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Posts Tagged ‘central bank’

2013/01/24: Technicals and Best Davos Insight

January 24, 2013 Leave a comment

© 2013 ROHR International, Inc. All International rights reserved.

A fresh set of Technical Projections and Select Comments are already available via the link in the right hand column, current through Wednesday’s US Close. And those are now very relevant to the near term price activity in equities that are done standing still since the end of last week. Other asset classes that have also had some reasonably strong swings.

More on that below. Yet the most interesting public insight (versus any backroom conspiracies) to come out of the World Forum in Davos, Switzerland was the CNBC interview of Bridgewater Associates’ head Ray Dalio. While he revisits quite a few topics he has expounded upon previous, his review of his general approach to ‘the machine’ (which he considers the best analysis approach to both the economy and the markets) is a always a pleasure to hear…   

CNBCdavosDALIOclip-130124…and a reminder of why he is one of the most successful fund managers in history. In fact, that interview is split into two parts. The first is Dalio’s Perspective on Deleveraging, followed by Dalio on Policy & Productivity. The first part is very explicit on the importance of the various aspects and approaches to the current major deleveraging cycle. There are also discussions of how the central banks are affecting markets and economies, and a reminder that trading is a zero sum game.

 

The second section relates it all back to the current economic conditions, and even ends with a very brief individual country review. Enjoy the view. In the meantime, even though the markets took some interesting swings today, we feel the basic themes of stronger equities, challenged govvies and highly varied foreign exchange remain in place.

 

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2013/01/22: Calendar, Japan and ‘Sherlock Holmes’ Equities Psych

January 22, 2013 Leave a comment

© 2013 ROHR International, Inc. All International rights reserved.

The Weekly Report & Event Calendar is available through the link in the right hand column. This week’s Summary Perspective will be added sometime soon. Yet, in addition to the calendar are two key areas of interest we want to cover today: Japan and the degree to which the Equities psychology remains very positive in spite of some obvious headwinds.

First of all, the combined Bank of Japan and Japanese government anti-deflation program announced today is as breathtaking in its scope as it is quirky in its implementation. If they are so committed to ensuring the inflation rate ramps up to 2.0%, why are they deferring the extended additional asset purchase program until the beginning of next year? We suppose there is quite a bit of anticipatory psychology they expect to accomplish their ends without actually doing anything in the near-term.

Mr. Bernanke has shown how well that works on the Fed QE-Infinity program, so why wouldn’t Japan try it is well? Of course, the truly scary part is the degree to which they expect inflation to go from barely positive this year to something in the 3.0% area in 2014. That not only seems astounding as a prediction, but may well hold other risks to the Japanese government financing ability. They should be careful what they wish for.

Back to more mundane if still fairly exciting matters, the March S&P 500 future push above the 1,474.50 major September lead contract high. In essence amounts to the ‘jailbreak’ we had discussed in the Rohr-Blog US Equities Attempt a Jailbreakpost last Friday (in the wake of Thursday’s gap higher into that area.)

The bottom line is that in spite of this morning’s minor setback the bulls still own the trend unless and until the bears can get the market to Close back below last Thursday’s 1,470.70-1,465.60 gap higher. One of the key technical aspects that assisted Friday’s late session recovery was the inability of the bears to leverage the weak Michigan Sentiment number, as the March S&P 500 future held exactly at the 1,470.70 top of that gap. 

Click on Chart to enlarge

Click on Chart to enlarge

And in spite of our skepticism toward the equities across the first quarter, that all fits in very nicely with the broader technical projections allowing a move up to the low 1,500 area prior to the lead contract S&P 500 future being overbought once again. It is all about the confluence of factors we discussed in the previous Thursday’s (Jan. 10) Might US Equities Attempt a Jailbreak? post.

Once the equities demonstrate that the bears will not likely be able to force a Close back below last Thursday’s 1,470.70-1,465.60 gap higher, the path of least resistance becomes up; at least until they hit the next significant threshold.

We laid out the theory and practice behind that in a bit of a broader analytic psychology as to why the equities could continue lower in late 2008 in spite of how far they had already fallen. It all has to do with the combined perspective of Sherlock Holmes and Dynamic Disequilibrium

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2013/01/14: Calendar, OECD CLI, another great resource, Europe

January 14, 2013 Leave a comment

© 2013 ROHR International, Inc. All International rights reserved.

The Weekly Report & Event Calendar is available through the link in the right hand column. This week’s Summary Perspective will be added sometime soon. Yet, in addition to the calendar are two other resources which we feel you might find useful.

The first is this month’s Organization for Economic Cooperation and Development (OECD) Composite Leading Indicators (CLI), which they insist shows economic growth stabilizing in most economies. We can’t really disagree that was the case looking back to the upbeat factors we have already cited for late last year.

As noted previous, on the fundamental side there are reasons why the January statistical releases are going to be fairly upbeat in the US, and that will drive positive sentiment elsewhere. In fact, we still see the US influence as critical, with the news in Europe and some other areas not being nearly as strong. The US remains the key, and the headwinds there are going to intensify. We are going to have a full Taxulationismupdate very soon on that.

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

Def.: Combined impact of taxation, regulation and protectionism to an oppressive degree as official policy

But there is also another update from a source and a region that is highly influential. That is the latest edition of the Reserve Bank of Australia Chart Pack. That is the very simple name for a very robust set of economic indicators. Given the importance of the Asian and Australian economy, this is a great additional research resource.

While titled The Australian Economy and Financial Markets, it is actually a terrific, very current (updated through December 27th) global economic and finance graphical representation overview. And what it does have on Australia is an incredibly good sector and finance breakdown of many industries and finance functions for that important Asian natural resource economy.

And while the online version is very easy to navigate, it allows for the download of the full (34 page) PDF version as well. After all there are some lunatics (present writer proudly included) who want to be able to compare some fairly diverse factors in hard copy. It can be printed in a four-to-a-page easy review format, such as the example below comparing world share price trends…

Click on the graph to access the RBA Chart Pack home page

Click the graph to access RBA Chart Pack

It is no surprise that research generated by the RBA also includes extensive indications for Asia. And versus the passing view of China typical of so much European and US research, this means India and the Greater Asia economic sphere as well… including emerging markets.

Beyond that this is going to be another very big week, with an interesting twist on the confidence now helping the European markets…

 

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2013/01/03: Quick Post: Fresh Tech available & ironic ‘creeping’ tax view

January 3, 2013 Leave a comment

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

A fresh set of Technical Projections and Select Comments are already available via the link in the right hand column. They incorporate the sharp swings from the top of the year response to the US Fiscal Cliff avoidance effort. While that was characterized as a tax hike on ‘the rich’, it is important to note this was only insofar as the income tax rate is concerned.

And that is not the true sum of the real impact

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2012/12/11: Cal-Perspective and overall weakness in spite of some good data

December 11, 2012 Leave a comment

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

The weekly Report & Event Calendar is available through the link in the right hand column. This week’s Summary Perspective is also now available. Yet there is also an interesting anomaly in the fundamental influences. And it is not just the strongish US economic data versus the trepidation over the potential plunge off the Fiscal Cliff… as that dilemma looks closer to being solved timely enough (end of year or top of January) to avoid its worst effects.

There is also the negative outlook for Europe. Today’s German and Euro-zone (essentially the same) ZEW Sentiment (i.e. the forward view) was stronger than expected. Yet, that flies in the face of other indications out of Europe that are still incredibly weak… like the recent Italian and Spanish Industrial Production numbers that came in below already weak estimates. And anyone who thinks Germany is going to return to being a bastion of strength in Europe should take a look at Monday morning’s admittedly mixed Organization for Economic Cooperation and Development (OECD) Composite Leading Indicators (CLI).

The only real growth is in the US and (interestingly enough in light of recent official forecasts) the UK, with growth or even economic basing elsewhere problematic at best. Even more important is the degree to which Germany remains on a distinctly downward path into the early part of next year. The general tone of the OECD regarding the actual condition of CLI on individual countries is also typically charitable. How does France sliding further below 100 and remaining on a clear downward path indicate “weak growth”? And even though it is still marginally above 100, the same goes for Japan; especially in light of it just recently going back into recession.

And it appears that our continued concerns over US Taxulationism1 are finally beginning to bite. It is no longer just our theoretical assessment that these influences from a Nanny State run amok are a problem.

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

Def.: Combined impact of taxation, regulation and protectionism to an oppressive degree as official policy

There is now real-world confirmation from actual surveys of the impact this is going to have into the early part of next year. And that comes from none other than one of our favorite US employment-related resources

 

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2012/11/23: Weekend Thought: There is NO Bond Bubble… more so Cash

November 23, 2012 Leave a comment

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

It has been the bane of the ‘Bond Vigilantes’ (adamant bond bears) that all of the fiscal crises and incipient signs of economic growth have not led to a major capitulation of the primary government bond markets. Another short term round of that is apparent today. Equities are spurred higher in this week’s recovery from the midmonth break, yet govvies are holding steady… just as they did yesterday in the face of the higher equities. And due to better than expected German economic numbers, today’s rally would seem more than just technical. Likely even more frustrating for the bond bears.

While we will get back to more current market discussion below, the current intermarket asset class performance must be taken in a twofold broader context. The first is that the immediate threat to the equities is less from a still troubled Europe, and more so on the question of whether the US Fiscal Cliff issues can be resolved timely. The far broader and more meaningful aspect for the sometimes seemingly mindless resilience of the govvies is the question of whether there actually is a Bond Bubble? Our assessment for some time has been that as long as equities appear risky due to government policy interference and instability, equities are indeed at risk due to the potential for significant global economic weakening.

This is our classical Taxulationism1 fear. While many assert that the US election clarifying the path forward is constructive, we are not at all sure. What it guarantees is that the ‘Obama program’ will mostly proceed according plan. Possibly business will indeed be able to plan around the higher taxes and aggressive regulatory enforcement. On the other hand, the Obama health care reform and other measures might just lead to layoffs, closures, and at the very least many individuals facing the higher expense of shifting to personal health care plans from company-sponsored ‘group’ policies. Also to say the least, not good for consumer discretionary spending.

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

 Def.: Combined impact of taxation, regulation and protectionism to an oppressive degree as official policy

If that is going to weigh on the US economy, the one developed economy showing some growth now is going to weaken once again into next year. And that is a good reason why people still feel more comfortable in bonds than equities. All of the capital flow data on fund investment tends to back that up as well. And yet, there isn’t really any ‘Bond Bubble’ as such. If anything, there is a ‘Cash Bubble’. That was brought home to roost in a Financial Times video report on Monday.

While the title of the piece is Marooned in a bond ‘safety bubble’ and the opening discussion focuses on bond vs. equities flows, the point which eminently come to the fore is there no historic basis for this. As the graph below illustrates…
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2012/11/06: Quick Post: Weekly Calendar and Brief Update access on US election pollsters really wrong in some ways

November 6, 2012 Leave a comment

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

The weekly Report & Event Calendar is available through the link in the right hand column. The Summary Perspective will available later today in deference to wanting to wait for today’s US market Close to update the technical projections in front of tomorrow’s election response. And whatever the election may bring, one thing is glaringly apparent as the Northeast continues to struggle with Super Storm Sandy’s aftermath…

…the counterintuitive ability of markets to anticipate the degree to which the rebuilding effort is a ‘GDP-positive’ event. That is to say our views on the positive market anticipation of the reconstruction and rehabilitation effort trumping the extreme human tragedy and near term economic damage have been vindicated. It will ultimately provide more of a bump to GDP that the loss of business from the downtime of the businesses waiting for replacement/repair of their buildings and equipment.

And now it’s on to the election follies. And we have covered that at some length in today’s institutional TrendView BRIEF UPDATE, we will leave it for you to decide whether the more aggressive polling organizations and analysts have it right. And whichever side prevails in the race for the White House, there is a case to be made the market response might seem a bit perverse because…

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