Ao minuto: "Uma civilização inteira morrerá esta noite", ameaça Trump

[Keyser Soze]

The big picture in the US economy is one of a slowdown. This is indicated in above Index of Weekly Economic Indicators and in the quarterly updated GDP figures, including Personal Consumption and especially Investments. The yield curve continues to be inverted and the important spread between 3-month and 10-year rates is actually increasing week by week. The bond market still sees something uncomfortable down the road, but stocks continue unaffectedly higher. We still ask ourselves how stock traders are justifying present earnings growth forecasts with the current economic slowdown and a cooling housing market in the background. So far, we have been net long stocks and the positions have made money. Our philosophy has been that as long as the lower band in the bull channels for major indices have not been broken, we would remain net long.

In general however, we are getting increasingly nervous about stocks. The move higher in the last two quarters is not justified by fundamentals. The only question is, what kind of event it takes to trigger a sell-off. We believe that the housing figures (especially prices) will do the job. So far the prices of newly build houses are falling at the fastest rate ever YoY, but prices for existing homes are still within their seasonally adjusted trend channels. When we see a correction in the latter, we will not hesitate to short stocks through the broad market indices.

SAXO Weekly Market Update, 17th of November, 2006

[Keyser Soze]

sem querer ser "profeta da desgraça", convém estar atento à possibilidade de uma recessão nos States

November 06, 2006

Recession 2007
by Paul Lamont


As our clients know, we have been forecasting a very hard recession over the next few years. At the beginning of this year, our analysis was viewed with skepticism, but as more data comes in from the recent performance of the economy, our forecast is becoming more probable.

Debt

One of our main arguments has been that U.S. consumers are holding unsustainable levels of debt. The chart below from Ian Gordon, from The Long Wave Analyst shows private debt levels to GDP overlaid with his interpretation of the Kondratieff Wave. Without giving a lengthy description of the Kondratieff Wave, let us just say that as interest rates fall, investors are willing to take on more debt. Much of this credit is spent or used to fuel asset bubbles. Eventually bubbles exhaust themselves and deflate assets but debt is still owed. Participants must default on their debts causing loss of faith in financial institutions and subsequent depression. As you can see debt is now 300% of GNP, much higher than in 1929.



Where Is the Debt Coming From?

In the chart below from Yardeni.com, U.S. consumers have been withdrawing money from their houses at record levels. Simultaneously, they have been saving less. The reliance on home equity extraction (increasing mortgage debt) to fuel the economy is similar to stock market investors in the 20's, who were borrowing money to invest in the stock market. As history has shown, once the speculation exhausts itself assets deflate, but the debt still has to be paid back. Unfortunately, the housing bubble has already started its descent.



U.S. Housing Problem

Looking at the U.S. Housing Price Index chart below, from Robert Schiller author of Irrational Exuberance, the forecast that housing prices could not continue its trajectory was not very difficult. This rise has been driven by speculation. So far we have seen the ascent.



And now we are beginning to see the descent: On October 27th, "the government reported median new home sale prices dropped 9.7% in the past year to $217,100, the lowest price in two years." It's the largest percentage decline in 36 years according to MarketWatch. "Median prices for existing single-family homes are down 2.5% in the past year, the largest decline ever recorded." We believe housing prices have peaked and U.S. consumers will not have any new "paper capital gains" from home equity loans to spend. Thus our consumer driven economy is in trouble. U.S. Consumers with "no money down" loans or little equity in their houses have already started to walk away from their debts. In the third quarter of this year, foreclosures are up 43% from 2005 (albeit from low levels). In Colorado (the nation's leader), 1 in 127 households filed for foreclosure according to RealtyTrac. Nevada and Florida were closely behind with one new foreclosure for every 156 and 182 households, respectively.

New Car Sales

If U.S. consumers are getting financially squeezed, the first major purchase that they could try to delay would be buying a new car. Below is a chart from The New York Times that shows the annual change in car dealer sales. When new car sales fall "by 2% or more, the economy has either been in a recession or about to enter one." We have now fallen 2.4%.



GDP

GDP has also started to reflect the slowdown. The GDP advance estimate for the third quarter reported on Oct 27, 2006 by the U.S. Department of Commerce was a paltry 1.6%. Shortly following the data release, Bloomberg reported that that the Department of Commerce found a "statistical fluke" and had reported a 26% increase in auto production. Subsequently, the numbers will be revised downward to a GDP advance estimate of 0.9% for the third quarter. So this year, the GDP has gone from 5.6% to 2.6% to 0.9% in the first three quarters.

Why the U.S. will NOT have a Soft Landing



While U.S. consumers accumulated debt to keep the economy running, financial institutions gained more ownership of real estate (see above). The trouble is that real estate is extremely illiquid and when people get nervous they want cash. Unfortunately, banks are the most unprepared for this in the last 20 years. As you can see from the Federal Reserve Bank's chart below, U.S. banks are letting loan loss reserves dwindle (their 'rainy day' fund if you like), which support them when foreclosures increase.



This has not gone unnoticed at the Federal Reserve. In October 2006, a paper published by David Wheelock of the Federal Reserve of St Louis states:

"In sum, U.S. banks seem well positioned to withstand a modest decline in house prices, especially a localized decline. Still, empirical evidence from the United States and other countries indicates that declines in housing wealth can have severe macroeconomic repercussions, especially if banking system capital does become impaired."

History Repeated

We believe "severe macroeconomic repercussions" are highly likely and that "banking system capital" will be impaired. Continuing from our previous article "Credit Extreme Emotion," the comparison to the 1930-1933 period is striking. Stock market patterns, debt levels, interest rate cycles, sentiment levels, and banking reserves are all aligning for a credit crunch and major asset deflation. In the stock market rebound of early 1930, investors were overjoyed that they had survived the 1929 crash. There was a mild worry about recent commodity rises and inflation but the mood was still ebullient. Investors were 'only' down 20% off the 1929 highs (much like the S&P500 today). President Hoover told banking officials visiting the White House in June 1930, "Gentlemen, you have come 60 days too late. The depression is over." But the mood turned down again, inflation began to cool, commodities fell, and investors realizing that the large debt they had accumulated in the last year had to eventually be paid back started selling stocks. The third leg of the bear market resulted in the Dow Jones Industrial Average falling 85% from its high in April 1930. Three banking crises occurred during the next 3 years as frightened people desired cash. Farmers and investors were forced into foreclosure. Finally in 1933, when the debt had been cleaned out of the system, the stock market hit bottom and rallied for the next 73 years.

At Lamont Trading Advisors, Inc. we specialize in the management of risk and preservation of wealth. Visit our Current Strategy section for information on our asset allocation recommendations or Contact Us if you would also like to be notified when our investment analysis reports are published.

***No graph, chart, formula or other device offered can in and of itself be used to make trading decisions.

Paul J. Lamont - RIA
Lamont Trading Advisors, Inc.

http://www.safehaven.com/article-6242.htm

[Keyser Soze]

15:00
Economic Data (US, Oct): ISM Manufacturing out at 51.2 vs. 53.0 expected. ISM Prices Paid out at 47.0 vs. 58.0 expected.

Las muestras de que el enfriamiento económico puede ser más fuerte de lo esperado se suceden un dato macreconómico tras otro. El ISM manufacturero nos da una bajada de 52,9 a 51, 2, es decir el nivel más bajo desde el mes de junio del año 2003, creo que con esto está dicho todo, teniendo en cuenta que este indicador tiene fama de ser uno de los mejores indicadores adelantados del mercado para anticipar los períodos de fuerte enfriamiento. Afortunadamente para las bolsas la cifra no ha rebasado el nivel de 50, que se considera el nivel de contracción, ya que en ese caso hubiéramos podido tener un disgusto. La buena noticia es que aunque bastante peor de lo esperado, que era un nivel de 53, por lo menos se sigue estando por encima del nivel 50.

Además el dato de empleo mejora desde 49,4 hasta 50,8, volviéndose a meter aunque por los pelos, de nuevo por encima del nivel de expansión con nivel de 50.

Una muy buena noticia la trae esta cifra desde el punto de vista de la inflación, ya que la partida de precios pagados baja desde 61 a 47,1 bajada muy fuerte, y que muestra bien a las claras que la inflación está bajando muy violentamente gracias al descenso del precio del petróleo.

Si no tengo mal mi archivo, este sería el indicador de precios pagados más bajo desde febrero del año 2002

En suma podríamos decir que dato malo para la economía, yo diría que dato peligroso, muy peligroso, es muy importante ver qué sucede en los próximos meses y si se rebasa o no ese nivel fatídico de 50, aunque al menos en parte tiene cosas buenas, como está muy fuerte bajada del indicador de precios pagados y la mejora del empleo por encima de 50.

Así que lo dejamos en moderadamente malo para las bolsas a las que le viene mal el nivel de crecimiento que indica, pero bien la fuerte bajada de la inflación, en muy bueno para los bonos a los que les viene bien las dos partidas y en muy malo para el dólar al que le vienen mal ambas partidas.

Los datos de gastos de construcción y de Pending Home INDEX, también han salido peor de lo esperado, con lo que refuerzan el mismo mensaje: la inflación se está controlando, pero el crecimiento se está tambaleando peligrosamente muy perjudicado por el pinchazo de la burbuja inmobiliaria.

[aos_pouquinhos]

que andava a ter alucinações relativamente a estes argumentos.... recessão ou abrandamento. Parece que eram tabu nos mercados até à data, principalmente no mercado de acções.

A meu ver, lateralização em range alargado é o que me apraz dizer.

Recessão sá quando vier abaixo de zero.

Cumps

[Keyser Soze]

America's economy

America's economy is the world's largest and is a major driver of the global economy (though its importance is often exaggerated). After nine years of robust growth, America’s economic bubble burst in 2000; technology shares plunged and the economy was in recession before the devastating terrorist attacks of September 11th 2001. But the economy made a comeback and, despite a rash of corporate scandals and fears of a “double-dip” recession, growth picked up in 2002 and continued in 2003. A long-awaited recovery in the jobs market followed in 2004.

In 2005 the American economy continued to confound the pessimists, but an extended diet of slower growth now looks likely (and may be helpful). The housing market is cooling, inflation is trending upwards and the country's sizeable current-account gap needs closing.

[Keyser Soze]

Deconstructed

Oct 27th 2006 | WASHINGTON, DC
From Economist.com
Housebuilding activity tumbles again, pulling down America’s growth rate



AMONG all the questions pinging around the world’s financial markets, one stands out: how much and how abruptly is America’s economy slowing? On Friday October 27th, the markets got a partial answer: more abruptly than they thought. First estimates of GDP said that in the third quarter the economy grew by only 1.6% at an annualised rate, much less than expected and a full percentage point less than in the previous three months.

The most eye-catching component of the data was a dramatic tumble in housebuilding. Pessimists, who fear that the country’s housing bust will prompt a recession by causing Americans to slash their spending, will take this as evidence to support their case. However, optimists, who expect a soft landing, can find succour in the numbers too.

Builders are clearly suffering: residential construction fell by more than 17%, at an annual rate, in the third quarter, after sliding by 11% in the second. By itself, the further decline in housebuilding accounted for two-fifths of the quarterly fall in GDP growth. Yet there was little sign that the housing market’s troubles are yet causing broader economic pain. Consumer expenditure accelerated in the third quarter, growing by an annualised 3.1%, compared with 2.6% in the previous quarter, because spending on durables—especially cars, but also stuff for the home—was strong.

What next? The signals from the housing market are mixed. Builders’ optimism seems to have improved. The housing-market index, a widely watched measure of their confidence, was steady in October after falling for eight consecutive months. Most forecasters reckon that the drag on economic growth from falling residential construction will begin to wane over the next few months. But inventories are still high, suggesting more downward pressure on prices to come. Figures this week showed that the prices of both new and existing homes are lower than a year ago. The median price of an existing house is down 2.2% from September 2005. The typical new house is now almost 10% cheaper.

Thanks to cheaper petrol, strong wage growth and booming stockmarkets, consumers have shrugged off these price falls. At 4.6%, unemployment is low. Wages are picking up, just as falling petrol prices increase their real purchasing power: average hourly earnings rose by 4% in the year to September, their biggest nominal gain since 2001. Most indicators of consumer confidence are improving. The latest University of Michigan survey, published on the same day as the GDP figures, showed consumers more upbeat than at any time in the past 15 months. That may suggest that spending in the fourth quarter will stay healthy. Judging by rising durable-goods orders, investment spending may be strengthening. All of which suggests to optimists that the weakness of GDP in the third quarter will prove temporary.

America’s central bankers seem to share that view. At its policy-setting meeting on October 24th and 25th, the Federal Reserve decided to keep short-term interest rates at 5.25%. In the statement announcing their decision, the central bankers seemed sanguine about future growth prospects. “Going forward”, the statement said, “the economy seems likely to expand at a moderate pace.” And moderate growth is exactly what the central bankers want, in order to bring down America’s inflation rate, which is still too high for the Fed’s comfort.

Judging by the GDP report, that strategy may be working. Price pressures seem to be easing a little. The central bankers’ preferred inflation gauge, the deflator for personal consumption expenditures, excluding the volatile categories of fuel and food, rose at an annual rate of 2.3% in the third quarter, down from 2.7% in the second quarter.

Slower growth and easier inflation: so far, so good, the Fed may think. But the housing-market cloud is still overhead, and no one yet knows how long it will remain.