So says an article from Comstock Partners (www.comstockpartners.com).
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Edited excerpts from the article are as follows:
Retail sales (both total and non-auto) have dropped for three consecutive months. This has happened only five times since 1967—-four times in 2008, and one now. Vehicle sales have tapered off with May and June being the two weakest months of the year. Consumer confidence for both the Conference Board index and the University of Michigan Survey are at their lowest levels of 2012.
June payroll numbers were weak once again and averaged only 75,000 in the second quarter. The latest weekly new claims for unemployment insurance jumped back up to 386,000 and the last two months have been well above the numbers seen earlier in the year.
The ISM manufacturing index for June fell 3.8 points to 49.7, its first sub-50 reading in the economic recovery. The ISM non-manufacturing index for June dropped to its lowest level since January 2010. Most recently the Philadelphia Fed Survey for July was negative (below zero) for the third consecutive month.
The small business confidence index declined in June to its lowest level since October and has now dropped in three of the last four months. Plans for capital spending and new hiring have dropped sharply.
Despite all of the talk about a housing bottom, June existing home sales fell 5.4% to its lowest level since the fall of last year. In addition mortgage applications for home purchases have been range-bound since October.
Core factory orders, while volatile on a month-to-month basis, have declined 2.6% since year-end, and the ISM numbers cited above indicate the weakness is likely to continue.
The Conference Board Index of leading indicators has declined for two of the last three months and is now up only 1.4% over a year earlier, the lowest since November of 2009, when it was climbing from recessionary numbers. The ECRI Weekly Leading Index is indicating a recession is either here now or will begin in the next few months.
In addition the foreign economies will be a drag as well. A number of European nations are already in recession and others are on the cusp. The debt, deficit and balance sheet problems of the EU’s southern tier are a long way from any solution, and will not remain out of the news for long. China is coming down from a major real estate and credit boom, and is not likely to avoid a hard landing. The Shanghai Composite is in a major downtrend, declining 28% since April 2011. The view that China is immune because of their unique economic system reminds us of what people were saying about Japan in 1989.
The stock market is ignoring these fundamentals as it did in early 2000 and late 2007 in the belief that the Fed can pull another rabbit out its hat. It couldn’t do it in 2000 or 2007 when it had plenty of weapons at its disposal. Now there is little that the Fed can do, although it will try. In sum, we believe that the stock market is in store for a huge disappointment.
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Editor’s Note: The above posts may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
…[In spite of the fact that] our economy is still struggling to regain its strength [as a result of] stubborn unemployment and sluggish growth at home combined with a slowing China and a dysfunctional eurozone have cast a dark shadow on America’s eternal optimism….I believe there is nowhere else in the world where opportunity abounds and initiative is rewarded as it is in the U.S.A.. [This is confirmed by] the findings of IMD’s annual World Competitiveness Yearbook which surveyed more than 4,200 international executives as to how well countries manage their economic and human resources to increase prosperity. Of the 59 ranked economies in 2012, the U.S. ranked 2nd. Words: 734
Deutsche Bank’s Joe LaVorgna tracks payroll tax receipts as a measure of real-time labor market health [see an earlier article on that chart and a host of others here] and the latest data for the current quarter show receipts growing 6% year-over-year. [It brings into question all those purveyors of doom who claim that a recesssion is just around the corner.]
We love charts….so we reached out to some of the world’s most influential analysts, economists, hedge-funders and traders and asked them a simple question: “What charts are you always keeping your eye on?” [Here they are!] Words: 440
The permabears are coming out the woodwork. Bad, scary articles and news seem to attract more attention and eyeballs than good news articles or those that offer a counterbalanced view. Whenever someone gets interviewed on US TV, it’s for someone proclaiming the end of the expansion – you never see them interviewing someone offering a counter view of a more positive nature. This article gives you a balanced, opposing view to the tiresome popular perma-bear consensus so that you can make your own balanced decision. [As for our own conclusion, we don’t see imminent recession. Here’s why.] Words: 1315
Econintersect has been playing with an economic index based on the world as seen by Joe Sixpack. For lack of a final name, we have used a development tag of “Joe’s Index” which is based on Joe’s real income and the change in his home value, which, to various degrees, Joe sees as income (and/or wealth) gain or loss. Joe’s Index is indicating Joe Sixpack is coming back to the consumption trough. [Let us explain why we have come to that conclusion.] Words: 380
This past week we received the latest PMI readings for the world as a whole (48.9), the eurozone (46.4), and for 30+ individual countries [Read: Telling It Like It Is: Latest PMIs Reveal Truth About the Global Economy]…and the latest numbers signal contraction and even more so when adjusted to reflect the concentration of GDP by countries/region. [Let me explain.] Words: 600
I am amused by the Shadow Weekly Leading Index Project which claims the probability of recession is 31%. I think it is much higher….Let’s take a look at why. Words: 530
“The most important issue in this year’s election is the economy. Unfortunately, this topic has now been “politicized,” which means that you can’t talk about it without being instantly cheered or jeered by fans of each respective political team…[the truth of the matter, however, is that] the economy is much more important than this year’s election or either political team….The first step is getting past the political blame-game and understanding what’s wrong…. Let’s go to the charts.”
The U.S. economic recovery has been weak and the looming fiscal cliff threatens to act as a further drag on the economy. Europe is imploding with the chances of a ‘Grexit’ increasing, and Spain’s economy deteriorating and risking contagion. David Rosenberg looks at the state of the U.S. and global economy via 51 depressing charts.
The deficits aren’t going to stop anytime soon. The debt mountain will keep growing…Obviously, the debt can’t keep growing faster than the economy forever, but the people in charge do seem determined to find out just how far they can push things….The only way for the politicians to buy time will be through price inflation, to reduce the real burden of the debt, and whether they admit it or not, inflation is what they will be praying for….[and] the Federal Reserve will hear their prayer. When will the economy reach the wall toward which it is headed? Not soon, I believe, but in the meantime there will be plenty of excitement. [Let me explain what I expect to unfold.] Words: 1833