“EuroZone Composite PMI shows national divergence hits record high…
Yet, in aggregate, the Eurozone contraction decelerated with the Eurozone composite PMI rising from 47.2 to 48.6. So, what's it all mean?
Chris Williamson, Chief Economist at Markit offered this interpretation: "The Eurozone is showing clear signs of healing, with the downturn easing sharply in January and the region moving closer to stabilization in the first quarter. ...."
I disagree with Williamson. Those divergences show the Eurozone is getting sicker, not healing. .. Italy and Spain are still in deep contraction and France is a certified zombie…The Eurozone is a failed experiment. Structural flaws were too great initially, and they have increased over the years. No currency union in history has ever survived unless there was also a fiscal union. Current politics says it cannot happen, on meaningful terms.” - Mish Shedlock See the full post at Mish’s Global Economic Trend Analysis at
http://globaleconomicanalysis.blogspot.com/
http://globaleconomicanalysis.blogspot.com/
REGARDING THE GDP DECLINE
When the horrendous 4th Quarter 2012 GDP number was released, we heard many comments like the following: “If this really was the start of a new recession, like the ones in 2001 and 2008, then we would expect to see GDP excluding defense and inventories falling too. Instead, the growth rate is accelerating. –Paul Ashworth, Capital Economics. Apparently, most economists think this time will be different. But the book, “This Time is Different”, by Reinhart and Rogoff, Professors of Economics at Harvard, says otherwise. Countries as indebted as the US is suffer recession, stagnation or slow growth.
While the current this downturn is among the worst in US history for employment, it is not anywhere near as bad as other financial crises that have occurred world-wide. The following chart is from a presentation that updated data from the book “This Time is Different.” The update presentation is available at…
www.economics.harvard.edu/faculty/rogoff/files/Aftermath.pdf
In spite of low growth and slow employment gains, as of now, investors don’t believe a recession is coming since the Morgan Stanly Cyclical Index is performing well in relation to the S&P 500.
This is a busy
day so I am posting early. There has
been a lot of talk that this is the start of a correction. It may be but market internals are mixed and
not giving a clear signal regarding a sell-off.
NTSM
As of mid-day Thursday, the NTSM analysis remains HOLD.
I’ll post an update if it changes, but I don’t really
expect it to.
Sentiment remained 62%-bulls as of the close on Wednesday
{calculated from selected Guggenheim (formerly Rydex) bull/bear funds}. We’ll see if the buy-the-dip crowd moves
in. If not, we may well see a correction
get underway. The market was 8% above
its moving average as of yesterday so a pullback of about 8% could happen
easily. I goal to “tune” the NTSM
analysis to ignore moves of less than 10% - this is a long-term based blog; not
for regular trading – so if the market drifts down I may not get a sell in the
NTSM system.
MY INVESTED POSITION
Based on a BUY
signal 7 of 9-days, and more importantly, consecutive closes above the prior
high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14
January. I am currently invested in a
range of near 50% invested in stocks. 
