No matter what the cheerleaders say, this doesn't feel like a recovery ZT

快乐生活 · 发表于 2009-10-29 08:23

No matter what the cheerleaders say, this doesn't feel like a recovery ZT

By Gary Lamphier, Edmonton JournalOctober 29, 2009

Has this year's unlikely, seven-month-long stock market rally finally slammed into the brick wall of economic reality?
That's the key question on investors'minds, after the Toronto Stock Exchange's lead index shed a further 248 points Wednesday.
It marked the fourth straight triple-digit decline, and left the S&P/TSX Composite Index at 10,805.33, 843 points or 7.2 per cent below the 2009 high of 11,648.55.
The picture is only slightly brighter in New York, where the Dow Jones Industrial Average sagged 119 points to 9,762.69.
The loss left the blue-chip index 356 points or 3.5 per cent below its 2009 high of 10,119.47, reached just eight days ago.
Other major U.S. indexes followed suit, with the broadly based S&P 500 Index slipping nearly 21 points to 1,042.63--below its 50-day moving average--and the tech-laden Nasdaq Composite Index falling 56 points, to 2,059.61.
European indexes also backtracked Wednesday, and at press time, Asian markets appeared headed lower overnight.
Although North American indexes remain light years above the lows set in March--the TSX has soared 44.4 per cent, the Dow is up nearly 51 per cent, and the S&P 500 has gained 56.3 per cent--a full-scale retreat now seems underway.
Whether it turns out to be a routine correction in a new bull market, or another ugly downleg in an ongoing bear market, is anyone's guess. Personally, I remain bearish.
"Global equity markets are selling off as that dirty four-letter word-- R-I-S-K-- reasserts itself after a monstrous rally that has far exceeded the macro fundamentals," says David Rosenberg, chief economist and strategist at Toronto-based Gluskin Sheff&Associates, and one of the most vocal skeptics of the great rally of 2009.
"In the U.S., the stock market has been behaving as if we are somewhere in the third year of an economic expansion. And here we are still debating what month the recession ended, if it ever ended at all," he notes.
Prices for oil, gold, natural gas, copper and other commodities also declined Wednesday as the U.S. dollar rose, pushing producers' share prices lower.
Suncor, Imperial, EnCana and Canadian Natural Resources and Talisman were among the losers on the TSX, as well as miners like Barrick, Teck and Goldcorp.
Oil closed at $77.15 US a barrel, down $2.40 or nearly $5 below the 2009 high of $82, touched last week.
In the latest sign that the U.S. economy remains under siege, sales of new homes unexpectedly fell 3.6 per cent to 402,000 units last month, versus a consensus forecast of 440,000 units.
Many now expect the U.S. to extend-- or expand--its $8,000 tax-credit program for first-time buyers, which was set to expire Nov. 30. Without it, activity levels would be comatose.
The median new-home price in the U.S. sagged to $204,800, down nine per cent from a year ago. Builders had just 251,000 houses on the market last month, the lowest tally in 27 years. Earlier this week, another key measure of U.S. economic health --the Conference Board's consumer confidence index--slid 5.7 points for October.
On a positive note, U.S. durable goods orders rose one per cent in September, marking the fourth monthly gain in six months.
Meanwhile, the U.S. Commerce Department is slated to release third-quarter GDP data today. The median estimate among economists calls for growth of 3.2 per cent. If so, it would be the first uptick in more than a year.
On the earnings front, it remains a mixed story.
While the vast majority of major U.S. firms -- 82 per cent, based on Bloomberg's data--have beat analysts' (lowball) third-quarter earnings estimates, most did so by slashing costs, not boosting sales. And that's despite all the stimulus programs.
Unless the debt-hobbled U.S. consumer finds some cash under his pillow, the demand picture isn't likely to improve any time soon.
With home foreclosures still rising, the jobless rate nearing 10 per cent, bank failures continuing to ramp up, and dozens more on death watch, this just doesn't feel like a recovery to most people, no matter what the cheerleaders on Wall Street say.
Consider this statement Wednesday by New York State's lieutenant-governor, Richard Ravitch.
He predicts U.S. state governments will face deficits totalling as much as half a trillion dollars by 2011, after Washington stops doling out stimulus cheques. That would top the biggest federal deficit in U.S. history, barring the$1.4-trillion deficit recorded this year.
Ravitch says New York's current budget deficit of about $4 billion will swell to $15 billion to $18 billion over the next two years.
"These are numbers that are unprecedented. Banks are falling like autumn leaves, and nobody is projecting any significant growth in 2010."
With talk like that already scaring the wits out of America's shell-shocked consumers, who needs Halloween?
glamphier@thejournal.canwest.com
© Copyright (c) The Edmonton Journal

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