Better late than never, I suppose. The stock market went on a binge Wednesday and nailed its best day of the year. And this morning, with the futures up another 4.5 on the S&P and delirium running in the tech stocks, the NASDAQ is up another 10 points, or more, in the early accounts.
Is it genuine? Let me put on my best Clintonesque voice and say “Depends what you mean by GENUINE.”
Yes, the markets went up, so sure, it’s genuine in that sense.
Part of the hype cycle foundation this week was the Fed’s Beige Book report with the market focusing on the good news:
Reports from the twelve Federal Reserve Districts suggest overall economic activity expanded at a moderate pace during the reporting period from early April to late May. Activity in the New York, Cleveland, Atlanta, Chicago, Kansas City, Dallas, and San Francisco Districts was characterized as growing at a moderate pace, while the Richmond, St. Louis, and Minneapolis Districts noted modest growth. Boston reported steady growth, and the Philadelphia District indicated that the pace of expansion had slowed slightly since the previous Beige Book.
Time to break out the Milk & Honey? No, not exactly. The Beige Book included plenty of cautionary notes:
Hiring at manufacturing firms was mixed, but manufacturers in some Districts reported difficulty finding qualified workers such as welders.
Retail spending was flat to modestly positive in nearly all Districts.
Most Districts reported that home inventories decreased. Overall, home prices remained unchanged in many Districts, although reports were mixed. There were a few reports that sellers were lowering asking prices, leading to downward pressure on housing prices.
This last note is curious. What doesn’t seem to have shown up yet is the huge number of homes which are in the REO (real estate, owned) by banks and lending outfits. The work-out would be more clear if there was a single number we could find that showed us how much property is owned by banks and not yet on the market as that would tell us a lot about true – rather than notional – unsold inventory.
Speaking of which: Record low home mortgage numbers are continuing:
“Mortgage rates continued to drop this week, with the average 30-year fixed mortgage rate falling to the record low of 3.92 percent according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.42 discount and origination points. ”
So that’s where the recovery in home sales is coming from in some measure…
Still, all seems to be cheerleading and glee clubs in world markets: Japan was back over the 8,500 handle on the Nikkei 225, and France is well over the 3,000 handle on the CAC40, so what could possibly go wrong?
Well, plenty…remember Europe? For now, I chalk up yesterday to a normal short squeeze which is what happens in large declines. The market is still down 750 points from March and using my trading model in my personal account, I am still short and at least for the next week, that’s likely to be genuinely painful for us bears.
Stories like some Finnish finance dude meeting with the Ben and Tim show coming out saying the US is worried about European banks is like a NSS moment.
The problem is that while markets wait for “helicopter Ben” to quantatively ease the recent suffering of bulls, lots of people (including me) see the charts and don’t look for that to happen until the Dow gets down to the 11,300 level. Bears are a patient lot but deathly afraid of loud noises from overhead. The good news is the rally yesterday frightened off the helicopter pilots for a good while longer.
The rally will continue this morning while the helicopters refuel, I suppose.
Speaking of Greece
Which we were, a second ago, however obliquely though the decaf haze around here: Unemployment there is just a shade under 22% now. That’s a 37.89% increase from year ago levels. The real sign of change in Greece will come with the trend reverses for a couple of months back to back. In the meantime, suffering there grows.
Waiting on Fed Data
The Biggie today is the Consumer Debt Report from the Fed – comments on that tomorrow morning. But meantime mixed signals from the weekly unemployment numbers:
In the week ending June 2, the advance figure for seasonally adjusted initial claims was 377,000, a decrease of 12,000 from the previous week’s revised figure of 389,000. The 4-week moving average was 377,750, an increase of 1,750 from the previous week’s revised average of 376,000.
The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending May 26, unchanged from the prior week’s unrevised rate.
The advance number for seasonally adjusted insured unemployment during the week ending May 26 was 3,293,000, an increase of 34,000 from the preceding week’s revised level of 3,259,000. The 4-week moving average was 3,279,500, an increase of 11,500 from the preceding week’s revised average of 3,268,000.
Hillary in Charge
I must have missed the org chart change: Hillary Clinton is telling Syrian president Assad *(no fan of him, btw) it’s time to quit and leave his country.
Gotta wonder what Assad will tell her in return.
Meantime, another report of a massacre by “government backed gangs” is coming to light.
Gotta hand it to headline writers, this morning, as they’re kicking the brain cell into gear with “Panetta: U.S. Running out of patience with Pakistan on militant havens.“ Like we have patience presently?
Notes from the Worker’s Paradise
Dozens arrested at a plant in China (which makes Apple parts) for rioting.
Somewhere in here, I might note that I haven’t received a note yet from the Appleites who constantly ridicule me for driving and i7 with four monitors made in South Korea and Taiwan.
We all have an obligation to vote with our wallets….
Still dealing with battling press releases out of Wisconsin’s recall election this week. Example of some of the point-counterpoint:
“ConservativeHQ.com Chairman Richard A. Viguerie issued the following statement suggesting that, after his victory in the recall election, Wisconsin Governor Scott Walker is now the de facto leader of the conservative movement:
“Since Ronald Reagan left the national stage, many have auditioned for the role of leader ”
And on the other side…
“Leo W. Gerard, president of the United Steelworkers (USW) tonight declared his pride in a boots-on-the-ground historic Election Day in Wisconsin by the coalition of union members who mobilized in unity, only to lose a recall of the current governor that would have given working families a voice for their future.”
My solution to Wisconsin (and 49 other states) is to bar any interstate movement of money – right, left, the rich brothers, the unions….no interstate funds in state, county, or local elections. Let local politics remain untouched by special interests! Is that such a hard concept?
Password leak, that is: Some LinkedIn and eHarmony logons apparently have been revealed online.
Story in the Telegraph this morning reports “Unborn babies could be tested for 3,500 genetic faults.“ Wasn’t there a guy in World War II going down that path?
Teachers Learn Politics
Thousands of teachers walked off the job in Australia last night. They were offered a 2.5% pay hike, but not enough, since they had been promised more by politicians…
Let me think: Politicians say one thing when running and do pretty much the opposite once their seize power. Hmmmm…gee, gosh, never heard of that happening anywhere, have you?
Half on Quake Watch
Just the usual stuff, like a 5.9 down in Fiji overnight, but if you look at the one-week view on the HAARP magnetometers online, you’ll see there have been some pretty good-sized hits magnetically hitting earth this week, three incidents of more than -500 NT or more. So…in the past such things have occasionally been precursors to 7.0+ earthquakes, so we shall see in the next couple of days.
NO! I am not saying HAARP has anything to do with quakes. I am saying that there seems to be a sequence of magnetic anomalies followed by quakes of some size that is at least interesting to notice…got the EQ preps?
Fruits of Ohio
A report from a reader up thataway:
“Just an observation from here in Ohio. The fruit crop was devastated this spring by cold weather and there will be no peaches and few apples and grapes. The strawberry crop was ruined, too. Very small yield and poor quality. And that is supposedly that same for Michigan, Pennsylvania and New York. This is what happens when you have a warm winter and a freak spell of eighties weather in March. I have apple trees left over from an old working orchard and I can vouch the fact there are very few apples this year. So be prepared for higher prices this fall if you want to partake in any of these delights.”
If this wasn’t such a serious thing, I’d say something like “Fruit growers in a jam…” or something insensitive like that there. Let’s hope bad weather doesn’t leave cucumber growers in a pickle, either…
Passings: Ray Bradbury
Famous sci-fi writer famous for books like Fahrenheit 451 – the temperature at which books begin to burn – dead at 91.
Too bad he couldn’t have lived to see the sequel: Electrons 451. Instead of a temperature, maybe a port number?
More after this…