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

2012/03/07: Courtesy access to ‘Brief Update’ and extended discussion in new format

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

Short & Sweet on the specific market comments in this post, because yesterday’s TrendView Brief Update was also actually very brief for a change. That is because the equities key technical indications were very well crystalized for the sharp failure yesterday after such a long churn to the upside. And we are referring you back to yesterday’s analysis because the levels and psychology explored there for the March S&P 500 future remain the same for the critical late week period.

And one of the reasons we did not post to the blog during the highly active market swings yesterday was that we felt the more critical decision will be made in the late part of this week. Yet not necessarily solely upon the market response to the US Employment report. As we noted in the title of Monday’s post, “You better have ‘game’ prior to Friday…” (which was to say prior to Friday’s US Employment influence.)

And why is that? Because of all the factors we have covered previous on the more critical nature of the next phase of the attempt to address the European Sovereign Debt Crisis. That is something we have explored at length in previous analysis. Any of our regular readers should have been ready for the potential market dislocation under the influence of (finally) a more definitive deadline for at least the current attempt to defuse any immediate sharp failure of those European rescue efforts.

Which gets us to the other reason we were not available to add another post to our already extensive observations in that area yesterday morning. In addition to all of our highly active institutional analysis and sharing our background thoughts on the blog, we have resurrected a previous media role that allows for more extensive, open-ended discussion of those factors.

And I am very excited once again about…

2012/01/27: It’s a wrap: Risk Fizzle, Euro-hope, WEF ‘Global Risks 2012′, Smartest Guy in the Room

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

Looks like Helicopter Ben morphing into Gusher Ben didn’t help much… except to exacerbate what we all knew was going to be a disjointed week from the time we walked in. And the markets certainly did not disappoint in that regard. Pops and flops (equities and to a lesser degree risk assets like commodities), solid extensions of up trends (those strange bedfellows govvies and Gold), and significant reversals (back to the ‘risk-on’ US dollar “carry trade” in foreign exchange) were all apparent. And substantially due to the FOMC opting-in to a consensus the Federal Funds rate should remain effectively at zero for much longer than the middle of next year projected at their last meeting.

That summary view is all the reasonable response we anticipated in yesterday’s post on Gusher Ben attempting to push psychology upward from underneath hoping that the enthusiasm will pop like an oil ‘gusher’. This is nothing less than a mind game version of quantitative easing (i.e. de facto Q3.) All of the specific asset class analysis and the intermarket implications that came home to roost by yesterday’s Close spilled over into today were noted in yesterday’s analysis.

That said, the resilient equities have found a new/old cause for hope: fresh upbeat assessment of the potential for a Greek debt deal. EU Finance Minister Olli Rehn said this morning at Davos, “A Private Sector Involvement deal is imminent; if not today then likely over the weekend.” We shall see. Certainly everyone hopes he is right.  Yet there are several grounds for skepticism which even go beyond whether a deal can be crafted. There is now some concern whether the Greeks will sign on to something as modest as “reform” (forget “austerity”), and other issues remain.

2012/01/06: Quick Post: Underwhelming Equities Response to Strong US Jobs Number

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

And now we get today’s equity market response to the Strong US Jobs Number. There’s quite a bit that could be affecting that, but mostly it seems a major case of “buy the rumor, sell the fact.” The lack of any March S&P500 future push above the 1,281 area is telling.

2011/12/19: Quick Post: 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. 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 less so US influences that are as goofy in their way, yet not as influential at present.

In addition to the continued sharp influences from the attempts to address the European Sovereign Debt Crisis, there is also going to be quite an impact from important scheduled reports, communication from central banks and bankers as well as political events and news releases, yet with much lighter government debt auctions.

2011/12/15: Quick Post: US Jobs: Interesting Take on Chinese Import Duties

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

Nowhere is the Law of Unintended Consequences more evident than in global commerce. And especially as it relates to the myriad permutations of international trade disputes. So it shouldn’t be any surprise that the current move by China to slap duties on cars manufactured in America is the third round of something that started with the US action to block Chinese tire imports at the World Trade Organization. China had challenged that ban, but according to the front page article in today’s Financial Times the challenge was dismissed.

And so began another couple of moves on the international trading chessboard which included poultry as well as automobiles. It actually might be a bit humorous and characterized as ‘typical’ that the auto import confrontation is not much more than a game of Chicken if it didn’t have such serious consequences. And those include the impact for American workers; yet not exactly in the way that most observers might assume. In fact, the European auto manufacturers are suffering far more than their American counterparts.

2011/10/24: Quick Post: Enjoying the Equities Rally? Go Hug a Commie

That’s right. There is a debt of gratitude due a select subset of the ostensibly anti-capitalist extreme wing of the global labor moment. It has to do with last week’s passage of the most recent in a series of Greek austerity package. While the current Franco-German negotiations on the broader European Debt Crisis rescue plan is now critical later this week (more on that below), none of it could have proceeded without the further Greek austerity measures.

And last week’s approval by the Greek Parliament was a distinctly fraught affair. For one thing, the vote inside the parliament building was an extremely close run thing. It required the dismissal and replacement of one deputy in order in the coalition to secure a majority vote. Dodgy parliamentary practice it best, but it worked.

The more visible and overt battle was outside the parliament building, where mostly peaceful protesters signaled their disgust Greece was basically being blackmailed into submission by the more successful Euro-zone states. Whatever one’s view on that, the even more troubling battle was the overt physical fighting between two key factions.

Was it the Liberals versus the Conservatives? Nope. How about the Socialists versus the Capitalists? Not that either. And what we are talking about here is folks who were actually aggressively attacking each other with projectiles, and even smashing each other with clubs.

2011/10/11: Global Slowdown and US Housing Trump Positive Indications

The classically better equities market attitude into the top of corporate earnings announcement season was on full display yesterday. It had been a long time since the DJIA had gained more than 300 points from anything more than a previous sharp drop. That occurred yesterday after holding up well around the middle of the previous broad trading range, as was the case for a December S&P 500 future which also pushed up above the 1,155-45 range; which it had singularly failed to do in the wake of last Friday’s strong US Employment report.

However, there is a question as to whether this all confirms the return to a bull market, or is just another swing in a consolidation range that might still leave the general equities trend bearish? While only time will tell, there are quite a few indications which leave the current rally suspect. Not the least of those is the significant lack of volume on such a massive rally yesterday. That’s just not typical of truly bullish technical trend tendencies.

Beyond that, there are more than a few fundamental reasons to take the early earnings season euphoria with more than a grain of salt. Which is not to say the positive news should be completely dismissed, but more so that the balance of some very significant influences would still seem to favor a bearish outcome in the intermediate term.

2011/10/06: QuickPost: Trichet Out With a Bang in Spite of No Rate Cut

It was a very interesting final ECB press conference for John-Claude Trichet. The estimable ECB President is retiring at the end of the month, and used today’s press conference to effectively focus on some themes related to who has been effective and who has been remiss in Europe.

The ECB holding its base rate steady today at 1.5% seems that much less sensible in the wake of his opening statement assessment that second half Euro-zone growth would indeed be lower-than-expected. Reconfirming the recent ECB shifts to presuming intensified risks are on the downside, and the suggestion that banks should retain more earnings as reserves, would all seem to suggest that the central bank should be easing instead of holding steady at what appears to be a premium yield in the face of falling commodity prices.

However, as noted in our analysis earlier this morning, we suppose that he did not want the embarrassment of refuting that anti-inflation stance by actually cutting rates today. He might also figure that another 30 days won’t make much difference as he turns over the reins to Signore Draghi. We shall see.

However, what he had to say about the fact that roughly half of his eight year tenure has been spent addressing markets in turmoil was the far more interesting aspect.

2011/10/05: QuickPost: The Fed, Jobs, Housing and Europe

Much remains the same as yesterday in terms of the negative influences. And in our view those emanating from the US will count for even more of the future weakness in the intermediate term than the obvious headline focus on Europe.

Which is a bit of a radical view in light of the increasing social unrest response to draconian austerity measures in Greece. There are also the problems at the banks that have been highlighted by the problems at Dexia, leading to an admission by the European powers-that-be that just possibly banks which hold a significant amount of underwater sovereign debt are indeed going to need recapitalization; which is to say further significant support from the state.

Even in light of that admission being welcomed by the markets in the form of yesterday’s US equities late session sharp recovery from new lows, so far this is just so much talk. That said, getting back to sharply higher on the day from much lower did establish important technical bottoms for US equities (more on that below.)

However, all that still leaves the question that we have asked many times before: does crisis mitigation necessarily amount to a restoration of global growth that will be truly positive for economies and equity markets? And commensurately burdensome for government bond markets and the US dollar?