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Reports Are Not Yet Confirming Slowdown Was All Weather Related
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Reports Are Not Yet Confirming Slowdown Was All Weather Related

Apr 17 2014, 3:12pm CDT | by

The stock market has hung in there so far this year in spite of negative economic reports from December through February that indicated the economy was slowing significantly. Not that the market...

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14 weeks ago

Reports Are Not Yet Confirming Slowdown Was All Weather Related

Apr 17 2014, 3:12pm CDT | by

The stock market has hung in there so far this year in spite of negative economic reports from December through February that indicated the economy was slowing significantly.

Not that the market continued its winter rally. For 2014 so far, the Dow is down 0.9%, the S&P 500 is up just 0.6%, and the Nasdaq is down 2.2%.

Nevertheless, the market has continued to avoid the 10% correction that history says is overdue. Over the last 60 years, there has been a correction of 10%, or more, on average of every 18 months. It has now been 30 months since the last one (the S&P 500’s 19% decline in the summer of 2011).

Hopes are currently the main prop under the market, particularly hope that although the winter’s economic reports were ‘seasonally adjusted’, that the weather was so harsh that it had an unusual impact not handled by the seasonal adjusting, an impact that accounted for the economy’s problems.

It’s widely expected, or at least hoped, that economic reports for March and April will show a significant bounce-back that will confirm that assessment.

So far, the picture is not all that reassuring.

It is encouraging that the Thomson Reuters/ University of Michigan Consumer Confidence Index ticked up some, to 82.6 in April from its four-month low of 80.0 in March, and retail sales were up 1.1% in March, beating the consensus forecast of a gain of 0.8%.

However, manufacturing reports are mixed so far.

The Philly Fed Mfg Index rose to 16.6 in April from 9.0 in March, beating the consensus forecast of economists for an improvement to 10.0. But the Chicago PMI, measuring activity in the Midwest fell from 59.8 in February to 55.9 in March, well below the consensus forecast of 59. And the Fed’s Empire State (NY region) Index also fell sharply, to 1.3 in April from 5.6 in March.

Most troublesome though have been this week’s reports from the important housing industry.

There have only been two so far.

However, the Housing Market Index, which measures the confidence of home-builders, ticked up only to 47 in April from 46 in March, missing the consensus forecast of a recovery to 49, not showing much rebound after the big decline from 56 in February to 46 in March.

More troubling, new housing starts were up only 2.8% in March, to 946,000. That missed the consensus forecast of economists for a bounce back to 990,000 by a substantial amount. In spite of the increase, starts were still down 5.9% from the year earlier period, the biggest decline since April 2011. Meanwhile, permits for future starts fell 2.4%.

More than anything else, the economy and stock market need to see the housing market recover, since it has a strong history of leading the economy in both directions, up into boom times, and down into recessions.

Unfortunately, it may take some doing to have housing recover from its slowdown. It began stumbling last summer, when mortgage rates and home prices began rising, well before harsh winter weather could be blamed.


So the jury is still out on how much of the economic slowdown in the winter months was weather-related, particularly in the important housing industry./>

The sideways action of the market over the last six weeks indicates investors are cautious. They should remain so, at least until there is more convincing evidence that the winter’s economic slowdown was due only to the weather.

Meanwhile, the market remains overvalued, and overdue for at least a 10% correction, with the end of its favorable seasonal influence approaching, and in the second year of the Presidential Cycle, which since 1934 has experienced an average decline of 21%, usually in the second and third quarter of the year.

Sy is president of StreetSmartReport.com and editor of the free market blog Street Smart Post. Follow him on twitter @streetsmartpost. He was the Timer Digest #1 Gold Timer for 2012 (Gold Timer of the Year), as well as the #2 Long-Term Stock Market Timer.

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was to ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat t ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Ministe ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last month. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in com ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Must ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 million ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Baz ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 bill ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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