Earlier, you heard it from Jeff Gundlach, whom one can not accuse (at least not yet) of sleeping on his laurels and/or being a broken watch, who told his listeners to "reduce risk right now" especially in the frenzied momo stocks. Now, it is David Rosenberg's turn who tries to refute the presiding transitory dogma that 'things are ok" and that a Greek default will be contained (no, it won't be, and if nobody remembers what happened in 2008, here is a reminder of everything one needs to know ahead of the "controlled", whatever that is, Greek default). Alas, it will be to no avail, as one of the dominant features of the lemming herd is that it will gladly believe the grandest of delusions well past the ledge. On the other hand, they don't call it the pain trade for nothing.
From Gluskin Sheff
LET'S GET REAL
We are constantly being told how much better the economy is doing. It's incredible what the January employment report did to people's perceptions of the macro landscape. It's as if we were just transported to the mentality that prevailed this time last year. Below we chart out the YoY trend in core capex orders on a quarterly basis ... the pace has slowed now for six quarters in a row.
The peak was 20.8% in the second quarter of 2010, but then again, that comparison was skewed by coming off the depressed 2009 base. In Q4 of last year, the trend moderated to 7.3% from 9.5% in Q3, to actually stand at its lowest level since the end of 2009. Food for thought.
Maybe the economy seems to be doing better because we have all adjusted our expectations so radically after being disappointed for so long "” I mean "” take 2011 as an example. A year that would normally see 5% real GDP growth for this stage of the cycle came in at a woeful 1.7%. This, despite a $3 trillion Fed balance sheet (triple its normal size), zero percent policy rates now for three years and now going on year number four of $1 trillion-plus fiscal deficits. Based on all this stimulus, if this were a normal post-recession recovery, GDP growth would be 8% right now, not sub-2!!
RISKS LOOMING BIG TIME
I remain amazed at how the consensus economics community is so certain the U.S. economy has suddenly hit escape velocity ... again! The economy is on major duty life-support and yet the recession, we are told, ended nearly three years ago. And the best the economy can do is a trailing GDP trend of 1.7%. Go figure. Housing has bottomed, we are also told. No kidding? From a real GDP standpoint, residential construction has actually contributed to headline growth for three quarters in a row, and overall growth was still tepid.
In any event, in terms of peak contribution, it's probably over. And yet economists talk about this as if it's new and not already priced into the market. Of course auto sales are doing fine and this is a heck of a model year"”this is an area where an argument can be made that there is some pent-up demand. But what is interesting is that miles driven are down nearly 1% on a YoY basis "” buy more cars, drive them less. But autos are just 10% of total consumer spending on goods and the improving trend here masks a serious deceleration in service expenditures, which represent the bulk of household outlays.
One wild card is gasoline prices which are on a rising trend. Four bucks by May looks realistic and that alone would siphon around $70 billion from consumer pocketbooks right into the gas tank. Capital spending growth is following the pace of corporate profits on a downward trend to boot. The boost from inventory accumulation is behind us. Governments are bent on austerity "” that remains a secular theme. The biggest hurdle ahead: the hit to the economy from a widening trade deficit. The numbers out for December we saw on Friday were the thin edge of the wedge "” that widening occurred for different reasons (inventory-induced import boom). Wait until the European recession and Asian slowdown hits the export sector.
Preaching to the choir.
Indeed. Still good to read though, considering CNBC and Bloomberg can't seem to spread enough bullish fairy dust...
Bullish...or bullshit fairy dust?
Want to talk risk? Try taking a morning walk around a track and reading the bible with your two daughters in Orange County while black -
http://latimesblogs.latimes.com/lanow/2012/02/marine-shot-.html
A veteran Orange County sheriff's deputy feared for the safety of two young girls sitting in a parked car when he shot and killed a Marine sergeant in a dark parking lot near San Clemente High School, authorities said Friday.
Sgt. Manuel Loggins Jr. was shot early Tuesday as he started to get into the SUV where his two daughters -- 9 and 14 -- were sitting, authorities said. Jim Amormino, a spokesman for the department, said the deputy was fearful that Loggins -- who he said appeared to be acting irrationally -- was about to drive off with the girls.
"The real threat that was perceived was the safety of the children," Amormino said.
"The deputy formed an opinion that he had a deep concern for the children, that he would not allow Mr. Loggins to drive away with the kids," Amormino said.
A former commanding officer said Loggins routinely went to the school with his daughters during the early-morning hours to walk the track and read the Bible.
Amormino said Loggins was not armed and that it doesn't appear the incident was alcohol- or drug-related.
The shooting is being investigated by the Orange County district attorney's office. The deputy, a 15-year veteran, is on paid leave, which is routine in officer-involved shootings.
This cop is on PAID leave!?
One day soon people aren't going to give a d@mn that it's illegal to kill cops... just 'cause they're cops. I lived in New Zealand for a while, and one of the first things I noticed was how you could drive around a large city all day and maybe see only two or three cops in six hours of driving aorund. I see three cops in the first ten minutes of driving around my sleepy suburb in Florida. Now they're shooting people just because they think they're dangerous while the "brotherhood" protects them and sends them on paid leave while they fix things up?
"RISKS LOOMING BIG TIME" - uh yeah we know.
The risks are all over the place. I agree. But you still have to play the tape. Quiet the noise.
Armaggedon please....
Armaggedon please....
Absolutely NOT! That is exactly what they want. See below. Watch the information on both posts.
Fuck this market!! LOL
LD scenario - is still alive (meaning the TOP could already be in place) -- the sharp rally into the close today could have been Leg B of C. LD's are comprised of 3 waves primarily. The market would need to turn down and put in a new low below today's low. My target is 1336 SPX for the C leg of the LD (leading diagonal)
http://jeffreygtc.blogspot.com/2012/02/tuesday-february-14th.html
Fuck Rosenberg -- bearish for a 3 year rally...now he's getting bullish?!?!
You need to reconfigure your perspective.
There is no rally. There is no market. There is no capitalism.
It all ended in 2008. Your target is decided or not decided by a digital playground, not an array of humans making predictions on company performance.
Open your eyes, guy. Correlations last year were 0.86! 86% of the variance in a stock was defined by the S&P as a whole. There is no stock market. There are only SPY algorithms.
Rosenberg needs to be conscious of only one thing in this overall context, and that is the Lesson of 2011. That is Governments Will Do Anything to keep the wheels turning. They will murder people (Gadaffi), they will jail people and later drop charges if they need them out of the way (DSK), they will force people to lend money to others they don't want to lend to (the Greek bond swap).
Similarly, it's an election year and the Strategic Petroleum Reserve can hold gas prices down long enough for November. If gas is to go high this year, it has to do so very slowly and then not spike until late September when it's too late for Obama to stop it in time.
So don't bank on gas prices following "fundamentals". Governments care about nothing but re-elections.
Nice post, Crash,
All true and the market is the virtual reality that can only be sustained by moving away from the street of the real world. They will do this depite the knowledge that it will fail, because they don't know what else to do. Neither do I.
But I do know that some of us old timers were having this discussion from the crash of '87 on, and we decided that the market would never be a real market again; and it turned out we were correct. So what?
We didn't have the guns then and we don't have the guns now-----the other side has the guns and they will use them. It is no longer a country that I recognize or can own. Perhaps---PERHAPS, more people will begin to understand that Occupy is the only game in town for now, and begin to at least send those young idealists money enough to carry on the only resistence there is; I hope so.
The infiltrators among are getting paid to inflame and ridicule anything that even seems like a tiny threat, So I hope all the real people here do not become discouraged by the number of hits the red arrow receives---fuck'em.
We never imagined in '87 that tyhere would be any market without humans, but as you point out---this is where we are. What to do? Shit, I don't know---but, I will do nothing because it seems most likely without something to push against---these vandals will self destruct as has the dead machine they tried to foist upon the entire species---again, I say---fuck'em.
We are in the twilight zone, so anything is possible and everyone who resists---actively or passively----deserves support no matter who they are or whether you agree with them or not---
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