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Posts Tagged ‘pro-cyclical’

2011/11/18: Quick Post: Perverse Trend Logic on Bund Down with Equities Thursday Actually Reasonable

November 18, 2011 2 comments

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Good old PTL. Just when everyone thinks they have it all sorted out because certain intermarket relationships have become sacrosanct, the market hands everyone a surprise. Except it’s not really a surprise, because one of the first things our mentors taught us more years ago than we care to mention is, “Just when you think you have it all sorted out, the market will hand you a surprise.” And that was certainly the case yesterday for a lot of folks on US equities continuing with the second day of a pretty good drubbing, yet the previously obvious ‘haven’ German Bund also sagged for the second day running.

And now, even though the equities have not recovered much from the past couple of sessions’ sharp selloff, the December Bund future has actually broken down below short-term support in the 137.00 area. And right along with that the US T-note kept its bid yesterday (even allowing it had lagged the Bund on the way up), the Gold market took its own major drubbing, and the euro and the US dollar have done a good job of keeping the bid together while commodity currencies suffer of late.

As bizarre as all of that may seem, it fits in with a particularly narrative that points to the European Sovereign Debt Crisis reaching a critical inflection point…

…which means the Germans are going to have to get their head out of the sand (or will be forced to do so by the rest of Europe and the world) in order to rationalize their current dysfunctional position.

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2011/09/18: Weekend Thought: During His Jim Cramer Interview, Secretary Geithner Spilled the Beans

September 18, 2011 2 comments

Quite a bit of softball questioning, and others that were leading insofar as they allowed Treasury Secretary Geithner to promote the administration’s renewed stimulus agenda. Nothing necessarily wrong with that; high-level political interviews are after all the art of the trade-off.

However, some of the questions were so generalist as to be meaningless. “Europe alive or dead in three years?” We presume Mr. Cramer meant “the Euro-zone”. And of course the correct answer is “absolutely“, without having to qualify in what form. While they agreed that would include saving Greece within the zone, we are not so sure (and will have more to say on that sometime soon.)

And one of the most telling insights from the interview came in response to one of those seemingly softball questions regarding why the administration’s new jobs initiative must be passed to avoid crippling economic weakness. It was less about the specific benefits or costs of the program, and more so about an aspect of the general economic context that very few have been willing to explore.

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