‘Danger, The Emergency Destruct Sequence Has Now Been Activated’: DOW Nears All Time High Despite US Economy Barely Growing, Wage Recession Hits 5 Years; Worse Than Jobs Drought, Stock-Market ‘Greedometer’ Flashes Red, Wal-Mart Situation “Getting Worse”, And Congress Finally Start Cutting Spending!!
DOW Nears All Time High Despite US Economy Barely Growing
By the close, the Dow Jones Industrial Average DJIA -.00% was 89 points from its record high finish of 14,164.53 on Oct. 9, 2007, while the S&P 500 SPX +0.12% was less than 50 points from its loftiest close of 1,565.15, reached the same day.
The U.S. economy barely grew in the fourth quarter although a slightly better performance in exports and fewer imports led the government to scratch an earlier estimate that showed an economic contraction.
Congress Finally Start Cutting Spending!!!
The economy barely grew in the fourth quarter while the number of Americans filing new claims for unemployment benefits fell more than expected last week.
UBS: Today’s Positive GDP Report Was WORSE Than Last Month’s Negative GDP Report
The BEA just released its second estimate of U.S. fourth quarter GDP.
Total output expanded 0.5 percent – a marked increase over the initial estimate, which showed a 0.1 percent contraction in the U.S. economy.
However, personal consumption growth, which clocked in at 2.2 percent in the initial estimate and was expected to rise to 2.3 percent in today’s release, actually slowed to 2.1 percent.
Commentary: Key indicators look ominous for the market
Brett Arends warns that key indicators have begin to look ominous for the market.
“Danger, the emergency destruct sequence has now been activated. The ship will self-destruct in t-minus, ten minutes. The option to override automatic detonation will expire in t-minus, five minutes…” — Mother, “Alien” (1979)
Have you ever felt like Ripley — Sigourney Weaver — at the end of Alien? After the monster has wiped out all of her fellow crew members, she decides to kill it by blowing up her spaceship, the Nostromo. She sets the ship’s self-destruct mechanism and races for the escape shuttle — only to find the alien now blocking her way.
The next few minutes are a hair-raising race against time. As Ripley barrels back through the long corridors of the space ship, “Mother,” the voice of the ship’s computer, ominously counts down the time left until everything will go kaboom in a blinding, space-bending explosion.
The stock market feels a little like this. The higher it goes, the more euphoric the cheerleading, the more the airheaded Gamma-class humans put on the happy face and hum their way to work, the more terrifying it becomes for anyone who actually bothers thinking. (Luckily, this excludes most of Wall Street). At best we feel like Jones, the ship’s cat, getting banged around in a portable cage.
That’s not good.
You might have thought that Monday’s slide in the equity market wiped out quite a bit of the euphoria in the markets. If so, you’d be wrong based on the Hulbert Nasdaq Sentiment Index which is still at its highest level since March 2000:
Via Short Side of Long:
What I find even more intriguing than all the technical mumbo jumbo I just wrote about, is that just about everyone is not expecting the outcome laid out in this post. Mark Hulbert runs a great service called Financial Digest, which tracks the opinions and recommendations of various newsletter advisors for the Nasdaq. Just like any other contrarian indicator, when the Hulbert Nasdaq Sentiment shows the majority of “gurus” holding net short exposure it usually means its the time to buy and visa versa.
As bad as the current job recovery has been — and it’s by far the weakest since World War II — the recovery in wages has been far worse.
Five years after the recession began in December 2007, total wages in the economy have yet to fully recover in real terms, Commerce Department data show. In other words, the wage recession continues.
By comparison, the longest previous post-war wage recession, which began with the 2001 downturn, was over in 2-1/2 years, even though that jobs recession lasted four years.
Two weeks ago, Wal-Mart stunned the world when a leaked memo discloses that February sales had been a “total disaster” and the company was facing the worst February start since 2006. Today, Bloomberg’s deep throat in Bentonville strikes again, as a new leak emerges. “Wal-Mart Stores Inc (WMT), already struggling to woo shoppers constrained by higher taxes, is “”getting worse” at keeping shelves stocked, the retailer’s U.S. chief told executives, according to minutes of an officers’ meeting obtained by Bloomberg News. “We run out quickly and the new stuff doesn’t come in,” U.S. Chief Executive Officer Bill Simon said, according to the minutes of the Feb. 1 meeting. Simon called “self-inflicted wounds” Wal-Mart’s “biggest risk” and said an executive vice president had been appointed to fix the restocking problem, according to the minutes.”
Even those who have gotten used to following the ongoing train wreck that is JC Penney were shocked yesterday when the company’s Q4 results came out.
The numbers were abysmal, with JC Penney’s same-store sales–the level of sales made by stores that have been operating for at least a year–dropping a staggering 32%.
On the ensuing conference call, JC Penney’s new CEO Ron Johnson took responsibility for the mistakes JC Penney has made, but he discussed the results as if the company were merely in the midst of a big transformation that will soon be complete.
Whether JC Penney eventually completes the transformation that Ron Johnson has embarked on remains to be seen.
Cash would have been a lot worse.
The sequester is here to stay — at least for a while.
Lawmakers and aides say they do not expect Congress to turn off budget sequestration before April and that negotiations to freeze the automatic spending cuts could drag into May or beyond.
Over the last few weeks, there has been increased speculation that the sequester would go into effect Friday but be addressed in a March deal to keep the government funded.
Asia Officially Has More Billionaires Than North America – A first for any global list.
Asia has more billionaires than any other continent, a survey by a China-based wealth magazine showed on Thursday, apparently overtaking North America for the first time.
There were 1,453 people around the world with a personal wealth of $1 billion or more as of January, said the Hurun Report, a luxury magazine publisher that compiled the list.
Asia had 608 billionaires, North America 440 and Europe 324, it said in a statement.
It is believed to be the first time Asia has been named as home of the largest proportion of super-rich on any global list.