2012/05/17: Fed more likely to step in. Does it matter?

© 2012 ROHR International, Inc. All International rights reserved.

It is one of those canards in the current equities market (and to a lesser degree economic) psychology that there is no more extensive QE (quantitative easing) at present by central banks outside of Japan. Nor is there any explicitly planned. Yet there could easily be more if conditions warranted.

This is a form of the central banks’ desire to both have their cake and eat it. Whatever one might call it (‘Bernanke Put’, etc.), the central banks have indicated that they are indeed ready to provide more liquidity if necessary due to deteriorating economic conditions or disorderly market activity.

Seems like a good way to underpin market psychology. Yet, will it really help all that much if the crunch returns? Frankly we’re skeptical. And the context of the FOMC minutes key passage yesterday highlights how the promise of easing or liquidity infusions in a crunch will not likely actually do much overall for the economy.

2012/04/25: Waitin’ on the Fed: Highlights and Headwinds… which will win out?

© 2012 ROHR International, Inc. All International rights reserved.

The FOMC rate decision and statement, Fed staff and member forecast revisions, and Chairman Bernanke’s press conference are alleged to be a major driver for the markets later today. Forget about it. It’s going to be more of the same, even if it is a supportive factor. It will be no surprise of the net focus will be continued improvement in US growth, even if at a slower pace than the Fed would like. More blame and derision will likely be (rightfully) heaped on the ineffective US administration and Congressional response to the problems in employment and housing. That is ultimately linked to the uncertain business environment regarding taxes, regulation and a bit of protectionism: Taxulationism(1) still rules. Yet, after all that only one thing matters…

There is still a ‘Bernanke Put’ ready to be implemented if necessary. There will almost certainly be a lack of any overt commitment to further immediate QE (quantitative easing.) That will be a disappointment to the aggressive bulls who would like to see the Fed continue to juice the economy and equities market (along with other risk assets.) However, that famous a cappella group Benny and the Doves are still singing the same tune: the Fed is prepared to step in if conditions should deteriorate. Voilà… the ‘Bernanke Put.’

And in spite of those two highlights, further central bank support may indeed be necessary at some point. It was most interesting that the equities Closed lower last Thursday in spite of 18 out of 18 corporate earnings announcements beating estimates. That was due to the increasing headwinds that are appearing from many macroeconomic quarters…

(1) Taxulationism © 2010 Alan Rohrbach & Jack Bouroudjian. All international rights reserved unless explicitly waived

2012/04/09: Courtesy ‘Market Alert’ from Friday… Back in tomorrow

© 2012 ROHR International, Inc. All International rights reserved.

Short & Sweet on the specific market comments in this post, because we are out today with the UK and Europe. That said, Friday’s TrendView Market Alert was also a view on some very interesting influences coming up early this week. Might this possibly be the beginning of a more substantial significant trend reversal in equities? That’s quite a bit more problematic into the beginning of a new quarter and the June S&P 500 future only dropping to initial support at 1,375-67 so far. 

And without a new trading high of any substance last week (i.e. only marginally above the previous week’s 1,415.50), there is not even a bona fide pattern top in place. While across time the equities might still be topping out, the seasonal phase and significant support below the market indicate any major trend reversal will most likely occur on a ‘trading’ basis. There will more likely be some further filling out in a more convincing top between the mid-1,300 and low-1,400 area than any further sharp capitulation.

That said, there are a couple of wild cards out there.

2012/03/23: Will Govvies get the ‘benefit’ of Equities ‘doubt’? Yes and No.

© 2012 ROHR International, Inc. All International rights reserved.

In spite of the buoyancy of the German Bund, govvies are still acting more like a market entering an intermediate term trend reversal to the downside. As we have not seen that since QE2 anticipation and implementation back in August-November 2010, some perspective might be useful. What we know for certain is classical macro-technical equities vs. govvies counterpoint trend activity is back.

Yet, that can appear confusing at times because of the leads and lags. Govvies tend to “interpret” the equities trend rather than respond with any immediate inverse activity. This was the case both before and after last week’s sharp trend activity in both asset classes. Govvies that held up well in the face of the previous equities rally were crushed by the June S&P 500 future push above 1,367-69 last week Tuesday.

2011/12/13: Quick Post: Apologies & Observations and Weekly Reports & Events Calendar Now Available

© 2011 ROHR International, Inc. All International rights reserved.

The full calendar is available through the link in the right hand column. Apologies for this taking until today, but we were called away from the office yesterday afternoon, and have been busy with a critical matter this morning. It seems that LIFFE (London International Financial Futures Exchange) was a bit less than aggressive in alerting the data vendors to the change in the Long Gilt future delivery basis from 6.0% to 4.0%.

We have been busy the last couple of days, and especially this morning consulting with our own very adept data vendor on some final considerations for the timely necessary conversion of the historic data to make it relevant for the new 4.0% basis contracts. This is especially important as the volume has already shifted to the first of these, the March 2012 Gilt future.

This is such a robust week once again, it is impossible to include anything but a fraction of the major influences in an overview. Yet, key aspects will be those that relate to the continuing debt and fiscal reform problems in Europe and a heightened US influence once again.

2011/11/25: Quick Post: Courtesy Access to Rohr Report Brief Update Today

© 2011 ROHR International, Inc. All International rights reserved.

Short & Sweet. We are not sure who is even around today, and the significant divergence from classical intermarket relationships noted in our previous analyses means a courtesy look at today’s Rohr Report TrendView BRIEF UPDATE institutional edition is the best way to ensure everyone has what they need.

While there is a bit of summary form of the background to the European situation exacerbating global economic softening, that has all been extensively covered in previous posts. The Brief Update is intended to provide the modicum of further technical trend indications and intermarket psychology normally included in the market perceptions sections of the blog.

We hope you find it useful, and wish everyone a good weekend.

2011/11/18: Quick Post: Perverse Trend Logic on Bund Down with Equities Thursday Actually Reasonable

© 2011 ROHR International, Inc. All International rights reserved.

Good old PTL. Just when everyone thinks they have it all sorted out because certain intermarket relationships have become sacrosanct, the market hands everyone a surprise. Except it’s not really a surprise, because one of the first things our mentors taught us more years ago than we care to mention is, “Just when you think you have it all sorted out, the market will hand you a surprise.” And that was certainly the case yesterday for a lot of folks on US equities continuing with the second day of a pretty good drubbing, yet the previously obvious ‘haven’ German Bund also sagged for the second day running.

And now, even though the equities have not recovered much from the past couple of sessions’ sharp selloff, the December Bund future has actually broken down below short-term support in the 137.00 area. And right along with that the US T-note kept its bid yesterday (even allowing it had lagged the Bund on the way up), the Gold market took its own major drubbing, and the euro and the US dollar have done a good job of keeping the bid together while commodity currencies suffer of late.

As bizarre as all of that may seem, it fits in with a particularly narrative that points to the European Sovereign Debt Crisis reaching a critical inflection point…

…which means the Germans are going to have to get their head out of the sand (or will be forced to do so by the rest of Europe and the world) in order to rationalize their current dysfunctional position.

2011/10/21: Quick Post: Good News and Bad News… Which Also Is Good News For Now

The good news is that the economic data has been relatively mixed, yet with a positive note today from German IFO (a current reading for October) being just a bit better than expected. Corporate earnings announcements have also not been spectacular, yet positive enough to promote the typical earnings season bid in equities. The bad news would appear to be the inability of Germany and France (the players who really count) to agree the full funding and functional guidelines for the European Financial Stabilization Facility (EFSF.)

Yet, in their inimitable way equities are taking the deferral of the decision deadline from Sunday’s EU Summit to a further ‘final’ meeting next Wednesday as a relief. It appears all that soccer excellence (as opposed to American football’s focus on use of hands) is paying off… another excellent example of high proficiency at ‘kicking the can down the road.’ Of course, the only problem we see is that the Europeans might just be running out of road.

As we noted on Tuesday, Chancellor Merkel was right to inject a dose of reality at the top of the week. As she made clear, a final decision just three days after the Troika (IMF/EC/ECB) report on Greek fiscal sustainability was a ‘dream’. Our expectation now is much the same as earlier this week that markets will allow approximately another week or so for the European negotiations to evolve.

Even Wednesday’s new ‘final’ deadline likely can be fudged once again for just a short while. However, our next major blog post is still going have the title Will Candy Coated Equities be Spooked by the Halloween Goblins? As there are good reasons to doubt Europe can sort this out… and the US will soon re-enter the sovereign debt crisis fray.

2011/10/04: QuickPost: Might Monday Have Been About Obama and Congress?

So much of what is ostensibly bothering the economies and equity markets right now is being blamed on Europe. Yet, we still feel that much of the concern should rightfully be directed at the weak outlook for the US economy. The most prominent center of consumption (conspicuous or otherwise) for the other global economies seeming damaged contributes significantly to the sense of weakness elsewhere. The rest of the world may no longer get pneumonia when the US catches cold, but they can surely catch cold if the US has pneumonia.

And that includes the degree to which China is no longer simply cooling, but seems headed for a much harder economic landing than was previously predicted. Of course, there had been some signs of that; most prominently in the last couple of month’s OECD Composite Leading Indicators, which we highlighted when they were released. That had already shown China moving toward a potential real slowdown. Contrary to hopes in some quarters, it was never reasonable that the emerging markets were going to rescue the developed economies. In fact, for all of the fixation on China’s aggressive growth, it is still a relatively small economy compared to the major, mature developed economies. As such, it still relies heavily on its exports to those economies; especially the US.

And what have we seen over the past couple of days? Nothing less than the failure of the US administration and Congress to come to grips with steps necessary to reinvigorate the US economy, and an imperious tone from the President on demanding action on his Jobs America bill during the press conference at the top of his Cabinet meeting yesterday.

After hearing from Dallas Fed President Fischer yesterday about the degree to which the Fed should not be attempting any further major actions, we wonder what we will hear from Chairman Bernanke today? To further convolute matters, anti-Fed Congressman Ron Paul will be exploring the potential to audit the Fed. Talk about basic bad timing all the way around!

As noted previous, there is even a pernicious new phase of protectionism entering the picture. Do we really need a trade war? Someone should illuminate the Congress on a little thing called “Smoot Hawley” (same protectionist instincts circa 1930.)

2011/09/27: QuickPost: Taxulationism Trumped? Collins Calls for Regulatory Timeout

For any of you who haven’t run into it before, ‘Taxulationism’ is a term describing over-taxation, over-regulation and the impact of protectionism. It was one of the key topics which was included in my US midterm election-day 2010 Financial Times ‘Insight’ column on why the Fed’s QE2 liquidity infusion was likely to be ineffective. To give credit where credit is due, that term came out of a conversation I was having with my friend Jack Bouroudjian at his office early last summer.

Like many of us, Jack was astounded by the retrogressive taxation and especially regulation efforts of the Obama administration. He noted that none of them had probably ever read Arthur Laffer’s work on the regressive nature of elevated taxation and regulation, and I suggested that we should describe it as ‘taxulation’. Jack then added the ultimately prescient thought that those sorts of things always lead to protectionism as well, and completed the effort by evolving that into ‘Taxulationism’.

And there is little doubt it is the major hurdle which is crippling US job creation. That comes from everyone beginning with Alan Greenspan late last year, through Dallas Federal Reserve President Richard Fisher, others at the Fed (or sick of being asked, “What the Fed is going to do about the economy“, when the real problems are creatures of Congress), and even many in Congress itself.

And finally someone right there in the belly of the beast has suggested a pointed solution to the problem that has constrained any meaningful job creation by corporate America… AND she’s among the most moderate.