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MARKET ALERT: Stock Traders Are The Most Bullishly Positioned In Six Years While U.S. Post Worst Holiday Sales Since The Recession, Chinese Rating Agency Puts U.S. On Negative Watch, Richmond Fed Manufacturing Start Contracting AGAIN, And Half of America Expects No Deal.


Stock Traders Are The Most Bullishly Positioned In Six Years

In Late 2006, the S&P 500 futures market traded around 1435 and the commitment of traders was at an extreme net long position. The market fell shortly after only to manage a miraculous rise in the face of hedge funds going bust and an exploding and over-leveraged credit market. In mid-2008, the S&P 500 futures also traded around these levels, from where the epic collapse really began. Six years later, the S&P 500 futures traders are the most bullishly positioned they have been since those heady over-confident days….   Chart: Bloomberg

Worst U.S. holiday sales since the recession

U.S. holiday retail sales grew 0.7 percent this year versus analysts’ expectations of 3 to 4 percent growth according to MasterCars’s Spending Pulse. This year’s figures mark the most tepid pace of expansion since 2008, when the U.S. economy was in recession. WASHINGTON (AP) — U.S. holiday retail sales this year grew at the weakest pace since 2008, when the nation was in a deep recession. In 2012, the shopping season was disrupted by bad weather and consumers’ rising uncertainty about the economy. A report that tracks spending on popular holiday goods, the MasterCard Advisors SpendingPulse, said Tuesday that sales in the two months before Christmas increased 0.7 percent, compared with last year. Many analysts had expected holiday sales to grow 3 to 4 percent. In 2008, sales declined by between 2 percent and 4 percent as the financial crisis that crested that fall dragged the economy into recession. Last year, by contrast, retail sales in November and December rose between 4 percent and 5 percent, according to ShopperTrak, a separate market research firm. A 4 percent increase is considered a healthy season…

Chinese rating agency puts U.S. on negative watch

Chinese rating agency Dagong Global Credit Rating Co. on Tuesday put U.S. sovereign debt on a negative watch and highlighted what it said was a lack of political consensus on how to tackle Washington’s debt problem over the long term. In a statement on its website, the rating agency said “each political party insists on the proposition favorable for its own interest. Therefore, it is difficult to form a long-term consensus on solving the debt problem ultimately, which leads to the unceasingly fiscal deterioration of the government.” Dagong said outstanding U.S. federal debt will rise to 105% of GDP and 609% of fiscal revenue by the end of 2012. It warned that the “solvency of the federal government is on a descending trend.” It also warned of a difficult 2013 if there was no resolution on how to avert the fiscal cliff of austerity measures due to take effect at the start of the year. “The U.S. economy will probably fall into recession in 2013, and stay weak in the long term, which will further weaken the material basis for the government to repay debt.” In August 2011, Dagong cut U.S. Treasurys to A from A+, with a negative outlook, saying growth in U.S. debt is still outpacing revenue growth.

Richmond Fed Manufacturing Misses Expectations And Falls To 5

The December Richmond Fed Manufacturing Index is out and it’s a miss.The headline number fell to 5 from 9 in November.  Economists were looking for a reading of 8. “Looking at the broad indicators of activity, new orders were virtually unchanged, shipments grew more slowly, and employment declined,” wrote the Richmond Fed.  “Other indicators were mixed. Capacity utilization turned positive, while backlogs fell further. Moreover, the gauge for delivery times inched higher, while finished goods inventories grew at a slightly slower pace and growth in raw materials inventories edged higher.” The survey tracks manufacturing activity in the central Atlantic region of the U.S….    

GALLUP: Half of America Expects No Deal

PRINCETON, NJ — Americans’ optimism that President Barack Obama and congressional leaders will reach a budget agreement before Jan. 1 has waned somewhat over the past week. Fifty percent now believe this and 48% are doubtful, a change from the previous three weeks, when the solid majority of Americans were generally confident leaders would reach a deal to avert the so-called fiscal cliff.

Trend: Likelihood of Averting Fiscal Cliff

The fiscal cliff is not the only cliff we’re racing toward; there are others. by Charles Hugh Smith, Of Two Minds: The fiscal cliff dominates the mainstream news, but it is more like a bump on the pathway to the real cliff. In essence, the path has turned down and we’re picking up momentum, gaining speed as we head for the cliff. The real cliff is the gap between what has been promised and what can plausibly be collected in tax revenues: $86 trillion but one recent estimate, over $120 trillion by other guestimates. The difference is caused by the relative rosiness of the projections to control Medicare and Medicaid spending. Lower estimates assume we can stop the growth of these programs in the long-term, something that has not yet happened for the reason that the system lacks any controls to do so. This gap widens by $7 trillion a year. That is, the promises to present and future retirees and beneficiaries goes up if we count the promises made not just for 2013 but for the future. This $7 trillion is twice the entire Federal budget and roughly 50% of the nation’s GDP. Understood in this way, we can see that raising taxes by $200 billion or cutting expenditures by $200 billion is not going to keep us from hurtling off the real fiscal cliff in a few years….

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