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Posts Tagged ‘European Debt-Dilemma’

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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2013/01/23: Quick Post: The Great Dissembler triumphs again

January 23, 2013 Leave a comment

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

The weekly Report & Event Summary Perspective is available through the link in the right hand column. This week’s Calendar has also been available since yesterday. And the continuing contradiction remains between fundamental influences that remain weaker than expected in some cases yet with technical trend activity which remains quite firm.

However, that is not such a huge surprise since the March S&P 500 future pulled off the ‘jailbreak’ above 1,474.50 last Friday (i.e. also a weekly Close) we had been discussing as a potential over the past several weeks. With a range of key technical indications (i.e. one of our classical ‘confluences’) pointing to next significant psychological and technical resistances not until 1,510 and 1,526, it is normal for the market to shrug off negative news until it gets closer to those levels.

After that, some of the problems which the equities are so happy to blithely ignore at present may come back to haunt the developed economies in spite of the generally upbeat psychology at present. And in our humble view, one manifestation of the sorts of problems that might well represent a real economic and market headwind came out of a less than obvious source: Secretary of State Clinton’s illness-delayed appearance before the US Senate Foreign Relations Committee.

It was obviously less of any sort of direct economic or market influence, and more so a clear indication of the utter inability of most folks in the US Congress, even the ostensibly very smart ones, to follow up on a line of reasoning. And there was one particularly interesting exchange and aftermath.

That was Mrs. Clinton’s emotional outburst in response to Senator Ron Johnson (one of those really smart folks in Congress) pointedly questioning her on the degree to which the Administration clung to its lame (and completely unsupported) claim that the Benghazi attack sprung spontaneously from a previously orderly demonstration. Just for the record (and edification of anyone who just came out of a several month coma), there was no evidence whatsoever of any demonstration at all prior to a very well-coordinated attack on the US facility.

That is in no way intended as a partisan criticism. As it is eminently clear that no additional critical information of any sort came out of this important hearing, there is plenty of failure on both sides that informs an even more depressing view than any failure to get to the truth behind the Administration’s disinformation policy how’s and why’s: neither side of the US political divide is capable of critical pursuit of information, as they are all much more interested in spouting sound bite fodder for their next set of election campaign ads… or so it seems.  

Hiilary's Hardline Hissy-fit

Hillary’s Hardline Hissy-fit

Mrs. Clinton’s fit of pique with Senator Johnson’s pointed discussion and inquiry is a wonderful case in point. As you hear her respond that it really doesn’t make a difference whether the attack sprung from a demonstration or “…guys out for a walk one night who decided they’d go kill some Americans…”, keep one thing in mind: Nobody ever asserted that latter was the case. And in taking that line, one of the Great Dissemblers (right along with husband Bill) of US and likely global politics won the day.

And for anyone who is unfamiliar with the term ‘dissemble’ it means, “To disguise or conceal behind a false appearance, or alternatively to make a false show.” Well, it seems we have a wonderful example of both here.

 

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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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2013/01/18: US Equities Attempt a Jailbreak… Subject to Recapture?

January 18, 2013 Leave a comment

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

As we noted last Thursday, the March S&P 500 future was going to be critical if and when it pushed up into 1,474.50. Of course, that was the September 15th lead contract (September 2012 at the time) rally high from the QE-phoria ECB and Fed driven surge. All of the broad technical factors which make that area such a major technical trend decision confluence were reviewed at length in last Thursday’s post Might the US Equities Attempt a Jailbreak?

And they remain much the same, as those major indications actually do not change much week to week. What also does not change much week to week is the relatively soft economic data out of Asia and Europe that has been countered by stronger readings in the US. We saw more of that this morning in the East and Europe, yet now have a day in the US with almost no economic data.  And the weak economic data in Europe might not be so troubling in the wake of the ‘lack of crisis’ guidance from President Draghi at last week’s ECB press conference.

As we have covered quite a bit of the fundamental positives and negatives of late, it is more important to focus on the end of weak technical activity today. What is most important is the manner in which the March S&P 500 future fell back from a push to a 1,480 high yesterday to park itself right near 1,475 on the Close. That leaves the decision either way with the activity later in the session into the weekly Close.

And each camp has its challenges. Before we explore those it is important to note that the market might decide not to decide: we could have another quiet Friday drift that has actually been the tendency over the past several weeks. However if either the bulls or bears are going to gain a clear advantage, each as to prove their case beyond a specific technical threshold.

On present form, the bulls have a bit easier in the context of the obvious upward momentum. While any gap higher that fails to get through next resistance (especially if it is particularly critical resistance) might also be exhaustion, remaining well above yesterday’s 1470.70 low early in the session creates additional support around 1,474.50 today. That said, the bulls still need to achieve a close at least several dollars above that level in order to have the jailbreak continue on the upward run. That is now reinforced by the top of the overall channel from the major November low (CH2) extending to up around 1,478 today.

SPHdaily-130117And based upon that same psychology of whether a gap higher fails, the bears really have their work cut out for them. Given that the rally up until yesterday had stalled at no better than a pre-existing interim congestion and 1,465-67, it is of note that Wednesday’s daily Close was 1,465.60 (i.e. right in the low end of that range.) That makes it very clear technically that the bears need to get the market to close back below 1,465-67 to turn the latest upside Acceleration attempt into Exhaustion instead.

However, what is clear technically does not necessarily mean it is easy to accomplish in the real world market activity. The market also gapped up last Thursday above the previous congestion and rally high the 1,460-62 area. Even though it stalled at what was then the top of the same channel, the lack of ability to close back below 1,460 left the aggressive New Year up trend intact.

The difference this time is that any lack of ability to put the market back below the current gap will create the escape above 1,475 that points to the low 1,500 area at a minimum. We will revisit the reasons for that elevated interim objective below. However there is a much more critical near-term psychology which will likely affect the market later today…

…and that has to do with the current general global regional influence psychology.

  

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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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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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2012/11/22: Happy Thanksgiving with NO Ambush

November 22, 2012 Leave a comment

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

Happy Thanksgiving to all of our US readers, with thanks especially for the lack of any big time volatile swing in the wake of an ambush today.

Let’s begin by allowing that there is typically only a marginal chance something will change radically on a surprise in one major financial center while another major center is closed for a holiday. That said, it has happened during some past instances. Tuesday’s Summary Perspective (available via the right hand column link) includes a brief discussion of how the US bond bears were ambushed in early November 2004. Back then the US bonds were under pressure near a critical low.

Yet on the November 11th Veteran’s Day holiday (also a Thursday) the German Bund saw some very weak German news that extended its rally to a significant new high. That deferred a broader US bond selloff for four months. In the event this time around the potential for Chinese and Euro-zone Advance PMI’s released today was certainly a concern for the recent equities rally back from a significant selloff. Yet, in the event they were constructive enough to allow equities to advance the last several days’ bid.

So no ambush this time, except…

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