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It is little surprise the market is tanking when you look at what the economic indicators are doing. You cannot build an economic recovery on borrowing and voodoo economics. The question is how bad will this get before wise up and return to sound fiscal policies.
1. The ECRI weekly leading index growth rate peaked on October 9, 2009 (at 28.54%; now at 9.0%).
2. The Conference Board’s LEI peaked at 109.4 in March (109.3 in April).
3. ISM orders/inventory ratio peaked at 1.805 in August 2009 (1.33 in April).
4. University of Michigan consumer expectations peaked on September 2009 (at 73.5) – now at 65.3 in May.
5. The UofM index of big-ticket consumer purchases peaked in February-March at 136; is down to 129 as of May.
6. Jobless claims bottomed at 442k on March 11. They had peaked at 651k on March 28, 2009. But they are back at 471k, which is where they were back on December 19, 2009 so the improvement has stalled out. Not only that, but to keep 472k into perspective, claims were at 453k the week after 9/11 (and the economy back then was eight months into recession). Yes, yes, employment has been rising of late; however, keep in mind that nonfarm payrolls are in the index of coincident indicators; claims are in the index of leading indicators. Please let’s not drive looking through the rear window.
7. Single-family building permits peaked at 542k (annual rate) in March (were 484k in April).
8. Mortgage purchase applications peaked on April 30th at 291.3 and now are at a 13-year low of 192.1 even though mortgage rates have come down 20 basis points since the nearby high.
9. Auto production peaked at 7.8 million units (seasonally adjusted annual rate) in January – was at 7.2 million in April.
10. Electrical utility output was down 0.1% YoY as of May 15th. Could be another early sign that the production revival is behind us.
I don't know much about Canada's economy, other than what I glean from the boards of hockey arenas. If the data these guys amassed is so startling you'd think they'd move out of Toronto and get an office in a real city... Gluskin Sheff - Wikipedia, the free encyclopedia
Anyhow the indicators that I am tend to but faith in are a heckuva lot closer to mainstreet. My pals in commercial real estate have signed more deals for both leased space and purchases in this the middle of Q2 than they have in the previous 15 months. My friends in the trucking / shipping / logistics sectors are similarly on track for their best quarter in at least 12-18 months. There still are segments of the economy that are ailing, and firms that refuse to get their heads out of the sand about how hostile the current administration is to many business activities, but for the most part the cloud of fear that cloaked too much of the economy is gone. People have woken up to the fact that China is going to keep on running its factories full tilt and monkeying with its currency to keep the flow of exports leaving its ports at record levels. If other firms do not respond with better products and better values the waves of junk will crush them and they'll get no help from Washington DC...
We did the rolling over in 2008. We are now in the recovery and salvage phase, one that has its ebbs and flows.
We had a 12% correction. We will have many of these moves +/- 10/15% until the fiscal mess sorts itself out, i.e. governments around the world slash unnecessary spending and fiscal conservatism ratehr than fiscal socialism once again rules the Street. Then and only then will we see sustainable rises.
Give it 3-4 years. Until then build your positions, rack up the dividends, pick robust companies, and trade fads.
It is little surprise the market is tanking when you look at what the economic indicators are doing.
Some of the indicators you listed are not leading indicators so are not relevant. A dip in a single month when the over all tread is up is not significant, indicators typically zig-zag in part due to seasonality (many are not seasonally adjusted).
The crash is directly related to the Euro crisis, seems pretty obvious.
Anyhow, I really don't care about the equity markets correcting. I do my gambling in Vegas.
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