It appears that new jobless claims have dropped "sharply". http://news.yahoo.com/s/ap/20100422/ap_on_bi_go_ec_fi/us_economy
Good news, right? Last week the consensus estimates were that the number would be 440K new jobless claims but it came in at 480K. This week it was at 456K. The nuttyness is that the 440K was forgotten and the 480K became the new benchmark. Within a week we've gone from disaster (with the high increase from 440K estimate to a reality of 480K) to a recovery (with the decrease from 480K to 456K).
Yesterday, I moved most (not all) of my 401K money into bond funds for the time being. The stock market is insane. I think we've finally reached the high. I think it makes sense to stick to things like bonds that have a consistent rate of return for the most part. Over time there will be opportunities when stocks or real estate or gold or other assets are low and you can move the bond money to those and ride the upswing. I predict there will be increasing volatility as insiders game the system through establishing quarterly expectations. You can also take advantage of it if you pay attention.
Thursday, April 22, 2010
Thursday, April 8, 2010
Retail Sales and New Jobless Claims
A multitude of reports have come out this morning that show big gains for a number of retailers. CNBC's Jim Cramer says that this means the major averages might be low http://www.cnbc.com/id/36230309. On the other hand, there were 460K new jobless claims that exceed expectations.
It seems everyday there are conflicting new reports. If people are still losing their jobs, why are they still consuming so much? My opinion is that the stock market itself is creating a wealth effect that makes people feel better than they otherwise would if they relied more exclusively on their income. Unlike Cramer, I don't believe today's retail sales show that a great recovery is underway or that stocks are going to rise rapidly - depending on your timeframe. If Cramer is suggesting that the stock market may go up in the next month or two, that's certainly possible. If you have the flexibility to move in and out of the stock market it is possible it may go up.
Personally, I believe Bond markets are still the place to be. These include corporate and Federal T-Bonds. I still do not see a sustainable job recovery. I suspect the stock market is currently overvalued and will decline within the next few months. Once this happens, you will see a selloff and people will stop consuming. The pyschology of the wealth effect will go in the other direction and numbers will go down again.
Folks may feel richer at the moment. But they are not.
It seems everyday there are conflicting new reports. If people are still losing their jobs, why are they still consuming so much? My opinion is that the stock market itself is creating a wealth effect that makes people feel better than they otherwise would if they relied more exclusively on their income. Unlike Cramer, I don't believe today's retail sales show that a great recovery is underway or that stocks are going to rise rapidly - depending on your timeframe. If Cramer is suggesting that the stock market may go up in the next month or two, that's certainly possible. If you have the flexibility to move in and out of the stock market it is possible it may go up.
Personally, I believe Bond markets are still the place to be. These include corporate and Federal T-Bonds. I still do not see a sustainable job recovery. I suspect the stock market is currently overvalued and will decline within the next few months. Once this happens, you will see a selloff and people will stop consuming. The pyschology of the wealth effect will go in the other direction and numbers will go down again.
Folks may feel richer at the moment. But they are not.
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