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David Rosenberg: “When They Say Unemployment Rate, They Mean The S&P 500″
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Last week's plunge in wholesale sales (and "completely involuntary" surge in inventories) has Gluskin Sheff's David Rosenberg greatly concerned that current quarter real GDP will be very close to stall speed. However, as he notes, "either Mr. Market has yet to figure this out or simply doesn't care any more because of the well ingrained belief that the 'Fed has my back'."
When even the Fed is pimping stocks as cheap, he explains, you know what is dominating the thought process of the central bank's targeting – "they say unemployment rate, but they really mean the S&P 500." The 'wealth effect', however, only benefits a chosen few and as Rosie illustrates, an historically low 52% of American households have any money invested in the stock market (based on a recent Gallup poll) – which merely spurs the 'bulls' to argue that the Fed has to be more aggressive…
Via Gluskin Sheff's David Rosenberg,
What a shocker! U.S. wholesale trade — which, by the way, is as big as the retail sector – plunged 1.6% in March and is down now in three of the past four months. The consensus was looking for +0.4%, So this comes as a big surprise and not only that, but February was marked down to a 1.5% gain from 1.7% initially. This not only suggests that we could see a downward revision to first- quarter growth but the momentum into Q2 is very tepid, as is the case for a variety of indicators. The declines were fairly broad-based to boot with computers (-0.9%), metals (-2.5%), machinery (-1.5%), paper (-2.9%) and chemicals (-1.8%) all down sizably.At the same time, wholesale inventories rose 0.4%, taking the inventories-to-sales ratio back up to 1.21 from 1.19, and more disturbingly, the ratio for the cyclically sensitive durable goods sector rose to 1.61 from 1.59, which is the highest since October 2009.
From a going forward point of view, the fact that the inventory buildup looks to be completely involuntary is not good news for the production schedules in coming months. It could well be that current quarter real GDP growth is going to be very close to stall-speed of 1% at an annual rate, and either Mr. Market has yet to figure this out or
…
Source: http://www.philstockworld.com/2013/05/11/david-rosenberg-when-they-say-unemployment-rate-they-mean-the-sampp-500/
