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Wednesday, August 8, 2012

STOCKS GO NOWHERE AND NOTHING HAPPENS: Here's What You Need To Know, August 8, 2012

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Wednesday, August 8, 2012

It was another quiet day. But there were some signs that the consumer is really scaling back.

First the scoreboard:

Dow: 13,175, +7.0, +0.0%
S&P 500: 1,402, +0.8, +0.0%
NASDAQ: 3,011, -4.6, -0.1%

And now the top stories:

McDonald's, the world's largest fast food chain, announced a rare decline in monthly same-store sales. In July, sales fell 0.1% in the US, 0.6% in Europe, and 1.5% in Asia/Pacific, Middle East and Africa. "In July, U.S. comparable sales were relatively flat as the promotional activity did not offset the effects of the sluggish economy and last year's launch of the Mango Pineapple smoothie," wrote management.
Online travel agencies Orbitz and Priceline both gave worrisome outlooks and their shares got punished. Priceline warned weakness in Europe was impacting the current quarter.
All this followed yesterday's report that consumer credit growth decelerated substantially in June, with revolving credit (eg. credit cards) shrinking. "The weakness in consumer borrowing reflects the consumer retrenchment after their mini spending spree last year," said economist Gary Shilling.
Shilling has been warning that the U.S. economy is in the beginning of a decade-long period of painful deleveraging. He also told Business Insider there was a pretty good chance that the U.S. was already in a recession. "Retail sales fell in April, May and June - and 27 out of 29 times sales fell for three consecutive months since data started in 1947, the economy was in or within three months of a recession." SEE ALSO: Expert Explains In Horrifying Detail How The Next Shock Will Shatter The Global Economy >
Bearish economist David Rosenberg also sees a trend that normally occurs only in recessions. Specifically, he pointed to the collapsing export metrics, which have a high correlation to recession. We'll find "that the U.S. prints a negative-GDP reading on the back of a negative export shock that does not appear to be in any forecast," he wrote this morning.
But things aren't all bad. BMO's Brian Belski, who reminded us that stocks can go up as profits and GDP go down, circulated a presentation featuring 16 bullish economic and financial market indicators. Click here to see Belski's bullish presentation >
Don't Miss: The 15 Best Housing Markets For The Next Five Years >