Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Economic Recovery Faces More Speed Bumps

Economics / Economic Recovery May 23, 2011 - 08:25 AM GMT

By: Money_Morning

Economics

Best Financial Markets Analysis ArticleJon D. Markman writes: Of all the economic news last week, the fall in unemployment claims had the most positive impact. It's great to see them come down, and my work suggests that May is on track for a 275,000 gain in payrolls, which is well above current consensus.

Claims fell by 29,000 to 409,000 last week, the second improvement in a row after a couple of sad-sack weeks that were muddied by special events like a new emergency benefits program in Oregon and the layoffs resulting from the parts shortage in Japan.


All told, over the past two weeks claims have fallen by 69,000 -- which nearly erases the 74,000 spike in claims in the prior two weeks. In short, we're back to where we were a month ago.

First is manufacturing. The Philadelphia Fed Index showed once again the manufacturing recovery is losing speed. Global demand is still strong, especially in emerging markets, but check this out: the index has fallen to a seven-month low of 3.9 from 18.5 in April. And the sub-indexes were equally terrible, showing that new orders are down, shipments are down, prices paid are down and prices received are down.

That's a lot of downs. It means that manufacturing is still expanding but at a slooooower and sloooooower pace. This kind of data says the recovery may be in gear but its durability is in question.

Second, we have the U.S. existing home sales data, which clanked a lot more than expected in April -- down 0.8%. That was the first decline since February and flew in the face of two straight advances in pending home sales.

Bottom line:The big news events of the week fit together. Until the housing market improves, the lightly-skilled workers who make up most of the current hard-core unemployed will not find the kinds of jobs that push wages higher and juice consumer demand. That's keeeping a lid on U.S. economic growth, making manufacturers stumble around.

Still, there is a big difference between a slowdown and a contraction. Slowdowns, which is what we are facing now, can serve to stretch out an expansion, albeit at a painfully sluggish pace.

So why hasn't the market spiraled down into a darkened abyss with flames spewing out from its engines?

It's the same reason we have seen for two years. Weak economic news keeps the Federal Reserve focused on providing liquidity, which is all the markets really care about.

The best stocks to own in these circumstances are those that don't depend on tons of growth to keep their engines running. Food makers, groceries, drug makers and health insurance providers may not be capable of producing an initial public offering (IPO) that doubles its first day -- but they should provide steady profits in soft times.

And how about that LinkedIn Corp. (NYSE: LNKD) IPO? The business social networking Website connected with the public markets in a big way after months of anticipation.

Shares were priced at $45, but debuted for trading on the open market at $83. LNKD zoomed as high as $122.70 before backing off in the final hour to around $96. But the bubblicious enthusiasm only lasted for a day, because shares closed lower on a third of the volume the following day.

Markets Zig Zag
Overall, the markets started the week on a sour note, advanced with a touch of optimism in the middle, then spiraled lower into the close of trading on an option-expiration Friday.

The Dow Jones Industrial Average sank 0.7% for the week, while the the Standard & Poor's 500 Index fell 0.3%, the Nasdaq Composite fell 0.9% and the Russell 2000 fell 0.8%. Crude oil sank 0.2% last week and gold rebounded a bit, up 1.4%.

The number of new highs fell to 174 on Friday, among the lowest levels of the year, while the number of new lows rose to 87. These levels show a lack of leadership in either direction.

The key issue for bulls is that old-line and new-wave momentum stocks like Caterpillar Inc. (NYSE: CAT), Apple Inc. (Nasdaq: AAPL), Chipotle Mexican Grill Inc. (NYSE: CMG) and Lululemon Athletica Inc. (Nasdaq: LULU) have not made new highs since the beginning of April.

And the key issue for bears is that nothing is really breaking down, either.

The bulls are still clearly in charge since the major indexes are within 3% of their one-year highs, but they are having trouble persuading sideline-sitters to join them.

Most of the catalytic events of last week were negative. We had a slew of weaker-than-expected economic data points as well as softer-than-expected earnings reports.

The one big bright spot of the week was Dell Inc. (Nasdaq: DELL), which reported on Wednesday a splendid quarter and advance in its recovery effort. But even then bulls were not able to sustain their advantage; Dell shares gave back 4.4% on heavy volume on Thursday and Friday.

Retailers' earnings reports were mostly on the weak side, as women's fashion chain Limited Brands Inc.(NYSE: LTD) -- you know it better as Victoria's Secret -- revealed a disappointing outlook, and Sears Holding Corporation (Nasdaq: SHLD) posted a larger than expected loss.

In corporate actions, the discount chain Big Lots Inc. (NYSE: BIG) yanked itself off the auction block, taking its already sinking shares down another 11%.

Thermo Fisher Scientific Inc.(NYSE: TMO) announced a potentially transformative deal to acquire allergy diagnostics services provider Phadia for $3.5 billion, and BlackRock Inc.(NYSE: BLK) said it would buy back a stake of itself from Bank of America Corporation (NYSE: BAC) for $2.5 billion. The TMO and BLK deals were treated very positively by the markets.

Drug Stocks Deliver Highs
The ranks of the new highs have been rather slim lately. But among them are a lot of companies we care about - companies I think are going to keep leading the market higher in ways the majority of investors don't seem to appreciate.

New one-year highs came from the much-hated big drug maker Merck & Co, Inc.(NYSE: MRK).

Also topping the new-high list were health-care leaders Baxter International Inc. (NYSE: BAX), Coventry Health Care Inc. (NYSE: CVH), Amgen Inc. (Nasdaq: AMGN), Cardinal Health Inc. (NYSE: CAH), Medtronic Inc. (NYSE: MDT), DENTSPLY International Inc. (Nasdaq: XRAY), Cigna Corporation (NYSE: CI), Humana Inc. (NYSE: HUM), Express Scripts Inc. (Nasdaq: ESRX), and Becton Dickinson and Co. (NYSE: BDX).

Get the picture? Big Pharma is back, baby, and with a vengeance. Yet where is the love? Where are the ticker-tape parades on financial television? Who's shouting about how Big Pharma has returned from the wilderness to lead the market higher?

I don't see any big embracing of this fantastic, sector-wide move at all, so it most likely has legs and stamina.

I think part of the problem is that most people rank their medical insurance company right up there with their cable television provider. But let's face it. The reason we cringe as consumers at Cigna and Humana is that they know how to make and keep a buck -- and that actually is a pretty good trait for a company.

One of the funds focusing on this group is iShares Dow Jones US Health Care ETF (NYSE: IHF). Owning it lets you overweight HMOs in your portfolio.

The Week Ahead
May 23: No releases scheduled

May 24: New home sales (4/11). Last report was lowest since 1973.

May 25: Durable goods orders (4/11)

May 26: GDP growth for Q1, estimate for Q2; Jobless claims

May 27: Personal income(4/11); personal consumption expenditure; Core prices; Reuters Consumer Sentiment Index for mid-May.

Source :http://moneymorning.com/2011/05/23/...

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in