nice post i watched teppers interview already at zerohedge website. out of all the market pros he has to be the most annoying personality. he seems so fake and constantly acting.
It is very interesting how they disagree on the direction of the economy and the stock market and yet all of them are multi millionaires, if not billionaires.
Did anyone take ECRI's recession call serious? Because I did. But fundamentals doesn't seem predictable anymore. For example I tracked new order component in local manufacturing surveys contracting for months. And now initial jobless claims slump as if companies increase hiring?
I think ECRI usually has a good forecasting abilities, but this time they seem to have been wrong. Europe did sink into a recession and China (as well as the commodity sector) felt a decent slowdown. However, US has managed "so far" to escape that path. But obviously, it is only a matter of time until the next slowdown starts and one of these will finally break the expansion down into a recession.
I wasn't bearish in 2010 when double dip was expected by majority. I wasn't bearish even in 2011 during a major correction and a crash as majority expected a recession. However, in later parts of 2012 I have now turned bearish as I expect we are now in the late stages of the business cycle. So far, we haven't seen the stock market enter a downtrend nor have we seen a slowdown in economic activity, but in my opinion cracks have been obviously for quarters and it is only a matter of time until we have a major slowdown.
Dear M. ECRI most likely got it wrong this time,but it seems to me that the economy is far from growing in a healthy fashion.Q4 earnings aren't particularly exciting so far:no collapses,but not much growth either and guidance for 2013 isn't very bullish(and the S&P is very generously priced,implying strong growth,and analysts' expectations are likely way of the mark).Economic activity isn't that strong:ISM PMI came in at 50.7 and new orders at 50.3 and local fed surveys have been disappointing as you said.Re jobless claims: http://www.alhambrapartners.com/2013/01/25/jobless-claims-apparently-go-both-ways/ As highlighted by other commentators,the seasonal adjustments in January are particularly heavy,to account for the loss of temporary holiday jobs.However these jobs aren't always lost according to the DLO schedule.As such some strange numbers can come out of their black box during this month.Subsequent reports generally make up for the difference by coming in worse than expected. Durable goods orders also paint a rather gloomy picture,if one is willing to go beyond media hype: http://www.alhambrapartners.com/2013/01/28/durable-goods-trend-unchanged/ To sum it up,it seems to me that we're either in the early stages of a recession or very close to one.I also suspect we're close to a major stock market top.Unfortunately it's almost always very painful to be an early(even slightly so)contrarian:the market moves against you and the enchanting voice of the sirens makes you sway.
Bloomberg Terminal also has decent amount of data including the 5 Year Forward BE Rates. Otherwise, use Federal Reserve site and subtract the 10 Yr TIP yield from the 10 Yr Nominal yield to find the difference, also known as the Break Even Rate.
nice post i watched teppers interview already at zerohedge website. out of all the market pros he has to be the most annoying personality. he seems so fake and constantly acting.
ReplyDeleteSoros is scary
ReplyDeleteWhich part of it?
DeleteIt is very interesting how they disagree on the direction of the economy and the stock market and yet all of them are multi millionaires, if not billionaires.
ReplyDeleteRisk Management is the key, not directional calls.
DeleteGeneral question:
ReplyDeleteDid anyone take ECRI's recession call serious? Because I did.
But fundamentals doesn't seem predictable anymore. For example I tracked new order component in local manufacturing surveys contracting for months. And now initial jobless claims slump as if companies increase hiring?
M.
I think ECRI usually has a good forecasting abilities, but this time they seem to have been wrong. Europe did sink into a recession and China (as well as the commodity sector) felt a decent slowdown. However, US has managed "so far" to escape that path. But obviously, it is only a matter of time until the next slowdown starts and one of these will finally break the expansion down into a recession.
DeleteI wasn't bearish in 2010 when double dip was expected by majority. I wasn't bearish even in 2011 during a major correction and a crash as majority expected a recession. However, in later parts of 2012 I have now turned bearish as I expect we are now in the late stages of the business cycle. So far, we haven't seen the stock market enter a downtrend nor have we seen a slowdown in economic activity, but in my opinion cracks have been obviously for quarters and it is only a matter of time until we have a major slowdown.
Dear M.
DeleteECRI most likely got it wrong this time,but it seems to me that the economy is far from growing in a healthy fashion.Q4 earnings aren't particularly exciting so far:no collapses,but not much growth either and guidance for 2013 isn't very bullish(and the S&P is very generously priced,implying strong growth,and analysts' expectations are likely way of the mark).Economic activity isn't that strong:ISM PMI came in at 50.7 and new orders at 50.3 and local fed surveys have been disappointing as you said.Re jobless claims: http://www.alhambrapartners.com/2013/01/25/jobless-claims-apparently-go-both-ways/
As highlighted by other commentators,the seasonal adjustments in January are particularly heavy,to account for the loss of temporary holiday jobs.However these jobs aren't always lost according to the DLO schedule.As such some strange numbers can come out of their black box during this month.Subsequent reports generally make up for the difference by coming in worse than expected.
Durable goods orders also paint a rather gloomy picture,if one is willing to go beyond media hype: http://www.alhambrapartners.com/2013/01/28/durable-goods-trend-unchanged/
To sum it up,it seems to me that we're either in the early stages of a recession or very close to one.I also suspect we're close to a major stock market top.Unfortunately it's almost always very painful to be an early(even slightly so)contrarian:the market moves against you and the enchanting voice of the sirens makes you sway.
Thank you,
DeleteI really appreciate your comments.
M.
Can anyone tell me where can i get the info to get the breakeven rate ?
ReplyDeletei don't know where to get data from TIPS.
Thanks
http://www.bondtools.com/tips.html
DeleteKaiser
Bloomberg Terminal also has decent amount of data including the 5 Year Forward BE Rates. Otherwise, use Federal Reserve site and subtract the 10 Yr TIP yield from the 10 Yr Nominal yield to find the difference, also known as the Break Even Rate.
ReplyDelete5 year breakeven rate today would be 2,24 ?
Delete0.89-(-1,35)= 2,24
¿How this number is interpreted ?
Delete