In a more optimistic piece today Irwin Kellner from MarketWatch points out 21 different reasons why he thinks the worst is behind us and while the US economy has not bottomed yet it is becoming increasingly clear the bottom is near.
The points Irwin mentions are more or less immensely flawed but it is a positive spin nonetheless and a good breath of fresh air. Irwin’s 21 arguments lie below:
- The Conference Board’s index of leading economic indicators has risen for two months in a row.
- Producer prices have increased for two straight months.
- Consumer prices rose in January — the first monthly gain in six months.
- The Baltic Dry Index, which measures the cost of shipping key raw materials like copper, steel and iron, has more than doubled from its recent lows.
- Existing-home sales rose in December, and participants in our weekly survey think that another rise took place in January.
- Pending home sales went up in December.
- Builders’ confidence inched up this month.
- Thanks to lower interest rates, applications for both new mortgages and refinancings of existing mortgages are rising.
- Real hourly earnings rose 4.5% in December following a 3.3% increase in November.
- An index of consumer expectations rose in January.
- Retail sales shot up by 1% in January — the first monthly rise since June.
- The decline in consumer credit moderated in the latest month.
- New orders for consumer and nonmilitary capital goods went up in January.
- The ISM index of manufacturing went up last month.
- The ISM index of services rose last month for the second month in a row.
- The money supply is soaring, a sign that there’s plenty of liquidity in the economy.
- The 3-month London interbank offered rate, a measure of banks’ willingness to lend to each other, has dropped to 1.2% from close to 5% a number of weeks ago.
- Other measures of the state of the financial markets, like the TED spread and the 2-year swap spread are down, as well.
- Prices of credit default swaps for banks have fallen from their peaks.
- The corporate-bond markets are thawing out, too; some $127 billion in dollar-denominated debt was issued in January, the most for any month since last May.
- Some securities on banks’ books are starting to recover in value.
We won’t dive into everything stated above but we can summarize some key points that present a contrary viewpoint to Irwin’s upbeat mentality:
- Retail is hurting… REALLY BAD.
- Consumer Confidence is at an all time low.
- Housing market rebound? What rebound?
- Bernanke speaks, recession will not end in 2009.
The list goes on and the debate continues. We still feel it is too early yet to alter our distinct bearish sentiment. The November lows have just recently become irrelevant and regardless of when the economy bottoms the market looks to have much more downside to be seen.
Signs of life
MarketWatch, Feb. 24th, 2009