Harvard MBA Indicator Says SELL!!!
The Harvard Business School has blessed us with quite a few amazing captains on Wall Street: Ben Bernanke, Lloyd Blankfein, Jamie Dimon, Hank Paulson, Larry Summers, Barack Obama, and Mike Bloomberg, to name a few.
In February 2009, CNBC posted an article detailing the Eleven Most Surprising Stock Market Indicators: Read Here. Hem-lines, the amount of snow in Boston, who wins the super bowl, the amount of aspirin sold, as well as a few others, are all pretty reliable predictors of the market, amazingly enough. But one of the eleven has just been triggered: the % of Harvard MBA’s going into Wall Street “market-sensitive” type jobs. When the percentage falls below 10% it is a buy signal (this happened in 2009). And when this number crosses 30%, it is a sell signal. 2010 numbers are in…. survey says? 32%. Ruh Roh.
Well, you might wait till next week to bet on the sell signal taking effect; Thanksgiving week is traditionally one with a nice upward bias, particularly in the last 20 years. See this chart:
Well maybe I am cheating a bit as I write this (Sunday evening). The Irish have been bailed out. And not only from the town drunk tank (Craig Cummings that’s for you!), but from the financial mess too: $100 billion. That’s like Two GM bailouts. Or an AIG bailout. Or a Bank Of America loan-loss backstop. Or half of a Citigroup loan-loss backstop. Or half of what we paid to buy Fannie and Freddie’s crap. Or one sixth of QE2.
From Richard Russell: “You can fool a lot of people a lot of the time, but you can’t fool the markets. QE2 was about buying bonds, which was supposed to raise the price of Treasuries and lower interest rates. Beyond that, QE2 was supposed to create more liquidity and almost force the reluctant banks to lend more. And last, QE2 was supposed to lower the international value of the dollar (this despite the protests of our angry enough creditors). The stock and precious metals markets took QE2 simply as additional liquidity, but the bond market took it as inflationary and despite the Fed’s strategy, the bonds sold off, pushing rates higher (not exactly what the Fed wanted).”
Oh, by the way, Moody’s downgraded three Irish Banks this morning. Thanks. Meredith Whitney, we are waiting…
Here is wishing you all green screens this week.
Where we left off 4:00pm EST:
DJIA 11,203.55 +22.32
S&P500 1,199.73 +3.04
NASDAQ Composite 2,518.12 +3.72
Futures now at 7:30am EST:
NASDAQ 100: +2.25
Key Data out today:
08:30: Chicago Fed
Since the prior close, some key stories:
– Ireland “request” bailout.
– “Portugal is Next” says London Telegraph.
– Some For-Profit colleges may lose federal aid over abuses.
– Markets mixed and flat overseas, as are US futures, which were initially green.
– WSJ article cautious on CB and TRV fyi.
– $35b 2yr auction today.
– European auto stocks firm this morning (Renault, VW, Peugeot, Porsche).
– Record US farm exports reflect Midwest boom (3.7% unemployment only).
– ETF’s hold 9 years of U.S Mine supplies.
– MRK drug found to help kidney patients (WSJ).
– GMCR supposedly one of the most heavily borrowed shorted Friday. Restates Earnings late Friday. Hmm? I’m just saying…
– QE2 is being undermined (WSJ) by all the critics in the market, who are making yields go up. Ummm… market it is your fault for having expectations that don’t mimic Timmy’s.
– Japan’s experience shows limits of QE; the BOJ kicked off a round of asset purchases in ’01 but wound up abandoning the program in ’06 after finding rock bottom rates to be ineffective in stimulating the economy; some think Japan was not aggressive enough in its quantitative easing (WSJ) WSJ Article Here
– Obama will fix his credibility with business folks by giving a speech in January.
– Huge Insider Trading Probe and Expert Networks: Firms mentioned include SAC, Citadel, Wellington, Primary Global Research, and Broadband Research. WSJ Article Here
– Employers see rising payroll taxes at Federal and State levels as barrier to new hiring.
Pre-market: TECD, TSN, VAL
After the Close: ADI, BRCD, DOLE, HPQ, JACK
Significant Movers This Morning:
GMCR + 12% (squeeze) BRCM + 5%, TGT +3%, PHM -9%