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Posts Tagged ‘EFSF’

2012/09/07: Draghi + data = equities ecstasy, until US Employment

September 7, 2012 Leave a comment

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

Does the Draghi-data confluence create the next extension of the equities beyond critical resistances like 1,440-45 in the lead contract S&P future? Or could this be the next exhaustion in the equities now up against bigger resistances? And the next major primary government bond market rally opportunity as we head through the quarterly futures expiration cycle? More on that below. But first…

The ECB producing a more extensive (both in scope and duration) plan to stabilize the yields of distressed Euro-zone sovereign debtors was indeed a positive step. Even though “the devil is in the details”, the European bond markets have taken it very well. That diminished ‘tail risk’ (of an overt government bond market and ensuing banking failure) has allowed the equities to push-up markedly.

And that is in spite of the fact that there is not yet any sign Spain or Italy will opt in to the new bond support program. There are also other less than impressive aspects of the evolved ECB program for Europe that we revisit below. However, almost needless to say, yesterday’s better-than-expected economic data in the US assisted equities in pushing through recent resistance, aided further by somewhat less-depressed-than-expected economic figures from Europe this morning.

That is up until this morning’s somewhat disappointing US Employment report. It is very clear that anything which brings into question the viability and potential for increased momentum in the US economic recovery is not good; especially in the context of so much general global economic weakness. And in spite of the impressive upsurge in the equities yesterday, they are only headed for the much bigger technical trend thresholds that will decide whether this rally is just getting started, or reaching another near-term exhaustion.

While we will have more to say on that below, for now it is important to note some key limitations that were necessary inclusions in the ECB plan for Europe…

 

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2012/08/28: Quick Post: Back from holiday… Weekly Calendar Now Available

August 28, 2012 Leave a comment

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

Just back in today, and the Big Apple was a blast! I know a lot of Midwesterners find it a bit gritty and WAAAAAY too frenetic. Maybe it’s just because I’m a particularly high strung Midwesterner that I find its energy and attractions far outweigh the intensity and hustle. I suppose it’s a matter of taste, and that means a lot more than just the food. On balance it’s a great town.

The weekly Report & Event Calendar is available through the link in the right hand column. This week’s Summary Perspective on Key Influences will also be available later today. All we can say is Europe’s latest round of ’Kick the Can’ still seems to be working very well.  For all we have our reservations about the extended viability of the US (and more recent European) equities rally, it is a wonder to behold. We offer our compliments to ECB President Draghi on the outstanding spin he attached to supportive comments on the euro at the end of last month in London.

As we noted last week, while clearly stating the European Central Bank will “do whatever is necessary” to save the euro, he quickly backed off at the following Thursday’s ECB press conference to make sure everyone also heard the caveat “within our mandate.” What a wonderful canard by which to flip the whole matter back to the political class regarding the nature of that ECB mandate. And by clarifying the political steps necessary to allow the ECB to act, he also left a much clearer path to potential resolution…

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2012/08/21: Quick Post: Weekly Calendar and Perspective Now Available

August 21, 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 along with this week’s Summary Perspective on Key Influences. All we could say was ’Kick the Can’ seems to be working very well.  For all we have our reservations about the extended viability of the US (and now European) equities rally, it is a wonder to behold. We offer our compliments to ECB President Draghi on the outstanding spin he attached to supportive comments on the euro in London.

While clearly stating the European Central Bank will “do whatever is necessary” to save the euro, he quickly backed off at the following Thursday’s ECB press conference to make sure everyone also heard the caveat “within our mandate.” What a wonderful canard by which to flip the whole matter back to the political class regarding the nature of that ECB mandate. And by clarifying the political steps necessary to allow the ECB to act, he also left a much clearer path to potential resolution…

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2012/08/18: Quick Post: Weekend Reading on Continued Contentious Inconsistencies

August 18, 2012 Leave a comment

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

Equities seem like the Energizer Bunny of up trends right now… they just ‘keep going and going’, even if in a choppy and grinding manner some of the time. Yet, as we noted in the wake of Wednesday’s first September S&P 500 future daily Close above the 1,399-1,402 resistance, the burden of proof was on the bears to put the market back down or it was likely headed higher in the near term.

We will be very concise once again on the specific market comments in this post, because yesterday’s TrendView Brief Update  is a pointed discussion of the significant clash of forces between the equities market and other asset classes.  And a lot of the intermarket tendencies were just plain inconsistent with classical tendencies, and that became more so the case into late last week.

As we noted in our QE is the Opiate of the Perma-Bulls part 1a (part 2 to be provided soon) post a week ago Wednesday, it has been a “bad news is good news” equities market of late. And Perma-Bulls seem to feel the worse the better, at least insofar as that increases the chances for additional central bank Quantitative Easing or other forms of market intervention.

In a “rock and a hard place” psychology, that would be the ‘rock’ that underpins the market. And yet the ‘hard place’ that both investors and short-term portfolio managers find themselves in is the now almost pervasive weak economic data outside of the US. Even the stronger than expected UK Employment figures and Retail Sales this week along with US Retail Sales, Industrial Production, NAHB Housing Market Index, Michigan Sentiment, and Leading Indicators did not seem to help equities all that much in the face of weak data elsewhere.

And the other key aspect we keep a close eye on also reconfirmed those troubling global economic tendencies two weeks ago…

 

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2012/08/10: Quick Post: Courtesy Brief Update: “Rock and a Hard Place” Equities

August 10, 2012 Leave a comment

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

Short & Sweet again on the specific market comments in this post, because today’s TrendView Brief Update is a pointed discussion of the significant clash of forces in the equities market. As we noted in Wednesday’s QE is the Opiate of the Perma-Bulls part 1a (part 2 to be provided soon), it has been a “bad news is good news” equities market of late. And Perma-Bulls seem to feel the worse the better, at least insofar as that increases the chances for additional central bank Quantitative Easing.

That would be the ‘rock’ that underpins the market. And yet the ‘hard place’ that both investors and short-term portfolio managers find themselves in is the now almost pervasive weak economic data. Even the recently Teflon Equities could not withstand the weak Chinese Export data today in the wake of their other weak data yesterday. All of which is only the further reflection of across-the-board weak global economic indications backlashing into China.     

And the other key aspect we keep a close eye on also reconfirmed those tendencies yesterday…

 

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2012/08/08: QE is the Opiate of the Perma-Bulls part 1a

August 8, 2012 Leave a comment

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

While Part 2 will be forthcoming soon, there are some developments which warrant immediate review due to the market focus highlighting them into tomorrow. For anyone who has not already read it, you might want to review our post from Thursday for some key points that we expand upon below. Also note that our general skepticism over the central banks’ ability to reinvigorate economic health purely with liquidity expansion is not a recommendation to sit short of equities at any particular point. Timing and risk management are still essential, and right now the equities are trading well technically.

That said, we seem headed for the next critical phase either later this week or by the middle of next week. And much of it relates to the same sorts of things reviewed in our discussion last Thursday: problems in Europe and relative health of China, even if the US Fiscal Cliff dilemma seems (incredibly) off the table with Congress out for a five week summer break.  

As noted in previous analyses, Europe is now being ceded a “benefit of the doubt” grace period on the inference that ECB President Draghi will be ready to move forcefully if Spain and Italy get German approval for European Financial Stability Facility (EFSF) support. That is typically a 3-5 day hiatus from bearish sentiment, and may even last a bit longer this time given how close they seem to something more substantial than previous efforts.

However, that only plays into our previous concerns over whether crisis mitigation and/or liquidity expansion amounts to anything that actually restores robust global economic growth. While the bulls use the prospect of various forms of Quantitative Easing (QE, ultimately the ‘Bernanke Put’ and now the ‘Draghi Put’) as an excuse to move money into equities, there is a far more important real world influence late this week.

That comes in the form of…

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2012/08/07: Quick Post: Weekly Calendar and Perspective Now Available

August 7, 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 along with this week’s Summary Perspective on Key Influences. Even as we remain a bit skeptical of the extended rally, it must be allowed that the better sentiment from the extended implication of ECB President Draghi’s press conference can push equities higher in the near-term.

That much was apparent by Friday morning, so it is no surprise that the positive equities influences have the upper hand for now. And as we noted on Friday, that means the primary government bond markets and US dollar were going to suffer as their ‘haven’ bid tendencies were reversed in the face of the sustained near-term equities strength.

And with a relatively light reporting calendar early this week, the factors that might discourage equities once again can only appear from Wednesday into Thursday based upon two aspects…

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