|
-- Posted Monday, 6 July 2009 | Digg This Article | | Source: GoldSeek.com
Rick’s Picks Monday, July 6, 2009 “Phenomenally accurate forecasts” Taking their cue from our cautiously optimistic, if factually challenged, Fed chairman, mainstream purveyors of news have been spewing propaganda for months about a “recovery” in the second half. But do investors actually believe this poppycock? We never would have imagined so, at least not before Thursday. But when the broad averages plunged on weak payroll numbers released ahead of the holiday, they buttressed the conclusion that Wall Street was genuinely surprised by the economy’s punk performance. How punk? In percentage terms, unemployment increased by just a tenth of a percentage point, to 9.5%. But what seemed to throw investors for a loop was a spurt in job losses, which totaled 467,000 last month. That is significantly higher than in May, suggesting that the jobs component of the economy is getting worse, not better.
This could not have surprised those who get their economic news from newsletters rather than from the major networks, CNBC, and other officially sanctioned mouthpieces of the status quo. In general the newsletter world has been far more bearish on the economy than prime-time peddlers of the Commerce Department’s statistical swill. While the latter tend to interpret, say, a moderate slowing of the collapse in home prices for a month or two as great news for the builders and for the economy as a whole, the latter tend to see a meaningless statistical blip. Speaking for ourselves, you could say we see the glass as half-full – but of hemlock. One economic fact alone should give any optimist pause, to wit: There are at least a half-dozen state governments teetering on the edge of bankruptcy – including California, the world’s sixth largest economy -- and quite a few more in very serious distress. Under the circumstances, it seems incredible that anyone besides Kudlow or Abby Cohen – which is to say, two of Wall Street’s most recklessly self-aggrandizing shills – would expect payroll numbers and joblessness to show steady signs of improvement. Stocks Extremely Vulnerable So if the economy is about to relapse, what might that portend for stocks? We think the broad averages are extremely vulnerable, especially if tech-sector earnings for Q2 fail to live up to the speculative binge that goosed Nasdaq stocks in particular. The potential for extreme disappointment is even greater in the financial sector. Some of you may recall that the current bear rally in stocks was touched off by news in early March that Citicorp had mysteriously “earned” more than a billion dollars. This fueled explosive buying in the financial sector that has since flattened ominously. Are investors once again growing fearful that the banks, even those that “passed” the stress test, face a mark-to-market somewhere down the road? If so, it’s hard to imagine which stocks will lead the next charge. *** Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Monday, 6 July 2009 | Digg This Article | Source: GoldSeek.com
Previous Articles by Rick Ackerman
|
