will rally for of Bags , go up 15% from the lows of March and April by clocking the best monthly result since 2003, will be a bit 'of macroeconomic data reassuring face of it, but in the last two weeks there has been a optimism on the prospects of ' American economy that seems unjustified.
A sign of renewed confidence it gives us the US.recession.08 contract, traded on ' market information of Intrade . It is a tool that allows you to bet on the odds of recession in the U.S. in 2008.
As the chart below, in the last 15 days - to be exact, from April 24 - the contract fell sharply to below 55%, which marked the lower limit of a fork between 55% and 75% by which expectations of bettors had gone stabilizing the beginning of the year.
The descent then went speeding by the end of April, with the result of bringing the contract to quote today recession risk of 26% just - a level lower than that prevailing in mid-October, when the U.S. stock market touched the highest in this cycle (see chart below, by StockCharts).
to give credit to these signals, it would seem that the worst for the U.S. and for the equity markets (including the ' S & P 500 index remains guide) is now to consider the past. But it is a conclusion that I disagree and do not recommend to cultivate. The evidence to the contrary, in fact, too - as I will try to show.
A look in more detail the performance of the contract of Intrade, is seen as the downward movement have focused the dates of 24 and 30 April and 2 May. These are the days in which they were issued a set of all macroeconomic statistics, apparently, higher than expected: unemployment benefits (April 24), GDP (April 30) employment report (May 2).
In addition, April 30, there was also the announcement of further rate cuts by the Federal Reserve with a statement which contained a less negative - than the announcement of monetary policy six weeks earlier - on the growth prospects of the U.S. economy.
It would appear there is a direct link between the data macro and changed investor expectations. If so, I would add that many are at this moment, to take the risk of fireflies for lanterns. Scratching below the surface, in fact, it seems to me clear that the U.S. economy is not improving at all, on the contrary.
consumption in crisis
I gave more overall from among those published recently, the preliminary estimate of GDP the first quarter. The markets breathed a sigh of relief at an annual growth of 0.6%, better than expected.
If this result is synthetic but broken down and analyzed, it is difficult to see how it was only the accumulation of stocks (manufactured goods remained unsold because of a question that was weaker than the firms had expected) to keep GDP above the zero line.
Net stocks, the final sales , in real terms fell by 0.2% on an annual basis, a sign that demand has begun to shrink. If the ' exports remains buoyant (+5.5%) thanks to the weak dollar and an international economy is still growing - especially in Asia - the most worrying signal comes from consumption - 70% of the U.S. economy . I would return here
analysis of Asha Bangalore of Northern Trust . The only positive component at the level of household spending, was that relating to the consumption of services , pushed upward by the 14.2% recorded by the annual expenditure on electricity and gas. The reason, adjusted for inflation? A colder winter than normal.
For the rest, consumers have witnessed a state of crisis more and more pronounced the budgets of American families. The cost of durable goods fell by 6.1% per annum, that of non-durable goods 1, 3%.
Overall, the 3.0% clocked by consumption of goods is the weakest since the fourth quarter of 1991, when the U.S. economy was emerging from recession, as evidenced by the chart below, by Northern Trust .
We shall now at ' employment. Data on unemployment benefits of 24 April, unusually positive, that is not even worth talking. A week later (May 1) were immediately contradicted by new findings confirm that, overall, a trend deterioration in the net. So let's concentrate on the most important monthly report on the labor market, released last Friday.
Employment declined
The rate unemployment fell from 5.1% to 5.0% while the decline in employment was just 20 000 units, less than expected and smaller than the decrease of 81 000 units the previous month. The stock exchanges have breathed a sigh of relief, which, however, in hindsight, is the result of a certain blindness.
E 'has often been observed that, during their turn in the U.S. labor market, official figures are affected by a calculation of the monthly balance of fledgling companies and defunct companies (the so-called birth / death adjustment ) which leaves to be desired because it ignores the cycle. The result is that in times of economic cooling as the current, the tendency is to take account of non-existent jobs.
Watch Bangalore that excluding the birth / death adjustment , the busy over the last year have fallen by 630 000 units. Including it, as do the official statistics, leads to an increase of 157 000 employees. Short, there is a huge difference of 787 thousand units, due entirely to an artificial and unreliable method of statistical adjustment.
A check can be done by adding, to the data on employment, the workers forced to part-time for economic reasons (because they are forced by the company and not by choice) and called on workers "Marginal." The unemployment rate widened which Bangalore is obtained as follows:
This second, broader measure of unemployment in the U.S. economy (blue line) rose from 8, 2% a year ago to 9.2% in April, showing a marked decline and shows no signs of slowing down. For Bangalore, it is a much more reliable data about the real state of the U.S. labor market.
In the report last Friday, then there was another important element of weakness, that of the estimation of hours worked , fell in April by 0.4% on an annual basis - further indication in the opinion of Bangalore, the second-quarter GDP will be negative.
Let me conclude with two observations.
The hole of the housing market
The housing market, from which originated the slowing U.S. economy and the crisis in international markets continues to deteriorate. The following chart is always drawn from Northern Trust , illustrates the trend in sales of new homes .
In March, the latest data available, it fell by 8, 5%. There are no signs of slowing down or, even less, impending stabilization.
From a peak of July 2005, the fall in sales was 63.1% so far - than any other postwar recession. Other indicators have all the same evidence: the housing market is a bottomless pit, the bottom has not yet been touched.
credit markets, "the horse does not drink"
Then there is the bitter response of the inefficiency - so far - the monetary policy.
Despite the cuts of 325 basis points of Fed funds (from 5.25% to 2%), determined by the Federal Reserve, the availability of credit in the economy U.S. is becoming increasingly scarce in all sectors (credit to businesses, both small and large, real estate credit, consumer credit). As told last
Loan Officer Survey , edited and published yesterday by the central bank, the lenders are blocked by the deterioration of assets, from inadequate liquidity in secondary markets, worsened by the reliability score, and, in Overall, a " reduced tolerance for risk."
50% of brokers polled by the Fed claims to have made more stringent lending standards in the housing market than three months ago, largely in response to continued depreciation of the collateral pledged.
22.7%, compared to 15% in January, are stated to be available to offer consumer credit . It is, as evidenced by the following graph of Northern Trust, the highest percentage since the second quarter of 1980.
As we say in slang, " the horse (ie the U.S. economy) not drink" (the reference is given to liquidity injections by the Federal Reserve).
Without credit, the business is stagnating and consumers - too much debt, and increasingly at risk of losing their jobs – tirano i remi in barca e badano a risparmiare. In presenza di consumi in calo, le imprese non investono.
L’economia Usa, nonostante il sostegno che viene dal dollaro debole e da una domanda estera ancora tonica, resta un malato in via di peggioramento.
Stimare – come fanno gli scommettitori di Intrade - che le possibilità di recessione siano solo una su quattro mi sembra wishful thinking . Per me, sono molte di più.
E resto dell’avviso che anche i mercati azionari, nelle prossime settimane, esaurito lo spiritato bear market rally dell’ultimo mese e mezzo, torneranno a rammentarcelo.
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