Nice try, still no cigar
Steve Cook on Disciplined Investing


Have You Seen This?


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Have You Seen This?


   This Week’s Data

    Weekly mortgage applications (secondary indicator) were reported down .6%.

    March personal spending fell .2% versus expectations of a .1% decline and an increase of .2% in February.

    March personal income dropped .3% versus estimates of a decrease of .2% and a .2% fall in February.

    Weekly jobless claims declined 9,000 versus forecasts of a rise of 5,000.


    The latest from Paul Volcher:



I can’t seem to let this go.  I guess because Obama can’t either:

    Obama and the rule of law:

  International War Against Radical Islam

The Market

    Despite a host of good news (see below) and a valiant try, the indices (DJIA 8125, S&P 873) just couldn’t close above the 8401, 876 resistance level.  The more often stocks try to penetrate this level and fail, the more powerful the resistance becomes.

    My thinking continues to be: this Market could break either way from current levels; but for the moment, 8401, 876 is the top end of a trading range; support exists at 7949, 740;.  Our Portfolios are sellers at S&P 900 and buyers at S&P 740.  

    Others perspective:

    Bespoke looks at ‘sell in May and go away’:

     Headlines with Market implications:

(1)    the first quarter GDP was reported [headline number in yesterday’s Morning Call] down more than expected.  Stocks soared.  Why? First there was a lot of talk that GDP could be down as much as 8-10%.  So perhaps there was a bit of ‘relief’ to the rally. Second, a couple of components to the headline number were interpreted [rightfully so] very positively by investors: consumer spending was up and inventories were down--both supporting the notion that the economy is bottoming.  

As an aside, the major negative weighing on the reported number was government spending.  How does that happen when $700 billion from the Stimulus Bill is supposedly being spent? [answer: it’s not; because it is not a stimulus bill, it is a barrel full of pork projects many of which are not ‘shovel ready’].

      Net investment wasn’t very encouraging either:

(2)    the release of the Fed statement following its meeting.  Basically, there was very little that changed: its Fed Funds target rate [0-.25%]--unchanged; its characterization of the economy [weak with signs of improvement]--unchanged; its program to pump money into the financial system via purchase of Treasuries and Agencies--unchanged.  Bottom line, with credit to Erin Burnett, ‘the Fed is satisfied with what it is doing and it is going to keep doing it.’

(3)    China is ramping up its own stimulus program emphasizing the purchase of consumer durables [TV, washer/dryers, etc] which should put a little kick in the gitty-up of companies like Corning and Whirlpool.  And a bit of anecdotal evidence from Caterpillar--which reported that its sales of earth moving equipment to China are back to pre-recession levels.

Posted 04-30-2009 8:25 AM by Steve Cook