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By Paul B. Farrell, MarketWatch
Earning season is here. Are you still optimistic about 2013? In the fifth year of an aging bull? With Fed QE stalling? Cheap-money near ending? GDP falling to 2%? Commodities dropping? Political gridlock till 2016? No-new-taxes GOP? Tea Party’s demanding austerity? As unemployment rises? Euro zone near breakup? North Korea, Iran, Syria threatening? Market warnings, crash predicted, recession, cash out? How to factor all into [...] Breaking Bad With earnings season underway, perhaps pulling back to 30,000 feet is worthwhile to glance at the macro environment that is backing these new all-time high nominal stock prices. These six charts say it all… Macro-economic data (levels and beats/misses) have rolled over after looking like it was different this time…
And all three global risk factors are becoming increasingly worrisome - from US growth, European ‘risk’, and China growth…
The business cycle has turned into slowdown… …
US Budget [...] Empty Walmart Shelves Show The Biggest Problem With The US Economy Walmart customers across the country are complaining that many stores have trouble keeping items stocked. This is being reported by Renee Dudley at Bloomberg News, who notes that the workforce has fallen by 120,000 since 2008, and that in the same time the company has added several hundred locations. This actually speaks trend at Walmart represents a bigger problem with the U.S. economy. Companies have expanded [...] Why There’s a Bull Market for Stocks And Bear Market for Workers The corporate recovery. Wednesday the Dow Jones Industrial Average rose above 14,270 – completely erasing its 54 percent loss between 2007 and 2009. The stock market is basically back to where it was in 2000, while corporate earnings have doubled since then. Yet the real median wage is now 8 percent below what it was in 2000, and unemployment remains sky-high. Why is [...] testosteronepit.com / By Wolf Richter “I’m sitting on cash,” Felix Zulauf said when he was asked in an interview where he was putting his money. With decades of asset management experience under his belt, he’d founded Zulauf Asset Management in Switzerland in 1990. But now he was worried—and has turned negative on just about everything. In Europe, growth would be weak. In the US, “everyone” was expecting decent growth, but he saw the possibility of [...] CITI: Stock Market Sentiment Is Perilously Close To All-Out Euphoria Citi’s Chart of the Month is an update to the firm’s proprietary “Panic/Euphoria” model. Simply put, when investors are panicking, then it’s probably a good time to buy. If investors are euphoric, then it’s probably time to sell. … Here’s a historical look at Citi’s model:
Citi
Stocks Are Set for a Possible Repeat of 1987! Says Marc Faber Stocks are up big to start 2013 but Marc Faber, Editor [...] Sucker Alert? Insider Selling Surges After Dow 14,000 Insiders have been pulling out of stocks just as small investors are getting in. Selling by corporate executives has surged recently as the Dow Jones Industrial Average hit 14,000 and retail investors flooded into stocks. The amount of insider selling has usually preceded market selloffs. “In almost perfect coordination with an equity market that was rushing toward new all-time highs, insider sentiment has weakened sharply [...] From Sober Look: U.S. equity markets are touching multi-year highs as investors increasingly allocate to the risk-on trade. But there are a few signals that may indicate some need for caution – at least in the short-term: 1. Consumer sentiment remains quite weak, which could easily create headwinds for corporate earnings. 2. Energy prices have been on the rise, with WTI crude oil at the highest level since September. 3. Regional manufacturing data isn’t [...] Leah Schnurr Stocks ended little changed on Friday as investors took a step back from buying ahead of next week’s busy corporate earnings calendar. Overall earnings are expected to grow by just 1.9 percent in this season, according to ThomsonReuters data. Analysts say that, with the bar low, there’s room for companies to beat expectations, and that may have contributed to the rise in stocks so far in 2013. That rally has slowed in the last [...] Brace Yourself: Earnings Disappointments Ahead The buzz is modest at best for the fourth-quarter earnings season. Don’t be surprised to see your fair share of disappointments. It’s being called the new normal. And at this point we are all used to it — an anemic growth story for the U.S. and global economy. And while the fourth quarter is typically an earnings grower due to holiday spending spurring money movement, the buzz [...] by WashingtonsBlog It’s Time to Create a Grown-Up Economy Liberal economist Dean Baker writes: Just as little kids have to come to grips with the fact that there is no Santa Claus, it is necessary for millions of liberals, including many who think of themselves as highly knowledgeable about economic matters, to realize that President Clinton’s policies sent the economy seriously off course. *** The Clinton economy was driven by a stock bubble. This is not a [...] Commentary: 10-part test: rational investing in irrational markets By Paul B. Farrell, MarketWatch New record? Yes. Dow 14,165, “almost there” says Barron’s in its latest Big Money poll. Still, hedge your bets: “After three years of handsome returns for U.S. stocks,” optimism about 2013 is “waning as the list of things to worry about grows longer.” The big worries: “Corporate earnings growth is slowing, there’s the threat of war in the [...]  Peter Schiff 2012 – Buy Gold! Buy Silver! Own Real Things!!!
FABER: ‘Mr. Obama Is A Disaster For The United States’
Faber annihilates the Deficit President. “It’s difficult to tell where the market will go from here because we have so much manipulation. It’s money printing versus weaker corporate earnings.” “I’m surprised. On the re-election of Mr. Obama, I would have thought the market should be down at least 50%. Mr. Obama is a disaster for business, [...] From The Reformed Broker: What could go wrong? The Fed is DJing the hottest dance party ever, and everyone is getting down. Well, not everyone, but you get the idea. Anyway, if there’s anything that could derail us, it’s an ordinary, cyclical recession. The kind we used to have before Greenspan decided they were no longer necessary. Today, I’d like to talk about the relationship between earnings recessions and economic recessions. Because we’re [...] MARC FABER: Obama Is A Disaster, The Stock Market Should Have Fallen 50%, And You Should Buy Yourself A Machine Gun
Marc Faber, publisher of the Gloom Boom, & Doom Report, told Bloomberg Television’s Trish Regan and Adam Johnson on “Street Smart” today that “Mr. Obama is a disaster for business and a disaster for the United States” and that he “thought that the market on his reelection should be down [...]
Marc Faber: Stocks could plummet 20% Marc Faber, editor and publisher of the Gloom Boom & Doom Report, sees a 20% decline ahead for the Dow and S&P 500 from their recent highs. Here’s what a 20% decline in the S&P 500 ($SPX) would look like. He was featured on CNBC in Europe on 10/23/2012. Source: StockCharts.com
Downward Earnings Revisions Are A Game-Change For The Stock Market In the face of a world-wide slowdown, [...] If global economy is going to get slower, would investors be willing to take on more risk?
Morgan Stanley’s Joachim Fels: ’We have a global economy that has entered what I call the twilight zone’ Services industries from Asia to Europe cooled last month after the euro-area debt crisis pulled economies including Spain and Italy into recession and damped global growth prospects. The purchasing managers’ index fell to 53.7 in September from 56.3 in [...] This Market Is Looking Like 2006-2008 — Here’s How To Know When To Get Out Jefferies global head of equity strategy Sean Darby warns in his latest note to clients that a key change in the underlying fundamentals of the stock market rally is going unnoticed amid all of the talk about QE3 and the U.S. elections.
Darby writes that “corporate earnings are now forecast to drop in 3Q after consecutive quarterly [...] Europe Goes Red, As S&P Whacks Growth Forecast S&P has just whacked its growth forecast for Europe. It now sees a contraction of 0.8% this year, and 0.0% growth next year. European markets have gone red. Italy’s benchmark FTSE MIB had been up slightly earlier in the day, but is now down 0.6%. S&P says new recession hitting euro zone Standard & Poor’s Rating Services on Tuesday pared down its economic forecast for the euro zone in [...] Top analyst Rosenberg: Stock market earnings could be in big trouble David Rosenberg’s latest contains some good insights on the current state of corporate earnings. Rosenberg says earnings are far too optimistic and likely to be ratcheted down. It’s very early in earnings season, but this is a trend we’ve already noticed in some bellwether names like FedEx and Norfolk Southern. Rosie says: Earnings expectations are far too optimistic and destined to come down. The [...] by Phoenix Capital Research
By all counts, the latest ISM (a measure of manufacturing in the US) was a complete and total disaster. In August the ISM hit 49. Anything below 50 is considered a recessionary rating.
However, things are even worse below the surface. The ISM is made up of several components. Its Production component is back to May 2009 levels. The New Orders component is back to April 2009 levels.
And worse of all, [...] Dropping Fed Ex Package Shipments…Recession Coming? CHART OF THE DAY: From today’s “Bloomberg Economics Brief,” Bloomberg economist Rich Yamarone releases a chart showing that FedEx’s total U.S. package shipments may indicate a bleak outlook for economic activity. Is a recession in the cards? How Federal Express Package Shipments Relate to the Economy
Federal Express Cuts 2013 Profit Forecast on Economy, Fuel
FedEx Corp., an economic bellwether as operator of the world’s largest cargo [...] By Oliver Pursche There’s no other way to say this. QE3, which was announced by the Fed Thursday afternoon, is a bad idea. The danger of QE3 isn’t a sudden burst of inflation (emphasis on the word sudden, as we will ultimately pay for this). The immediate short-term danger is that QE3 is tantamount to an admission by the Fed that our economy is feeble enough to require further [...] by Phoenix Capital Research
We’ve entered a truly dangerous environment in the financial markets. Economic fundamentals are deteriorating rapidly. Consider the US… By all counts, the latest ISM (a measure of manufacturing in the US) was a complete and total disaster. In August the ISM hit 49. Anything below 50 is considered a recessionary rating. However, things are even worse below the surface. The ISM is made up of several components. Its Production component [...] Mike Larson: After a rocky start to the summer, stocks have trended higher over the past few weeks. That much is fact. So why do I remain leery of themarket? What are MY indicators telling me about this rally? Can this uptrend really hold? Those are the most important questions I want to answer for you. But to give you a sneak preview: No, this doesn’t look like the start of a [...] “We are viewing the second quarter as a turning point in corporate earnings, we had eight quarters of double digit earnings growth and the last two quarters were very strong with high single digit growth, but for this quarter we are looking for growth to be down about 1.5 percent. Christine Short, senior manager at S&P Capital IQ, told CNBC. http://video.cnbc.com/gallery/?video=3000103951#eyJ2aWQiO From Charles Hugh Smith: …If we look at corporate profits, we notice they have skyrocketed since late 2009. Can they continue this trajectory into the stratosphere? Correlation isn’t causation, but it probably isn’t coincidence that profits rose as savings plummeted, consumer credit expanded, and the dollar weakened. Here is another look at corporate profits. Note they shot to unprecedented levels in the 2000s as debt rose and the savings rate dropped to near-zero. Corporate [...] By Craig Stephen HONG KONG (MarketWatch) — China may have reassured investors it has avoided a collapse in growth, but corporate profits and prices are increasingly taking the strain. There was some relief as GDP growth came in at 7.6% in the second quarter, but the economy is showing new signs of falling into deflation. Some analysts argue China will now need much more aggressive interest-rate cuts. In April, [...] Comstock Partners Long before it became headline news, we were talking about the corrosive effect of excessive debt, the softening U.S. and global economy, the “fiscal cliff”, the implausibility of a European solution, the probability of a hard landing in China and the prospect that corporate earnings estimates were far too high. Now these negative stories are carried in the Wall Street Journal every day. This week alone carried articles on downward earnings [...] Corporate earnings are the latest hurdle for a stock market that has been navigating an environment of slowing growth. In the coming week, the second quarterearnings season kicks off with just a few reports, but they will be important early looks at whether the fallout from Europe and the slower global growth is hurting corporate America. Alcoa [AA 8.725 -0.195 (-2.19%) ] is first out on Monday, followed by an interim report from Chevron [CVX 105.07 -0.96 (-0.91%) ] Wednesday. Results Friday are expected [...] From Zero Hedge: Confused by all the amusing arguments of a housing “recovery” in the sad context of a reality in which the economy is once again turning from bad to worse missing expectations left and right, corporate earnings and margins have rolled over, U.S. states and cities and European countries are filing for default or demanding bailouts at an ever faster pace, and only headlines such as “stocks rise on [...] |
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Get Ready For The Reckoning: Stock Markets Heading For A Surprising Fall
Top Economist Hussman: US Likely Entered into a Recession in Mid-2012
The U.S. economy likely slid into a recession during the middle of 2012, said economist and fund manager John Hussman.
The U.S. economy officially grew 1.3 percent in the second quarter and 2 percent in the first quarter, but such assumptions are made with backward-looking indicators, or those that capture events that have already happened.
Leading indicators, which point to where the economy [...]