“The U.S. economy showed fresh signs of slower growth in the second quarter, with factory activity slipping in the mid-Atlantic region while groundbreaking declined at home construction sites.
Other data on Thursday showed a spike in new claims for
jobless benefits last week as well as soft underlying inflation that could
point to weak demand in the economy.
"We are seeing a soft start for growth in the second
quarter," said Sam Bullard, an economist at Wells Fargo in Charlotte,
North Carolina.” Story at…
http://www.reuters.com/article/2013/05/16/us-usa-economy-prices-idUSBRE94F0J520130516
But really, this is (insanely) seen by many as good news
since it means the Fed is more likely to continue with QE,
FED HAWKS CALL FOR RETREAT FROM MORTGAGE STIMULOUS
(Reuters)
“A trio of hawkish regional Federal Reserve officials are
calling for the U.S. central bank to stop buying mortgage-backed bonds, citing the recent improvement in
the housing market…Richard Fisher, President
of the Dallas Federal Reserve Bank [said]…"We can rightly declare victory
on the housing front and (reduce) our purchases, with the aim of eliminating
them entirely as the year wears on," Fisher told the National Association
for Business Economics on Thursday in Houston.
"I believe the efficacy of continued purchases is questionable." Story at…http://www.reuters.com/article/2013/05/16/us-usa-fed-idUSBRE94F0SP20130516?feedType=RSS&feedName=businessNews
The above only addresses the mortgage backed bonds which
is a part of QE.
JP MORGAN GOES ALL-IN ON RALLY; SEES SURGE GROWING (CNBC)
“JPMorgan took the lead Friday in the battle of the
bulls, raising its year-end price target for the Standard & Poor's 500 to 1,715. That's a
big leap from the firm's original projection of 1,580, which the index blew
through on April 24.
The forecast is the highest call among Wall Street
strategists, who are uniformly optimistic about the market's prospects this
year.” Story at…
http://www.cnbc.com/id/100745860
US CONSUMER SENTIMENT ROSE IN MAY (Bloomberg)
“Consumer confidence rose in May to the highest
level in almost six years as an advancing stock market and cheaper gas prices helped lift Americans’ outlook on
the economy…The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 83.7
in May, the highest since July 2007, from 76.4 the prior month, a report today
showed…“We’ve got a consumer that’s been stunningly resilient to tax hikes and
sequestration,” Mike Englund, chief economist at Action Economics in Boulder, Colorado, said before the report. “It’s not an
optimistic consumer, but it’s a resilient one.”
Story at…http://www.bloomberg.com/news/2013-05-17/consumer-sentiment-index-in-u-s-rose-to-83-7-in-may-from-76-4.html
Consumer confidence usually follows the stock
market. No wonder this indicator is up.
LEADING ECONOMIC INDICATORS UP (Conference Board)
“The Conference Board Leading Economic Index® (LEI) for
the U.S. increased 0.6 percent in April to 95.0 (2004 = 100), following a 0.2
percent decline in March, and a 0.4 percent increase in February.
“Says Ataman Ozyildirim, economist at The Conference
Board: “After a slight decline in March, the U.S. LEI rebounded in April, led
by housing permits and the interest rate spread. Labor market conditions also
contributed, although consumers’ outlook on the economy remains weak. In
general, the LEI points to a continuing economic expansion with some upside
potential. Meanwhile, the CEI, a measure of current conditions, has returned to
a slow growth path, despite declining industrial production in April.” Press
release at…
http://www.conference-board.org/data/bcicountry.cfm?cid=1
LEI is back in the green.
No help for the Bears.
FROM THE CHIEF ECONOMIST AT THE COINFERENCE BOARD
“The U.S. economy grew at a 2.5% pace in the first
quarter, but we continue to expect fiscal tightening via the sequester spending
cuts to slow growth in the remainder of this year.” More available at…http://www.conference-board.org/data/bcicountry.cfm?cid=1
MARKET RECAP
Friday, the S&P 500 closed UP 1% to 1,667 (rounded)
VIX was down about 5% to 12.45.
NTSM
Friday, the overall NTSM analysis was again SELL at the close for
reasons outlined in the EXTREME BULLISHNESS paragraph of Wednesday’s blog.
In addition, today (like yesterday) there was a statistical indicator of
complacency (I call the “calm-before-the-storm”) that often occurs at or near a
top; today was also “statistically-significant", so a reversal would be
expected Monday; and now the S&P 500 is 13% above its 200-dMA, another market negative.
I can’t begin to explain this market. (Conspiracy theories abound, but hey, that’s
just the internet.) With the Fed backing
the market, maybe it WILL go up
forever. All I can guess is…foreign
money keeps pouring in.
ART CASHIN (CNBC)
Art offered 2-possibilities about the near
term future: (1) Pause (2) Parabolic move up as shorts cover. He said, “[The number of] Stocks at a 52-week
high are at levels not seen in 35-years…the markets could go parabolic
[up]…this could turn into a “rocket shot” [if we don’t pause here].” Video at…http://video.cnbc.com/gallery/?video=3000169217&__source=yahoo%7Cheadline%7Cquote%7Cvideo%7C&par=yahoo
MY INVESTED POSITION
I remain about 20% invested in stocks as of 5 March (S&P 500
-1540). My reasoning may be found at…(although
that probably looks pretty lame by now.)http://navigatethestockmarket.blogspot.com/2013/03/why-i-got-mostly-out-of-stock-market.html
The NTSM system sold at 1575 on 16 April. (This is just another reminder that I should follow the NTSM analysis and not act emotionally – I am under-performing my own system by about 2%!)
I have no problems leaving 20% or 30% invested. If the market is cut in half (worst case) I’d only lose 10%-15% of my investments. It also hedges the bet if I am wrong since I will have some invested if the market goes up. No system is perfect.
