50 Reasons I'm Not Sold on This Rally
Aug 8th 2012 11:53PM
Updated Aug 8th 2012 11:54PM
OK, so I'm no Morgan Housel or Anand Chokkavelu. I'm not going to list 100 amazing economic facts or tell you 100 of the greatest lessons I've learned over the course of my investing life (which are both unbelievably good reads, may I add), but I do love making lists. Every week I list of three stocks near 52-week highs worth selling, three near 52-week highs worth buying, three to get on your Watchlist -- in short, I love lists!
What I don't love is seeing the stock market hitting highs not seen since early May despite a steady dose of negative news. I wouldn't go so far as to call myself a Negative Nancy, but I'd definitely lump myself among the skeptics. As the market indexes rise, my skepticism is rising even faster, and here are 50 reasons why, in no particular order.
1. The unemployment rate ticked higher to 8.3% in July, the 41st consecutive month of more than 8% unemployment and considerably higher than the 5.76% average unemployment rate since 1948.
2. U.S. 10-Year Treasury notes closed the week yielding 1.58%. At that rate, it'd take about 45 years for you to double your money. Inflation figures show that prices historically double every 20 years.
3. Spain's unemployment rate rose to 24.6% in the second quarter, with youth unemployment rising to 53%.
4. Barclays (NYS: BCS) , Deutsche Bank (NYS: DB) , and countless other money-center banks are under investigation for deliberately fixing LIBOR rates (the interbank lending rate) for their own financial benefit. Barclays had a $456 million fine levied against it last month, while Deutsche Bank is provisioning north of $300 million to deal with potential fines.
5. Consumer spending growth dipped to 1.5% in the second quarter, the second slowest level of growth since 2009.
6. Greek unemployment levels rose to 22.5% in April, while youth unemployment actually fell to 51.5%.
7. Global crude oil demand is growing at its weakest pace since 2009.
8. The U.S. national debt is rapidly approaching $16 trillion.
9. Apple (NAS: AAPL) widely missed Wall Street's second-quarter estimates as sequential iPhone sales fell by 9 million -- proof that every stock is fallible.
10. Wage growth is the slowest on record and is being vastly outpaced by inflation.
11. To add to the wage-growth woes, according to a recent survey by job search site Career Builder, 42% of workers report living paycheck to paycheck.
12. Revolving credit, which includes credit card spending, rose by $8 billion in May, the highest increase since November 2007.
13. China's GDP expanded by 7.6% in the second quarter, its slowest rate of increase in three years and well below its average annual expansion of 10% since 1980.
14. Worldwide mobile-phone shipments will rise by only 4% this year, their slowest growth rate since 2009.
15. The U.S. wealth gap between old and young is widening at an alarming rate. As of 2011, 37% of all U.S. households that are led by someone younger than 35 have a net worth that's either zilch or negative.
16. Despite lowering the federal funds rate to a range of 0%-0.25% in December 2008, the Case-Shiller Home Price Index has proceeded to fall 7.7% since then.
17. In 2001, families with an income below $50,000 had energy expenditures totaling 12% of their income. In 2012, that same family spent 21% of their disposable income on energy costs.
18. Spain's $125 billion bailout bought time, but its 10-year lending rate still sits at a high 6.85%.
19. United Parcel Service (NYS: UPS) , a plain-view gauge of economic health, cut its earnings guidance on weaker Asian and European business.
20. In 2011, the U.S. paid China about $74 million each day (not counting holidays and weekends) in interest on the $1.1 trillion in U.S. debt it and its corporations held.
21. In the past year, the cities of Stockton, Calif., San Bernardino, Calif., Mammoth Lakes, Calif., and Harrisburg, Pa., have all filed for bankruptcy protection.
22. Since 1970, the U.S. has recorded a budget deficit every year, save for the 1998-2001 period, where President Clinton led the U.S. to four consecutive budget surpluses.
23. There were 1.046 million foreclosure filings in the first half of 2012, according to RealtyTrac -- a 2% increase over the previous six-month period.
24. U.S. manufacturing growth in July expanded at its slowest pace in 19 months.
25. Macau casino revenue grew at just 1.5% in July, its slowest growth rate since the recession in mid-2009.
26. U.S. buybacks had their third-highest year on record in 2011, while dividend yields suffer near all-time lows.
27. According to a survey conducted by Gallup in May 2012, 32% of all U.S. workers aged 18 to 29 are underemployed, the highest level since May 2011.
28. About 43% of all American families spend more than they earn.
29. Keeping in mind the rise in consumer credit discussed earlier, the average consumer credit card interest rate as of late July was 16.87%.
30. And keeping in mind that average 16.87% interest rate, total U.S. revolving credit card debt stood at roughly $870 billion as of May 2012.
31. High-yield U.S. and European corporate debt defaults recently topped 2% in July for the first time since October 2010, according to ratings agency Fitch.
32. One in six people in the United States is considered to be living in poverty, the highest level since the 1960s.
33. According to a survey conducted by Career Builder eight months ago, of the 3,000 human resources individuals it interviewed, only 23% said their company was looking to hire in 2012.
34. The average duration of unemployment is currently 38.8 weeks, up dramatically from 16.5 weeks in March 2008 and just below an all-time high.
35. The U.S. trade deficit with China in 2011 was 49,000 times as large as it was in 1985!
36. According to ZeroHedge, the nine biggest banks in the world have derivative exposure totaling nearly $229 trillion dollars! Considering JPMorgan Chase's (NYS: JPM) recent $5.7 billion derivatives snafu, doesn't that make you feel safe?
37. Outstanding student-loan debt surpassed a staggering $1 trillion earlier this year despite rising default rates.
38. According to a survey from the Employee Benefit Research Institute, 29% of surveyed workers have saved less than $1,000 for retirement, with 56% having saved less than $25,000.
39. It's widely expected that Ireland's banks will need a second bailout of at least 4 billion euros to cover loan losses. This is on top of the 63 billion euros that Ireland's government has injected into the banking sector over the past three years.
40. China's private-sector PMI has fallen for nine consecutive months.
41. Since May 2011, the euro has lost about 16% of its value against the U.S. dollar. With many U.S. corporations operating overseas, negative currency translations are becoming the norm.
42. At 6%, Italy's 10-year lending rate is getting dangerously close (once again) to the 7% barrier that necessitated Greece, Portugal, Ireland, and Spain to ask for financial assistance.
43. Don't look to the U.K. for help, as Britain's household debt levels hit $2.35 trillion, their highest levels since the 1980s.
44. Between 1999 and 2009, top U.S. corporations outsourced more than 2.4 million U.S. jobs.
45. According to a survey conducted by NBC and The Wall Street Journal in late June, 61% of respondents thought the U.S. economy was headed in the wrong direction.
46. Corn prices are setting record highs, thanks to an epic drought, and threatening to push food prices even higher.
47. Through March 2012, 5.78% of all homeowners were more than 60 days late on their mortgage. What's more, the foreclosure process has widened to 631 days from notification to eventual removal.
48. A recent study conducted by JPMorgan Chase finds that U.S. state and local governments have a pension deficit totaling $3.9 trillion.
49. The U.S. debt ceiling has been raised a whopping 78 times since 1960.
50. Finally, who could forget the list I highlighted earlier this year of the dumbest ways the U.S. government is spending taxpayer money.
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The article 50 Reasons I'm Not Sold on This Rally originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He's a sucker for a good list. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Apple and JPMorgan Chase. Motley Fool newsletter services have recommended buying shares of, and creating a bull call spread position in, Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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