That inventory restocking has to be out there somewhere, right?
For months now, we’ve been skeptics of the great “inventory rebuilding” hypothesis that seemingly every economist and market pundit (and their brothers) seemed to latch on to in predicting our imminent economic rebound and end to the recession.
Well, jury’s still out on whether the recession’s over, but one thing’s for sure — we’re still waiting for the inventory restocking.
In today’s November ISM manufacturing survey, Barclays Capital said the “greatest source of weakness was inventory liquidation.”
ISM said manufacturers’ inventories “contracted at a faster rate in November,” with the index at 41.3, its lowest level since August.
Apparel, leather & allied products “is the only one of 18 manufacturing industries reporting higher inventories in November,” ISM said. Continue reading…
US stocks jump, as the dollar falls, the risk trade comes back on, and Dubai’s problems are apparently only Dubai’s problems after all.
DJIA jumps 127 (1.2%) to 10472, a fresh year high and its highest level since Oct. 2 of last year. S&P 500 gains 13 (1.2%) to 1109, Nasdaq Comp rises 31 (1.5%) to 2176. Dollar slides, euro hits $1.51 again. Crude rises, and gold touches the $1,200 level, closing just below it.
Again, S&P 500 trades as high as 1112.33, but continues to have trouble breaking above this level. The longer this situation persists, the worse it gets for the bulls. Resistance is resistance for a reason, after all. Eventually, somebody will decide to settle up their bar tab, and then all hell will break loose.
ISM’s manufacturing survey shows growth, but weaker than last month. Construction spending is flat, but only because of downward revisions to prior months – and it remains down sharply from a year ago. Auto sales up a bit; Ford sold more cars, GM less.
Financial and commodity markets ended November with a bang and wasted no time getting off to a good start in December.
Asset classes rose across the board in November, and barring a wave of selling this month, 2009 will be one of the best calandar years on record, James Picerno points out at The Capital Spectator.
“The Federal Reserve has engineered the party and so far everyone’s enjoying themselves,” he says, referring to near-zero interest rates.
But there’s a good chance 2010 won’t look nearly as good as this year, as the economic recovery faces many challenges.
“The Phoenix rising from the ashes is destined for the hard work and complications of navigating the new landscape of subpar growth, debt, higher interest rates and inflation and the general hassles that accompany rebuilding what’s been lost over the past two years,” Picerno cautions.
The Dow’s currently up 122 at 10467, has risen more than 60% off the early-March lows and is up almost 20% year-to-date. But as we previously detailed, stocks are set to fall for the decade, and some remain pessimistic that another “lost decade” could be on the horizon.
Posted by Steven Russolilloon December 01, 2009 Economy, Markets /
- Job cuts are on the horizon as stimulus fades, WSJ reports. Isn’t the labor market supposed to be stabilizing?
- Residential construction may continue to bounce along the bottom, Calculated Risk says.
- Consumption growth hasn’t returned to pre-recession levels, contrasting patterns during three previous downturns, Mark Thoma writes at MoneyWatch.
- Lots of chatter in the blogosphere about the “black screen of death” glitch affecting Microsoft’s (MSFT) operating systems. But ZDNet.com’s Adrian Kingsley-Hughes says alarm over the security update glitch is likely unwarranted.
- YouTube may look to stream TV episodes, for a fee. “No matter how it proceeds, YouTube is likely to be just one of several outlets trying to get consumers to pay for TV on the Web in 2010,” Peter Kafka reports.
- John Paczkowski wants some data to back up all the bragging Amazon (AMZN) does about the Kindle.
The Bank of Japan tries to inject a little liquidity into the world’s second largest economy, for what little that’s worth, and this morning’s data doesn’t exactly show that the world’s largest economy is roaring, either.
The decade's data aren't pretty, no matter how you slice them.
It’s been a “lost decade” in more ways than one, and the future doesn’t look much brighter.
Stocks are down in the 2000s and the job market has shrank throughout the decade. In October, private sector companies employed 108.4 million people, which is one million fewer than in October 1999.
“Not since the Labor Department began tracking payroll employment in 1939 has there been such a stretch with no net job gains,” WSJ’s Real Time Economics says. The two recessions as well as the recent burst of productivity growth can be blamed for diminished jobs.
Overall, employment is higher now than a decade ago thanks to the government producing two million additional jobs during that stretch.
“The labor market would indeed be worse if it weren’t for those two million extra government jobs,” blog says. “But this hardly seems like the path to prosperity.”
We’re on a technicalkick today here at Market Talk, so might as well add another post highlighting some key December factoids about the Dow Jones Industrial Average.
The Dow’s recorded gains more in December than any other month, as the index has increased 71% of the time, according to Dow Jones’ market data group. The Dow averages a 1.4% gain in December, but the real returns have historically occurred in the final 10 days of the year.
Investing in the Dow only during December’s final 10 days has generated positive returns 75% of the time, with an average 1.6% gain.
Doesn’t sound like an extraordinary number. But when it’s compared with the average annual price-return for the Dow — about 7.5% since inception, excluding dividends — roughly 21% of an annual average return occurs in the final 10 days of the year.
Dow industrials starting December on a strong note, currently up about 148 at 10492. Minus a few hiccups here and there the index has continued to run higher throughout the majority of the year, rising more than 60% off the early-March lows.
The index rose 6.5% last month, marking its biggest November gain since 2001, and remains up 19% year-to-date.
Posted by Paul Vignaon December 01, 2009 Markets, S&P 500 /
Another thing about the S&P 500, and it’s a dynamic that seems to be playing out today as well: the index has been meeting heavy resistance right around the 1110 mark. That’s about halfway between the October 2007 and the March 2009, and represents a pretty big marker for the technically minded in the market.
In fact, even last week’s selloff in the face of the Dubai fiasco can been seen in this technical light. On Wednesday, the day before Thanksgiving, the S&P 500 closed at 1110.63. A light breeze could’ve blown it down. The Dubai news was an easy excuse for a selloff, and markets tumbled smartly on Friday.
The index hit a 52-week high of 1113.69 on the 16th of November (and closing at 1109.30.) Since then, it’s been bobbing and weaving below that mark. Today it got as high 1109.03, and you know the bulls are gunning for this level in a big way.
But like the economy in general, the more time the indexes spend stuck at this level, the more vulnerable they become. One the one hand, the economic news is decidedly mixed: ISM’s manufacturing index slipped today, illustrating an economy that is barely in expansion territory. On the other hand, central banks from Toyko to Washington continue to flood the market place with cheap money, and that is a dynamic in which equities absolutely thrive.
November was pretty good for the S&P 500, which rose 5.7%, and the index is off to a sharp start this morning, up more than 1%. But the index has only 23 trading left to avoid posting its first losing decade ever, and it’ll need a monster month to do it.
“Absent a 12.14% December return this will be first negative total return decade for the S&P 500,” S&P’s senior index analyst Howard Silverblatt says. The S&P has never, he adds, had a 12% gain in the month of December
Still, from March 9 through November, the index is up 62%, its best gain since the 66% rally that ended in November 1938. But it doesn’t look like the index will start the next decade off with that kind of vigor.
Wells Fargo predicts the S&P 500 will end 2010 “fairly flat relative to current levels,” within a range of 980 and 1150.
“On average, stocks are flat 12 months after relief rallies, and we expect 2010 to generally follow suit,” firm writes. Predicts ripple effects when government supports are removed, notes the continued difficulties of the US consumer and also notes equities’ discomfort “anytime the dollar hints at minor strength.”
US stock futures look frisky premarket, following advances overnight in Asian markets and currently in Europe as the US dollar loses any buoyancy gained in reaction to last week’s financial tremors in Dubai.
Asset classes reverting to the usual pattern we’ve seen lately with dollar weakness — stocks and commodities up; gold, oil both surge higher. Bank of Japan overnight rolls out a generous lending facility as it attempts to ward off deflation and boost the local economy. Interesting to see some central banks still willing to ease further, despite what many see as a budding global recovery.
October pending home sales, November ISM manufacturing index and Oct construction spending all due at 10:00am. US Nov auto sales also due for release today.
US dollar index down 0.6% at 74.45. S&P futures up 9.00, Dow futures 66. Ten-year lower, yield at 3.23%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy. He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital […]