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Notes to myself, possibly of interest to others.
-- Bill Northlich

Thursday, November 3, 2011

Rosenberg Daily - Snippits

  • So the gold price sees instability, the bond market sees deflation and the stock market sees prosperity. From our lens, a resolution to the marathon Eurozone crisis is still nowhere in sight. It is fanciful to believe the global economy is not about to head into a discernible slowdown. ISM export orders are at their lowest level since June 2009. That there is jubilation over a 13.2 million unit SAAR in auto sales in October — barely above replacement demand — really underscores how far the bar of expectations has been lowered in these post-debt-bubble times.
  • The stock market went into this latest round of turbulence extremely overbought and investor complacency is staging a return. The latest Investors Intelligence survey shows the bulls at 43.2% vs. 40.0%; the bears at 36.8% vs. 37.9%. The bull/bear spread widened further this week (+6.4 from +2.1) — a big sentiment swing from -11.9 less than a month ago.
  • In aggregate, (our) models suggest a below-consensus forecast of 60,000 jobs created in October (median analyst estimate is 95,000, with the estimates ranging from 50-150k). We expect the unemployment rate to remain steady at 9.1%, in line with consensus.
  • One thing is for sure, the cost of carry where it is and likely to be will be highly constructive for the fixed-income market in general, and in corporate bonds. We see that BB-rated bonds are still trading 150 basis points higher than they have in the past three-to-six months ahead of recessions. In other words, this is one asset class that has a built-in cushion right now against potential bad economic news.

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