The stock market’s tepid response to the awful claims number today has me, well, stunned. How much more confirmation do investors need to understand this economy is just not right? A run of poor economic reports for weeks topped off by a lousy employment report and two crappy claims numbers in a row?
I can’t imagine how Dave Rosenberg is gonna play this, since he already took his bow yesterday, which he well deserved.
Tomorrow we have a run of four lesser data series reporting, all of which combined are just as important as claims. All subject to downside surprises.
The CPI any month now could show zero growth highlighting weak consumer demand and the risk of deflation, a situation that usually accompanies the severest economic declines.
Retail Sales could easily show zero or negative growth, though consensus is looking for slightly positive growth.
Consumer Sentiment could show a further decline in the face of consensus looking for a slight bounce off of a sharp previous month drop.
Business Inventories certainly look vulnerable to a downside surprise after the Q2 GDP report showed inventory gains sharply reduced after the poor May inventories report.
Beyond hitting the trifecta tomorrow I’m no longer sure what the market needs to be convinced, or even what its looking at anymore? Do you sense my frustration?
After today there has to be lots of economists who see the odds of a double dip of at least 50%. And the possibilities of another more serious economic decline continue to grow into the category of a non trivial possibility. The near zero inflation rate and the fact the three month T bill never made it past 15BPs, or so, are signs something is very wrong, that we never really recovered out of the depths of the financial crisis. Now comes the upward restatement of the savings rate with the GDP report, showing consumers are scared and holding back.
Next week we have more on manufacturing and more on housing. Not sure that there is an investor out there that can learn anything from those reports they don’t already know – housing is at the bottom because it has no place lower to go and manufacturing is trending downward.
Ben Bernanke shows no hesitation using a term like “unusual uncertainty’ and in fact wears his fears for the economy on his sleeve. Forget Rosenberg. Forget Roubini. Forget Krugman, because of his politics. Robert Shiller, the economist who predicted the tech and real estate bubbles, and has not predicted any other declines to my knowledge that have not occurred, sees the economy having a greater than 50% chance of going into recession.
Now if Bernanke’s fears are realized, corporate earnings are going to be shredded. So in the face of all this the market gives a polite tip of the hat with a half hearted correction for one day and threatens to pop upward today? Where’s the market’s anticipation of future events routine that its known for?
I am lost.