Market comments for July 15th UPDATE

The CPI data came in at -0.2% in June, compared to +0.2% in May. Core CPI came in at +0.3% in June and was up +0.3% in May. This is showing that core prices are really rising as many feared. This economy is sounding more like we are in "stagflation". These CPI Core numbers are in line with what is happening with what has happened to the Core PPI numbers as well. In June Core PPI rose to +0.3% from a May reading of +0.2%.

The Empire State Index came in at -3.76 in July versus in June it was -7.96. Expectations for July were for the number to be 0.0, so this is not a good number and indicates a slowing business climate. That's hard to imagine given the business climate has felt like it has almost stopped the past 3 months. This data is in line with the Inventories data which is also rising and showing that Manufacturing is slowing down even further. This data is feeding into fears a double dip recession is going to occur.

Later this morning, Industrial Production data will be released for June, as well as Capacity Utilization and Michigan Sentiment data for July. Here's what to watch for Industrial Production came in in May at +0.1% and expectations for June are for a +0.3% reading. I expect the number to disappoint. Capacity Utilization came in last month at 76.7% and expectations are for a reading of 77%, indicating more usage of existing capacity. I think this number will disappoint as well and be below 77%. And lastly, Michigan Sentiment in June came in at 71.5, and expectations are for it to be 70.0% reading. I believe this number will be somewhere between 71.5% and 70.0% and will not be off by much, resonating with the general feelings in the country of negativity, partly based upon the politics of the moment on the issue of whether the Congress is going to raise the debt ceiling and also the higher Unemployment numbers this month. The trends are not good and we may be very close to going back officially into a recession.

Bah, humbug! The Futures look positive this morning in advance of this data. The Dow Futures indicated +44 before the CPI data came out and the Empire State Index. Now the Dow Futures indicate a +43 reading, so nothing has really changed with respect to the Futures.

Today is Options Expiration for July so expect high volume today.

UPDATE: 6:55am PST

Industrial Production came in at +0.2%, not +0.3% as expected. But the huge news is that the Michigan Sentiment came in at only 63.8 vs an expectation of 70.0 and a reading last month of 71.5!!! This is a huge disappointment but a realistic data point on how people are really feeling.

Capacity Utilization came in at 76.7%, same as last month and not the 77.0% expected.

Mini Poll Summary for Dec. 2009 on the question, "How long do you believe this recession will last?"

The final results for the 2009 Mini Poll are done and now tabulated. So first, here's the question asked: "How long do you believe this recession will last?" For the month of December there were 33% that see it will be much longer than 2012 and another 33% who believe we are going to be in a Depression. There were 13% who believe it is over now at yearend 2009, and various smaller percentages for 2010, 2011 and 2012 to make up to 100%.

These numbers are interesting because this voting took place during the month people do their Christmas shopping. While the sample size of the vote was only 24, it was interesting how gloomy many see the future.

Stock Market outlook: Where are we headed?

I thought it was time to do some charting and see what has happened in the past few months and where we are headed by mid October using charts as a predictor. I have included two charts today. The first is of the Dow and the second is of the S&P 500 using a 3 year period. I have two added lines on each chart. One is colored Blue and represents why so many thought we were headed down the past month (and we didn't). The second line is red and it shows the highs I think are still possible between now and Options Expiration in October, before we do finally have that downturn I have been expecting. Here are the charts:



For the Dow it says that we will not go over 10,000 and on the S&P 500 we will not go over 1090, but there is still the possibility of some good gains in the meantime. Those of us still holding any Short positions, you have endured a lot of pain these past few months, me included. I don't know for you if this is the time to sell, as it could be almost the worst possible time to do that. But let me be clear here, there is more pain ahead short term for short positions and those wanting to get out should, as you know your tolerance for pain better than I do. I will tell you this, I am holding mine and may buy more to average down. The question to ask yourself is this: Do you think we are near the end of the recession or do you think we are near the bottom of the decline? They are very different questions with differing strategies depending how you answer the questions. I think we are near the bottom of the decline. Just 12 Percent of Stimulus Money Has Been Spent according to this report dated August 5th. Moreover, that 12 percent includes some $13 billion from the Social Security Administration in one-time $250 checks to current Social Security recipients. So we haven't had enough stimulus yet to really make much of a difference. Add to that the fact that over 400,000 were dropped from the unemployment numbers reported yesterday as they gave up looking for work. When the Congress extends benefits for the unemployed, those 400,000 will be added back into the unemployment numbers, making the overall percent unemployed much higher.


It has been a good week for my shares of stocks long and they have given me gains for the week but I am looking at building cash right now in preparation of the Fall drop.

Market outlook for June 24th, 2009

This morning in pre-market Durable Goods Orders were reported to climb again 1.8% for May, as compared to a 1.8% gain in April. It is a very small positive sign, but the market is looking for any good news these days and a gain is better than a loss. The market may rise today but not a very strong rally in my view. The bigger news being awaited by the market is the announcement by the Fed after several days of meetings. Will Fed Chairman Bernanke say he still sees the worry of deflation or will they say they see and are concerned about inflation. In my view the Bulls and Bears will each have a strong case with whatever they say as a case can be made for being Bearish or Bullish. It doesn't really matter what they say. It is more important as to what the actual data says on the economy. So far, it's pretty bleak! If you are an American, Asian or European who is watching the data and see the Unemployment rate in the U.S. is at 9.4%, in California it's at 11.5% or in Spain it's 17%, you can say we are still in a bad recession. If you are one of those who are unemployed yourself, then you feel we are in a Depression!

But in pre-market the Futures are up and in Europe trading is up as well. Those views are by those who have money to invest and are obviously employed. They don't feel the pain of job loss! Only when the market goes down do most start to feel the pain of the reality of the economic conditions in their countries. Stay tuned!

Don't forget to vote in the Mini Poll on the right margin if you haven't voted this month. There is only 1 week left before I summarize June's data.

How long is this recession compared to all the others? See the Chart

From Chart of the Day, the following tidbit of information on the length of this recession:

Chart of the Day

While the stock market has rallied nicely since bottoming on March 9th, the economy continues to struggle. For some perspective on the current economic recession, today's chart illustrates the duration of all US recessions since 1900. As today's chart illustrates, the five longest recessions all began prior to 1930. The length of the current recession (now in its 18th month) is above average and the longest recession since the Great Depression.

March Mini Poll data summary: How long will recession last?

Here is a summary of the Mini Poll data for March as compared to December, January and February.

First the question.
How long do you believe this recession will last?

Data for December, then January, February and March:
Mid 2009 4%, 17%, 10%, 12%
End 2009 35%, 25%, 24%, 21%
Mid 2010 15%, 13%, 12%, 3%
End 2010 15%, 10%, 4%, 18%
Mid 2011 12%, 17%, 10%, 3%
End 2011 8%, 0%, 10%, 3%
Mid 2012 0%, 0%, 2%, 3%
End 2012 0%, 0%, 2%, 0%
Much Longer than the choices you have provided 0%, 0%, 10%, 12%
We are going to be in a Depression 12%, 19%, 18%, 24%

If I summarize by Year:
2009 39%, 42%, 34%, 33%
2010 30%, 23%, 16%, 21%
2011 20%, 17%, 20%, 6%
2012 0%, 0%, 4%, 3%
Depression 12%, 19%, 18%, 24%

Sample size for December was 26, for January 48 votes, for February 51 votes and for March 39 votes.

The largest change in the data showed that many now believe that we will go into a Depression.

Now March had one major voter voting more than once during the month and they voted for the Mid 2009. I took out the duplicate those duplicate votes in the data above.

I have cleared the data accumulated from the Mini poll so feel free anytime this month to enter again when you believe the recession will end. We can all see how the results change over time. I wish more would vote as with a bigger sample size it would become more statistically relevant but I am appreciative for those of you who do vote so thanks!

February Mini Poll results on length of recession

Here is a summary of the Mini Poll data for February as compared to January & December.

First the question.
How long do you believe this recession will last?

December data for December,then January and finally February data:
Mid 2009 4%, 17%, 10%
End 2009 35%, 25%, 24%
Mid 2010 15%, 13%, 12%
End 2010 15%, 10%, 4%
Mid 2011 12%, 17%, 10%
End 2011 8%, 0%, 10%
Mid 2012 0%, 0%, 2%
End 2012 0%, 0%, 2%
Much Longer than the choices you have provided 0%, 0%, 10%
We are going to be in a Depression 12%, 19%, 18%

If I summarize by Year:
2009 39%, 42%, 34%
2010 30%, 23%, 16%
2011 20%, 17%, 20%
2012 0%, 0%, 4%
Depression 12%, 19%, 18%

Sample size for December was 26 and for January 48 votes and for February 51 votes.

The largest change in the data showed that many now believe that we will go longer than 2012 as we have gone from 0% to now 10% and many have now given up on ending this mid 2009.

Now February had a number of people voting more than once during the month and most voted for the End of 2009. If I take those out the data changes dramatically. Here's how it changes:

Timeframe Number of Votes and %
Mid 2009 2, 5%
End 2009 7, 17%
Mid 2010 5, 12%
End 2010 2, 5%
Mid 2011 5, 12%
End 2011 4, 9%
Mid 2012 1, 2%
End 2012 1, 2%
Much longer 5, 12%
Depression 9, 22%

If I summarize this scrubbed data by Year:
2009 39%, 42%, 22%
2010 30%, 23%, 17%
2011 20%, 17%, 21%
2012 0%, 0%, 4%
Depression 12%, 19%, 22%

This is a significant change over the raw data presented at the beginning of this post, especially as to the % of people believing we are headed for a Depression. It shows a steady increase in those who feel we are headed for a Depression and a significant reduction in those seeing it ending in 2009


I have cleared the data accumulated from the Mini poll so feel free anytime this month to enter again when you believe the recession will end. We can all see how the results change over time. I wish more would vote as with a bigger sample size it would become more statistically relevant but I am appreciative for those of you who do vote so thanks!

Take a poll on how long recession will last

Even if you have taken the mini poll on the right margin before, it is appropriate to take it again as much has changed in the past 2-3 weeks. So please take the Poll and let's see when people believe the recession will be over. Thanks so much.

January Mini Poll results: When will the Recession end?

Here is a summary of the Mini Poll data for January as compared to December.

First the question.
How long do you believe this recession will last?

December datA followed by January data:
Mid 2009 4%, 17%
End 2009 35%, 25%
Mid 2010 15%, 13%
End 2010 15%, 10%
Mid 2011 12%, 17%
End 2011 8%, 0%
Mid 2012 0%, 0%
End 2012 0%, 0%
Much Longer than the choices you have provided 0%, 0%
We are going to be in a Depression 12%, 19%

If I summarize by Year:
2009 39%, 42%
2010 30%, 23%
2011 20%, 17%
2012 0%, 0%
Depression 12%, 19%

Sample size for December was 26 and for January 48 votes. Thanks for voting!


On January 3rd, in an earlier post, I came across the results of another poll with a similar but slightly different question. First the question and then the data with a link to that poll below.

Q. When do you think manufacturing will come out of recession?
mid 2009 6%
end 2009 41%
mid 2010 29%
end 2010 or later 23%

The results are comparable to my findings but a little more negative outlook. Here's the link to Industry Week website.

I have cleared the data accumulated from the Mini poll so feel free anytime this month to enter again when you believe the recession will end. We can all see how the results change over time. I wish more would vote as with a bigger sample size it would become more statistically relevant.

Mini Poll on When you think recession will end

This is the last day of January and I will be summarizing the data tomorrow and comparing it to December's outlook to the question. Take the poll on the right side of the page if you visit here today.

Thanks.

Yes We Can: How You can help turn the economy around.

That's right, "Yes We Can" collectively turn this economy around almost without even President Obama's help or that of the Congress. How can we do that? By having some faith that you truly can make a difference. Look, the economy is driven mostly by Consumer Spending, 70% to be exact. I know that about 10% of our citizens are unemployed, while many are currently worrying about their job security as well. But the 90% of us, who are employed, can help the country and our citizens by deciding not to stop our purchasing all together or eating in instead of going to a restaurant. Look around where you live and ask yourself if you want to see all the businesses close shop or restaurants go away. I don't. We can all turn this economy around, if we believe in our own power and spend again. I'm not saying spend with abandon, but what I am saying is to get back to a more normal and healthy lifestyle, rather than being so afraid.

Here's an example from my own experience. Our 12 year old refrigerator had a problem this past week. We were weighing whether we should get it fixed of buy a new one. We can think of good reasons for choosing either side of the choices. But when we add in the mix that it is good for the economy to buy a new one to help manufacturing jobs, to help a shipping company deliver it and a store that sells it, we have decided to buy a new one. Then the question is what to do with the old one? We have decided to give it away to someone, or charity, who might want it, or need it, or could get it fixed and use it, for another 12 years, as refrigerators have an expected life of 25 years.

Another example is choosing to eat out in some of our favorite restaurants. Every neighborhood has a favorite restaurant they take the family to or go to on a special evening. If those restaurants weren't there anymore, it wouldn't be the same living there any more. So choosing to go out to dinner helps support those restaurants keep surviving and helps those people who work there keep their jobs. Even some of the upscale restaurants, which have Valet parking service, can help a kid have a job.

The American people are a generous people and give freely to charity. We need to also think that charity also begins in our neighborhoods. We collectively can turn this economy around, but it starts with each of us as individuals deciding we are going to help President Obama with his most difficult job. When America is back the world will come back too. Right now they are scared too. Scarcity begets scarcity, but abundance begets abundance. Which mindset do you want to bring forth? Take accountability for getting out of this recession and preventing us from a Depression. Yes We Can!

Take my Poll on how long you believe the recession will last

Please take a brief moment to make your choice on the right side of this page. The Mini poll has one week left before I summarize the data and compare it to last month's summary.

The Recession about to show up in a Shopping Mall near you!

News from the front page of the San Francisco Chronicle states today that Shopping Malls across America will be closing in droves in 2009. You will be shocked when I tell you their predictions. According to Burt Flickinger III, managing director of New York consulting firm Strategic Resource Group, at least 200,000 stores and 2000 to 3000 Malls will close in 2009, the bulk of them in the next few months!

Have you ever seen these scale of cutback in your lifetime? That gives you an idea of the implication on the unemployment rate. Simply unbelievable and scary.

Recession or Depression: What's the difference?

I was reading an old book I have had for about 25 years. It is an historical recounting of the conditions in society in the 20's and 30's focusing specifically on the stock market crash of 1929 and then the Great Depression of the 1930's. Yes stock prices for companies like IBM, GM and other top quality names had gone from hundreds of dollars per share, down to the single digits during the Crash and some had committed suicide by jumping out of windows in NY City. But what was surprising to me was that many didn't see any difference in their own surroundings in towns and cities across America, unless they were looking carefully for differences. For example, during the Great Depression there were less trucks on the roads and less cars. There were more people hitchhiking than usual, as many were transients looking for cities and towns where there was work. None noticed that trains had fewer cars attached. Nor did they notice the length of the Unemployment lines, unless they too were looking for work. When and if they were fortunate to go out to a restaurant, there was always an opening in those, where in better times, were filled to capacity and you couldn't even get a reservation.

There were more visible signs in more seedy areas, like the length of the soup kitchen lines and the homeless shelters, which extended around the block from their entrances. Other signs were the number of people applying for any job that had openings with skill sets much higher than were needed for the job. There were more panhandlers in major cities and the migration of those panhandlers to cities in warmer parts of the country. Hospitals were more crowded with people who were sick and had no place to go or live. Doctors helped patients without knowing whether they were going to be paid at all. Remember it lasted a number of years from the stock market Crash of 1929 through 1930, 1931, 1932 and 1933 into 1934.

The real difference between a Depression and a Recession can be boiled down to this. If you are working and secure with some savings and you see the news with high Unemployment, it is most likely that we are in a Recession, even a bad recession, but if it is you who are out of work with not much savings and more insecurity, you are in a Depression. So open your eyes during this holiday season and, if you can, help those less fortunate who need a helping hand, a warm smile and possibly your friendship. You see, their suffering is all around us and, in this season of hope and charity, we must open our hearts and our wallets. Merry Christmas. Donate to your local Food Bank or Homeless Shelter.