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Weekly Bull/Bear Recap: January 23-27, 2012
Submitted by Rational Capitalist Speculator
Weekly Bull/Bear Recap: January 23-27, 2012
Bull
+ The ECB’s Long-Term Refinancing Operation (LTRO) has clearly quelled fears of an imminent liquidity crisis; Spanish and Italian 10-yr yields have plunged. The operation will provide time for policymakers to forge ahead with structural reforms. Germany is opening the door for pro-growth policies in the periphery. Furthermore, Greece is an isolated case. A Greek default is already priced in and a climax would actually lift the air of uncertainty. Says billionaire investor George Soros, “I think we are on the verge of putting the acute phase of the crisis behind us,” adding that he believed Italian sovereign bonds represent a “very attractive” speculative investment. Finally, business confidence in Germany increases for the 3rd month in a row, while record low unemployment boosts consumer confidence. The bloc’s largest economy will avert recession and support investor confidence in the Eurozone region.
+ U.S. economic data continues to shine. The Richmond Fed’s manufacturing survey increases from 3 to 12, lead by New Orders and expectations of improved business conditions (we have the same bullish result from the Kansas City Fed); note that all regional surveys have improved in January. Moreover, the ATA Truck Tonnage Index spikes the most in over a decade in December. Chief Economist Bob Costello hints that a wave of inventory restocking has begun. Core Durable Goods Orders reestablish their bullish trend, which bodes well for Q1 manufacturing performance. On the jobs front, state unemployment rates continue their trek lower. Finally, consumer confidence improves to 75.0 and is the highest in almost a year.
+ The global economy has clearly stabilized after a brief air pocket in the prior quarter. According to the Markit PMI, economic activity in the Eurozone unexpectedly grew in January, led by Germany and France. Meanwhile, monetary easing; such as India’s unexpected decision to cut their Reserve Ratio, Thailand’s interest rate cut, and Brazil’s upcoming rate cut, will further support economic growth. Copper and comments from Caterpillar support the global re-acceleration thesis. Even Japan had some good news on the consumer front.
+ The Fed announces that interest rates will be held low throughout 2014 and state that they will step in with QE III should the global economy deteriorate further. Risk assets spike as investors are reassured that the Fed will maintain vigilance for any economic slowdown. Criticism of the program won’t be nearly as intense as QE II due to slowing economic growth in Emerging Markets.
+ Obama clears the way for an economy that’s “built to last,” by explicitly stating in his State of the Union address that domestic companies will receive government assistance to create jobs. Leaders understand the grand opportunities that lie ahead. The U.S. manufacturing renaissance is in its infancy.
Bear
- Global growth is slowing to a stall. Japan’s central bank cuts its 2011 and 2012 economic growth forecasts, citing strains from balance-sheet repair in the U.S. and weaker growth due to the European debt crisis. On a grander scale, the IMF slashes its global growth forecasts and expects the Eurozone to enter a recession. Meanwhile, Australia and the UK are teetering on the brink of recession, while South Korea reports its slowest economic growth in 2 years. In China, officials want to see a 30% decline in residential real estate to reach a “reasonable” level —(and in the process cause an uprising of the middle-class). Meanwhile, protests in Tibet are spiraling out of control. Finally, Obama ups the ante on protectionism with his State of the Union address.
- The Eurozone crisis is worsening. There is still no agreement on the Greek Private Sector Involvement (PSI) negotiations, raising the specter of a credit event and uncontrolled default (how many times have we heard that a deal is close?). Making matters worse, EU leaders and banks are demanding further austerity on the depression-racked country due to missed targets. How long before peripheral citizen’s say “The hell with this” or creditor governments say “This isn’t working”? Meanwhile, Portugal is fast coming down the pipe with 10-yr bond yields hitting record highs, as Antonio Saraiva, the head of the country’s industry confederation, confesses that the nation will need a bailout. In Spain, recession is knocking at the door, while unemployment is far worse than expectations. In Italy, Monti’s government is set to face its first real test as truckers have blocked the flow of essential goods into Rome and other large cities. In France, S&P downgrades 3 banks and the country’s president acknowledges that he’s likely to lose the presidency in 3 months, unleashing a wave of uncertainty in regards to Eurozone economic policy. Finally, “Trade unions plan (a) pan-EU action against (the) fiscal compact.”
- Despite all the hoopla in the past month, the U.S. remains vulnerable to an exogenous shock. 4th Quarter GDP disappoints, growing 2.8% vs. expectations of 3.0%; note that the economy hasn’t grown over 3% since the Q2 2010. Final demand registers a paltry 0.8% and Personal Consumption underperform expectations. Meanwhile, Fed President Dudley sees “significant impediments” to economic growth this year. Finally, weekly consumer metrics continue to flag a significant slowdown in January versus an already weak December.
- The probability of an oil price spike, likely upending the global recovery, grows. The EU imposes an embargo of Iranian oil (to begin July 1st), despite Iranian threats of a blockade of the Straits of Hormuz or just cutting off supply immediately. Meanwhile, oil producers are now content with $100 oil, saying that it won’t affect global growth; we’ve heard this before, but the threshold price keeps rising. Azerbaijan police foil another Iran plot to assassinate the country’s Israeli ambassador.
- Japan reports a trade deficit for the first time since 1980. While sporting a debt to GDP ratio of over 200%, any consistent trade outflow from the country would conjure anxiousness towards its real paying ability (not printed Yen, which implies a loss of real value of interest payments).
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Recap, bitchez!
Gold dominated your mother and her Scottrade account!
Back above water again, bitchez! :-)
Ron Paul Should Ask His Next Audience This Question;
I'm curious, how many people here sent money to my campaign?
(You'll probably hear many cheers from the audience.)
Dr Paul can respond;
Well I guess I better do good on my speech today. I can see we're all invested in this project.
Kelly Clarkson - Your Country Needs You
http://www.youtube.com/watch?v=dq1oE1d_BHQ&feature=youtu.be
Here is a little economic secret for the ZHer's. If you want to see what the inflation rate is, more or less, ignore the CPI. Look at the PPI. People think the Producer Price Index reflects FUTURE prices but this is incorrect. The PPI is reflecting current prices as producers bid up the price of imputes.
Austrian economists know everything.
So if you want a realist look at prices here the are;
2005-01-01 7.3 2006-01-01 4.7 2007-01-01 4.8 2008-01-01 9.8 2009-01-01 -8.8 2010-01-01 6.8 2011-01-01 8.9
So to assume the inflation rate in 2011 was 8.9% would be correct. Certainly not this bull shit fed to the press;
2005-01-01 3.4 2006-01-01 3.2 2007-01-01 2.9 2008-01-01 3.8 2009-01-01 -0.3 2010-01-01 1.6 2011-01-01 3.1
it was an interesting event. I was there in that period. When do you think that it will be the next one? yacht charter
We are all going to die: http://bit.ly/ywzqNI
I understand the bull argument and agree that unless something bad happens that is not appropriately priced in, it will be a very good year for the market.
What could possibly go wrong?
Wait....I figured it out....
All bad news is priced in, but good news isn't.
Bullish!
It's better than that ..
Like a Clinton tax increase, the bad news is priced in retroactively.
Will Americans be able to afford imports of commodities, or will American manufactureres have competitive exports? The latter has the better lobby, so I will guess B...more killing of the Dollar, Pound, Yen, and Euro.
"What could possibly go wrong?"...Usually, something not "priced in".
Anyway, ONLY eleven months, left in 2012!
button down the hatch!
How the capital F do you reconcile the two opposing arguments? They aren't even in the same galaxy. "The global economy has stablized" vs "The global economy is on the brink of recession", "US economic data continues to shine" vs "GDP registers almost no growth". It isn't bull vs bear, it's fantasy vs realism. One is Lord of the Rings and another is a dry documentary on economic history. Sure you would much rather watch Lord of the Rings for the entertainment value, but only an insane person could possibly believe it represents reality. Following the bull case here can only lead to the same place: 1929, 1979, 1999, 2007, and what really looks to be 2012. Hmm notice a pattern. Each time was a can't lose enviroment for the bulls. They painted the same picture they are painting now. "Stocks can't lose", "Stocks are undervalued", "The economy has seen the greatest expansion in history", "Deficits don't matter", "Future growth will pay for the debts of today". I just wonder what Q4 would have looked like if the tax cut for business investment wouldn't have expired at the end of the quarter?
true true and true, but I'm enjoying the short term run up and got an aisle seat near the fire exit
haha! nice one...
This kinda reminds me of 2008
Lehman Brother goes Bust, Then the great crash comes in
fast forward to today
MF Global goes Bust , Then the second great crash comes in
Rgds,
Maybe this time it will be different and we will see better results. ball busting
In the words of Felix Zulauf, nobody knows the tentacles that a Greek default will have...or of a country leaves the euro zone..
http://www.readtheticker.com/Pages/Blog1.aspx?65tf=444_felix-zulauf-if-one-country-exits-the-euro-all-hell-will-break-loose-2012-01
and here
http://stockmarketadvantage.com/felix-zulauf-is-bearish-on-europe-and-emerging-markets-in-2012/
Um... I think it's pretty obvious.
The real bazooka was put to our heads a few weeks back and the trigger has yet to be pulled.
http://www.zerohedge.com/news/bank-america-forces-depositors-backstop-its-53-trillion-derivative-book-prevent-few-clients-dep
"Laslty, nobody should make the mistake that BofA is alone in this move: every other bank that has major derivative exposure and has a depository base has certainly been forced to do precisely the same by its bigger accounts, who have no desire of being exposed to surging counterparty risk and would much rather split it with America's depositors. "
just ask corzine
The GOLD BULL just gored the BEAR. Damaged inflicted not major, but on the offence.
why as offense? Can you give me more details? printed t shirts
+ Obama clears the way for an economy that’s “built to last,” by explicitly stating in his State of the Union address that domestic companies will receive government assistance to create jobs.'
What could this possibly mean? I am dumbfounded at the dark and heavy emptiness I sense from reading it.
Let's examine it closer.
'Obama clears the way for an economy that's built to last'
- Obama gave the life of the country and the wealth of its citizens, each of whom had the quality of morality, which is only attributable to individuals, to banking institutions and the military industrial complex. Obama refused to prosecute fraud, shipped ever more of these individual's jobs overseas and signed away the protections of their bill of rights.
'Domestic companies will receive government assistance to create jobs'
- Obama transfered tax revenues from productive companies and employees and gave the money to the likes of Solyndra and Ener1.
Anyhow people can write this stuff with the intention of pissing off their audience but unless that is their intention they should try something more befitting their psychotic tendencies.
you are Bearish only when teh market is bullish, and the other way around...
So if you are not bearish now, then when are you bearish? When the dow is at 9,000 maybe!
The stock market is not like Gold ans Silver, it's an illusion of wealth....
In my view people can not wait for the next coming crash in mid Feb/March to go for gold and silver...
If you are still waiting for Qeasy, then take a look at the Japanese markets charts.
"Take off is optional, Landing is a must"
Jan. 23 (Bloomberg) -- Joseph Granville, a technical analyst who has been publishing the Granville Market Letter from Kansas City, Missouri, for more than 40 years, talks about the outlook for the U.S. stock market. He speaks with Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)
http://www.youtube.com/watch?v=ehWrbBiPxOk
New Jersey votes to outlaw guns Jan 30. Get the word out:
http://njgunforums.com/forum/index.php?/topic/31510-nj-assembly-committe...
Local Greek newspaper Kathimerini, just reported urgent meeting of highest Country Council to take place tomorrow. Might be default announcement.
Today's State of the Union:
-Fed says, on 2nd thought, we need life support for a lot longer than expected as we diddle with sub 2% GDP (almost all accounted for by inflation plus inventory channel stuffing).
-POTUS says the road to prosperity is easy: bank on speculative technology companies (which go bust the day after his speech), and hope that tourism will become our major industry
-From the "Leaders need to lead by example" department: billionaire banker Romney paid 14% tax rate. Then again lil Turbo Timmah was entrusted with the whole US Treasury.
Felix Zulauf thinks that the correction could start in the end of the second quarter and be a big one 20% correction. Source: http://www.felixzulaufblog.blogspot.com/2012/01/second-installment-of-2012-barrons.html
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