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Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Control Panel: Trends flatten||Date: 3/24/2013 4:39 PM|
|Author: WendyBG||Number: 418772 of 501048|
The Control Panel trends in the U.S. flattened this week. The stock indexes stabilized, as did Treasury yields.
The Fear & Greed Index dropped into Greed (70) after several weeks of Extreme Greed. All stock sentiment indicators were still bullish. The "mungofitch lagged MA" was strongly bullish, though it dropped a teeny bit. The stock indexes did not set new highs this week, though they didn't lose much.
The stock picture in the U.S. is still strongly bullish. The flattening may be the start of a broad top. Mungofitch has pointed out that tops are usually broad, while bottoms are ususally sharp. Or the flattening may be a pause in another rise to new heights.
European stock indexes fell mildly due to the Cyprus situation. The euro is still falling and the USD is still rising.
MZM (the big boyz money supply) and M2 (the broad household money supply) have stabilized in the past few weeks. YOY M3 (the calculated money supply) is still growing faster than the GDP and faster than the inflation rate.
The multiplier and velocity are low and dropping, otherwise consumer price inflation would be higher.
Fiscal stimulus from personal consumption expenditures (some of which is debt-financed) is rising. So is government debt (fiscal stimulus). This is helping stimulate the economy, though GDP growth is slow. Corporate profits are high and rising as of 3Q2012.
Financial conditions are loose and stable in the U.S.
The MSM is covering the Cyprus problem. The U.S. markets are watchfully waiting and not reacting negatively. Gold ticked up a little, but the SPX:gold ratio is still near a 2-year high.
The National Association of Realtors was optimistic and unemployment seems to be easing a little. The Index of Leading Economic Indicators rose. The Institute for Supply Management showed continuing growth.
To a contrarian, the optimism in the stock market has been too high, so a flattening of the trend is actually encouraging.
For the time being, there is no reason to worry...barring a sudden crisis from Europe.
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