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ALL SORTS OF HURRICANES ON THE LANDSCAPE TODAY
By Charles Payne, CEO & Principal Analyst
8/26/2011 1:38:43 PM Eastern Time
These days there seems to be a new shocking poll out every day, but there was news this morning from Gallup that speaks volumes about why the economy isn't moving. When asked the best long-term investments the reply was overwhelmingly...gold!
This is incredibly interesting stuff, but says Americans have lost faith in this country and in the powers that have the ability to keep it great. Interestingly, Ben Bernanke took a poke at Washington today, but it's the fact the Fed and the Administration are so fixated on short-term bounces in the economy that the longer term potential is dimming. Rising debts and a weaker dollar are the one-two punch that ultimately hurts bonds, savings, and eventually stocks. People seem to understand this more than the experts.
There is an element of our future wrapped around an inner belief things are going to get better. It's a self-fulfilling destiny that makes success possible in part because we know it's going to happen. These days there are too many unknowns to be confident, and what we do know doesn't suggest greatness. We know the government has grown in size and intrusiveness. We know this Administration wants to greet hard-earned success with harsh rhetoric and higher taxes. We know this Administration is trying to create a medical system that will dilute care and send costs soaring. We do know the Fed has no qualms printing money and probably will continue to do so.
Things have changed dramatically in the past ten years. There was a time when Americans invested in war bonds. There was a time you knew owning a piece of land in this country was the bedrock of future wealth. From what I understand, this is the first time Gallup has included gold as an option in this survey. There is no doubt years ago it would have had a negligible impact as witnessed in the organization's 2003 survey on the best long-term investments.
Wired Friday
By: Brian Sozzi, Equity Research Analyst
Between you, me, and the lamppost I am supremely charged up today. Maybe it was the buildup to the Bernanke J-Hole speech. Maybe it's the fact that my native Long Island could be known as the Lost Land of Long Island by Monday morning due to Hurricane Irene. Or, like the steroid using former baseball slugger Manny Ramirez, maybe it's just me being me. So, I leave you with these thoughts going into the weekend.
Bernanke at J-Hole
Market talked down this event all week, yet there clearly were people long into the speech. Stocks went down the drain as Bernanke did not come out and utter "by Monday, QE3 will be reality." However, Bernanke did once again reiterate that further unconventional easing was an option, and the extension of the next FOMC meeting to two days in September suggests a real probability for an announcement. That sent the market higher as risk was priced a bit more as if the dual spigots (low rates until mid-2013) that pump out easy money will be back in action, instead of one spigot as is currently the case.
Hurricane Irene
Hopefully, this won't be the final time you get to read my musings on all things the stock market. I am smack in the heart of Hurricane Irene according to weather reports, and plan to ride this sucker out with a package of beef jerky, candles, and sugar free Red Bull. I think there is downside risk to the August same-store sales reports from specialty apparel retailers as mom and dad shifted spending to hurricane stock up purchases. Yes, I know there are no hurricanes on the West Coast, but the East Coast is prime locale for many major retailers.
August Consumer Confidence
What confidence? I continue to look at consumer expectations for income when evaluating the future potential of retail stocks. With no break in the downward spiral on this metric, it continues to be difficult to say the bottom is in for the S&P Retail Index. As for the holidays, which I am getting a fair amount of inquiries on, I am not sure how things will unfold to be honest. The consumer remains very volatile month to month and to date, the action in the sector stocks tell me the holidays are an unknown quantity as well.
Consumers Sentiment Ramps Lower
By: Carlos Guillen, Research Analyst
The latest news reflecting the state of the consumer was released earlier during this morning's trading session, and it conveyed a continuous deteriorating state of morale from the consumer at large. The University of Michigan Consumer Sentiment August final result landed at 55.7, which was a tad lower than the Street's expectation of 55.8, decreasing from the 63.7 reached in July. This month's reading was the lowest since that reached in November 2008. While it was a bit discouraging to see consumer sentiment continuing to ramp lower, it was more discouraging to see that consumer expectations notched lower as well. This was reflected by the survey's gauge of consumer expectations as it decreased to 47.4 from the prior 56.0 level.
The rather sharp decline in consumer sentiment is very troublesome, particularly as this tends to be a leading indicator. The consumer is losing hope very fast as they continue to see their financial situation deteriorating with no hope of any improvement. This sense of hopelessness is increasing the belief that another recession is well on its way. Quite surprisingly, the consumer's main reason for feeling so pessimistic about their financial outlook was that it perceived the government as not playing a stronger role in pushing the economy along. Consumers overwhelmingly made a u-turn in terms of their optimism and are now significantly more pessimistic, as they have lost faith in the government's ability to use fiscal and monetary mechanisms to stimulate growth. Consequently, consumers are now pulling back on their expectations for consumption, and this can certainly derail all efforts to keep the economy from sinking.
Awaiting Irene
By David Urani
To begin with, I will say that my logic/intuition tells me that Irene is not going to be a major disaster for New York City. Although the projected path charts this thing going straight over Manhattan, hurricanes are unpredictable, and there is a good probability that it veers away, weakens, or both. However, as someone who lived in New Orleans during hurricane Katrina (my home was flooded and everything I owned there ruined), I now know never to write off once in a lifetime events (I consider the 2008 financial crash here on Wall Street as one of those, too). Before Katrina hit, for me and most everyone else I knew, it felt a lot like other hurricanes that threaten to hit the city but never follow through. In fact, other weaker hurricanes had hit not long before, and merely caused temporary flooding in certain places.
By no means do I think this is on the same scale as Katrina; it is not as strong and there are no levies looming over any big cities. That said, it is not so much a killer hurricane as much as it is potentially very damaging. The last major hurricane to hit the city was in 1821. It caused a 13 foot water surge that flooded the entire area from Battery Park up to Canal Street. You can only imagine what kind of damage that would do nowadays. That hurricane was a category 3 or 4 though, while this one is category 2 now and may go up to 3 near the Carolinas (but is very likely to be category 1 or less by the time it nears NYC). However, they say the 1821 hurricane could have been much worse if it wasn't during low tide. This hurricane would come during higher tide.
This could never match the devastation I saw in New Orleans, but certainly if it is still on course come Saturday, I will buy some duct tape for the windows and head to the grocery store for a day or two worth of water and food. If nothing else, it may be very disruptive.
Note: I want to wish the best for those in the Carolinas who are likely to see the worst of this.
Life, Liberty, & the Pursuit of Happiness
By Charles Payne, CEO & Principal Analyst
These days there seems to be a new shocking poll out every day, but there was news this morning from Gallup that speaks volumes about why the economy isn't moving. When asked the best long-term investments the reply was overwhelmingly...gold!
This is incredibly interesting stuff, but says Americans have lost faith in this country and in the powers that have the ability to keep it great. Interestingly, Ben Bernanke took a poke at Washington today, but it's the fact the Fed and the Administration are so fixated on short-term bounces in the economy that the longer term potential is dimming. Rising debts and a weaker dollar are the one-two punch that ultimately hurts bonds, savings, and eventually stocks. People seem to understand this more than the experts.
There is an element of our future wrapped around an inner belief things are going to get better. It's a self-fulfilling destiny that makes success possible in part because we know it's going to happen. These days there are too many unknowns to be confident, and what we do know doesn't suggest greatness. We know the government has grown in size and intrusiveness. We know this Administration wants to greet hard-earned success with harsh rhetoric and higher taxes. We know this Administration is trying to create a medical system that will dilute care and send costs soaring. We do know the Fed has no qualms printing money and probably will continue to do so.
Things have changed dramatically in the past ten years. There was a time when Americans invested in war bonds. There was a time you knew owning a piece of land in this country was the bedrock of future wealth. From what I understand, this is the first time Gallup has included gold as an option in this survey. There is no doubt years ago it would have had a negligible impact as witnessed in the organization's 2003 survey on the best long-term investments.
Wired Friday
By: Brian Sozzi, Equity Research Analyst
Between you, me, and the lamppost I am supremely charged up today. Maybe it was the buildup to the Bernanke J-Hole speech. Maybe it's the fact that my native Long Island could be known as the Lost Land of Long Island by Monday morning due to Hurricane Irene. Or, like the steroid using former baseball slugger Manny Ramirez, maybe it's just me being me. So, I leave you with these thoughts going into the weekend.
Bernanke at J-Hole
Market talked down this event all week, yet there clearly were people long into the speech. Stocks went down the drain as Bernanke did not come out and utter "by Monday, QE3 will be reality." However, Bernanke did once again reiterate that further unconventional easing was an option, and the extension of the next FOMC meeting to two days in September suggests a real probability for an announcement. That sent the market higher as risk was priced a bit more as if the dual spigots (low rates until mid-2013) that pump out easy money will be back in action, instead of one spigot as is currently the case.
Hurricane Irene
Hopefully, this won't be the final time you get to read my musings on all things the stock market. I am smack in the heart of Hurricane Irene according to weather reports, and plan to ride this sucker out with a package of beef jerky, candles, and sugar free Red Bull. I think there is downside risk to the August same-store sales reports from specialty apparel retailers as mom and dad shifted spending to hurricane stock up purchases. Yes, I know there are no hurricanes on the West Coast, but the East Coast is prime locale for many major retailers.
August Consumer Confidence
What confidence? I continue to look at consumer expectations for income when evaluating the future potential of retail stocks. With no break in the downward spiral on this metric, it continues to be difficult to say the bottom is in for the S&P Retail Index. As for the holidays, which I am getting a fair amount of inquiries on, I am not sure how things will unfold to be honest. The consumer remains very volatile month to month and to date, the action in the sector stocks tell me the holidays are an unknown quantity as well.
Consumers Sentiment Ramps Lower
By: Carlos Guillen, Research Analyst
The latest news reflecting the state of the consumer was released earlier during this morning's trading session, and it conveyed a continuous deteriorating state of morale from the consumer at large. The University of Michigan Consumer Sentiment August final result landed at 55.7, which was a tad lower than the Street's expectation of 55.8, decreasing from the 63.7 reached in July. This month's reading was the lowest since that reached in November 2008. While it was a bit discouraging to see consumer sentiment continuing to ramp lower, it was more discouraging to see that consumer expectations notched lower as well. This was reflected by the survey's gauge of consumer expectations as it decreased to 47.4 from the prior 56.0 level.
Awaiting Irene
By David Urani
To begin with, I will say that my logic/intuition tells me that Irene is not going to be a major disaster for New York City. Although the projected path charts this thing going straight over Manhattan, hurricanes are unpredictable, and there is a good probability that it veers away, weakens, or both. However, as someone who lived in New Orleans during hurricane Katrina (my home was flooded and everything I owned there ruined), I now know never to write off once in a lifetime events (I consider the 2008 financial crash here on Wall Street as one of those, too). Before Katrina hit, for me and most everyone else I knew, it felt a lot like other hurricanes that threaten to hit the city but never follow through. In fact, other weaker hurricanes had hit not long before, and merely caused temporary flooding in certain places.
By no means do I think this is on the same scale as Katrina; it is not as strong and there are no levies looming over any big cities. That said, it is not so much a killer hurricane as much as it is potentially very damaging. The last major hurricane to hit the city was in 1821. It caused a 13 foot water surge that flooded the entire area from Battery Park up to Canal Street. You can only imagine what kind of damage that would do nowadays. That hurricane was a category 3 or 4 though, while this one is category 2 now and may go up to 3 near the Carolinas (but is very likely to be category 1 or less by the time it nears NYC). However, they say the 1821 hurricane could have been much worse if it wasn't during low tide. This hurricane would come during higher tide.
This could never match the devastation I saw in New Orleans, but certainly if it is still on course come Saturday, I will buy some duct tape for the windows and head to the grocery store for a day or two worth of water and food. If nothing else, it may be very disruptive.
Note: I want to wish the best for those in the Carolinas who are likely to see the worst of this.
Life, Liberty, & the Pursuit of Happiness
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