Posts Tagged ‘durable goods’

The Hindenburg Omen: How Long Before Americans Cry, ‘Oh, The Humanity!’ As Obama Policies Fail?

August 31, 2010

A cartoonist used the image of the Hindenburg to describe the ideologically-biased mainstream media’s horrified reaction to Obama’s plummeting poll numbers back in July 2009:

But now there is another, far more frightening connection between Barack Obama and the infamous Hindenburg explosion.

Obama aint going down quietly: he’s taking the entire American economy with him:

The Hindenburg Omen IS Scary, but So Are the Fundamentals
Posted Aug 25, 2010 01:37pm EDT by Aaron Task in Investing

After tumbling below 10,000 yet again Wednesday morning, the Dow rebounded to close above that psychologically important level and was slightly higher early Thursday. Still, fear in the market is being expressed by the continued rally in Treasuries and widespread chatter about an ominous sounding technical indicator: The Hindenburg Omen.

The Hindenburg Omen has a roughly 25% accuracy rate in predicting big market upheaval since 1987, meaning it’s far from infallible but isn’t inconsequential either. The indicator’s creator, mathematician Jim Miekka, compares the Hindenburg Omen to a funnel cloud that precedes a tornado in a recent interview with The WSJ. “It doesn’t mean [the market’s] going to crash, but it’s a high probability,” he said.

Complex and esoteric even in the world of technical indicators, the Hindenburg Omen is triggered when the following occurs, Zero Hedge reports:

  • — The daily number of NYSE new 52-week highs and the daily number of new 52-week lows must both be greater than 2.2% of total NYSE issues traded that day.
  • — The NYSE’s 10-week moving average is rising.
  • — The McClellan Oscillator (a technical measure of “overbought” vs. “oversold” conditions) is negative on that same day.
  • — New 52-week highs cannot be more than twice the new 52-week lows. This condition is absolutely mandatory.

These criteria have been hit twice since Aug. 12, prompting Miekka to get out of the market entirely, The WSJ reports. Judging by the recent market action, many others are following suit — or at least moving in the same direction.

Worry List Lengthens

As Henry and I discuss in the accompanying clip, there are a lot of reasons to be worried right now that having nothing to with The Hindenburg Omen, the “Death Cross”, Mercury being in retrograde or myriad other indicators cited by market pundits of various stripes.

More fundamental reasons to be concerned include:

It’s the Economy, Stupid: This week’s weak durable goods and home sales reports are just the latest in a string of desultory data. In sum, the macroeconomic data strongly suggest the job market isn’t going to improve anytime soon. And if the job market doesn’t improve, there’s really not much hope for a turnaround in housing, consumer sales or anything else really. Oh, and the stock market is still expensive on a cyclically adjusted P/E basis, making it more vulnerable to an economic slowdown.

Unusual Uncertainty: On July 21, Fed chairman Ben Bernanke testified on Capitol Hill that the Fed’s forecast called for real GDP growth of 3%-3.5% for 2010 and 3.5%-4.5% in 2011 and 2012. Less than a month later, the Fed announced plans to buy Treasuries again (a.k.a. “QE2”) and, as The WSJ reported this week, there’s a tremendous amount of dissention within the Fed about the ‘right’ policy prescription.

Financial Follies: Whether it’s renewed concerns about Europe’s sovereign debt crisis, more U.S. bank closures or reports of commercial developers walking away from properties, it’s clear the problems in the financial system were not resolved by various and sundry bailouts and government stimulus … not by a long shot.

Good Politics vs. Good Economics: S&P’s downgrade of Ireland’s debt and Greece’s revenue shortfall show the short-term perils of the austerity measures that have swept Europe. But promising to cut government spending and slash deficits appears to be a winning political strategy in America right now. Certainly, it’s a key message of Republican and Tea Party candidates, who appear to have the momentum heading into the November mid-term elections. But if Europe’s ‘PIIGS’ are any example, gridlock might not be so “good” for the economy this time around, much less the financial markets.

Of course, the “good” news here is that there’s so much to worry about and the markets typically are darkest just before dawn.

CEOs of large corporations see a mess created by Obama to blame for the malaise that we haven’t seen since Obama’s long-lost twin Jimmy Carter was president:

This week, Intel CEO Paul Otellini and Jim Tisch, CEO of Loews Corp. both blamed the President’s policies for creating an environment of “uncertainty” that is crippling America’s economy.

The Obama administration is “flummoxed by their experiment in Keynesian economics not working,” Otellini said Monday in a speech in Aspen.

Higher taxes and more regulation add an additional $1 billion to building a semiconductor manufacturing plant in the U.S. vs. overseas, the CEO said.

As a result, “the next big thing will not be invented here. Jobs will not be created here,” Otellini said, warning of “an inevitable erosion and shift of wealth, much like we’re seeing today in Europe…this is the bitter truth.”

Loews’ Tisch made similarly themed comments in a Bloomberg interview on Wednesday. “Part of the problem is that business has very little confidence in what’s been going on and very little visibility,” he said.

But is it just CEOs?  Is it just big business?  Surely Obama’s anti-business policies are making things easier for the little guy, right?

Wrong:

For America’s Middle Class, the Hits Just Keep on Coming
Posted Aug 25, 2010 07:50am EDT by Aaron Task

A lot of ink and pixels have been spilled this week over the ICI’s report that equity mutual funds suffered net withdrawals totaling over $33 billion in the first seven months of 2010. Myriad reasons were cited for the trend, including a mistrust of stocks, the flash crash and an aging population. (See: The Next Bubble? Investors Flee Stocks in Droves In Favor of Bonds.)

Perhaps the biggest reason of all hasn’t gotten enough attention: Americans are making due with less and don’t have the money to put into stock funds, and many are taking money out of their investments to pay for basic necessities like food, clothing and shelter.

With wages stagnant for those who still have a job “a lot of people are having to tap into their nest egg to keep their living standards going,” says Damien Hoffman, co-founder of WallStCheatSheet. “A lot of people are living out of principal. There’s no other way to get around that.”

Fidelity’s recent report of a sharp increase in the number of 401(k) participants seeking loans or hardship withdrawals in the second quarter is further evidence of the disappearing middle class. “These are basically emergency ways to fund yourself. We think it’s a scary statistic,” Hoffman says. “Where is the middle class going to be if they draw down their 401(k)s drastically over course of next few years?”

Obama’s anti-business and profoundly socialist policies seek to punish business in every way he can.

A lot of Americans were probably happy with that in November of ’08.

But that was before they began to realize the truth that either all boats rise, or all boats sink.  Nancy Pelosi never drained the political swamp, as she falsely promised, but Barack Obama has certainly drained the ocean of economic opportunity (and very likely poisoned the bluebird of happiness, but that’s a crime for another day).  We need the rich, and the big businesses, in order to have jobs.  When they profit, the rest of us do.  And when they are demonized and attacked and regulated to death, the rest of us suffer, too.

Because name the last time a poor person hired you and gave you a good paying position.  If you’re a liberal, let me add, “It was never, wasn’t it, dumbass?”

It’s not really accurate to say that Obama is “anti-business”; he’s the MOST anti-business president ever.

A glance at Obama’s appointments and their actual world business experience should suffice to reveal how important business was to Obama.

Obama filled his administration with radicals out to “fundamentally transform America.”  And being the kind of man or woman who was oriented toward meeting payrolls and expanding businesses really didn’t need to apply.

And these eggheaded Marxists are seizing money from the private sector – and even from the future – and making terrible decisions about how to invest it.  We get turtle tunnels and monkey cocaine studies rather than infrastructure investment.  Had it been up to businesses as to how to invest the trillions of dollars that Obama pissed away, things would have been a lot better now.

I love the title from a US News & World Report article: “Obama’s Anti-Business Policies Are Our Economic Katrina.”  It’s written by Mortimer Zuckerman, who used to be a huge supporter of Barry Hussein, until he finally realized that “the One” was nothing more than a great big fart in the wind.

And even Obama’s own Democrat Party is now finally beginning to realize what a great big fart in the wind Obama truly is.  They hitched themselves to the Obama bandwagon; and now the wagon is burnt to ashes.

On November 4, 2008, the voters of the United States of America voted for national extinction.  And yet many are surprised that we’re now following in the footsteps of the Dodo bird.

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Car Sales Fall Back To Historic Lows, Proving Cash-4-Clunkers Was A Clunker

September 30, 2009

The problem with the liberal-glorified cash-for-clunker program was always obvious to anyone who would but contemplate: the spike in sales merely robbed future sales, or delayed past ones.

My own parents waited for at least a couple months to buy a car for the program to go into effect.  Ultimately they walked away from it due to the massive aggravations of the program (my father is a very patient man unless and until things stop making sense – at which time he starts to lose it) and decided to keep their “clunker” until they needed to buy a new car.

The funny thing is, they very likely would have already bought a new car had it NOT been for the cash-for-clunker program.

September Auto Sales Seen Slumping Post-‘Clunkers’
Published: Monday, 28 Sep 2009
By: Reuters

U.S. auto sales likely fell in September back to the nearly three-decade lows of early 2009 without government incentives to spur buying, leaving in doubt the timing and pace of a recovery for the battered industry.

Nearly 700,000 new cars and trucks were bought by U.S. customers through the government “cash for clunkers” incentive program from late July through the first three weeks of August, a leap from recession-stunted sales earlier in 2009. […]

“There are still a lot of obstacles out there,” she said. “I think we are still going to see the hangover from ‘cash for clunkers’ both in September and almost potentially through the end of the year.”

Sales Drop at All Major Automakers

U.S. auto industry sales rose 1 percent to more than 1.2 million vehicles in August from a year earlier under the “clunkers” program, the first time monthly sales pierced the 1 million mark in a year.

However, none of the largest manufacturers are expected to post sales gains in September, and Edmunds has forecast a 23 percent industry sales decline for the month.

Edmunds expects Ford Motor to post a 9.7 percent sales drop, GM a 46.1 percent drop and Chrysler a 48.7 percent decline among the Detroit automakers.

Edmunds expects Toyota Motor to post a 9.7 percent sales decline, Honda Motor an 8.3 percent drop and Nissan Motor a 1.1 percent drop among Japan-based automakers.

The August sales gain represented a seasonally adjusted annualized rate of 14.1 million vehicles, but did little to turn the tide on annual sales. U.S. auto industry sales were down nearly 28 percent through August 2009 versus last year.

Global Insight expects U.S. September auto sales to come in at a 9.33 million seasonally adjusted annualized rate, or well below the 12.5 million unit rate from a year ago when credit markets froze in the wake of the Lehman Brothers collapse.

The median forecast for U.S. auto industry sales was 9.5 million vehicles from 41 economists surveyed by Reuters, while J.P. Morgan believes the annualized rate could drop to 8.9 million vehicles — the lowest month since December 1981. […]

This comes as no surprise to people who had a clue.  For example, John Quelch predicted in August:

C4C disrupted the even flow of supply and demand. New car buyers held back in advance of the launch of the program; in fact, many prenegotiated with dealers to do so. And, now the promotion is over, expect year-on-year sales to be lower than they would have been because so much consumer demand has been concentrated in the promotion period.

The Daily Plunge predicted:

The auto industry received a short-term “sugar high” at the expense of lower future sales when the program is over. The program apparently boosted sales by about 750,000 cars this year, but that probably means that sales over the next few years will be about 750,000 lower. The program probably further damaged the longer-term prospects of auto dealers and automakers by diverting their attention from market fundamentals in the scramble for federal cash.

And whaddyaknow?  That’s basically exactly what happened.

In addition, the fuel savings came at a very high cost.  In fact, in order to save $815 million in oil via the better mileage of the new cars, the U.S. Treasury had to pay out $2.877 billion.  In other words, for every dollar saved in fuel, the taxpayers lost $3.53 cents.  Some savings.

Poor people – who couldn’t afford to buy a new car with the cash for clunker incentive – will also now lose out on billions of dollars’ worth of used cars that were destroyed under the program.  The price of the cars that would have improved their lives (and their mileage) were shipped to China as scrap metal.  And law of supply and demand guarantees that the price of used cars will go up for the people Democrats always say they’re trying to help.

The cash for clunkers program ought to sound eerily familiar to people who’ve done any reading about the Great Depression, because it was the same kind of program that led to the slaughter of hogs under the Agricultural Adjustment Act (which was intended to raise hog prices but led to famine instead).  The issue here is the same one as back then: the profound arrogance of economic planners who think if they just get enough data, and they turn all the diodes exactly the right way, and if they get all the right memos and all the right forms, that they’re going to be smarter than free market would be.

Big government liberals invariably believe they know how to allocate resources better than markets do — just like the Marxist economic planners did.  And the problem is like that fairy tale about the old woman who swallowed a fly; every single solution they come up with just creates another problem, and then you get this continual snowball effect that just keeps getting more insolvable.

And thus it is with the cash for clunkers thing.  Maybe some of these people who bought a new car didn’t really need a new car; what they really needed was a new refrigerator or a new washing machine – but they got such a great deal on that car!  The government knows better that they needed to buy a new car more than they needed to buy a new refrigerator or a washing machine or a host of other products.  And so the government artificially incentivized people to buy the car that they really didn’t need.  And instead of buying all the things that they really should have bought and WOULD have bought anyway WITHOUT the billions in taxpayer dollars, now people have taxpayer-funded cars they really didn’t need to buy.

So, as an example, were told that “Durable goods orders show unexpected decrease in August,” but it shouldn’t have been “unexpected” at all.  What it was was the opportunity costs due to all the people buying cars instead of other goods.  Like refrigerators and washing machines.

And at the same time, all we’ve really done is rob demand from a couple of years down the road, where these people were almost by definition ultimately going to buy new cars anyway.  Why?  Because they have CLUNKERS, dammit!