Monday, September 21, 2009

What I'm reading...

A selection of the finest of the web tonight....

1 - John Hussman of Hussman Funds noted a shift in their position as a result of "My discomfort about strenuously overbought and moderately overvalued conditions overlaps with skepticism about the U.S. economic “recovery,” which appears to be nothing but an artifact of government spending, while intrinsic economic activity remains weak."

"The percentage of bullish investment advisors now rivals that seen at the 2007 peak. Stocks are strenuously overbought. The S&P 500 is overvalued to the extent that we now expect just a 6.6% annual total return over the coming decade (a level that except for the period since the mid-1990's has corresponded more to bull market peaks than bases for sustained advances). Historically, such combinations of overbought, overvalued, overbullish evidence have generally been unrewarding, so we don't even need to consider special cases."

It's difficult to say, if or when the buying will relent, but when thoughtful, well-connected individuals indicate that a top is near it's worth adding to your list of "points to ponder".

2 - We heard from some pundits today that the economic recovery will not be based on the shoulders of the already burdened consumer, but rather driven by increased corporate spending. Well, Caterpillar might be a pretty good gauge of those increases in corporate spending and frankly it's looking pretty bleak from CAT's perspective.

"The maker of heavy industrial vehicles and equipment showed that dealer sales of its heavy equipment fell by a whopping 48% in August. The largest drop was in the truck and bus segments and in its industrial segment. Also noted was that North American dealer sales of its equipment were down by 57% in August. This is a slightly less-bad figure than the -59% reported for July. By region, Latin America sales fell by 37% in August versus a 28% drop in July; while Asia-Pacific region saw a 33% drop compared to a 30% drop in July. The EMA, or Europe, Middle East, and Africa, was down 50% in August as it was in July."

3 - Swine Flu Part II - There are some interesting things to watch over the next 6 months with regards to the Swine Flu. Watch what happens internationally, particularly among poorer countries that have large natural resource exports and watch what happens domestically if employers start seeing large absenteeism due to prolonged outbreaks of the flu.

Consider this piece -- US business group warns of swine flu absenteeism

"The largest American business federation presented scenarios in which more than 10 percent of staff are too sick to come to work on any given day over the course of several months to a year."

"In communities where H1N1 flu circulated this past spring, the infection rate was roughly 6 percent to 8 percent over a three- to four-week period. During the winter season, infection rates could be two to three times higher, as both the H1N1 (swine) flu and the seasonal flu circulate and sicken people simultaneously."

Also, note the UN report that was leaked to a UK paper that indicated that millions could die in the world's poorest countries.

Just something to have on your radar.


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