1. This phony 1.4 tril EU EFSF and 50 % haircut, which is just a partial one does not solve any of the real problems but bought some time and triggered the usual short covering as expected. The market still climbs the wall of fear as the ISE numbers stay bearish. Rydex and other sentiment numbers have improved but are not at top levels yet. SPX makes a daily 9 count which leaves room for 4 higher closes. The DOW broke above the 200 MA today with the SPX testing it at 1274 and the 1290-1300 level seems to be the target within 2 weeks.
Todays positive New Moon helped to rigger t he final stage of this unseen rally as it climbs faster than any time before – with the best one month upside swing in the last 10 years. One bellweather Apple has still to reach the 430-40 target.
Todays phony GDP of 2.5 % will be revised down as consumer confidence is at depression levels.
We have previously presented the correlation of US consumer confidence and spending in the form of retail sales, leading us to wonder how it is possible that “The More Depressed And Broke US Consumers Are, The More Worthless Trinkets They Buy.” Following today’s GDP data it is not difficult to see where this post is headed. As we noted earlier, the biggest contributor to the 2.5% annualized GDP spike (the biggest sequential surge since Q4 2009), was Personal Consumption, i.e. consumer spending. This is for the quarter ended September 30, when the market plunged to 2011 lows. It is also the quarter when consumer confidence collapsed completely. And that is what we are showing. Courtesy of John Lohman, we present the correlation between US consumer confidence and the main driver of US GDP growth. Of course, if one assumes that consumer confidence is the true (and leading) data series here, it means US GDP would have declined at a roughly 3% annualized rate. Credible? Realistic? China-inspired? We leave it up to our readers.