Archive - Aug 12, 2015

"[The] devaluation of the yuan risks a new round of competitive easing that may send currencies from Brazil's real to Indonesia's rupiah tumbling by an average 30 percent to 50 percent in the next nine months, according to investor and former International Monetary Fund economist Stephen Jen."

Based on data for the week ended August 7th, the Major Trend Index dropped to a NEGATIVE reading of 0.90, led by declines in both the Attitudinal and Momentum/Breadth/Divergence work. The topping action evident in the MTI and other disciplines is consistent with either a severe correction, or a cyclical bear in the near future. We’ve therefore cut net equity exposure in both the Leuthold Core and Leuthold Global Funds to 38%, down from 48% in late July, and 61-62% in late June. A further reduction is possible in the days ahead.

Two weeks ago we introduced you to Abengoa - the Spanish renewable-energy company - that received over $230 million in US taxpayer subsidies and loos set to become Solyndra 2.0. While all the politicians have taken their pound of flesh, Abengoa bonds have collapsed for five days in a row, now trading at record lows around 45 cents on the dollar - flashing the bankruptcy imminent light. Solyndra 2.0? Another one off? Or another symptom of the Oligrachic ignorance of where the money comes from...It appears US taxpayers can kiss that money goodbye...

Asset price inflation, a disease whose source always lies in monetary disorder, is not a new affliction. It was virtually inevitable that the present wild experimentation by the Federal Reserve - joined by the Bank of Japan and ECB - would produce a severe outbreak. And indications from the markets are that the disease is in a late phase, though still short of the final deadly stage characterized by pervasive falls in asset markets, sometimes financial panic, and the onset of recession.

Just keep shoveling...

"When all the experts and forecasts agree – something else is going to happen."

During six months of protracted and terribly fraught negotiations between Athens, Berlin, Brussels, and the IMF, the idea that Spain, Italy, and Ireland somehow represented austerity "success stories" was frequently trotted out as the rationale behind demanding that Greece embark on a deeper fiscal retrenchment despite the fact that the country is mired in recession. For many in the periphery, the notion of an economic recovery is fiction, plain and simple.

Creative destruction... or just destruction...

For a few days, Fox News didn't know how to handle Donald Trump's "blood" comments about one of the network's favorite anchors. Then someone woke up and realized that if you're Fox, being boycotted by the GOP frontrunner simply isn't tenable.

If our government can't destroy all the private-sector jobs directly, it will do so indirectly by borrowing so much money the system collapses.

China has officially gone the "nuclear" route, SocGen says, and the read through for the global economy is not good. Here's how to profit going forward...

Mission Accomplished?

The week's weakness started with the surprise yuan devaluation, but the moves in everythingfrom crude oil to U.S. government debt signal that investors and traders are telling the Fed to hold off for now. Will U.S. policymakers listen? Make no mistake: the Fed marches to its own data-dependent drum. These indicators will only tell you if the central bank has the right tempo to support markets.

Oil prices are oscillating higher and lower this morning (likely helped by the collapsing dollar) despite a report from The IEA that the global oil glut will persist well into 2016. As The FT reports, global oil supplies are still growing at 'breakneck speed' and outstripped consumption in the second quarter by 3m barrels a day, the most since 1998, rather ominously concluding, "while a rebalancing has clearly begun, the process is likely to be prolonged."