GDP
There is so much data out this week that we'll all be stuffed by week's end. Ha, no kidding but we focus on a few reports below:
IFO: Whether its the IFO, the US Consumer Confidence or any other sentiment survey the Expectations component is really the index to pay attention to. The chart below left shows how Expectations in Germany have led consistently over the years. Comparing the Expectations to GDP growth would have provided a nice preview of economic output in the quarters ahead. Now that German sentiment is back at '07 levels will it continue higher or start to fizzle?
|
Of course real economic output and profits is what the stock markets are watching. If you expect 4% growth in 2010 then stay Long. If not look to pare back holdings and/or get ready to Short again.
Will the US achieve 4% growth in 2010? Next year actually looks like another year of "low hurdle" growth as 5 of the last 7 quarters saw negative GDP growth (when chaining to 2005 dollars). Therefore yes 4% growth is attainable but many will argue that the bar is set to low and actually would be creating a negative divergence story for 2011.
|
4% growth certainly won't be achieved without some leadership by the consumer, which is low, low, low right now.
|
I was recently asked for a breakdown of one of my trend-following models for the last 3 years. Here are the results below: You'll notice that in December that things take a turn for the worse. Meaning that if we are about to see a little deja vu for the 3rd consecutive year (actually it would be the 6th consecutive year that the trend would have collapsed in Dec.) then Sell. The upward trend is over for now and we'll be looking for a comeback in 2010.
please read the Disclaimer below if you have any questions.
|
| |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
YTD |
| 2009 |
+1.6% |
+1.0% |
-2.1% |
0.0% |
+2.7% |
-0.8% |
+0.5% |
+0.2% |
+2.2% |
+0.5% |
+1.0% |
n/a |
+6.9% |
| 2008 |
-0.2% |
+1.8% |
+4.0% |
-1.3% |
0.0% |
-1.4% |
-1.4% |
+1.0% |
+3.6% |
+10.0% |
0.0% |
-2.6% |
+13.5% |
| 2007 |
+1.5% |
+0.7% |
+1.0% |
+2.2% |
-1.3% |
-0.4% |
+0.4% |
-0.8% |
+4.3% |
+1.6% |
+1.0% |
-1.6% |
+8.5% |
|
|
YTD |
| 2009 |
|
| 2008 |
+13.5% |
|
2007 |
+8.5% |
|
|
