Wednesday, May 24, 2006

Economic Flux

The Economy has been expressing patterns of high fluid shifting, not only in Pricing, but also in Production Indexes and levels. The worst element of the sharp shifting of direction may be the inducement to speculate, this tendency has always increased prior to a Recession; often driven by invested interests trying to shore up the Market in the face of declining Prices. Neither the invested interests, or the Speculators, are successful in the long-term. This Author has been considering all the known instances of erratic Market pattern, and cannot think of an instance where the pattern led back to a Bull Market. Other Trackers may actually utilize Market records, though, and challenge the previous statement.

I proved yesterday, to my own satisfaction if not Others' (I am easy to please), that OPEC had engaged in a Shore of the Oil Price. I find today that New Home Sales are up dramatically, though only by sloughing off the Inflation clips of the initial Purchase Price. The numbers of units available for Sale functionally forestall any attempt to shore Prices here, something like 5 months worth of units at the current Sell levels. Durable Goods Orders fell some 4.8%, 2% if one removes Aircraft; the real worry is unreported, this consisting of Business Contract orders for vehicles. What does it all mean?

Another month of current levels of Index readings will mean that the Stock Markets will have to dump an appreciable degree of value from their current Stock prices. This could be delayed up to one Year, and even reversed, by better Production numbers; but current Stock prices insist on preservation of full Production, and expectation would imply that Plant utilization will continue to decline from the present 86.1% (I think this was the last Reading). Stockholders should not be in a hurry to shift out of Stocks, though, as other Markets will also be declining if Plant utilization is going down. lgl

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