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Weekly Bull/Bear Recap: Jan. 30 - Feb. 3, 2012

Tyler Durden's picture





 

Submitted by Rational Capitalist Speculator

 

Bull

+ The U.S. economy is now in a sustainable expansion:

+ The global economic outlook is improving:  

+ In Eurozone political and financial news, European nations take one step closer to integration with 25 out of 27 nations signing the new fiscal compact treaty.  Moreover, leaders signal strong resolve to save the region, as talk of initiating a €1.5 Tn bailout fund is making the rounds.  Meanwhile, the Spanish 10-yr yield breaks under 5%, the Italian 10-yr yield breaks under 6%, the Belgian 10-yr yield breaks under 3.7%, and the French 10-yr yield breaks under 3%.  Markets signal that a strong firewall is in place for a Greek and/or Portuguese default. As a hefty insurance policy, the second LTRO on February 29th will likely be more than double the size of the first one (@ ? €1Tn), thus reinforcing the firewall for the banking system from a Greek or Portuguese default.  Besides, the Greek default has been on investors’ radars for so long, even martians on Pluto know that Greece is defaulting.  A climax would result in a rally as uncertainty is lifted.  

Bear

- The end game is coming into view for the Eurozone:  

  • Germany has demanded that Greece cede its budgetary sovereignty to the EU, a request Greece has declined.  Furthermore, stiff resistance from Greek political leaders to implement further austerity makes for another “Papandreaou referendum-like” showdown with the troika.  And for the trifecta, the Hellenic republic has warned that it may need even more bailout cash.  
  • Portuguese bond yields are repeatedly hitting record highs; hard default #2 is rapidly approaching.  
  • In Ireland, a solid majority demand a referendum (guaranteeing a defeat for the army of unelected technocrats in Brussels).  As Hollande eloquently stated, “Where democracy retreats and politics pulls back, the markets advance.”  
  • Hollande is creating daylight between himself and Sarkozy in the French presidential election (here’s a primer on what he wants to do).   

- On the region’s economic front, austerity is biting, hard.  Italian business confidence slumps to the lowest in 2 years.  While Germany is benefiting from a weaker Euro, it’s coming at the expense of the rest of the Eurozone; the region’s unemployment rate remains near the highest since 1998.  French consumer spending dives 0.7% vs. expectations of a gain of +0.2%.  Even worse, German December retail sales tank 1.4% vs. expectations of a 0.5% gain (the 4th decline in last 5 prints); so much for a low unemployment rate.  Meanwhile, on the financial front, banks are using some of the LTRO money to buy sovereign bonds; but that’s about it.  They continue to de-leverage, cutting off credit to the Eurozone and undermining any recovery in the region.  Furthermore, post-crisis highs in FX swaps between the ECB and the Fed point to tight liquidity conditions, despite unprecedented worldwide coordinated monetary loosening.        

- The throes of stagflation are in plain view; China “unexpectedly” holds off on reducing reserve requirements for banks, opting instead for reverse-repurchase contracts.  Simultaneously, here’s what a popping housing bubble looks like.  Protests are progressively more intense.  

- On the U.S. economic front, the S&P Case-Schiller index flags a deepening double-dip for the 99%’s largest asset.  Lower home prices will anchor consumer confidence over the medium-term.  Over the short-term, rising gas prices are starting to damage confidence; the Conference Board’s survey disappoints, printing 61.1 vs. expectations of 68.0 (led by a decline in the present situation). 

- Israel/Iran continues to bubble underneath the facade of bullish sentiment.  No groundbreaking announcements were made after the UN inspection.  Instead, it’s looking increasingly clear that the U.S. is no longer in control of the situation; an Israeli unilateral attack could come in as soon as 3 months.    

 


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Fri, 02/03/2012 - 18:15 | Link to Comment Sudden Debt
Sudden Debt's picture

Unemployment may be low but people over here are scared shitless about losing their jobs. Today i talked to somebody with 20 years of experience who lost his job and had to take a job where his pay was as high as his pay was 20 years ago.
People over 50, forget it, people over 40, have to take severe paycuts.
Now why would anybody hire young people who come out of school if they can hire people with 20 years of experience for the same pay?

Fri, 02/03/2012 - 19:24 | Link to Comment doomz78
doomz78's picture

The price action of gold has been rejected for today.  The Matrix has failed.   So have the job numbers.  Im sure Bart Chilton is all over it.  lol  

Fri, 02/03/2012 - 22:16 | Link to Comment economics1996
economics1996's picture

Maybe they are scared because we lost 1.2 million jobs in the last two months.

Fri, 02/03/2012 - 18:15 | Link to Comment LongSoupLine
LongSoupLine's picture

Summary:

 

A heck-a-lot of bull going around.

Fri, 02/03/2012 - 18:29 | Link to Comment resurger
resurger's picture

H1 2012:

Bullish

H2 2012

Bearish

 

 

 

Fri, 02/03/2012 - 18:32 | Link to Comment Vaiman
Vaiman's picture

It's quite obvious the market doesn't hear any bad news or disregards it real fast but it embraces any ounce of positive data and goes balls out full bore.  It seems Europe isn't much of a concern anymore.  With the political machine pumping bullshit through the big media outlets, it's pretty much impossible to paint the real picture for the majority of the market and obviously the institutions don't care about the real picture.  It runs off the backs of the press.  So truth doesn't apply.  Only what is touted as truth.  Belief is powerful even if it's believing a lie.  Unfortunately the end of it is destruction.  So are the uninformed being led down the path like sheep to the slaughter?  

Sat, 02/04/2012 - 00:47 | Link to Comment economics1996
economics1996's picture

The political elite look at it as another day to get a check and fuck some slut.

Fri, 02/03/2012 - 18:39 | Link to Comment dfh85
dfh85's picture

2nd LTRO will push this rally into the uppermost echelons of over-bought ness at which point there will be an all mighty moment of clarity hailed by a legion of Chinese pig farmers who have sold the top and are willing to bail out the globe for the paltry sum of our souls.

Sat, 02/04/2012 - 03:36 | Link to Comment Vic Vinegar
Vic Vinegar's picture

Dear Grey Bag,

I have to end with a comment for you tonight.  I really wanted trav7777 to respond to my comments but he would not.

The diffference between you and trav is...

...

a) trav is legit

b) you are a dumbfuck

It feels weird interacting with this site at times.  There's no shortage of real people to respond to, but I'll be damned if this site ain't getting overloaded with grey bags like yourself. 

And to think you got a green for this nonsense!  I don't wanna think about it.

http://www.youtube.com/watch?v=cwPg8gJq_Kw

Sat, 02/04/2012 - 09:20 | Link to Comment Cand-Hamz-Bitchez
Cand-Hamz-Bitchez's picture

Better to be a grey-bag than a d-bag!

Hahahaha, bitchez.

 

Fri, 02/03/2012 - 19:04 | Link to Comment LooseLee
LooseLee's picture

'Belief' is a psychological 'illusion'. It is a thought-construct that seeks security in an idea. Unfortunately, these markets are levitating on the 'belief' that things are getting better; without regard to the facts on the street. Do you believe any government statistic? If you do, then ride that statistic with your financial assets. However, if you 'percieve' the facts of what is really going on, and have no emotion regarding it, you will naturally wait until euphoria hits the wall (or as close to 'the wall' as you humanly can), and then base your financial position on that 'perception'. Agreed, it is most difficult to 'perceive' the 'top' of euphoria, but I must say it is getting close. Us bears are trigger happy at the current market levels, but we must remember that the 'bulls' are the most easily deceived group of investors that exists. They will push this run further than is thought logically possible---much like TPTB have been able to stave off the ultimate collapse of the financial system for as long as they have. The 'Day Of Reckoning' is approaching, and most "bulls" are completely oblivious to this fact. Keep your powder dry and your height of 'awareness' finely tuned....

Fri, 02/03/2012 - 19:35 | Link to Comment buckethead
buckethead's picture

What I learned this week.

Manic-depression is a frustrating mess.

That and a reverse-repurchase contract is essentially a trip to the pawn shop, although the asset which is pawned might not have the mutually agreed upon value (or any value at all for that matter).

Q: Can a reverse-repurchase contract be rehypothicated? By both counterparties?

Just for fun: If I sold my house in a reverse repurchase, can I still take out several home equity lines? Let's say 30 of them at 100% of mark to 2006 values.

Seems fair to me. If PDs can do it, why not me?

Fri, 02/03/2012 - 19:47 | Link to Comment adr
adr's picture

Bullshit case: Jobs are actually down by almost 2 million using real numbers. Car sales to dealers don't count because by June 90% of them will still be sittin on the lot with $8k worth of incentives on the hood. 90% of the jobs added to the service sector are minimum wage part time. The major rise in durable goods in December is due to the tax credit expiring. If you culd write off 100% of the cost, why wouldn't you buy??? Ahh the bull case, built on nothing and running on hopium fumes.

Sat, 02/04/2012 - 09:23 | Link to Comment Cand-Hamz-Bitchez
Cand-Hamz-Bitchez's picture

Fight the fed, fight the government, gold bitchez, the economy will never get better, S&P 500 will be sub 500 at the end of 2010, anybody who doesn't believe me is Nadler.  Zimbabwe had nothing on the U.S.  Gold to 50 bajillion trillion.

Hiding under my porchez with beans bullets and bullion, bitchez,

Johnny

Fri, 02/03/2012 - 19:53 | Link to Comment monopoly
monopoly's picture

Well, this is a bullish post. You don't have to drink what they are serving but not shorting this market gives one a sense of relief. Going to get interesting. And you cannot even change the channel before you hear about the wonderful jobs report. Not one commentator has mentioned those who have given up looking for work or the quality of jobs created.

But there were new jobs and that is good. Tough market to short. Glad I never go there.

Fri, 02/03/2012 - 22:52 | Link to Comment propflow
propflow's picture

whats a bear???

Sat, 02/04/2012 - 00:49 | Link to Comment economics1996
economics1996's picture

The big brown animal that pisses in the woods.

Sat, 02/04/2012 - 09:24 | Link to Comment Cand-Hamz-Bitchez
Cand-Hamz-Bitchez's picture

So your wife after a couple of Heinekens?  LOL

Sat, 02/04/2012 - 11:45 | Link to Comment economics1996
economics1996's picture

Only if she has really big tits.

Sat, 02/04/2012 - 02:14 | Link to Comment luna_man
luna_man's picture

 

 

"whats a bear???"...PATIENT!

 

patience, is a virtue

Sat, 02/04/2012 - 07:45 | Link to Comment The Reich
The Reich's picture

Buy on rumors!

Sat, 02/04/2012 - 17:07 | Link to Comment RazorForex
RazorForex's picture

Gold is at a very solid resistance point. Friday's close was very bearish and the daily chart is showing a very nice bearish candlestick formation.

http://www.youtube.com/watch?v=y8H6LeKcxws

Gold price ready for a pullback?

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