The Picture Is Unmistakably Bearish: America’s Triple A Rating At Risk, Housing Starts Fall In November, FedEx Earnings Fall, And Guidance Is Weak, And Insiders Are Selling…
Fitch warned that the U.S. is more likely to lose its top-notch “AAA” rating if lawmakers cannot agree on how to cut the deficit and avoid the broad government spending cuts and tax increases that go into effect next year if no deal is reached.
Chart showing housing starts and completions with a 6 month lag:
from MarketWatch: U.S. housing starts fall 3% in November
Building permits up 3.6%; single-family permits ease 0.2%
Construction on new U.S. homes fell 3% in November to a seasonally adjusted annual rate of 861,000, led by declines in the West and Northeast, the Commerce Department reported Wednesday.
Economists polled by MarketWatch had expected housing starts to fall to a rate of 865,000. See economic calendar.
It’s a miss.
Freight giant FedEx just released its quarterly financial results, and at first glance it looks like a disappointment.
Fiscal Q2 earnings per share came in at $1.39, down from $1.57. Analysts were looking for $1.41 per share.
“Operating income for the quarter improved at FedEx Freight and FedEx Ground due to increased volumes and higher yields, while persistent weakness in the global economy and increased demand for lower-yielding international services limited profits at FedEx Express,” said CEO Fred Smith. “Earnings also were negatively impacted by disruptions caused by Superstorm Sandy.
Better watch out: Insiders are selling
Corporate insiders are no longer on the side of the bulls.
This represents a remarkably quick shift from the situation that prevailed just one month ago, when the average insider was behaving quite bullishly. (Read my Nov. 21 column, “Insider behavior points to imminent rally.”)
After all, the stock market is barely 4% higher today than then. And though a return of that magnitude in one month’s time is nothing to sneeze at, is that really enough of a rise to justify such a big shift in insider behavior? Either something has led them to change their minds about their companies’ longer-term prospects, or they have become short-term traders like the rest of the market.
It’s probably a little bit of both. Since the government doesn’t gather data on the reasons for insiders’ behavior, we don’t know for sure.
But regardless, the picture the data paint is unmistakably bearish.
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