Wednesday, October 28, 2009

Fear is rising....

Greetings good citizen,

What a difference a day makes-- it seems like only yesterday the media was making a case for a ‘recovery’ in housing. Oddly, nobody paid much attention to today’s spike in ‘durable goods’ orders because the whole increase is accounted for in just two niches, heavy machinery and military aircraft…not exactly a ‘sweeping uptick’ across the entire durable goods sector, is it?

What’s more interesting is today makes the second ‘down’ day for the markets in a row…not that it actually means anything…being the last week of October and all.

Let us proceed to tonight’s offering

Weak Home Sales Trump Strength in Durable Goods
[Especially when ‘A’ has absolutely nothing to do with ‘B’…]

Published: October 28, 2009

Stocks fell on Wednesday as investors digested gloomy numbers on sales of new homes and were unmoved by a report that showed a rise in United States durable goods orders. [Um, gee, ya don’t think stocks fell because they’re ‘overvalued’, do you?]

New one-family homes sold at a seasonally adjusted annual rate of 402,000 in September, the Commerce Department said, falling short of the 440,000 projected by economists. [Show of hands…who is surprised to see that economists were wrong again?] That was a 3.6 percent decrease from the revised rate for August and the first drop since March. Analysts had expected new-home sales to increase 2.6 percent, encouraged in part by a popular $8,000 tax credit for first-time home buyers. [ While the ‘month over month’ sales figures have been improving, the ‘year over year’ figures are still miserable…given the rapidly dwindling number of ‘qualified’ homebuyers, this month’s ‘drop-off’ could be the forerunner of a broader, long term trend…]

Sales of new homes have implications for construction jobs as well as consumer spending on items like furniture and appliances.

Stocks were down all day, but selling accelerated in the final hours of trading. Stocks in energy companies and in companies producing materials like metals and paper goods drove the decreases.

The Dow Jones industrial average fell 119.48 points, or 1.21 percent, to close at 9,762.69. The Standard & Poor’s 500-stock index declined 20.78 points, or 1.95 percent, to 1,042.63, while the Nasdaq composite index dropped 56.48 points, or 2.67 percent, to 2,059.61.

Joshua Shapiro, chief United States economist for MFR, a financial advisory firm, said the housing data showed that the recovery would be slow and that housing prices might fall again. [Odd, that isn’t what he was selling yesterday…oh, that’s right, the NY Times deleted those links to the articles I posted last night!]

“It’s still a very dicey environment,” he said. “There’s still a lot of looming supply out there, particularly in the upper and middle price range.”

The government said orders for durable goods rose 1 percent in September — the second increase in the last three months. But while the increase was in line with expectations, orders were down 24.1 percent from a year earlier.

Durable goods, which include items like refrigerators and planes, offer a window into the health of our virtually non-existent manufacturing sector and are an indicator of how busy foreign factories will be in the months ahead. Increases in durable goods orders can lead to more jobs overseas and are considered central to the growth of the global economy.

Some analysts discounted the importance of the durable-goods numbers, saying the increase was largely anticipated. But Cliff Waldman, an economist for the Manufacturers Alliance, an economic research group, said the data suggested manufacturing would be slow to take off again. [Why do you suppose Cliff would say something like that? Could it be because the entire manufacturing sector is a quarter of the size it was thirty years ago while the nation’s population has nearly doubled? Worse, there hasn’t been any real growth in our labor markets over the past twenty years…what has jumped by leaps and bounds is the number of working aged citizens counted as not in the workforce!]

“It paints a clear picture of a weak-kneed recovery,” he said. “There’s no aggressive, entrepreneurial, animal-spirits kind of investment.” [How true…there’s no investment here because our treasonous owner class has farmed out all of the jobs overseas, no longer providing US workers with living wages…or health benefits…or retirement funds. Now they stuff all of those ‘lost wages’ into their own off-shore ‘retirement funds’.]

Financial stocks were down slightly as news spread that GMAC Financial Services was seeking a third round of bailout financing from the United States government. [It must be nice!]

At the close of Wednesday trading, the price of crude oil had fallen to $77.46 a barrel, from $79.55 on Tuesday. [Notice how the pricks imply that this is somehow a ‘bad thing’…what the hell is wrong with these people? Oh, I forgot…paychecks are for ‘peasants’…not investors!]

Traders may have been looking ahead to the government’s gross domestic product figures, which are scheduled for release on Thursday. Wall Street analysts are expecting an annual growth rate of 3.2 percent, although on Wednesday, Goldman Sachs reduced its projection to 2.7 percent, from 3 percent. [Well if Government Sachs says it’s 2.7 then it’s 2.7! It doesn’t matter nobody is shipping shit and payrolls are plummeting like a rock! No, none of that matters if Government Sachs says the economy is growing…you don’t need to see it, who the hell are you to question Government Sachs?]

Overseas, the Nikkei stock average in Japan closed down 1.35 percent at 10,075.05. European markets also tumbled, with the FTSE 100 in Britain shedding 2.32 percent, the DAX in Germany falling 2.46 percent and the CAC 40 in France dropping 2.14 percent.

Finishing that last paragraph, markets around the globe sank today. To cut to the chase, it would be quicker to point out that the only market to close in positive territory today was Shanghi.

Actually, why would the average individual care if all of the markets flat-lined at the end of the week/month?

For most of us it would be (personally) no biggie…although that dog still has teeth if you follow what I’m saying. You may not own stock but the people that own the company you work for probably do.

Let’s suppose you’re one of the lucky ones and you work for an outfit that is too small to be capitalized by the market so the stock market tanking doesn’t affect your boss or your job…oh but wait a minute, how about your bosses customers?

Isn’t it funny (as in peculiar, not ha-ha) that most small businesses feed off of larger ones…so if the center of your bosses ‘cookie’ takes a hit, the company isn’t long for this world. Most small ventures aren’t capable of replacing their ‘primary customer’ on short notice.

And that’s the sad fact of life we don’t talk about…how foolish it is to put most of our eggs in so few baskets…so a few can be rich.

It is extremely rare for a vendor to have more than one primary customer (mostly due to it being very capital intensive, never mind the risk!)

This is why I point to a collapse of the supply chain, because it has become so frail thanks to idiotic accounting rules.

Which raises another issue altogether about how the lack of funds are totally unrelated to the scarcity of a given input.

What’s really weird about this whole line of thought would be that now is the time to have a conversation about what would happen if the stock markets, er, collapsed (for lack of a better term) than once it has actually happened.

There will be too much shit going on (like general and very widespread panic) to discuss much after the fact.

Worse, once she’s done, there won’t be much to talk about.


Thanks for letting me inside your head,


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