Can't buy stocks, can't sell 'em
Economic fundamentals continue to weaken, making the long side unattractive. Yet the prospect of more money printing makes the short side downright dangerous.
Market fundamentals were dealt another knock early this week by Monday's retail sales report, which was negative for the third month in row, both for total sales and sales excluding autos. According to the people at The Liscio Report, who do terrific work, streaks like this are rare.
Since the ex-auto series began in 1967, there have been only five instances of three-month streaks in both series. Four were in 2008; the most recent results mark the fifth. Liscio pointed out that three-month streaks in either series are also rare. Since 1947, there have been only 29 streaks of three months of negative retail sales (i.e., just 3.7% of the time). However, all but two of those have been during recessions, or within three months of one.
All the news that makes it fit to print
As the Liscio folks said, "In other words, this is a worrisome sign," and I obviously agree. It indicates that the economy is either in a recession or close to one (we really barely got out of the 2008-09 collapse), and the pressure continues to build on the Federal Reserve to do something about it.
There was a chance we would get some hints this week during Federal Reserve Chairman Ben Bernanke's congressional testimony on Tuesday, but he just pointed out that the economy was weaker than the Fed had previously thought, and that he was prepared to act. But he gave no indication what he might do or when he might do it.
Given Bernanke's air ball, I turned my attention to how stocks behaved in the wake of earnings reports. (I don't really count the financial stocks that have reported as any kind of an indicator, because they are all make-believe in the first place.)
Is Intel trying to tell us something?
One of the companies I keep an eye on, Intel (INTC), reported Tuesday night and managed to beat the number for this quarter, thanks to an inventory build, but it lowered guidance for next quarter. Frankly, though I have no position in Intel, I was surprised that earnings weren't a little bit worse, and I suspect the lower bar it has set for itself will not be low enough.
As for the stock, after briefly trading lower both Tuesday night and Wednesday morning, it closed about 4% higher on Wednesday. That seemed to inspire confidence across the tech sector, which boosted the Nasdaq ($COMPX) and pulled the Dow ($INDU) and S&P ($INX) higher as well.
Then Qualcomm (QCOM) and F5 Networks (FFIV) both lowered guidance, and both rallied anyway. Meanwhile, IBM's (IBM) revenues were light again, but its earnings were magically better -- as usual -- and it gained 3%.
Money, money everywhere, and not a stock will sink
The action in those four stocks demonstrates that, in a money-printing environment, it is extremely difficult to succeed on the short side.
There are various and sundry stocks that have declined "painlessly" -- e.g., Research In Motion (RIMM) -- but from a practical standpoint, it is nearly impossible to have any serious exposure unless you are a sensational trader. Perhaps the recent tech action was just shorts being squeezed, and negative news will shortly become negative news, but I don't think that dilutes the point that, despite poor macro and bottom-up fundamentals, short-selling has never been more difficult.
Easy on Fleck's for being a pessimist. You got to call em' like you see em'. Optimism about our current economy is either denial or delusion.
We got a massive train wreck, folks. The fiscal cliff looms dead ahead. What we've done to get back on track the last four years is a bust. Europe is crashing and burning. Food, gas, healthcare costs going up. Unemployment rising again.
Deja vu. Going into fall 08 all over again. Maybe worse. FORWARD?
Good luck with that.
Kind of makes you wonder why they're making shorting difficult, perhaps it's because they want everyone in on the brighter side of things before the rug is pulled and we go to crap again?
Spanish bond rates are going close to all time highs, if they reach 8% lookout (currently 7.267%). Europe has been quiet last few days, almost too quiet, and then there's China. China is now rethinking thier posistion on thier own growth and will probably go that route, which makes me wonder if thier 7.6% growth rate was accurate or not..
And then there's the fed whose only real play is to bring interest rates to 0% so the banks are forced to find people to lend to so they can make a profit, opposed to the .25% they are making now on thier money by hording it.
With all the head winds we're facing, perhaps going short is'nt a great call, but I can't see investing money either, perhaps cash is the best posistion to be in now?
You want to talk to me? I know that the alliteration in "pessimism" must have confined and confused you. I can do it right now and off the top of my head. He is hardy lesser lthan "teleprompters" ,,, ah, who is the President? I would not go there. What he has said is coming down and all is "lag" time. We 'bandaide" ..... emphasis on aide. Did you get that? Are you that daft not to see what is going on? We are not what we were. We are dumber in all cultural ways.
Yeah, you think about it. Press your button the right way as if give a darn. We .... as a nation are in serious trouble. The "markets" are insignificant. They have been.
30 stocks that will drop like rocks really soon-- the Dow. Have you given any consideration as to who IBM's customer is? It's business. IBM is one of the Dow's leading stalwarts but as the economy slows down, it will see it's stalwartiness fully disappear. Seeing as it sold all of it's tangible assets a decade ago... what remains? Trademarks, copyrights and patents... oh my. Caterpillar bet on the wrong farm. Instead of leading us into the future by centralizing civilization in energy-efficient cores connected by mass transit or alternative fuel vehicles, it helped build bad dams in China and broke ground for new Wal-Marts that fizzled in BRIC nations. Apparently, we're going to increase our intake of Fast Food- (two other Dow members) as these stalwarts are dethroned. I'll pass on obesity-prompting sodium-laced nutrition-less diet and concentrate on my garden sans the GMO frankenstein fruit. I'll also pass on Facebook, Twitter and eyesight-narrowing handheld devices. I already passed on banks and look forward to the sum total penalties fines and prison sentences that BETTER happen to bankers worldwide. It's about companies with stable employment ranks that make it here and don't have hired-in executives earning 500 times what the workers get. Fair isn't a barge being rowed by slaves, it's an all-encompassing effort with the focus on quality, not quantity or how management will be screwing with the underlings today.
Reform... it's the new buzzword... hope it's a great contagion. Legalese? Never again. Notably, the business world can add deception and fraud into a contract and it is binding. Let's not allow it any longer. You flirted with 13,000 Dow components... but you sold your assets and don't mean much in the scheme of current circumstances. May you drop plenty, perhaps down to 120 this week and a new era of Man sans Self-Proclaimed Elite, restore Pride and Honor over New World Order.
"great post v_l (hope you meant 12,000 on the dow and not 120 - yikes!). love the analysis (which i think is spot-on),"
No typo... you have to remember how egotistically ignorant they are at the top. Having terminated all the viable personnel, sold the secrets to foreigners, abandoned the buildings and auctioned off the machinery and equipment... what specifically comprises a Dow component today? Say- nothing- and be spot on. The markets are leased office space, phony executives, fiat gambling in inflationist style financial crap shoots. Europe is dead. Two-thirds of our real money is buried in those bonds. Default will collapse all other bonds (that never fulfilled what bonds are meant to) and compromise all of the derivative contracts. Both bonds and contracts were written using a False LIBOR Index, so the claim of bogus instrument is accurate but the ability to recompense or compensate no longer exists. Everyone 65 years old or older will get a piece of paper saying: We Owe You but can't pay you for 50 years. They deserve that promise for having caused this whole economic collapse with greed and ignorant claims of Elitism. All this said... everyday we waste not creating a sub-economy for the inevitable plus one day... will take that much longer to organize on the day we crash. And we will. There is no such career as Financier. No need for collusion among money handlers and no use for complex financial instruments that exist above and dysfunctional to the real economy. Where do you go when you've screwed the world? You BETTER already have your ticket. As for those of us resigned to digging in dumpsters... hate it. Get enraged by having to do it. Spark up your skill sets and intolerance... both are coming into vogue as soon as this week.
Oh and bookmark this prediction - Obama loses by 4%. Someone leaks his college records and that does it. He certainly can't release them as he knows it spells doom for him. The birther thing is probubly a canard. The irony is that claiming to be from Kenya when it suited his needs has now become a liability. "Oh what a tangled web we weave when first we practice to deceive" (Bacon).
the fundamentals will out in the long-term ... and mr. long-term is a'knockin' at the door folks.
great post v_l (hope you meant 12,000 on the dow and not 120 - yikes!). love the analysis (which i think is spot-on), the passion about consequences for the banksters (the new york a.g. is beginning the process) and the new world order (this wealth transfer to the crony capitalists and elite cannot stand or we risk spain-like street riots).
as for fleck's article - he is drinking the anthony m. kool-aid now and cannot make up his mind. the last of the bears gets the spins. qe (aka hopium) has lost its impact and effectiveness - the emperor (world central banks) have little left in the tank. time for some good old fashioned punishment, pain, austerity, deleveraging, downfall of elitism, and a return to the road to recovery.
"I personally don't see this being like either '08, or 1929, difference is now people have more guns, and have lost the ideals that helped get us through 1929. That to which I speak is helping one another out, people will be less likely now to give a stranger A meal, instead that stranger will be given a ball of lead. But this is our cultural shock of having A global economy"
Indeed. But you have to consider how far we got distorted when wealth tried to anchor us in the 20th Century. Guns allude to psychotic behavior. I suspect they will play out short and volatile, then go back into the darkness where they can be delusional without contestment. The hard part is not being a victim. In the book: Business Plans For An Uncertain Future... it refers to the fact that things will reach the point where change MUST occur and it does, regardless of what opposes it. Keep your hat on, we are nearing that time.
I think the king of pessimism has finally got himself caught in an endless loop.
He's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's pessimistic on short-selling, which means he must not be pessimistic on going long. But he's still pessimistic on everything, so he must not be pessimistic on going short. But he's
Hinkley, you vote Republican and blame Obama for mad spending, but have you ever checked the facts, lets see who the mad spenders really are.
Reagan grew government 6.8% per year X 8 = 54%
Bush grew government 7.7% per year X 8 = 61%
Clinton grew government 3.5% per year X 8 = 28%
Obama is growing government at 1.4% per year X 8 year projection = 11% He's the most frugal President we've had in 60 years, if you want to return to the mad spending of the republican years, fine, but you you can only blame yourselves for our children's debt. Until you stop being part of the problem and vote responsibly for Democrat's our Country has no hope.
what became of obama's campaign promise to tackle gun-control. no change there. these assault rifles and "gimmick" multi-round drum ammo clips have no viable place in our society.
get with it obama - Lord knows the tea baggers and conservs in the pocket of the nra will never take any action.
RELATED ARTICLES
DATA PROVIDERS
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Japanese stock price data provided by Nomura Research Institute Ltd.; quotes delayed 20 minutes. Canadian fund data provided by CANNEX Financial Exchanges Ltd.
ABOUT BILL FLECKENSTEIN

This column is a synopsis of Bill Fleckenstein's daily column on his website, FleckensteinCapital.com, which he's been writing on the Internet since 1996. Click here to find Fleckenstein's most recent articles.
RECENT QUOTES
WATCHLIST
MARKET UPDATE
| NAME | LAST | CHANGE | % CHANGE | |
|---|---|---|---|---|
| There’s a problem getting this information right now. Please try again later. | ||||
[BRIEFING.COM] The S&P 500 ended this week with a bang, roaring to a new all-time high on the back of stronger-than-expected economic data, influential leadership, and an ongoing appreciation for the Fed's monetary policy support.
The bullish bias was evident in premarket action as the S&P futures pointed to a higher start without the benefit of any definitive news catalyst. Stocks indeed benefited from a blast of buying interest at the opening bell on this ... More
More Market News
Currencies
| NAME | LAST | CHANGE | % CHANGE |
|---|---|---|---|
| There’s a problem getting this information right now. Please try again later. | |||
RECENT POSTS
Our own funding crisis could very well be precipitated by trouble elsewhere. And there are signs that Japan's bond market may be rejecting the nation's monetary policy.
VIDEO ON MSN MONEY
MSN MONEY'S
- Shared
- Commented
- Viewed



