La ignorancia es felicidad

Reflexiones de David Rosenberg:

That doesn’t mean that investors are not going to treat the data as good news —it just doesn’t mean they are going to be right any more than they were in the autumn of 2007 when they took the stock market to new highs and then maintained a “buy the dips” view in early 2008, especially when President Bush unleashed the powerful tax rebates (that had an impact all right, but was measured in weeks).

Ignored in the employment report were the declines in full-time employment, the stagnant workweek and slide in the diffusion indices.

Ignored in the manufacturing ISM report were the declines in the leading components, such as new orders, backlogs and vendor performance.

Ignored in the pending home sales were the non-seasonally data showing month-over-month declines in all regions (-16.9% in the Northeast; -12.3% in the Northwest; -5.1% in the Midwest; and -0.7% in the West) as well as on a YoY basis (-22.5% in the Northeast; -17% in the Northwest; -15.2% in the Midwest; and -21.0% in the West).

Ignored was the fact that construction spending in July contracted 1% (consensus was -0.5%) and this is likely to lead to an even weaker print for Q2 real GDP (to 1.5% from 1.6%).

Ignored was the fact that outside of the sales tax holidays and retroactive jobless insurance cheques, chain store sales would have been +1% YoY and not +3% as reported in August. And, as last Friday’s NYT puts it (page B1 — Discounts Help Lift Back-to-School Sales), “all of the discounting was a troubling sign for the fall and holiday seasons” — equity investors ostensibly thought otherwise). The Investor’s Business Daily reported that the discounting in August was “among the deepest ever”(!).

Ignored was the fact that within the Conference Board consumer confidence index, the ‘facts-on-the-ground’ present situation component fell to 24.9 in August from 26.4 in July.

Ignored was the fact that the ECRI weekly leading index has been around -10.0% now for seven weeks in a row and nobody, even the architect of the indicator, seems too fussed about it (shades of 2007).

Ignored was the non-manufacturing ISM index, which came in well below expectations, at 51.5 from 54.3 in July — the weakest since January. Amazingly, the employment component dropped to contraction terrain of 48.2 in August from 50.9 in July and provided a total non-ratification of the payroll report where all the job gains were reportedly in the service sector! Again, like its manufacturing counterpart, all of the leading indicators in the non-manufacturing ISM fell in August (52.4 from 56.7 for new orders; 50.5 from 52.0 for order backlogs; and 51.0 from 52.0 for vender performance).

Ignored was the fact that the blended manufacturing and service sector ISM fell to a seven-month low of 52.1 in August from 54.4 in July, not to mention far off the nearby high of 56.0 reached in April (right when the stock market peaked; just as it bottomed at 40.6 when the S&P 500 hit its trough — market timers take note!).

Within the non-manufacturing ISM survey, a mere seven industries reported “growth”, down from 13 in July, 14 in June, and 16 in May, which was the nearby peak (in November 2007, the month before the recession started, 10 industries reported growth). This means that in August, only 39% of non-manufacturing industries said they had posted an increase in activity, compared with 72% in July, 78% in June and 89% in May. In other words, our call for a continued slowing in the pace of economic activity does not look far off the mark, and when that slowing is occurring after a 1.5% growth rate on GDP, there is precious little margin before contraction takes over.

Enlace: https://ems.gluskinsheff.net/