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

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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

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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.

2012/01/26: FOMC de facto QE3 helps everything except US dollar

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

Looks like Helicopter Ben has morphed into Gusher Ben. Due to both the economics and current elevated fiscal focus, it is impolitic right now for the Fed to expand its balance sheet beyond already bloated levels. That would be the equivalent of dropping dollar bills from helicopters. So instead it seems to have opted-in to a consensus that the Federal Funds rate should remain effectively at zero for much longer than the middle of next year projected at their last meeting.

Aside from the fact that a prediction of where interest rates are going to be fully across the next several years seems quite an overreach in its own right, there are the other knock-on effects. By attempting to inspire confidence with free liquidity indefinitely guaranteed, Mr. Bernanke and the rest of the Fed is actually 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.)

Unfortunately for them, the first things that are shooting up once again are the prices of risk assets, as the return of the ‘risk-on’ trade assists everything except the US dollar. Is it just us, or does it feel an awful lot like spring of last year once again? In any event, the increase in commodity prices represents what now seems to be the next round of the Risk Asset Hot Potato game in a zero interest rate environment, which typically raises more questions than real economic activity.

2012/01/25: Quick Post: Merkel’s Jerry Maguire Moment, Obama, Apple, and Hungary & the Fed

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Well, it seems to have finally happened… Germany’s Jerry Maguire Moment. At long last this week it is finally agreeing to “show (me) the money” to the rest of Europe hungering for greater funding for its sovereign debt bailout funds. However, that comes with significant strings attached, along the lines demanded previous on major moves toward closer integration of the European Union…

…and that is along much more stringent Teutonic fiscal lines. Those are at the very least distasteful to much of Europe, and completely unacceptable to the UK. That much was clear from Mr. Cameron’s rejection of the push for such an agreement at the previous EU Summit. As such, if Frau Merkel made her assertion during her meeting last week with French president Sarkozy that everyone should relax on the sovereign debt dilemma because the entire EU treaty was going to be ready for next week’s follow-on EU Summit, it appears as specious as we suggested when they announced it.

In fact, it only reinforces our view that might’ve seemed a bit extreme when we noted it one week ago: the bombastic, bi-polar nature of the leadership in Europe right now. As noted then, the vacillations are almost as troubling as the lack of real progress. If the rest of Europe is not going to go along (and there are others who disagree as well) with the extreme strictures in the German proposals for closer integration, then the only inference that can be taken is that Germany is not going to agree to greater funding of the rescue operations.

So maybe it is not a huge surprise she has also at least partially thrown Greece under the bus this morning by noting the bailout may not be working. What is interesting about that is she allows that the combination of the requisite billions of euros along with austerity does not seem to be getting the job done. And that last bit is the most interesting part.

2012/01/24: (Yet) To Be, or Not To Be (Discounted)? That is the Question

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

The good ship Greek Debt Negotiation has seemed to suffer the same fate as the Costa Concordia (with due respect for the latter being a human as well as a financial tragedy.) Both ran close to the shoals of disaster. The Concordia in the form of an actual shoal, and the debt negotiations in the even murkier shallows of financial canard. The difference is that the Concordia should reasonably have had a chance to avoid its fate through either high-tech instrumentation warnings or more conservative navigation by its captain. The Greek debt negotiation was already effectively aground before it started, after very early technical indications the country was drowning in more debt than it could possibly service were widely ignored.

More on that intractable situation below. The real question is how the equity markets are gliding along so well near the top of their recent rally in the wake of the indication at the top of this week those negotiations were truly failing. Is it possible that a Greek debt default on (or into) its major March 20th €14.4 billion bond maturation is already discounted? Is it possible this is something the equity markets can simply ignore? Or is it more so that this is yet to be discounted at some point in the future? Drawing the full implications of all that is nothing less than disturbing and fascinating.

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.

2011/11/25: 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.

2011/10/04: 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.)

2011/10/03: Taxulationism Update: Fisher Confirms Fed View & Protectionism Back With a Vengeance

There is a new and pernicious development on one area of Taxulationism that did just not seem that important in the face of more pressing concerns on taxation and regulation: protectionism (which is the ‘ism’ at the end of Taxulationism.) For the most part up to this point it has included nothing more than the US scoring points against itself by failing to pass free-trade agreements which would significantly enhance export potential.

That is substantially due to the degree to which the Liberal faction in Congress wants to impose labor law requirements on our trading partners. The sense of things there seems to be that it would be better for the low-end laborers in these countries to have no jobs rather than jobs where the wages and environmental standards don’t suit the sensibility of the US Congress. Of course, this is nonsense that has allowed our other trading partners to take advantage of the US. And we will be revisiting an even more benighted effort from Washington DC below.

In the meantime, for any of you who didn’t see it, Dallas Fed President Richard Fisher appeared as a guest host on CNBC’s Squawk Box this morning. He has been one of the most vocal opponents of the Fed’s quantitative easing efforts, and has also been very clear on the degree to which the weak economy is a creature of Congress, and something they (and NOT the Fed) must address.

And while not railing against regulation very specifically this morning, he once again focused on the degree to which Washington DC is creating confusion on the fiscal front as well. He noted that unless and until business felt a greater sense of ‘clarity’, not much was going to happen on the business investment and especially the jobs front. He even went outside of his region to point out the dilemma of an institution generally perceived as being very rich: Harvard University.

2011/09/09: Obama Jobs Plan DOA: Higher Taxes Won’t Fly with Republican House

First of all let’s allow that there are many other factors buffeting the equity markets today. Greece had a failed T-bill auction, which heightens the fears that either over the weekend or some other time very soon it will actually default. There was also the downbeat communication from the ECB at yesterday’s post-rate decision press conference that it had significantly lowered its 2011-2012 growth forecast.

That was much like the recent change in the Fed’s projections. Yet, it was different for the ECB, because it had maintained upbeat expectations and raised interest rates over the earlier part of this year. It’s downside revisions for what was considered one of the few remaining much strong economic centers is that much more telling for the global economy as well as Europe. And in yesterday’s post we discussed why Monsieur Trichet’s claim that at 1.50% the ECB’s base rate was still accommodative was misguided; with political implications for Chancellor Merkel as well as a negative influence for the European economy.

Of course, Mr. Bernanke’s reiteration yesterday of the Fed’s concerns about the near-term economic weakness didn’t help either. Although, we can’t imagine what else he would’ve said without being completely disingenuous and looking foolish. And he revisited a very relevant point that set the stage for Mr. Obama’s jobs program speech yesterday evening: the current economic weakness was not created by faulty monetary policy, it is a creature of the political class, and they’re the ones who have to address it. And it seems less likely than ever that the political process in the United States is going to offer any solutions for the economic mess anytime soon… and that’s the real problem with what President Obama proposed yesterday evening.