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Employment the leading indicator?

[Zero Hedge]

The week ended July 31 saw 479K initial jobless claims, obliterating the expectation of a minor improvement of 455K from the prior week’s 460K (revised from 457K). Continuing claims continue rising, and are now at 4537K versus expectations of 4515K. We are certain that this latest horrendous economic data point will be spun positively in 3….2….1…. (in the meantime the ongoing US collapse is about to drag the USDCAD back to parity).

The only silver lining: those who had previously fallen of insurance lists, are now back to collecting subsidies from the government, as the ranks of those collecting EUC and Extended Benefits increased by 257K in the week ended July 17, courtesy of Obama’s most recent “communism-lite” stimulus.

Seems like too much good news has been factored in and now the bad news starts leaking one by one.

Categories: economy, us Tags: ,

ECRI Plunges At 9.8% Rate, Double Dip Recession Virtually Assured

[ZeroHedge]

The ECRI Leading Economic Index just dropped to a fresh reading of 120.6 (flat from a previously revised 121.5 as the Columbia profs scramble to create at least a neutral inflection point): this is now a -9.8 drop, and based on empirical evidence presented previously by David Rosenberg, and also confirming all the macro economic data seen in the past two months, virtually assures that the US economy is now fully in a double dip recession scenario.”It is one thing to slip to or fractionally below the zero line, but a -3.5% reading has only sent off two head-fakes in the past, while accurately foreshadowing seven recessions — with a three month lag. Keep your eye on the -10 threshold, for at that level, the economy has gone into recession … only 100% of the time (42 years of data).” We are there.

Complete collapse in the long-term chart:

Don’t be too worried as it is virtually assured not assured yet.

Next thing to confirm is for the S&P500 neckline to break. Apple is also showing similar chart pattern with neckline just nearby. The projected target price is just to scary to be mentioned.

Will APAC be affected seems we’re not moving in tandem with the US market?

Categories: economy Tags:

Harry Dent sees depression ahead

Today Economy

Are we at the top of a sucker’s rally to end all sucker’s rallies? Harry S. Dent Jr. thinks so, and he’s got a best-seller to prove it. The Great Depression Ahead reports that the downturn that began in 2008 was nothing more than a warm-up act. A sort of Long John Baldry to The Rolling Stones that lay ahead.

Dent deserves a listen. He called the 2008 downturn, back in 1992. And he’s not one of those perennial bears who keep predicting a recession until one happens. He forecast the boom of the 1990s at a time when many disagreed.

Dent’s calls have been mainly demographics-based. His research shows that we spend the most when we’re in our mid-40s. “The peak in spending is age 46,” he told me in a phone interview last week. “If you take the peak of the baby boom in 1961 when they were born, and you add 46, you get: hey, the boom’s over by the end of 2007.”

There’s much more to The Great Depression Ahead than simple arithmetic though. “We have this four-season cycle over time. There are no exceptions to this. You get a deflationary period like the 1930s. Then you get a spring boom like the 1940s, ‘50s and ‘60s with mild inflation. Then you get a summer downturn with very strong inflation. Then you get a wonderful fall bubble boom with disinflation and very low interest rates. And then you get winter again with deflation.”

Extending Dent’s analogy, the credit crisis that began in 2008 threatens to make this one of the coldest winters in history.

Dent predicts an extended downturn, stretching into the early 2020s. “Just like we predicted for Japan back in the late 1980s, which occurred,” he said. “Our economy goes through this progression over and over again.”

Dent made six predictions during our call:

  • The U.S. stock market will crash in 2010. “Even though the economy is recovering, and even though GDP is coming in even stronger than expected, look at defaults on mortgage loans: residential and commercial. They’re just going straight up. All these defaults lead to foreclosures. Foreclosures continue to keep housing prices depressed. And as long as they stay down, more and more people are under water in their mortgages and more and more people default … A lot of mortgages reset around July, August, September. That’s what we think is the trigger. We think that by late summer, the banking system is going to be in trouble again, the economy is going to start to fail and stocks will be crashing.”
  • Recovery in the U.S. will be hampered by a massive deleveraging process. “One of the things we’ve done in our newsletter is outline the total debt in the U.S. People are looking at the federal deficit, that’s the smallest thing. Debt and leverage in financial institutions, which has never occurred before, is $17 trillion. Consumer debt is $14 trillion. Unfunded liabilities – social security, Medicare, Medicaid – is anywhere from $45 to $65 trillion. That’s something a corporation would have to report as a liability. And corporate debts are at $11 trillion. When you see that in history, it’s crystal clear. There’s only one thing that happens. You get a deflationary, deleveraging downturn. That is what a depression is – a big chapter 11 for the economy.
  • The commodity bubble will burst. “The biggest liability for Canada is its dependence on exports and commodity prices. We see this commodity bubble bursting, and continuing to burst. We think oil is going to get back to somewhere between $10 and $18 a barrel in the next two, three or four years.”
  • B.C. real estate will be a good investment, eventually. “There will be a second boom in retirement and vacation homes. And the most attractive area for that obviously is British Columbia. I would not be buying that now, and I wouldn’t be buying in Whistler, Vancouver or Victoria. Those are some of the most over-valued markets in Canada. Buy after a crash, which I think you’re going to see in the next two, three or four years.”
  • Worry about Japan’s sovereign debt. “Japan has got a unique problem. They already have unbelievable debt. They basically chickened out of dealing with deflation and deleveraging and didn’t really let it happen except in the corporate sector which is the smallest part. So they’ve got high debt and an aging population. The only reason Japan has been able to sail through this, without it being much worse, is that they have very low government interest rates: 1.5% give or take. That’s because they have such a high-saving public. People save the most in their 50s. Now Japan is going to be tilting more toward the 60s where people spend their savings to retire. Their savings rates have already dropped very substantially in the last couple of decades. And they’re actually going to go negative at some point. So where is Japan going to get this cheap money? Government debt is going to rise during this downturn, because governments have to take the shocks.”
  • Worry less about the U.S.’s sovereign debt. “They’re just not going to be able to keep it up. We think the voters and foreign creditors are going to call a halt to the U.S. just going into endless stimulus.”

If US and Japan, the two biggest economy is destabilized. People will look into China, India and Brazil. China is have a property bubble in the making. India not business friendly. Brazil big but overheated. Singapore being the middleman of both USA and China will be even even more affected.

Fri is just a surprise that Dow not only gap down but drop 260 points in a single day! It is very near the head and shoulder neckline. Looking ahead, STI have to hold onto 2888 and Shanghai index have to hold onto 2388. The big caps have made their move, maybe its time for penny counters.

My friend mentioned that everytime Obama talks about the economy, stock market will go down and it’s 100% accurate! Is it because he has been pressing the bank too hard? And with re-election will come soon, is it a ploy to get rid of him first? I just got the feeling he did offend too many of the rich and powerful people who’s interest is not aligned to his. Anyway the bank bill will come out soon, think it’d be a good show to watch.

Categories: economy Tags: ,

U.S. stock futures firmer as Europe calms; data in focus

MADRID (MarketWatch) — U.S. stock futures edged higher Thursday amid a wave of earnings and Hewlett-Packard’s deal to buy Palm as the focus moved away from Europe’s sovereign debt worries.

S&P 500 futures rose 5.7 points to 1,195.80 and Nasdaq 100 futures rose 9 points to 2,015.75. Futures on the Dow Jones Industrial Average rose 34 points.

U.S. stocks moderately rebounded on Wednesday after stronger earnings and the Fed reiterated economic conditions warrant leaving rates low for what’s likely to be an extended period. That helped take the sting out of the third sovereign debt downgrade in Europe in two days as the Dow Jones Industrial Average rose 0.5%.

“Looking ahead to today, weekly jobless claims in the U.S. should be the data focus and markets are looking for an 11,000 decline in initial claims,” said Jim Reid, strategist with Deutsche Bank, in a note to investors. Jobless claims are expected at 8:30 a.m. Eastern time.

There were a number of earnings reports, particularly in the agrichemicals and household products sector.

With Euro report negating the good news of US market, it will be interesting to see how the market will play out.

Alcoa Slips!

WSJ:

NEW YORK (Dow Jones)–U.S. stocks opened slightly lower Tuesday as a disappointing first-quarter report from Alcoa and a wider-than-expected trade deficit dampened sentiment, pushing the Dow Jones Industrial Average back below the 11000 level.

The Dow Jones Industrial Average was down 20 points, or 0.2%, at 10986 in early trading. Alcoa was the measure’s worst performer with a drop of 2.8%. The aluminum giant reported a narrower quarterly loss and held out hopes for improvement in the year ahead, striking a positive note as the first major company out of the gate to report first-quarter earnings. But its earnings excluding items merely met analysts’ estimates while revenue came in weaker than expected. UBS cut its investment rating on the stock to neutral from buy following the report.

Intel is the next heavyweight to report, with the world’s largest chip maker slated to post its first-quarter numbers after the close of trade Tuesday. Ahead of the report, Intel edged up 0.2%, making it the Dow’s best performer.

The Nasdaq Composite slipped 0.1%. The Standard & Poor’s 500 index declined 0.2%, with the materials and energy sectors leading its decline.

Tuesday’s small drop in stocks comes after the Dow on Monday closed above 11000, something it hadn’t achieved since the financial system began teetering nearly 19 months ago. By inching past the milestone, the Dow continued what amounts to a stealth rally in a market characterized by below-average trading volume and small daily moves.

The market is now looking to see if the S&P 500 can climb above the key 1200 mark. It closed Monday at 1196.48, its highest close since Sept. 26, 2008. However, the measure appeared unlikely to reach that level Tuesday, as investors were disappointed by Alcoa’s report and data that showed the U.S. trade deficit rose more than expected in February.

The wider U.S. trade deficit came as soaring imports of consumer goods and industrial supplies outweighed the impact of oil imports falling to their lowest level in 11 years. The deficit rose 7.4% to $39.70 billion in February, higher than the $39 billion shortfall Wall Street was expecting.

High chance tomorrow Ausgroup will drop also. What a bad timing!

First sign of weakness

WASHINGTON (MarketWatch) — The Business Cycle Dating Committee of the National Bureau of Economic Research met last Thursday and decided it would be “premature” to declare the end of the recession, according to an NBER statement released on Monday. “Many indicators are quite preliminary at this time and will be revised in coming months,” the statement said. The NBER is the non-profit arbiter of recession dating. The recent recession began in December 2007. Many Wall Street economists informally believe that it ended in the middle of 2009, making it the longest recession since the Great Depression.

Many stock form doji ahead of quarter 2 report. Other than Yangzijiang and Cosco and a few other special stock, broad market movement is seeing signs of profit taking. Can it be people is trying to pre-empt something?

Ezra had good news yet still dropped by 10 cents. When you have good news and yet the stock can drop so much, it is a sign of danger ahead. Ezra is trading in a channel, if it breaks, shortist will come in for a run. Keep a tight stop as lots of divergence is already showing is many sector.

MarketWatch: Correction could be coming

I’ve mentioned that the divergence was seen on STI since last week and on friday it has followed Hang Seng (breaking out of a symmetrical triangle) to move higher.

During this period, watch out for profit taking session, or at least pocket some for those at resistance turning down and put some at counters at support. Like this, you will be cutting down your risk while still enjoying the potential upside.

Always remember the old maxim: let your profit run, cut your losses short.

Friday was a good run for many stock. Really did not expect the bullishness of the market on Friday. Friday is a very good indicator of what will happen on Monday due to the willingness of trader holding the stock over the weekends. Given my current holding as listed:

  1. Ausgroup (red)
  2. Capmallasia (red)
  3. Tat Hong (green)
  4. StraitsAsia (green)
  5. Seroja (green)
  6. FraserComm (red) – super heartache
  7. Ryobi Kiso (green)

I will be looking at a few forgotten counters to enter at support while divest some while on the up move. Cashout on GoldenAgri on Wednesday due to small holding only.

My friend recommended me to put up a weekly post on “My Mom recommendation” since she’s somehow always able to spot counters poise for big move example GMG (heartache) and Seroja but I was always not willing to enter due to lack of good entry.

I will be looking into the trading framework to reduce portfolio risk. I will take quite some time so keep a lookout for this column.

ANNANDALE, Va. (MarketWatch) — Is it too quiet out there?

After a couple of years of extraordinary volatility on Wall Street, the relative calm of recent weeks might be considered a very welcome development.

But some advisers nevertheless worry that it means the market is overdue for a correction.

The last time the S&P 500 /quotes/comstock/21z!i1:in\x (SPX 1,194, +7.94, +0.67%) dropped by at least 1% in a single trading session was Feb. 23. If today proves to be yet another day without a 1% decline, as indeed looks likely mid-day, it would mean that today is 32nd straight session without this big a drop.

You have to go back to May 2007 to find another occasion in which the S&P 500 index went this many sessions in a row without dropping at least 1% in any given session.

As we know now, of course, May 2007 came just a couple of months prior to the eruption of the sub-prime mortgage mess and the end of the 2002-2007 bull market.

more…