Archive for November, 2011

10 Tuesday PM Reads

Afternoon train reading:

• Are You A Born Investor? (Psy-Fi Tech)
• The Man Who Busted the ‘Banksters’ (Smithsonian Mag)
Marshall Auerback: Interview (Resource Clips)
• Counting the Underwater Homeowners (Economix)
• In the Name of Corporate Profitability, 1781 and Today (The Reformed Broker) see also Are Corporate Balance Sheets Really the Strongest in History? (Hussman Funds)
• Echoes of history: The German fear of inflation rears its ugly head again (Periscope Post)
• Network Effects: How Google & Apple Dominate Mobile (Read Write Web)
• How Brooklyn Got Its Groove Back (City Journal)
Bartlett: Gingrich and the Destruction of Congressional Expertise (Economix)
• No art? No social change. No innovation economy. (Metropolitan Group)

What are you reading?

Source: Read Write Web

Category: Financial Press

Fact or Fiction: Is the Consumer Back?


Fact or Fiction: Is the Consumer Back?
Stacy Curtin
Daily Ticker

Category: Media, Retail, Video

Flow Chart For The EFSF

Peter Tchir started TF Market Advisors in 2011 as a platform to trade marketable securities as well as provide expert market information. He is a regular guest on Bloomberg TV and radio, and is often quoted in the Wall Street Journal, the Associated Press, and Fox Business News. Peters clients include top hedge funds, money…Read More

Category: Bailouts, Federal Reserve

Merkel to neuter the German Constitutional Court?

It looks as if Mrs Merkel is trying to neuter the German Constitutional court on matters relating to the euro zone financial issues – possibly without a referendum, report German newspapers. All part of the Machiavellian plan, I set out the other day. The Constitutional Court is to opine on a number of issues in…Read More

Category: MacroNotes

Taibbi: Judge Rakoff’s Rejection of SEC/Citigroup Settlement

Keith and “Countdown” contributor Matt Taibbi of Rolling Stone discuss the remarkable decision by U.S. District Judge Jed Rakoff to reject a $285 million settlement between Citigroup and the Securities and Exchange Commission for misleading investors. Taibbi points out that banks take punitive settlements in stride, saying, “They recognize that every now and then they’re going to get dragged into court, they’re going to have to give a little bit of money to somebody, and then they get to walk away and keep doing it.”

Matt Taibbi on Judge Rakoff’s decision to reject the SEC’s latest settlement with Citigroup

Category: Bailouts, Legal, Video

QE3 all but guaranteed

Likely confirming QE3 on Dec 13th when the FOMC next meets, Fed Gov Yellen, part of the Bernanke, Dudley trio said while the “Fed continues to provide highly accommodative monetary conditions to foster a stronger economic recovery in a context of price stability,” she said “the scope remains to provide additional accommodation through enhanced guidance…Read More

Category: MacroNotes

November 27, 2011:

The short term (weeks) bullish setup of several technical patterns, which are annotated in the first chart below is consistent with:

(a) the labor market leading the reacceleration in the U.S. economic recovery (see the charts and table of unemployment claims further below) as measured by the U.S. core business cycle, using quarterly GDP data, and by the monthly business cycle coincident indicator data from the Conference Board (CB), both adjusted for population growth, as demonstrated in charts further below; and

(b) the ongoing Strong Season of the annual stock market cycle from its bear-trap Oct 4 low, including the upcoming bullish yearend holiday season with its Christmas, Santa Claus, and the combination of month-end, quarter-end and yearend rallies, summarized in the schematic even further below.

Combined, we fully expect these chart patterns, fundamentals and seasonal conditions to lead to a significant short term stock market bounce, completely reversing its current oversold condition just as the Q4 pre-earnings reporting season gets underway in January.

Even more important to this occurring will be negatively correlated moves from both the bond market, which started topping out Friday, and the U.S. dollar doing the same this coming week, in spite of the constant barrage of (supposedly) negative news on the Eurozone debt crisis.

As a result of over-touted Economic Cycle Research Institute (ECRI) and many others being too early in their U.S. recession calls over several months, we expect that by yearend, all-important permabull institutional investors will join in a herding consensus that the U.S. economy is both decoupling from Europe, which is back into recession again, this time driven by austerity fiscal policies, and from the incipient slowdown in the investment-bubble driven Chinese economy.

All of this will support the NDX long position in our double-profit potential, countertrend hedge recommendation, which has virtually eliminated all portfolio volatility for the past almost four months.  Profits were taken months ago in our long-standing long positions in gold and bonds and short positions in the U.S. dollar.   Of course, we expect to re-establish these positions in our recommended model portfolio later next year.

We believe the coming popular assessment of a decoupled, reaccelerating U.S. economic recovery will then have been only correct on an intermediate term (months) basis, since longer term we still expect an after-shock, double-double dip global recession, following the financial crisis and Great Recession in the U.S.

We still fully expect the global economy will later enter into a vicious cycle, or downward spiral, with negative feedback loops, as the major international trading blocs have rolling recessions that will progressively interlock.  This will result in our long-standing call for a China/commodity bust and a follow-on major currency crisis continuing the forex de facto devaluation of the U.S. dollar since 1985 as the trading blocs clash trying to solve their sovereign deficit/growth problems in a major win-lose foreign trade battle that will last for several years.  The U.S. will likely ultimately win with a formal devaluation of the dollar.

If you are a Wall Street Journal subscriber, here’s a dozen-years late realization of the investor mass mood that we expect will become widely prevalent at the end of the equity Supercycle Bear Market late next year and persist for several years thereafter: Very slow growth 2012 then long bear to 2020

But please don’t confuse this with thinking we are perpetual doom and gloomers.  We fully expect all of this, as we forecasted more than a dozen years ago with our SMECT model A Forecasting Model That Integrates
Multiple Business and Stock-Market Cycles
to end the still-ongoing, ultimately debt and asset deflationary U.S. Supercycle Cycle Winter (see our summary quant table at the bottom here), and that it will be naturally followed by a reflationary economic Supercycle Spring, which will probably bring the Dow 30 ultimately to between 50,000 and 100,000 by 2030.

More specifically, our long-standing working model is that we expect the U.S. stock market will probably triple every eight years, if not double every five years, during the next equity Supercycle Bull Market.  And following the incipient equity Supercycle Bear that started 6.7-months ago on May 2, that Supercycle Bull Market will naturally follow a very volatile technical basing period during the two years between the coming Presidential election and the following midterm Congressional election in 2014.

Note in the first two charts below that initial unemployment claims, one of ten components of the CB’s (LEI), have declined to their lows seven months ago  (especially on a four-week smoothed basis), which is bullish for the U.S. stock market.  The stock market is another one of the LEI components, so the two time series are coincident to each other with a high inverse correlation, especially over several months.  And continuing claims, in the third chart, have even broken to new lows, which is equivalent to new highs in the stock market.

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Category: Markets, Technical Analysis, Think Tank

Home Prices Weaken in Q3 of 2011

The data point of note is that “the national index posted an annual decline of 3.9%, an improvement over the 5.8% decline posted in the second quarter. Nationally, home prices are back to their first quarter of 2003 levels.” This should not be astonishing to anyone who has been paying attention. > click for larger…Read More

Category: Economy, Real Estate

Euro in `Death Struggle,’ FX’s John Taylor Says

John Taylor, founder, chairman and chief executive officer of FX Concepts LLC, talks about the outlook for the euro and the European sovereign debt crisis. Taylor, speaking with Betty Liu and Dominic Chu on Bloomberg Television’s “In the Loop,” also discusses the Japanese yen.

Source: Bloomberg, Nov. 29

Category: Currency, Video

Confidence surprises to upside but…

Consumer Confidence in Nov at 56 as measured by the Conference Board was well above expectations of 44 and up from 40.9 in Oct. It’s the best since July and is almost back to the 11 month avg ytd of 57.6. The Present Situation rose 11.2 pts to the best since May and Expectations rose…Read More

Category: MacroNotes, Psychology