How Have Economic Reports Been Running?

Birinyi Associates asks: "This Is What A Strong Economy Looks like?"

This lends some support that the Fed is closer (than further) to ending its tightening:

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Weaker_econ

source:  Ticker Sense

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The rally in Treasuries today was based in part on the report that Medley Global Advisors claimed its One and Done. The WSJ called Medley the "Keyser Soze of Fed watchers."

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What's been said:

Discussions found on the web:
  1. KirkH commented on Mar 14

    Keaton always said, “I don’t believe in God, but I’m afraid of him.” Well I believe in God, and the only thing that scares me is Medley Global Advisors.

  2. Michael commented on Mar 14

    TLT has broken below a 26 week MA. Could see a rally up to 90 or so and still not break the down trend. It’s fallen 7 out of last 10 days on heavy volumes. A rally here is not unexpected. Helicopter Ben must be cringing cuz they’re gonna make him go further than he wanted.

    Time for Wrong Way Gross to come out and say the same thing.

    Rally will be over by Monday.

  3. Abobtrader commented on Mar 14

    Aggh, not the Medley note again. I wrote a comment on my blog re the Medly note and the FX market. A small gain in the euro was earlier attributed to this report. Basically, I take the view that Medley is given way too much credence in the market. I think their reports are often a case of the ’emperor’s clothes’ – that they don’t really tell us very much new but it’s all perception. I only read quotes from others who had read this particular report, but I question whether these guys really have any kind of edge when it comes to what’s going on at the Fed. Washington, maybe, but the Fed?

  4. Abobtrader commented on Mar 14

    LOL, I didn’t see the first comment from KirkH.

  5. Ray commented on Mar 14

    Bear fakeout. Everyone and there mother is proclaiming a market crash in the presidential cycle.

    I downloaded the pdf at lowryreports.com on market declines. We’re not there yet.

    Also – sentiment can’t be this bearish for the bears to win.
    There has to be:

    – complacency or extreme bullishness
    – rises on low volume
    – very “new highs”

    We need to literally run out of buyers. That won’t happen with margin debt expanding.

    Bears have to be patient.

  6. Michael C. commented on Mar 14

    >>>
    – complacency or extreme bullishness
    – rises on low volume
    – very “new highs”<<< That's funny. I know a whole lot of technicians that would argue all those criteria have been met. Except the last one actually. Shouldn't the opposite be true. The last prolonged tops have all had market highs unconfirmed by the number of new highs which is what we have now. ie. March 2000 and 2005. So why is "very new highs" needed. That is actually a confirmation of a bull market.

  7. B commented on Mar 14

    Those criteria have been met. Michael C. is right and the “new highs” is new index price highs not an expanding stock new high list. Maybe a misunderstanding of Ray’s post. I haven’t seen any Lowry’s report but I know for a fact it would not be an expansion of stocks at new highs. And sentiment is very bullish IN pricing action. Forget about your sentiment surveys. They are unreliable to worthless at a top. They are good for leveraging in to trading rallies within bull markets and for meaningful bottoms. Sentiment in 2000 was just where it is today in one important survey.

    Today’s rally was set up three days ago. We had a technical set up that I’ve traded many times over and over that is nearly 100% accurage in being a short term pop. Every savvy trader knows it and plays it. Plus, we had long rates take a hiatus to help fuel the penguins.

    We are missing a few pieces that could fall into place within days or it could take a few months. I’d vote the rally over by Monday as well. Depending on OE, it might be sooner. OE price pinning has the markets lower than we are now by Friday. Doesn’t always come to pass but I wouldn’t bet agains’t it. This market will not sit where it is much longer. Something has to break. There are a hundred secrets if you know what they are. That’s on top of TA and quant work. They all are looking mighty self-fulfilling to me. Picking the day is impossible. BUT, you don’t want to wait for the day anyway. By then, your portfolio has suffered because breadth has already declined internally. That’s why the smart money plays ETFs and Index Futures in the late stages of the bull. They are the last to fall. If you have a mutual fund, it likely has lost money since January. Maybe not alot depending on the holdings but…………

  8. muckdog commented on Mar 14

    All the bears seem out of their caves and prowling about. Kind of weird with the SP500 at rally highs.

  9. Michael commented on Mar 15

    re: Lowry. I can’t speak for all the averages since it’s difficult to do the calculations that Lowry does and I can’t afford a subscription, but in the DJIA, we’re losing leaders every time we move up. On 2/16, CAT, HON, BA, HPQ, PG, and JPM were at 52 week highs. Today, BA was the only one, HON was close, and PG blew up. So the average is masking weakness. Lowry said a top is a process, not an event, so we’ll see. DJIA hitting highs not seen late May/early June 2001 and the NYSE highs are 184 and the DJIA high is BA? Not sign of a strong market IMO.

    re:Sentiment. Follow the money.

    http://www.decisionpoint.com/ChartSpotliteFiles/060303_RydexCFRatio.html

  10. dave commented on Mar 15

    i guess i’m having a little trouble understanding how better-than/worse-than estimates is an actionable item on the fed’s agenda. Birinyi’s chart to me looks likes estimates are sometimes high and sometimes low.

    I am aware however the market has been rallying (but going nowhere) since last spring when fisher (Dallas Fed) said we’re in the eight inning of the tightening game. Eventually the fed will be done and we’re going to have to start looking at the economy instead of the fed-is-done rally.

  11. PC commented on Mar 15

    I find it amusing that Treasury’s rally today is attibuted to the report that Medley Global Advisors claimed its One and Done.

    I think what might have happened is that Treasurys got oversold and was due for a bounce. This is a technical oversold bounce and the downtrend in Treaurys is still intact.

    Remember back in 2004 when the Fed started to raise rates and everyone and his brother thought that bonds would get hammered? Turned out bonds rallied instead and thus was borned the famous “conundrum”.

    Now everyone thinks that when the Fed stops raising rates bonds will rally (opposite to the consensus view in 2004). What if Treasurys continued to fall after the Fed is done raising rates. Conundrum II?

    In the end price action is the best guide and nothing in price action so far says that the downtrend is over for Treasurys.

  12. B commented on Mar 15

    Bears? I’m not a bear. I’m a trader. I just want this market to be flushed out so I can get a buy signal and put my 401k back to work. Or, if the opportunity presents itself, go short.

    I’m a long term bull. Or, potentially bullish. I can’t predict the future so I can only paint the potential and hope it comes true without imbalances, flu or Iran or whatever screwing it up.

  13. Michael C. commented on Mar 15

    Well, the Empire manufacturing survey that came out today would argue against a “one and done.”

    >>>The overall Empire index is at its highest since July 2004, and the details of the report further reinforce the notion that resources are being stretched… All of these data fit with the notion of a 5% funds rate and are completely at odds with the notion of a stoppage at 4.75%.
    <

  14. Lord commented on Mar 15

    Is that a 4-5 month expectation cycle?

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