The recent activity in equities markets seems to be echoing the idea things are turning around, picking up, coming off a bottom or just generally improving. The problem with that kind of sentiment is that at this stage can it really be taken at face value? Economic reports – like today’s durable goods orders – are “surging” higher according to some news1 outlets, but after how bad things have been since this recession began, what are the actual watermarks for positive?
Durable goods orders for July came in as a 4.9 percent gain while June’s number was revised to a 1.3 percent drop versus the previous 2.2 percent drop. Since polls had predicted the number would be a 3 percent gain, this larger jump was a pleasant surprise.2 However, posting the “biggest gain in two years” just doesn’t feel like a really big accomplishment considering how low numbers have been lately.
The same observation could also be held to the recent positive news regarding home prices and sales. Since the housing market was awash in crisis, things may have hit rock bottom. Coming out of such an apparently deep hole may not be grounds for congratulatory responses and sighs of relief when the journey is only partially complete. Alternately, the gains in the numbers of units sold come after comparatively giant inventories from builders, something which likely led to lower prices. In turn, lower prices could have provided a catalyst for a jump in sales.
The true cost of keeping things from slipping completely into an economic chasm may have yet to be fully revealed. Wrestling with the forecasted deficit value of $9 trillion3 may mean the White House will run out of options if things do not pick up the pace towards growth. Repeating the term “green shoots” cannot will action and growth into existence. Continuation of today’s positive news and movement of economic indicators into the expansion or growth realm will be the next real step for the market to gain a strong foothold.
Past Performance is Not Indicative of Future Results.
Past Performance is Not Indicative of Future Results.
Disclaimer: Futures and options trading involve substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results.
1 http://money.cnn.com/2009/08/26/news/economy/durable_goods.reut/index.htm?postversion=2009082608
2 http://money.cnn.com/2009/08/26/news/economy/durable_goods.reut/index.htm?postversion=2009082608
3 http://www.google.com/hostednews/ap/article/ALeqM5g8-DEMtAE9q4i4ySQ0eV_qZefmRQD9AA8OV00
