‘Mixed’ is a word that pops up often in financial research reports these
days. The measures that give us hints about which way the economy and
markets are headed‹everything from the number of people out of work to how
difficult it is for companies to fund themselves are pointing in every which
direction. As a new Bank of America-Merrill Lynch report puts it: ‘The
[stock market] indicators are fairly evenly divided between positive and
negative readings.’
That’s not too helpful. It would be nice to know if it were time
to breathe easier, time to buy into the market, time spend a little more
money with a little less trepidation. Unfortunately or maybe fortunately‹the
economic and market forecasters have turned brutally honest on us. We’re all
waiting to see.
The battery of news this past week illustrates the up-and-yet-down nature of
the signals we’re receiving. Consider that on Wednesday the Commerce
Department reported that retail sales fell 0.4% between March and April. Yet
at the same time, consumers expressed more confidence about the economy than
they have since the fall, according to a much-watched survey released on
Friday by Reuters and the University of Michigan.
In the continued-bad-news category went fresh data on initial unemployment
claims they rose more than expected, dampening excitement about the mild
moderation of the week before‹and the housing market. On Tuesday the
National Association of Realtors reported that the median-priced
single-family home sold for 14% less in the first quarter than it did during
the same time period a year ago. The next day, housing-tracker RealtyTrac
reported a 32% year-over-year jump in foreclosure filings. And yet sales of
homes in certain markets southern California, southern Florida, Nevada are
spiking. A sign of the bottom
Then there is the financial system. Problems tied to bad loans
persist. The latest victim came forward on Tuesday: small-business
credit-card issuer Advanta said it would shut down all of its cardholders’
accounts after billowing losses threatened its viability. And yet elsewhere
the credit markets seemed downright rosy. The TED spread a gauge of how
willing banks are to lend to each other hit its lowest point since the
beginning of the credit crisis in the summer of 2007, and companies,
including Microsoft and Wal-Mart sold a relatively sizeable $32.6 billion of
debt to investors.
How does all that gel into a trend line Well, it doesn’t. The
talk of economic ‘green shoots’ from a couple weeks ago seems to have pulled
back. Now a lot of the talk is focused on a more-modest analogy involving
first and second derivatives. Without getting too far into the scary
Calculus stuff, the point is this: we may still be headed downhill but we’re
now headed a little bit slower. That seems like a sensible way to interpret
what’s going on. And perhaps even accurate.See TIME’s pictures of the week.
