With Fed Chairman Ben Bernanke doing everything he can on Capital Hill to sound as dovish as possible after the scare of a few weeks ago, it’s no wonder stocks are hitting fresh record highs.
But that’s where the good news for stocks stops this week and the bad news begins.
Consider the economic news.
Retail sales rose by 0.4% in June, which was just half the 0.8% gain that had been predicted. That report, coming on the heels of ugly wholesale inventory data, has had economists scrambling to slash second-quarter GDP forecasts down toward, and even below, 1%. That’s stall speed, folks.
Meanwhile, it looks like the sharp jump in mortgage rates is already having an impact on the all-important housing market recovery.
Wednesday morning, the Commerce Department reported housing starts dropped a steep 9.9% in June. On Tuesday, the California Association of Realtors reported existing home sales in the state – the largest residential real estate market in the country – fell 3.8% and attributed the decline in part to higher interest rates.
Then there are earnings. While it’s still early, the numbers are looking pretty ugly, with warnings from key companies galore – UPS being the prime example – about the outlook.
Second-quarter earnings are posting a blended growth rate of a paltry 1.4%, according to FactSet, and that includes a more than 20% rise in financial earnings.
Once you factor out the always squirrely bank earnings (bank-trading results don’t exactly reflect what is happening in the real world) you get a troubling picture.
Excluding financials, the growth rate drops to -3.0%, worse than the 2.3% decline that had been expected at the end of June, FactSet says. (Back at the end of March, earnings ex-financials had been expected to be up 2%.)
Revenues, meanwhile, are barely growing. FactSet pegs S&P 500 second-quarter sales growth on its way to a meager 0.8% rise.
In the background of all this is the significant uncertainty about the Chinese economy, emergin
That was a complete media fabrication. The selloff had NOTHING to do with Bernanke. He said NOTHING that was a change in policy. The media CLAIMED that "The Market Misread" something. You repeat the same common foolishness over and over - people may believe it as the truth.
The Hindy Omen sighting had more to do with the creation intraday of the Key Outside Reversal on 5/22 that in turn led to the selloff than anything Ben actually said but the MEDIA REFUSES to recognize charts and technical signals because they need to DUMMY EVERYTHING DOWN to the silly stupid grade school Beige Book level because it SELLS to the idle STUPID RICH. Why would anyone expect the ultra rich to actually THINK about the market when they are already paying a big FAT FEE to somone to think about all that for them? - since they were BORN! When you don't have to think about something - it makes you STUPID. The typical CNBC viewer knows more about Kim Kardashian and Paris Hilton than a stock chart.
Charts are 5th grade math. WAY too much thinking. That's why the Beige Book CAN'T have any charts in it.
The Fed Media Circus is a case of the stupid leading the blind who then IMAGINE their own truths. It's why our politicians are more interested in PERCEPTIONS than actual problem solving. The more they need to hang with the stupid rich to get elected, the more unable they are to solve or even recognize problems the majority of Americans face.
You are praising a thief and a criminal who will be responsible for the greatest financial catastrophe in the history of the world?
Maybe you should try explaining Benrnake's "superior-than-thou" skill set to the average American who STILL CANNOT REGAIN EMPLOYMENT after 5 years. The majority of people who lost their full-time jobs in 2007-2008 are STILL UNEMPLOYED.
The only thing from this testimony that market is taking away is that this is his last HH testimony. They will not tank the market today. In fact, they set a new high as farewell. Let us see when we return to reality tomorrow.