What a difference a day/month make

by Laura Ehrenberg-Chesler on September 2, 2010

in Economic Indicators, Employment, Foreign Markets, Investment Strategies

Yesterday, September 1st was a good day in the stock market.  The Dow closed up 254 points and the S&P 500 closed up 31 points.

Yesterday’s rally was different in one meaningful way as compared to the rallies of the past few months.  While ignoring a slightly negative ADP report, the market chose to focus on the first positive, significant economic data that  has been released in some time. 

1) U.S. manufacturing data was better than expected, it was actually strong 2) China manufacturing data was better than expected 3) India  and Australia reported strong GDP numbers.

These numbers, coupled with an idea we have been discussing on this blog, that the market will anticipate regime change in November, continue to point to the opportunity for a better than expected market in September, and maybe through November.

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Asia Down Sharply Overnight

by Marilou Long on August 31, 2010 in Economic Indicators

The Nikkei fell 3.6% yesterday due to continued strength in the yen combined with weak semiconductor numbers.  From the WSJ article:
“Regional semiconductor-related shares slid on worries about their demand outlook, and after Intel’s shares fell overnight following news the U.S. chip company said it would pay about $1.4 billion to acquire Infineon Technologies’ wireless unit. [...]

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What If ….?

by Laura Ehrenberg-Chesler on August 26, 2010 in Credit Crisis

A client recently sent me an interview with investment strategist Peter Schiff.   Mr. Schiff was right about the most recent debt cycle and correctly predicted the collapse of the housing market. 
He is currently very negative about the domestic market, and recommends buying gold and moving assets offshore.  Mr. Schiff believes we are heading down the path of [...]

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Existing Home Sales Down 27.2% in July

by Marilou Long on August 24, 2010 in Economic Indicators

Existing home sales fell 27.2% in July to a level not seen since 1995.  Inventories are at a record high of 12.5 months supply.  The median home price was unchanged at $182,600.  Refinancing activity picked up two weeks ago as the the 10 year Treasury broke the 2.80% level.  It is at 2.48% this morning, [...]

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Follow up to my post from Thursday

by Laura Ehrenberg-Chesler on August 20, 2010 in Credit Crisis

In yesterday’s research from Ed Yardeni, he quotes a WSJ article from August 17.  Ironically, that article, which I missed, reinforces the point I made yesterday in my blog.
In the article, Edward Pinto, who was a top official at Fannie Mae in the late 1980’s, reminds us that Congress passed a law in 1992 that imposed [...]

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The Debate over Fannie and Freddie

by Laura Ehrenberg-Chesler on August 19, 2010 in Credit Crisis

There is a lot of chatter these days about the role Fannie Mae and Freddie Mac played in the housing bubble, and the economic crisis that ensued. 
One school of thought is that Fannie and Freddie were just following the lead of the business community in chasing profits in sub prime lending.  The other believes they did not act prudently [...]

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Fertilizer Smells Sweet Today

by Marilou Long on August 17, 2010 in M & A Activity

Potash Corp, ticker POT, rejected an unsolicited bid today from BHP Billiton.  BHP bid $130 a share, and POT is currently trading around $140, up 25%.  From the FT article:
“The BHP Billiton proposal substantially undervalues PotashCorp and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled [...]

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Three ways to halt Deflation

by Laura Ehrenberg-Chesler on August 12, 2010 in Credit Crisis

Over the past few weeks, there has been an escalated debate about whether or not the United States will fall into a period of deflation.  Deflation is negative for the economy.
The three tools that can be used to halt deflation are: 1) Lower the fed funds rate to 0%.  2)Increase the number of dollars in circulation, which [...]

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Fed Meets Today to Discuss Quantitative Easing

by Marilou Long on August 10, 2010 in Credit Crisis

All eyes are on the Fed today as the Governors meet to discuss whether or not to resume quantitative easing.  The European debt crisis in the spring and the continued weak employment numbers in the US have turned their focus back to deflationary pressures in the economy.
From Ed Yardeni’s Morning Briefing today:
“There is a widespread myth [...]

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ECRI and the WLI Index

by Marilou Long on August 5, 2010 in Economic Indicators

The Economic Cycle Research Institute (ECRI), has had an impressive track record in forecasting recessions and recoveries.  The last several weeks, one of their leading indicators, the Weekly Leading Indicator (WLI) entered negative territory in its growth rate, and that rate stands at -10.7%.  Some analysts are claiming that when the WLI growth rate is [...]

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