| Rodrigo C.

Serrano, CFA
| SIPA | Columbia University
Master of International
Affairs ’14 Candidate

| New York City, NY
| 01-305-510-0181
| rcs2164@columbia.edu

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Chart: RCS Investments Source: China National Bureau of Statistics
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Chart: RCS Investments Source: China National Bureau of Statistics
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Chart: RCS Investments Chart: RCS Investments Source: China National Bureau of Statistics

Weekly Bull/Bear Recap: Sept 9-13, 2013

This objective report concisely summarizes important macro
events over the past week. It is not geared to push an agenda.
Impartiality is necessary to avoid costly psychological traps,
which all investors are prone to, such as confirmation,
conservatism, and endowment biases.

Bull

 Piggybacking on last week’s news of expansionary
readings from China’s Purchasing Manager’s Index,
more good news emanates from the communist country.
o Chinese exports surprise to the upside
i
, rising
7.2% vs. expectations of 5.5%, a result that
boosts the bulls’ assertion that global trade flows
have stabilized.
ii

o Data on retail sales (fastest rate of growth this
year), industrial production (17-month high),
and fixed asset investment have turned the
corner and are on the mend
iii
.
o Increasing evidence of a bottoming in economic
activity is accompanied by subdued inflation
readings, providing wiggle room for
policymakers there to stimulate should growth
prove fleeting.
o Hong Kong’s Hang Seng H-share index has
officially entered bull market territory, rising
above the 20% threshold.
 Signs of global stabilization are shifting the tide of
sentiment. In Europe, after more than 2 years of
negative readings, Sentix Investor Confidence for
September rockets higher to a reading of 6.5 from -4.9
(the metric’s second-highest reading on record)
iv
. A
reading of 0 delineates optimism (+) from pessimism (-).
Furthermore, the United Kingdom is set to grow at its
fastest pace of growth since 2007
v
.
 In the U.S.:
o The labor market continues to heal. The
Conference Board’s Employment Trends Index,
a leading indicator, prints 113.54 from 112.80,

Disclaimer:Pleasefirstconsultyourfinancialadvisorforallimportantinvestmentrelateddecisions
2
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!"#$%&'()*+,$#--./(*012+$324,5$
Þ App Level "?o? 1 MLh Avg. (8PS)"
Chart: RCS Investments Source: Mortgage Bankers Association
signaling continued job creation over the coming
months
vi
. Furthermore, while the bears may
point out a computer glitch as the cause of the
bullish print, the downward trend in jobless
claims is undeniable. On the temporary work
front, the American Staffing Association’s
staffing index reaches its highest point since late
2007, implying that job growth over the coming
months will be of the permanent vs. temporary
variety.
o The powerful long-term bullish trend in energy
production continues. If Texas were an
independent oil-producing state, it would be the
10
th
largest in the world behind Kuwait,
according to a May report released by the
Energy Information Administration
vii
.
Moreover, during the first week of September,
the U.S. produced more oil per day than at any
point in the past 24 years
viii
. A shale energy
revolution is in full swing, resulting in a
powerful impetus for long-term economic
growth.
 Russia’s Vladimir Putin pounces on off-handed remarks
from Secretary of State John Kerry and proposes
Syria’s Assad government hand over all chemical
weapons for their subsequent destruction
ix
. Obama’s
likely agreement to the plan will reduce uncertainty in
the Middle East, will lead to lower oil (gas) prices, and
will relieve the consumer of this persistent headwind.


Bear

 The U.S. economy will not pick up in the second half of
the year:
o An important leading indicator for the housing
market continues to flash red. The Mortgage
Banker’s Association home purchase index
notches its first negative year over year (YoY)
reading since November 2012, continuing a
precipitous drop in the YoY rate since July.
o On the consumer front, retail sales for August
disappoint, showing a month over month
increase of 0.2% vs. expectations of 0.4%. Core
Retails Sales also dissatisfy, printing a rise of

Disclaimer:Pleasefirstconsultyourfinancialadvisorforallimportantinvestmentrelateddecisions
3
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Chart: RCS Investments Source: US Deparment of Labor
0.1% vs. 0.3% expected. Meanwhile, the
University of Michigan’s consumer sentiment
survey sinks 5.3 points, producing a reading of
76.8, the lowest since May 2013
x
. These
indicators serve as warning shots of a very weak
consumer.
o The U.S. Department of Labor’s Job Openings
and Labor Turnover survey highlights
weakening demand for workers. “Job openings
at U.S. workplaces fell to 3.69 million in July --
the lowest level since January -- from 3.87
million in June, the U.S. Department of Labor
reported Tuesday.
xi
” Furthermore, the 3-yr
trend of rising manufacturing employments is in
danger
xii
.
 Is Europe really coming out of recession? While
investors may be turning sanguine on the outlook, the
data that really matters, hard data, tells a starkly
different tale. Eurozone industrial production for July
skids 1.5% after a +0.6% reading
xiii
, lead by worse than
expected readings for Italy
xiv
and France
xv
. Perennial
economic cellar-dwellers such as the Hellenic Republic
continue to print dire economic data; reports on
unemployment
xvi
, industrial production and inflation
paint a picture of a contracting economy trapped in the
throes of deflation
xvii
. In Spain, the beatings are set to
continue with Rajoy buckling under pressure from
Brussels and considering broadening the country’s tax
base (ie more taxes for a recession weary nation)
xviii
.
 Consumer economic data out of Japan highlights the
fragility of the economic recovery and fosters doubt
xix
as
to the effectiveness of Abenomics
xx
. Household
confidence falls to 43, vs. expectations of 44.3 and
dovetails weak retail sales and household spending data
published in late August.
 While a Syrian military conflict with the West may be
averted (for now
xxi
), underlying tensions between
Russia and the U.S. continue to rise. Vladimir Putin
op-ed
xxii
, reproaching U.S. leaders for advocating
“exceptionalism” and reminding all in Washington that
“we must not forget that God created us equal” quietly
infuriates American politicians
xxiii
.

Disclaimer:Pleasefirstconsultyourfinancialadvisorforallimportantinvestmentrelateddecisions
4

i
http://online.wsj.com/article/SB10001424127887324577304579062002224007182.html
ii
http://www.bloomberg.com/news/2013-09-08/china-trade-rebounds-in-further-sign-
economy-stabilizing.html
iii
http://business.financialpost.com/2013/09/10/chinas-economy-is-back-firing-on-all-cylinders/
iv
http://www.investing.com/news/economic-indicators/euro-zone-sentix-investor-confidence-
improves-to-6.5-in-september-252447
v
http://www.bloomberg.com/news/2013-09-13/u-k-recovery-seen-pushing-economy-to-
fastest-growth-since-2007.html
vi
http://www.bloomberg.com/news/2013-09-09/employment-index-in-u-s-increases-to-more-
than-five-year-high.html
vii
http://www.aei-ideas.org/2013/09/energy-fact-of-the-day-as-a-separate-country-texas-
would-now-be-the-10th-largest-oil-producing-nation-in-the-world/
viii
http://www.aei-ideas.org/2013/09/energy-fact-of-the-day-us-oil-output-surged-during-the-
first-week-of-september-to-the-highest-level-in-more-than-24-years/
ix
http://www.reuters.com/article/2013/09/13/us-syria-crisis-idUSBRE98A15720130913
x
http://www.bloomberg.com/news/2013-09-13/retail-sales-in-u-s-increased-less-than-forecast-
in-august.html
xi
http://www.marketwatch.com/story/july-job-openings-fall-to-369-million-2013-09-10-
1091195
xii
http://www.bloomberg.com/news/2013-09-13/factory-rebirth-fizzles-in-u-s-as-work-
shipped-overseas.html
xiii
http://www.rttnews.com/2187717/eurozone-industrial-output-july-plunge-signals-fragile-
recovery.aspx
xiv
http://www.bloomberg.com/news/2013-09-12/italy-output-unexpectedly-falls-signaling-
slump-may-not-be-over.html
xv
http://www.bloomberg.com/news/2013-09-10/french-industrial-output-unexpectedly-falls-
on-carmakers.html
xvi
http://www.huffingtonpost.com/2013/09/12/greek-unemployment-youth_n_3912193.html
xvii
http://www.chicagotribune.com/business/sns-rt-us-greece-output-
20130909,0,6074285.story
xviii
http://in.reuters.com/article/2013/09/10/spain-taxes-idINL6N0H13CN20130910
xix
http://blogs.wsj.com/economics/2013/08/29/is-the-japanese-consumer-losing-faith/
xx
http://en.wikipedia.org/wiki/Abenomics
xxi
http://www.zerohedge.com/news/2013-09-12/stratfor-warns-it-not-ending-evolving-syria
xxii
http://rationalcapitalistspeculator.tumblr.com/post/60994322971/via-as-obama-pauses-
action-putin-takes-center
xxiii
http://blogs.marketwatch.com/capitolreport/2013/09/12/putins-op-ed-gets-chilly-reception-
on-capitol-hill/

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