Da ne postam posebni post, a radi svoje evidencije: Sy Harding besplatni komentar: THE BULLISH SPIN RETURNED TOO QUICKLY! March 9, 2007.
As you know, the decline in global stock markets began in China , on concerns that the Chinese government was going to take steps to cool off China ’s overheated economy. It spread instantly around the world. Concerns were that, with the U.S. economy already slowing quite dramatically, if China , now also a global economic powerhouse, were to see its economic growth taper off, the combination would have global consequences.
Unfortunately, the deteriorating outlook for the U.S. economy has not improved. Even as the stock market was declining week before last, economic reports came in showing that Durable Goods Orders plunged 7.8% in January, new home sales plunged 16.6%, the Chicago Purchasing Managers Index fell to 47.9%, and the Commerce Department revised fourth quarter GDP from previously reported 3.5% growth to just 2.2%.
The additional negative reports didn’t receive a lot of attention however, as the financial media concentrated on whether it was time for investors to jump in to take advantage of the lower stock prices, and such side issues as whether former Fed Chairman Greenspan was out of line, or undermined his successor, by talking about the possibility of a recession by year end.
This week has been more of the same in the way of worse than expected economic reports. For months now the Fed has been saying one reason it is not worried about the economy is that worker productivity remains high. That lessens the need for companies to hire more workers, and prevents inflationary pressure on wages. But, whoops! On Tuesday, the Labor Department revised its previous report that U.S. Productivity was still growing at a 3.0% annual rate in the fourth quarter. It now says productivity declined to only 1.6% growth in the 4th quarter. And Unit Labor Costs – a gauge of wage push inflationary pressure – were revised up to an eye-popping 6.6% annual rate of increase, from the previously reported benign 1.7% rate.
Also this week, the Commerce Department reported U.S. factory orders fell 5.6% in January, the largest monthly decline since July, 2000, when by the way, the economy was slowing into the 2001 recession. Durable Goods Orders, just reported the previous week to have declined 7.8% in January, were already revised down even further to an 8.7% decline.
The National Association of Realtors reported its Pending Home Sales Index fell 4.1% in January. The Index has now fallen 8.9% over the last 12 months. However, the financial media was more concerned with whether a juvenile word used by not one, but two, home-builder CEOs to describe real estate problems, was appropriate in a public statement. The CEOs said the real estate sector is “going to suck for at least the rest of 2007”. Plain enough anyway.
Yet, there was apparently still not enough evidence for Wall Street that the economic slowdown is even real, let alone becoming worse. The ‘monthly jobs numbers’ for February would be released Friday morning. And according to Wall Street, if around 100,000 new jobs were created in February, investors could be assured that the economy is just fine. Huh? There was an average of 175,000 new jobs created monthly in 2004 and 2005. Even that was well below job growth in the 1990s, and was not considered great, since it takes about 150,000 new jobs every month just to keep up with the growing population. And over the final three months of 2006, jobs creation had fallen to an average of 138,000 jobs per month.
So now if 100,000 new jobs were created in February, it would tell us the economy remains strong?
When the report was released Friday morning it showed 97,000 new jobs were created in February, close enough to 100,000. And sure enough, Wall Street spokesmen were all over the media telling investors it was a ‘great’ number.
So investors are to believe that the still worsening declines in factory orders, durable goods orders, real estate activity, etc. are not indicative of a worsening slide in the economy, because the smallest monthly creation of new jobs in years indicates that everything is still great?
And although the stock market was overdue for a 10% to 15% correction to alleviate its overbought condition and excessive investor euphoria, its minor bounce back this week tells Wall Street that the 5% pullback was all that was needed to create bargain stock prices.
What a relief. If only I could believe any of it.
13.03.2007. (14:05)
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Bundy
Da ne postam posebni post, a radi svoje evidencije: Sy Harding besplatni komentar:
THE BULLISH SPIN RETURNED TOO QUICKLY! March 9, 2007.
As you know, the decline in global stock markets began in China , on concerns that the Chinese government was going to take steps to cool off China ’s overheated economy. It spread instantly around the world. Concerns were that, with the U.S. economy already slowing quite dramatically, if China , now also a global economic powerhouse, were to see its economic growth taper off, the combination would have global consequences.
Unfortunately, the deteriorating outlook for the U.S. economy has not improved. Even as the stock market was declining week before last, economic reports came in showing that Durable Goods Orders plunged 7.8% in January, new home sales plunged 16.6%, the Chicago Purchasing Managers Index fell to 47.9%, and the Commerce Department revised fourth quarter GDP from previously reported 3.5% growth to just 2.2%.
The additional negative reports didn’t receive a lot of attention however, as the financial media concentrated on whether it was time for investors to jump in to take advantage of the lower stock prices, and such side issues as whether former Fed Chairman Greenspan was out of line, or undermined his successor, by talking about the possibility of a recession by year end.
This week has been more of the same in the way of worse than expected economic reports. For months now the Fed has been saying one reason it is not worried about the economy is that worker productivity remains high. That lessens the need for companies to hire more workers, and prevents inflationary pressure on wages. But, whoops! On Tuesday, the Labor Department revised its previous report that U.S. Productivity was still growing at a 3.0% annual rate in the fourth quarter. It now says productivity declined to only 1.6% growth in the 4th quarter. And Unit Labor Costs – a gauge of wage push inflationary pressure – were revised up to an eye-popping 6.6% annual rate of increase, from the previously reported benign 1.7% rate.
Also this week, the Commerce Department reported U.S. factory orders fell 5.6% in January, the largest monthly decline since July, 2000, when by the way, the economy was slowing into the 2001 recession. Durable Goods Orders, just reported the previous week to have declined 7.8% in January, were already revised down even further to an 8.7% decline.
The National Association of Realtors reported its Pending Home Sales Index fell 4.1% in January. The Index has now fallen 8.9% over the last 12 months. However, the financial media was more concerned with whether a juvenile word used by not one, but two, home-builder CEOs to describe real estate problems, was appropriate in a public statement. The CEOs said the real estate sector is “going to suck for at least the rest of 2007”. Plain enough anyway.
Yet, there was apparently still not enough evidence for Wall Street that the economic slowdown is even real, let alone becoming worse. The ‘monthly jobs numbers’ for February would be released Friday morning. And according to Wall Street, if around 100,000 new jobs were created in February, investors could be assured that the economy is just fine. Huh? There was an average of 175,000 new jobs created monthly in 2004 and 2005. Even that was well below job growth in the 1990s, and was not considered great, since it takes about 150,000 new jobs every month just to keep up with the growing population. And over the final three months of 2006, jobs creation had fallen to an average of 138,000 jobs per month.
So now if 100,000 new jobs were created in February, it would tell us the economy remains strong?
When the report was released Friday morning it showed 97,000 new jobs were created in February, close enough to 100,000. And sure enough, Wall Street spokesmen were all over the media telling investors it was a ‘great’ number.
So investors are to believe that the still worsening declines in factory orders, durable goods orders, real estate activity, etc. are not indicative of a worsening slide in the economy, because the smallest monthly creation of new jobs in years indicates that everything is still great?
And although the stock market was overdue for a 10% to 15% correction to alleviate its overbought condition and excessive investor euphoria, its minor bounce back this week tells Wall Street that the 5% pullback was all that was needed to create bargain stock prices.
What a relief. If only I could believe any of it.
13.03.2007. (14:05) - - - - - promjene spremljene- uredi komentar - obriši komentar - prijavi ovaj komentar kao spam - zabrani komentiranje autoru ovog komentara- učitavam...