Just keep playing, boys. Keep playing.
This upcoming week is going to be light on the data front in the U.S., and we’re still between earnings periods. That’s not really good for domestic investors and traders, because it means, for one thing, they won’t be able to wash out the nasty after-taste of Friday’s dour jobs report and, for another, there won’t be any big counterweight to the continued rumblings and crisis talk emanating out of Europe.
People desperately want to see the U.S. recovery gaining momentum and speed. That’s a must-have if it’s to avoid getting caught in the European storm. Friday’s report cast doubt on just how sturdy the recovery really is. But while the jobs report is the most important data point, it’s not the only one casting doubt. The Economic Cycle Research Institute’s leading indicators’ index hit a 43-week low last week. When this index was rising a year ago, everybody and their mother was touting its predictive powers. Now that it’s rolling over? Crickets.
Then there’s the not very well known Consumer Metrics Institute, which is like a quant shop for consumer data (hat tip, John Mauldin.) They’re more numbers crunchers than economists, and their growth index is pegging 3Q GDP at, hold onto your hats, a negative 2% rate. “Perhaps the U.S. equity markets should obsess less about Greece and Spain and pay more attention to what is happening with consumers in their own domestic economy,” the firm writes.
Look, everybody expected growth to slow down once the various government props were removed. We’ve warned about a contracting money supply. We’ve warned that the only wage growth was coming from tax credits. Now, the props are falling away, and the table is still wobbling.
I was a guest on The John Batchelor Show last night – DJ columnist Simon Constable hosts it every other Saturday — along with Fox’s Alix Steele and Bloomberg’s Joe Brusuelas. Toward the end of our financial roundtable, Brusuelas noted that on Friday he was watching credit default swap spreads on France, Belgium and Austria spike higher, by as much as 30%, and warned that Monday could be especially rough. Austria in particular is one to keep a close eye on; the nation’s banks are especially exposed to Hungarian debt.
