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.

2012/05/11: Better headline global economic data could be highly ‘specious’

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

“Specious.” It’s one of those terms that gets tossed around quite a bit, even when it’s not necessarily proper in some contexts. Yet, it would certainly seem to apply to a goodly portion of recent “excellent” global economic data. And that was even before a range of important Chinese economic data disappointed today.

Much is suspect after the lower US Unemployment rate reported last week right through economic releases this week. And this is not a matter of attempting to find a dark cloud to obscure these silver linings. It just seems a desire to look for reasons why the global economy and equity markets are still good is once again overshadowing thorough assessment of the ‘story behind the numbers’.

And that’s true everywhere from the Far East right around into North America. Beginning with the latter, there is little doubt that the lower US Unemployment rate reported last Friday was a function of a lower labor force Participation Rate. In fact, it was down to 63.6% from 64.0% as recently as December. That’s not only quite a drop; it also speaks of a more pernicious tendency just as the Obama administration would assert this is slow yet steady “progress.”

That is the degree to which the folks who have left the unemployment rolls may not have dropped out voluntarily. It is no secret that a surge in layoffs occurred in the US in the wake of the 2008-2009 severe economic and market problems. Even as the US administration has been extremely keen to extend unemployment benefits availability above and beyond the previous regime, that is now coming to an end for many folks. And those who are no longer ‘officially’ looking for work while on jobless benefits are also dropped from the ‘unemployment’ numbers.

This not only portends a certain portion of the population will be in a more depressed economic state. It also has implication for the US fiscal and retirement program calculus. One of our favorite ‘street’ economic commentators said it best in his timely assessment of the US Employment report last Friday…

2012/04/27: Quick Post: Bifurcated market psychology again: Govvies and Equities both strong

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

In its way, it’s nothing less than breathtaking. The tremendous resilience of the govvies (at least the primary markets) in the face of the equities seeming to get back on track yesterday is impressive. Let’s allow that each of these asset classes is on a bit of a correction from recent highs. Even so, the degree to which govvies have maintained their overall bid while equities have rallied so strongly since the first of the year is quite a phenomenon. Maybe it is all just a reflection of the massive global central bank liquidity infusions and low interest rates; and that is causing investors to chase yield wherever they can find it.

However, there is very possibly another macro-technical factor at work: a classical corporate earnings announcement season split influence. That is to say positive earnings driving equities buying. At the same time troubling real world economic and political news causes other funds to seek the safety of the primary government bond markets. And that is more so typical of the short term cycle. As such, it is less surprising than might otherwise be the case. We have seen it before, and the operative question is, “What happens next?“

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.

2012/04/03: Just Do It vs. Triple-E

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

Whatever the other asset classes may be doing, it is a very interesting equity markets right now. And spite of some still formidable tail risks on Europe and the like, the market does have reasons to be encouraged. As we noted in our formal research, this week sees the information equivalent of carpet bombing by the liquidity infusion-oriented major central banks.

For those who’ve been reticent about diving into the equities since the first of the year, there seems a compelling (Nike-inspired) “Just Do It” imperative to not miss the further appreciation. And various factors this week would seem to support the idea the equities will find encouragement from quite a few quarters. After FOMC minutes this afternoon, it’s the ECB meeting and press conference tomorrow, all followed by the Bank of England meeting and somewhat limited statement on Thursday.

What we know for certain is moderate (Goldilocks “not too hot, not too cold”) US growth was highlighted again in the FOMC minutes. That will be seen as constructive, while allowing (‘50s pop group) Benny & the Doves to maintain further QE (quantitative easing) potential. Even if that was played down in the minutes, the rate hike horizon being pulled forward to late 2013 somehow does not seem much of a threat. The perception remains QE will be implemented if the economy weakens. There is still a ‘Bernanke Put’ out there.

There will also likely be another upbeat ADP Employment Change report tomorrow, driving bullish anticipation for Friday’s US Employment report. So after relatively constructive global Manufacturing PMI’s and other economic data, the only question becomes why aren’t the equities stronger?

It seems that on both the data and the central bank influences a June S&P 500 future that Closed yesterday above the 1,400-07 resistance for the second time in the current rally should have been doing better. Might it be that there are some broadly acknowledged tail risks out there, even if they are not dominant at present? Maybe it’s the Triple-E threat!

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.

2012/03/08: When is today not today? When it’s PSI participation results!

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Yes indeed, today is the deadline for the next European Sovereign Debt Crisis decision: PSI (Private Sector Involvement) decision on whether to participate in the ‘voluntary’ dilution of the value of their outstanding Greek bonds. Regardless of how that turns out, we must say it’s refreshing to finally actually have a bona fide deadline of any sort for what has been the otherwise amorphous European success in simply “kicking the can down the road.” And yet, in terms of its actual impact on the markets, it really isn’t actually, officially today that counts…

…because the 20:00 GMT (15:00 EST; 14:00 CST) deadline for bondholders to decide is not the moment we will find out the actual results. Those will be announced Friday at 07:00 CET (Central European Time: 06:00 GMT; 01:00 EST; 00:00 CST.) While it is probably fair to allow some time to review the results after the formal deadline, this just shifts one more of the intensive late week influences we had highlighted at the top of the week for today into tomorrow into the last trading day of the week.

2012/03/02: Quick Post: Déjà Vu on March S&P 500 future dip toward 1,367

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

To quote the immortal Yogi Berra, “It’s déjà vu all over again” as March S&P 500 future dips toward 1,367 this morning. Now what? That is not just a question on whether the market is going to generally go up or down from present levels. March S&P 500 future 1,367 is the extreme trading high from last May. As the NASDAQ 100 and DJIA have already been above equivalent highs over the past couple of weeks, any convincing escape of the lead contract S&P 500 future would represent a more decisive indication of bullish momentum.

As noted once again (after repeated earlier discussion of it) in Tuesday’s TrendView BRIEF UPDATE (linked in Tuesday’s post) while previous violations of resistance indicated the next 15 points higher, much above 1,367 lead contract S&P 500 future would not have much resistance until the 1,400 area, and 1,430-1,440 above that.

And we are cutting directly to the technical trend chase today because we have reviewed all the heavy cross currents in the ‘bi-modal’ economic outlook and market influences in previous analyses and blog posts.

 

2012/01/30: Quick Post: Observations and Weekly Reports & Events Calendar Now Available

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

The full calendar is available through the link in the right hand column. Apologies for the delayed posting this week due to significant technical challenges. Since two weeks ago we have been adding color-coding to the various reports and events to indicate the nature of the key influences or items of somewhat elevated importance.

There are no central bank meetings this week, due to the ‘split’ old month into new month week pushing the Bank of England and European Central Bank out into next week. Yet, it is always the case that these sorts of weeks see a lot of economic data…