Archive - Mar 2013 - Blog entry

Save yourselves, buy stocks!

Stunning Symbolism

This past week a near doubling of the amount to the ECB coincides with the Fed's non involvement with the direct bailout of European banks from $4,192 million to $8,343 million.

Consensus suggests India is a basket case while China is recovering. We think both views are incorrect and therein lies opportunities for contrarian investors.

All of D.C. is going to look dumb before this is over. Obama might get the award for deliberately mismanaging the process.

The US dollar rose to new multi-month highs against several of the major currencies, including the euro, Swiss franc, British pound and the Japanese yen.  The BOJ, BOE and ECB meet last week and none changed policy.  The Swiss National Bank meets on March 14 and is also unlikely to change policy.  The Federal Reserve meets the following week and is widely expected to stay its course.  It is not monetary policy then providing the new trading incentives. 

Nor can the dollar's gains be attributed to political uncertainty in Europe stemming from the inconclusive Italian elections, as was the case previously.   The immediate shock has worn off and Italian stocks and bonds have recovered the lion's share of those initial losses. 

Bulls remain in control of the tape even if there are only a few of them. There is better economic data in the U.S. as the Employment Report indicates (236K vs 171K expected & prior 151K) while the headline unemployment rate dropped (7.7% vs &.7.8% expected & prior 7.9%). The latter is the headline number HFT & algo traders jump on and “away we go!” Jackie Gleason would shout. Inside the numbers there is less cheerful data but “da boyz” running the programs never pay attention to these like: “4.8 million unemployed greater than 27 weeks and only 63.5% of the workforce engaged in work”. The latter numbers haven’t changed much.

What wasn’t said at the Senate hearings: too-big-to-jail is just part of the problem

Holder’s Letter Raises More Questions Than It Answers

The Fed Doves are not thinking of that outcome. If they did, they would be not so confident on their ability to control the outcome. That, or they're bluffing.

Be teased. 

Save yourselves, buy stocks!!!!!

New highs will become a daily headline feature it seems until we actually have a down day. 

Thursday, Jobless Claims fell (340K vs 347K previous), Productivity (-1.9% vs -2% previous) and Costs (4.6% vs 4.5% previous) were very poor reports, and the Trade Deficit grew (-$44.45B vs -$38B). Lastly, Consumer Credit expanded to $16.2 billion from $14.6 billion primarily on student loans (in a bubble) and auto loans (subprime auto loans booming).

And the Stock Rally Is Due to Money-Printing

I can't define it, but I know it when I see it...--Justice Potter Stewart