to buy not sell out of desperation.
Posted by: Gary | Dec 21, 2006 6:57:34 PM
