Green Shoots or Poison Ivy

by Larry Levin

Over the prior several weeks the financial media has been quite happy spinning bad news into good to keep the rally alive. Mr. Bernanke of the Federal Reserve joined in with his comment that he is seeing "green shoots of recovery" in his data. As you already know, most of it is baloney. However, I wonder how Mr. Bernanke and his ilk are seeing today's data - are they green shoots or poison ivy? Retail sales and the housing market are nowhere near recovery as today's data shows.

Surprising none but the "green shoots" crowd, retail sales dropped in April for a second month which further points toward rising unemployment prompting the average Joe to conserve cash. Specifically, the Commerce Department said retail sales fell .4% in April. Moreover, it revised March's poor data to a -1.3% drop that was larger than previously estimated. The drop in retail sales was said to be led by falling demand at electronics, furniture, clothing and grocery stores.

RealtyTrac reported today that foreclosure filings in April rose to another record, affecting one in every 374 housing units, and bank repossessions in particular may spike in the next few months. The report went on to say that foreclosure filings, defined as default notices, auction-sale notices, and bank repossessions were reported on 342,038 properties in April, up less than 1% from March but up 32% from April 2008.

Umm, I thought the bottom in housing was in? I can swear I heard that over and over again in the financial media.

"Much of this activity is at the initial stages of foreclosure, the default and auction stages, while bank repossessions were down on a monthly and annual basis to their lowest level since March 2008," Chief Executive James J. Saccacio said in a statement. "This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria."

Perhaps the worst is yet to come?



Previous Day's Trading Room Results:

Trade Date: 5/13/09

E-Mini S&P Trades*
(before fees and commissions):

1) FT buy @ 9:30am at 892.75 = -1.00 (1 lot)

2) Algorithm positions (8)...combined Secret's and Algo total...-2.50


Electronic (YM) Mini-Dow:

1) None today



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