Five Things You Need to Know: The End is Nigh!
But when is the last time the market bottomed on good news?
Kevin Depew's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. Retail Sales
The biggest mystery surrounding today's weak Retail Sales number was how anyone could call it an unexpectedly weak number. The Bloomberg headline read: "Retail Sales Unexpectedly Fall." But for the past eight weeks every retailer conference call we've listened to has echoed the same themes:
1) The macro environment is "challenging"
2) Traffic has been weaker than expected
3) Many consumers are trading down
4) Discounting is increasingly necessary to clear inventories
5) Lower and middle demographic brackets are much weaker than luxury segment, but luxury consumer is turning "more cautious'
This is true whether we're talking restaurants such as PF Changs (PFCB) and Chipotle (CMG), large big box warehouse clubs like Costco (COST) and BJs Wholesale (BJS) and even luxury retailers such as Neiman Marcus (NMG).
Overall, sales fell 0.6% , led by reported declines in auto dealers and restaurants, the Commerce Department said. Retail sales excluding autos declined 0.2%.
(See Minyanville's regularly featured economics education series, What Is It and Should I Care? for more on Retail Sales.)
2. The End is Nigh!
Headline screaming by on Bloomberg this morning right at the lows: S&P Says End of Writedowns Now In Sight for Big Institutions. That's one way to spin it.
What happened is Standard & Poor's increased its forecast for bank writedowns from subprime-mortgage securities to $285 billion from $265 billion.
The ratings company noted that the bulk of writedowns may already have been taken, hence the positive headline. Good news, right? But when is the last time the market bottomed on good news?
3. Nasdaq Divergences
Below is where we stand with the point and figure bullish percent indicators for equities, based on Investors Intelligence data.
- NYSE Bullish Percent: Os (Negative), 27.5%
- S&P 500 Bullish Percent: Os (Negative), 25.5%
- Nasdaq Composite Bullish Percent: Xs (Positive) 21.9%
- Nasdaq-100 Bullish Percent: Xs (Positive) 27%
- Russell 2000 Bullish Percent: Os (Negative), 26.3%
- NYSE High-Low Index: Os (Negative), 17.5%
- Nasdaq High-Low: Os (Negative), 6%
What is important is to note the divergence in the Nasdaq bullish percents which remain positive.
Also, the Nasdaq High-Low Index is now at 6.08%, slightly above the level reached in January, which was the lowest level since October 2002.
Prior to 2002, the lowest level for the Nasdaq High-Low, according to data from Investor's Intelligence, was 2% reached in 1998.
As well, we are seeing a wide variety of DeMarkTM indicators showing signs of possible exhaustion for the Nasdaq. Certainly, these are interesting times we live in.
4. Del Boca Vista Phase III Development Apparently Not Going as Planned
Florida resident and longtime Minyan Scott forwarded us a stunning article from the Palm Beach Post. In Boca Raton yesterday morning a crowd of more than 500 people showed up at the Boca Raton Housing Authority for housing voucher applications. The overwhelming turnout far exceeded the anticipated turnout and things turned ugly very quickly.
According to the Palm Beach Post, the crowd, mostly mothers who had spent more than eight hours in line, were forced to leave the property by 30 Boca Raton officers, including SWAT team members, who held up shields as they advanced toward the crowd.
Two people were arrested. Six to eight people were hospitalized for "exhaustion" during the ordeal, paramedics said. (We're not quite sure what the euphemism "exhaustion" refers to.)
Yesterday, before the tone of the story was downgraded for front page usage this morning (yesterday's link here), it concluded on an ominous note, but one familiar to readers of Five Things:
"Shayla Williams, 22, of West Palm Beach, was angered by the police tactics. "This place is going to get shot up later," she yelled to officers. "They can't treat us like this."
Social mood continues to darken.
5. I Got Five On It
Fittingly ironic, as social mood darkens the Bureau of Engraving and Printing continues to find ways to make our fiat currency more colorful.
Today the Federal Reserve will introduce a new $5 bill into circulation featuring splashes of color for the first time.
But that's not all! Minyanville has obtained a preview of the new $5 bill, and in addition to a color makeover it seems the Federal Reserve has also added some rather unique and interesting additional currency features to the ol' Honest Abe five spot.
The New $5 Dollar Bill
Hey, you can't win if you don't play!
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