With China's stock market and exports seemingly collapsing, all eyes will be on the USA this week to see if it can carry the world's economy, and provide the calm that the stock markets crave to mover investors from Fear back to Greed again. Here is the news that is coming...
Tomorrow - S&P Case-Shiller House Price Index (Has been heading down lately.); New Home Sales (High, but have been slowing.); and Consumer Confidence (Has been dropping.)
Wednesday - Durable Goods Orders (Has been declining, and has been negative since the Spring. The Consensus is for a decline of 0.4%.)
Thursday - Revision of GDP for Q2 (Expected to be 3.2%, up from initial estimate of 2.3%. It was negative in Q1); Jobless Claims (Has been below 300,000 for months - 270,000 is the Consensus.)
Friday - Personal Income and Outlay (The Consensus is for a 0.4% increase month over month; it has been flat lately.)
The key indicator is probably Durable Good Orders on Wednesday, as it is a very accurate reflection of underlying, non-services sector GDP. If this is negative again in this exceptionally fragile environment, all bets are off, especially if GDP then comes in below estimates as well, which suggests the US economy is not well, but the Jobless Claims look good, which suggests there will be an interest rate hike in September. Yes, this is contradictory...welcome to the world of the Managed Economy where policy often has a logic all its own.
Have you noticed? The Consensus is for a decline in Durable Goods Orders on Wednesday, but a whopping 3.2% growth in GDP on Thursday. Apparently growing economies don't need to produce stuff anymore.
Investments strategies in this Fearful New World?
The experts are now recommending one or more of, "Buy now...you'll never have an opportunity like this again!", and "It is time to reposition your portfolio (i.e. after a crash...thanks)...", and "Here are the stocks that you need to look at in a down turn!", and a weird one, "All will be well! Governments and central banks will bail in to raise stock prices...viva the free market!", and of course, "A long term strategy can survive the dips...stay in for the long haul and all will be well." (True, but how long is "long"?)
The writer bailed on all equities and bonds four months ago, as it became clear that an investor could not make more money between then and a market pull back than they would lose in the pull back, whenever it came. The path forward from here is not clear. It is suggested that investors be highly suspicious of anyone's advice at this point. If they didn't tell you to "bail out" over the last three or four months as things were getting "frothy", and especially after the Chinese market signaled problems so clearly over the last month, why would you depend on their advice to "bail in" now?
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