Market on a Precipice?

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.

BarryZee

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5 Responses to Market on a Precipice?

  1. Conscience of a Conservative says:

    Howard,
    Correct me if I’m wrong, but wasn’t this all expected on account of the census work being over? And are we just being negative over the any number..
    I just saw the following on Bloomberg…

    One TV news moderator bemoaned the fact that businesses
    added 71,000 jobs in July compared with the 83,000 experts had
    expected — as if an additional 12,000 jobs would have made the
    difference between Dow 10,654 (Friday’s close) and Dow 11,000.

    • hhill51 says:

      I’ll presume to answer for BarryZee in the affirmative, with the following qualifier: Private sector employment was expected to accelerate in the second half during the Apr/May time frame, as all the prognosticators looked at the five-figure monthly job creation as the end of long winter of job losses.
      \\\
      The economists looking at the job market were wearing their rose-colored glasses, so they started seeing the right hand side of a “U” shape, which would be getting America back to work by several hundred thousands of jobs each month by now. No such luck, unless you count the robots and the corporations, which do seem to have more and more civil rights these days, so maybe we just need to expand the definition of employment to match our expanded definition of citizen. I’m giving this thought-provoker from Barry a little more time in top billing position before posting a blog I’ve already written about our crazy job market and the rise of non-human employment.
      \\\
      hh

      • Conscience of a Conservative says:

        Thanks HH,
        I’m no economist but it’s clear we’ve seen inventory restocking that’s mostly run its course. We paid a lot of people to speed up purchases they were going to make anyway.
        Why on earth did anyone expect an acceleration?
        That said there’s a great deal of statistics posted on Calculated Risk that shows clear signs things are getting better, just not at the rate Treasury and other elected officials are looking for. Not that this is really in their control…

        Hope you don’t mind links.
        http://www.bloomberg.com/news/2010-08-10/economy-lost-momentum-while-i-was-pulling-weeds-caroline-baum.html

      • hhill51 says:

        I had a nice multi-paragraph reply teed up to go when my thumb brushed the touch pad on the laptop I was using last night, and wiped it out.
        \\\
        I was also using the analogy of medical issues, like C. Baum did in your link (thanks, I like them unless they are spam)….
        \\\
        Baum misses much of the economic forest in her comments, so I’ll do a separate blog on the topic later…
        hh

  2. jill says:

    Writing about jobs…

    These two article disclose the fact that the U.S. State Department through the United States Agency for International Development will provide millions of U.S.taxpayer dollars to train foreign workers to work in American outsourced factories. This program is in effect in South Asia and will be extended now to Armenia.

    I find this information very hard to understand. What do you suppose unemployed Americans feel about this?

    It is now official government policy to outsource American jobs.

    http://tinyurl.com/2cbjfgv

    http://tinyurl.com/35tfsvr

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