With today’s (Fridays) continued drop in the SPX (low of 1073.18 with 45 minutes left in the session), the index has now fallen 75 points from peak to trough. This is the second largest pullback in terms of points and percentage retracement since the March 2009 rally began.
My predictions as to the drivers of the print...
Have a look at the table of S&P 500 sectors — the only one that has outperformed in each of the past three decades is health care. No, Medical and pharmacy inflation was not in your imagination.Below are two charts showing details of that table. The first shows the absolute performance of each sector over each decade, while the second shows the relative performance of each sector vs. the broader S&P 500 index over each decade. Please note that the order of the sectors move from best performing sector at the top (consumer staples) to worst performing sector at the bottom (telecom) over that 30 year period.
Telecom services is the only sector to underperform in all three decades.
Somewhat surprisingly Consumer Discretionary almost did what Health Care did in terms of the outperformance in up and down markets. With the exception of 1% underperformance in the 90’s, it was right there.tCA was surprised. I'm not. For 30 years+ consumption has driven growth within the United States (and actually outpaced economic output as detailed in the post Why Does it Feel Worse than Reported?). Combined with the rise of mega-retailers and cheap overseas manufacturing at the expense of "mom and pop" retailers and domestic produces (i.e. profit at the corporate level vs. income at the employee level), is it really a surprise these sectors were able to outperform?
Japan’s exports rose for the first time since Lehman Brothers Holdings Inc. collapsed 15 months ago, adding to signs that the world’s second-largest economy is recovering from the global recession.There were two keys for this positive year on year increase... an Asian recovery and a comparison from an extremely depressed level.
Shipments abroad rose 12.1 percent in December from a year earlier, the Finance Ministry said today in Tokyo. The median estimate of 19 economists surveyed by Bloomberg was for a 7.6 percent gain. Exports fell 6.3 percent in November.
“Shipments to Asia, especially China, have been growing a lot and these are strong results,” said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute in Tokyo. “It’s safe to say that exports were strong” in the fourth quarter.Depressed Level
The improvement in exports last month was partly due to a favorable year-on-year comparison. In December 2008, shipments abroad tumbled 35 percent as global trade froze in the aftermath of Lehman Brothers’ collapse in September. From a month earlier, exports rose a seasonally adjusted 2.5 percent in December, today’s report showed.
U.S. consumer confidence in January hit its highest level in nearly a year and a half, but a closely watched housing index showed an unexpected decline in November home prices, giving a mixed picture of the economic recovery.
The Conference Board, an industry group, reported on Tuesday that consumer confidence rose for the third straight month in January, driven by improved economic conditions.
Its index of consumer attitudes rose to 55.9 in January, the highest reading since September 2008 and up from an upwardly revised 53.6 in December. The index topped the median forecast from analysts polled by Reuters for a reading of 53.5.
U.S. home prices slipped in November and were softer than expected in the latest sign that a rebound in the U.S. housing market is tenuous, according to Standard & Poor's/Case-Shiller indexes on Tuesday.
The S&P composite index of home prices in 20 metropolitan areas slipped 0.2 percent in November after a revised 0.1 percent October dip, for a 5.3 percent annual drop. A Reuters survey had forecast a 0.1 percent November rise. Prices were originally reported as unchanged in October.
On a seasonally adjusted basis, the 20-city index rose 0.2 percent in November, S&P said, after a 0.3 percent rise the prior month.
The home price picture remains mixed despite steady annual improvement, said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "Only five of the markets saw price increases in November versus October," he said. "What is more interesting is that four of the markets -- Charlotte, Las Vegas, Seattle and Tampa -- posted new low index levels as measured by the past four years."
The Office for National Statistics said Tuesday that compared with the third quarter, gross domestic product in the three months to the end of December increased 0.1%. Compared with the fourth quarter of 2008, GDP fell 3.2%. While the data showed that the U.K. officially emerged from a deep recession that began in the second quarter of 2008, the market was disappointed with the 0.1% amid consensus of a 0.3% gain.
"Avatar" is the winner and new worldwide boxoffice champion.The chart below shows the top ten grossing regions of the world and as can be seen, the breakdown of revenue for Avatar is much more broad and diverse than that of Titanic (take note of China and Russia).
After six rounds on the foreign circuit, "Avatar" is now the biggest-grossing film of all time, as earlier predicted.
Distributor 20th Century Fox said the James Cameron mega-budget blockbuster's worldwide cume -- excluding Puerto Rico -- was through the weekend just $2 million shy of "Titanic's" global boxoffice record of $1.843 billion. (Boxoffice in Puerto Rico, although generated offshore, is considered by Fox as part of its domestic total.)
The distributor confirmed that "Titanic's" historic benchmark fell as of early Monday.
Texas factory activity expanded in January, providing the Federal Reserve Bank of Dallas with a sliver of hope that the economy could be improving.
The Fed Bank of Dallas noticed that the production index in the manufacturing index rose further into positive territory during January, according to the Fed Bank’s latest Texas Manufacturing Outlook Survey.
The production index improved as more manufacturers continued to report increases in their activity levels. Others surveyed in the report said activity levels remained unchanged. The business activity and company outlook indexes also improved in January and reached their highest levels since mid-2007.
Existing-home sales plunged in December, dropping lower than expected after three straight increases that were fed by a fat government tax credit. Home Sales Home resales fell by 16.7% to a 5.45 million annual rate from an unrevised 6.54 million in November, the National Association of Realtors said Monday.
Monday's data said inventories shrank, and prices rose year over year for the first time in more than two years. Economists surveyed by Dow Jones Newswires expected an 11.6% decrease in sales during December, to a rate of 5.78 million.
Banks are making it difficult for some people to get loans. Joblessness in the U.S. is high, muting the economy's recovery.
Euro zone industrial new orders surged more than three times as much as expected in November against October, buoyed mainly by demand for intermediate and non-durable consumer goods, data showed on Friday.These levels are still down from November 2008 levels (a period that was already massively down due to the global slowdown).
Orders in the 16-country area rose 1.6 percent from October and were 1.5 percent lower than a year earlier, the European Union's statistics office said.
Economists polled by Reuters had on average expected a 0.5 percent month-on-month increase and a fall of 6.2 percent year-on-year.
Eurostat also revised upwards its October orders data to show slightly smaller declines than previously reported.
Leading U.S. economic indicators increased 1.1% in December and have risen for nine straight months, suggesting "that the pace of improvement could pick up this spring," according to a report released by the Conference Board on Thursday. The rise in the leading index was stronger than the 0.7% increase expected by economists surveyed by MarketWatch. Eight of the 10 leading indicators improved in December, a broad-based gain that points to "an economy in early recovery," said Ken Goldstein, an economist for the Conference Board, a private research organization.
China’s growth accelerated to the fastest pace since 2007 in the fourth quarter, capping Premier Wen Jiabao’s success in shielding the nation from the global recession and adding pressure to rein in a surge in credit.
Gross domestic product rose 10.7 percent from a year before, more than the median forecast of 10.5 percent in a Bloomberg News survey, a statistics bureau report showed in Beijing today. Asset-price gains, particularly in property, are creating problems for the government to guide the economy, Ma Jiantang, who heads the bureau, told reporters after the release.
CRE prices peaked in late 2007 and have fallen 43% from the peak and are now back to September 2002 levels.September 2002 levels in nominal terms, but pre-index (December 2000) prices in real terms (the REAL in the title is not "real").
Housing starts in the U.S. fell more than anticipated in December, while building permits unexpectedly jumped, signaling inclement weather may have kept builders away from worksites.
Work began on 557,000 houses at an annual rate, down 4 percent from November, figures from the Commerce Department showed today in Washington. Permits, a sign of future construction, climbed to the highest level in a year.
The government’s extension and expansion of a tax credit for first-time buyers may help underpin demand in the first half of 2010, giving builders reason to ramp up new projects. The gain in permits, which are less influenced by weather, indicates an unseasonably cold and wet December probably prevented some work from getting started last month, according to economists like Maury Harris.
The Producer Price Index for Finished Goods moved up 0.2 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed a 1.8-percent advance in November and a 0.3-percent increase in October. At the earlier stages of processing, prices received by producers of intermediate goods rose 0.5 percent and the crude goods index moved up 1.0 percent. On an unadjusted basis, prices for finished goods advanced 4.4 percent in 2009, after falling 0.9 percent in 2008.As can be seen below, the increase remains concentrated in energy.
The Journal reported that based on its analysis — which includes banking giants J.P. Morgan, Bank of America and Citigroup, securities firms such as Goldman Sachs and Morgan Stanley, and exchange operators CME Group Inc. and NYSE Euronext Inc. — executives, traders and money managers at 38 top financial firms can expect to earn nearly 18% more than they did last year, and slightly more than they did in the record year of 2007.While 18% seems like a massive jump (it is) from a level that was already too high (in my opinion), it ignores the broader issue of what has resulted from a government (i.e. taxpayer) guarantee on the downside risks of those banks deemed too big to fail... a MASSIVE increase in compensation (the joys of a "too big to fail" title for the select few).
I had to laugh at a histogram with a sample size of 4 and a data range from 1 to 2! This is data that really doesn't benefit from graphic visualization. :)
That won't stop me from updating it with every J-E-T-S win.And after an INSANE win (Chargers are [were?] the best team in the league in my opinion), here is the update....
And the relationship between capacity and inflation remains strong.Colder-than-usual weather contributed to the gain in December, with utility production rising a seasonally adjusted 5.9%. The output of factories dropped 0.1% in November after a 0.9% gain in November, repeating the see-saw pattern of the past four months. Output of mines rose 0.2%. Read our complete economic calendar and consensus forecast.
For all of 2009, output plunged 9.7%, the steepest yearly decline since output fell 13.7% in 1946. Output fell at a 12.5% annual pace in the first half of the year, then rose at a 9.6% annual pace in the final six months of the year. Since the recession began two years ago, industrial output dropped 10.8%. Manufacturing output fell 13.2% since the recession began.
In December, capacity utilization in industry rose to 72% from 71.5%. It's the highest in a year. For manufacturing, capacity utilization rose to 68.6% from 68.5%, also the highest since December 2008. The utilization rate in the factory sector -- a measure of slack in the economy -- is 11 percentage points below the long-term average, showing very weak inflationary pressures.
It is the relative strength of 'food establishment and drinking places' sales vs. grocery sales (as expressed in year over year terms). The relevance? Well, the data seems to suggest that "Pub Power" = Strength in the Dow, one year forward.The thought was that the relative strength (i.e. demand) of restaurants relative to cooking at home shows the following characteristics:
The consumer-price index rose 0.1 percent, less than forecast, following a 0.4 percent gain in November, Labor Department figures showed today in Washington. Excluding food and energy costs, the so-called core index also increased 0.1 percent.Looking at the details, inflation is concentrated in transportation (energy). Until pricing power moves into other areas (and labor), the Fed should have no concerns over keeping rates as low as they are.
Companies may have little success raising prices with unemployment projected to average 10 percent this year, the highest annual rate in seven decades. Federal Reserve policy makers have said they expect “subdued” inflation in coming months, allowing them to keep interest rates close to zero to help fuel growth.
“Consumer pricing pressures remain very subdued,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, who accurately forecast the rise in the core rate. “It gives the Fed further leeway to continue keeping rates where they are well through 2010.”
U.S. business inventories rose more than expected in November, according to a government report on Thursday, supporting views of a pick-up in the economic growth pace during the fourth quarter.
The Commerce Department said inventories increased 0.4 percent after gaining 0.4 percent in October, previously reported as a 0.2 percent rise.
Economists polled by Reuters had expected a 0.2 percent rise in November. The rebuilding of inventories following a period of aggressive liquidation is among the factors expected to drive the economy's growth as it recovers from the most severe downturn since the 1930s.
Forget about the overall total and look at the details. Driving more than half the contribution was an increase in the sale of gasoline (driven by the jump in the price of gasoline).U.S. retail sales fell in December unexpectedly, signaling restraint by consumers during the holidays as the economy wrestles with high unemployment.
Retail sales declined 0.3%, the Commerce Department said Thursday. Economists surveyed by Dow Jones Newswires forecast a 0.5% increase. November sales, however, were adjusted upward, to a 1.8% increase from a previously reported 1.3% gain. October sales also rose strongly, up 1.2%.
Excluding the car sector, all other retail sales in December fell 0.2%. Economists expected a 0.3% increase. The numbers were a disappointment for the economic recovery. The retail sales data are an important indicator of consumer spending. Consumer spending makes up 70% of GDP, which is the broad measure of U.S. economic activity. Thursday's report suggests high joblessness is restraining consumers and will mute the recovery.
Australia's unemployment rate fell to a seasonally adjusted 5.5 per cent in December from 5.6 per cent in November.
Total employment rose by 35,200 to 10,906 million in December, the Australian Bureau of Statistics said.
Economists on average had expected an unemployment rate of 5.8 per cent in December, with the number of employed up 10,000.
The number of people in full-time work rose 7300 to 7.64 million in December, from 7.63m, while the number of people in part-time work rose 27,900 to 3.27m from 3.24m.
Rolling 12 Month Receipts - Outlays - Surplus/Deficit as a Percent of GDPThe U.S. registered its largest December budget deficit on record as higher unemployment reduced revenue and the government spent money to help the economy recover.
The excess of spending over revenue rose to $91.9 billion last month, compared with a deficit of $51.8 billion in December 2008, the Treasury Department announced today in Washington in its monthly budget statement. The U.S. has posted a record 15 straight monthly deficits.
The December figure caps a calendar year in which the deficit widened to an all-time high, featuring unprecedented government spending to help engineer an economic recovery. The deepest recession in seven decades also resulted in the worst year for tax collections since 2004, according to calculations by Bloomberg News, as companies suffered and more Americans were shuffled to the unemployment line.
Why not do an EconomPic unemployment rate sugestion for this figure? Might look ugly...He is "of course" referring to the EconomPic method (a method that accounts for the huge swings in the participation rate) of calculating unemployment. Here it is...
Job openings in the U.S. fell in November to the lowest level in four months, a
sign employers are reluctant to expand staff even as payroll reductions waned from earlier last year.Openings declined by 156,000 to 2.42 million, the second- lowest level since records began in 2000, the Labor Department said today in Washington. The number of unfilled positions was down 50 percent since peaking in June 2007.
“It confirms the suspicion that most of the improvement in non-farm payroll employment has been due to reduced firing and not renewed hiring,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “This is the last shoe to drop for the recovery in the labor market and we’re still waiting.”
We all know the type of person who came of age in the Great Depression. They are the grandmothers and grandfathers who can't use a tea bag too many times, yet are enjoying comfortable retirements in warm climates. And we know what the children of the 1950s are all about. They are the optimistic boomers who embodied an age of continual upward mobility and possibility. They have often spent more than they earned, because for them it has been a truism that times can only get better. It's no accident that the psychology of entire generations is shaped by the milieu in which they grew up; economic research tells us that our lifelong behaviors are determined in large part by the seismic events—good or bad—of our youth.The below chart details one struggle that this "Recession Generation" is facing... employment.
So, given that we have just experienced the worst economic period in 70 years, it's no surprise that people have begun to wonder what sort of consumers, investors, and citizens will be bred by the Great Recession. Will there be, in effect, a "Generation Recession" of young people whose behaviors will be permanently shaped by the downturn?
Consumer credit in the U.S. dropped a record $17.5 billion in November as unemployment close to a 26- year high discouraged borrowing and banks limited access to loans.The chart below shows the change in consumer credit outstanding (year over year) as a percent of total personal consumption. In the latest period consumers have shed almost 0.82% of consumer credit outstanding as a percent of all personal consumption.
A labor market that’s shed 7.2 million jobs since the recession started in December 2007 is restraining consumer spending that accounts for about 70 percent of the economy. Fed policy makers have said tighter bank lending standards and reductions in credit lines are hampering the recovery.
The series of 10 straight declines in consumer credit was the longest since record-keeping began in 1943.
One playoff game into his career, Mark Sanchez is giving a pretty good off-Broadway performance.
So are the rest of the New York Jets, who are no longer an overlooked team after dismantling the AFC North champions twice within a week.
Any more doubters?
With their rookie quarterback playing mistake-free, the Jets turned their surprising playoff appearance into a long-running production Saturday. Sanchez threw a touchdown pass, and the NFL’s top running game took it from there, setting up a 24-14 victory over the Cincinnati Bengals.
Sanchez looked like a playoff pro, joining Shaun King, Joe Flacco and Ben Roethlisberger as rookie quarterbacks to win postseason starts. At times, Sanchez found himself on the sideline soaking it all in.
What would be helpful here is a NET figure (& chart, of course) showing the shift (gross & per capita) from production surplus to consumption surplus. It's a little hard to read between the lines (literally) in this graphic.The difference between GDP (what the U.S. produces) and Gross Domestic Purchases (what the U.S. purchases) is net exports. Thus, the charting is easy, but the result of the chart is rather astounding. The net level of purchases over production peaked at more than $2500 per person (that is literally $2500+ in a single year for every man, woman, and child within the U.S.) in September '06. This has "collapsed" to "only" $1150 a head, but that $1350 less that each person in the U.S. has been able to purchase (without producing) is a real decline.
“The Chinese,” he warned in an interview in November with Politico.com, “are in danger of producing huge quantities of goods and products that they will be unable to sell.”We shall see...
Job gains are nurses and teachers -- losses are construction and factory. Probably skews that way in each sectors demographics
Retailers pulled off a better-than-expected holiday season as rising consumer confidence -- and a last-minute shopping spree -- pushed sales higher in December, according to results released Thursday.And the resultant two year change (two years takes in account the massive drop from last year) shows the strength remains in a tween retailer and discount stores.
For about three dozen of the country's biggest chains, sales at established stores increased an average of 2.8 percent in December from a year ago, according to the International Council of Shopping Centers (ICSC), a trade group. Sales for the last two months of the year jumped 1.8 percent, compared with a record 5.6 percent drop in 2008 -- marking the strongest holiday performance in three years. The ICSC had forecast a 1 percent increase.
Taken at face value, historic index figures suggest that even an average hedge fund manager can easily beat the stock market while taking less risk. Since 1990, a weighted index of hedge funds has returned around 12 percent annually — about four percentage points more than the returns for the Standard & Poor’s 500-stock index — with just half the volatility, according to Hedge Fund Research.
On closer inspection, these claims look suspect. Research published in late 2007 by the Princeton professor Burton G. Malkiel showed that many hedge funds simply stopped reporting results after they became embarrassing. For funds that ceased reporting, the average monthly return in the six months before they did so was -0.56 percent. That contrasts with an average monthly return of 0.65 percent during their reporting lives.
For another piece of evidence, consider Hedge Fund Research’s investable Global Hedge Fund Index. Because this tracks real money invested in hedge funds, reporting vagaries ought to be less of an issue. Sure enough, the index has underperformed Hedge Fund Research’s broader theoretical benchmark in each of the last seven years, typically by a meaningful margin. In 2009, a recovery year for hedge funds, the investable index rose around 13 percent year compared with 19 percent for Hedge Fund Research’s voluntarily reported index.
