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!

2011/12/14: Quick Post: Courtesy Access to Rohr Report Brief Update Today

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

Short & Sweet. We are confident that any March S&P 500 future decision to remain below the 1,230 buffer below the 1,240-50 area for the weekly Close will be a key indication for equities. This reflects the skepticism other asset classes had already been exhibiting on overall resolution of European problems and global economy.

As we have been tied up with some technical problems of late. please access the current view through this courtesy look at today’s Rohr Report TrendView BRIEF UPDATE institutional edition as the best way to ensure you have what you need.

This is a summary form of the background and specific technical contingencies that are still consistent with all of our views of the past few weeks and previous posts.

We hope you find it useful.

2011/12/07: Quick Post: Technical Projections and Comments Now Available

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

The Current Rohr Technical Projections – Key Levels & Select Comments (as of Tuesday’s US Close) are now available through the link in the right hand column. We have summarized some of the most interesting and telling tendencies below.

2011/11/28: 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 both Europe and the US.

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, and government debt auctions. Regularly scheduled reports this week cover the typical transition week at the end of one month into the early part of the next; culminating in US Employment on Friday. And the auctions include quite a few long-dated offerings from Europe.

2011/11/21: 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 both Europe and the US.

In addition to continued sharp influences from the seemingly still failed attempts to address the European Sovereign Debt Crisis, there is also going to be quite an impact from whatever the fallout might be from the now almost assured failure of the US Congressional Fiscal Reform Super Committee. Our perspective on that is there are far too many folks who are very sanguine about the actual failure for two reasons.

2011/11/15: Quick Post: Cycles Accelerating: Hippies to OWS to Europe to US

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

The first media seer, Marshall McLuhan (who essentially invented the science of media’s influence on culture), famously noted back in the 1960’s that electronic media would destroy established social structures. And all he had to guide his perceptions was incipient developments in cable TV. Wonder what he would have said if the development and ubiquity personal computers was anything more than futuristic bit of imagination. [Although in the Dick Tracy comic strip they actually had wrist radios and TVs; forerunners of the PDA?]

But now we have an entire galaxy of information whizzing across everyone’s screens at the speed of light. And while the social structures of the 1960’s were reduced to rubble, society will always be reborn because it is a necessary cycle. However, there is little doubt the only real constant remains ‘change’, and it does seem to be accelerating.

Consider the turn of the cycle from the height of the Hippies to the end of that attempted utopian solution. After the 1967 San Francisco ‘Summer of Love’ it took two years to degenerate into the Manson murders and the Weather Underground. For the uninitiated that last group is a faction in the previously aggressive yet peaceful SDS (Students for a Democratic Society) which shifted to the pursuit of violent revolution. They had given up on peaceful pursuit of change and reverted to violence, because it seemed obvious to them that nothing was going to change. (Hence the group’s name, from the Bob Dylan lyric, “You don’t need a weatherman to know which way the wind blows.”)

Fast forward to Occupy Wall Street and what do you get?

2011/11/11: Quick Post: Santa Claus is Coming to Town… Maybe

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

“He’s making a list, checking it twice…” gonna buy stocks, but only if they’re nice…

…and therein lies the dilemma with any ‘Santa Claus’ rally this year.  As we have pointed out for many years now, there is no Santa Claus! This is actually much more so the “Santa Portfolio Manager” rally. The late year rally tends to be the case in years when equities are up nicely on the year, especially from the early part of the fourth quarter into the end of November.

That incentivizes portfolio managers who have any goodly amount of cash on the books to invest it rather than look ‘under invested’ compared to their peers. And no sensible manager waits until the last minute right into the holidays. In the down years there is often little or no late year rally, as the converse becomes true: managers seek to show plenty of cash.

The problem for managers attempting to ‘window dress’ their portfolios either way this year is the degree to which the US equities are right around last year’s Closing price levels. In addition they have been significantly schizophrenic of late, with major surges and downdrafts in the wake of constructive or abysmally negative news. The range of that news is also significant insofar as it encompasses everything from fiscal and debt crises to economic data and forecasts.

So it seems that Santa is quite conflicted this year as well. Whether the equities trend will continue to improve from last year’s finish, or put on another one of those sharp retrenchments back to quite a bit lower on the year remains in flux.

2011/11/09: Quick Post: Opera Berlusconi Continues… With Equities in Thrall, Yet Not Necessarily Bad

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

Opera Berlusconi has finally seen the fall of the ebullient Prime Minister. If not for his policies and management of the state, he will at least be remembered for the excitement he provided. Of course, that includes the degree to which his shenanigans pointed out the ineffectiveness of leadership in the profligate southern European sisters, and even Europe as a whole.

It was the sort of demonstration of narrow partisan domestic focus that ultimately belied the myth of there being a cohesive Euro-zone even more so than the riots in the streets in Greece. Italy is just that much larger, ostensibly competitive on an industrial basis, and potentially capable of the right sort of fiscal balance if only the political will were effectively exerted. And yet, the other aspect which is clear even from Italian domestic politics is that it also suffers from its own North/South divide. In that sense, it is the fractal miniature example of why Europe cannot really be a monetary union without becoming a fiscal and political one as well; and that’s not happening.

As just a brief early word on two primary asset classes’ price activity, on current form it seems the government bond markets had it right by rallying on the weak economic news and disturbing developments in Europe. That was in spite of the strength of equities, which can be an anticipatory bid during earnings season and then weaken once things revert to normal. However, in this case they seem to have also been defying the crushing logic of the fact that Europeans who had been so adept at kicking the can down the road, well, finally seem to be running out of road.

Italian 10-year government bond yields shooting up above 7.00% in spite of Mr. Berlusconi’s resignation (at least seemingly so for now) came as somewhat of a surprise to casual observers. We are not sure why they would be so shocked by that, as an spite of his obvious weaknesses and problems Mr. Berlusconi was at least a strong leader up until the recent extreme loss of confidence in him. What we do know is that the market is exhibiting a rational reaction to the fact that no one else in Italy is considered much better, or much more likely to generate support for the necessary budget adjustments.

This would seem to be a classic example of “be careful what you wish for.”

2011/11/07: Weekly Reports & Events Calendar Now Available

All in all, a very interesting week that also sees European debt auctions early in the week, followed by long-dated supply out of the US and Japan Wednesday into Thursday. After a slow start today, highlights of the reporting week include the fact that the US has returned to Standard Time in the wake of Europe and the UK doing so last week. Even with all of the major early month data and three significant central bank meetings out of the way last week, there is still quite a bit from scheduled reports and events to focus on this week.

There is quite a bit of central bank-speak, both from the Fed’s minions and European financial luminaries. We will undoubtedly be hearing quite a bit from the latter in any event, as the further evolution of the now wholly unwieldy European Sovereign Debt Crisis continues to unfold this week.

2011/11/04: Quick Post: Draghi Not Soggy. But Does G20 End Up Just a Cannes-Game?

There was quite a bit of concern about whether Signore Draghi taking the reins at the European Central Bank (ECB) would lead to a much looser regime that would ignore inflation. In the first instance he is an Italian central banker, who historically have been known to have no qualms about allowing significant amounts of inflation. While he has been personally committed to far more fiscal rectitude than any of his Italian predecessors, that still left a question in the air.

Especially so at a time when Italy is going to need seemingly massive help with its sovereign debt problem. There was some passing concern (nothing really too serious) that he might be overly accommodative in supporting the Italian government bond market through ECB purchases. And all of that was seemingly compounded by the first interest rate decision under his regime yesterday, as the ECB put through a surprise 25 basis point rate cut to 1.25%.

Horror of horrors? Well, not really. Along with the rest of the world, European inflation does remain very high at present. As such, an easing ECB seemed to be joining Fed Liquidity Lubrication Club. However, in the context of the recalcitrant rate rises into an obviously weakening European economy by hawkish predecessor Jean-Claude Trichet, the reversal of one of those hikes hardly makes Signore Draghi an inflation Dove.

In fact, the economic data all seems to have vindicated his decision to make a bold move at his first interest-rate meeting as ECB President. As events have evolved today at the G20 meeting in Cannes, he has also rejected the idea that the ECB should continue purchasing the sovereign bonds of Europe’s weakest fiscal sisters. In that regard his indication that the Euro-zone needs to get its European Financial Stability Facility (EFSF) act together (funding, mandate, leveraging mechanism) is wholly consistent with that of his predecessor. On the whole, a very solid showing.

However, whether the ECB has turned just a bit more dovish is the least of the equity market’s concerns. The now bizarre machinations in Greece, and more importantly the continued lack of agreement on the critical funding and operational aspects for EFSF are plaguing the markets today. The biggest problem seems to be recurring failure of lofty pronouncements followed by no credible details on all of these various rescue at fiscal reform plans. And once again at the G20 in France, it is all starting to feel like not much more than a Cannes-game!!