Morning Market

Yesterday, the big news was the release of massive liquidity in a coordinated move by the central banks.  While I don't believe this was a positive development (more on that in the next post) the markets were obviously thrilled.  Prices moved through all three EMAs on decent volume.  Yesterday's fundamental event was what was required...

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Bonddad Linkfest

India GDP slows to 6.9%Eurozone unemployment hits Euro area highDanish economy shrinks againBusinesses are planning for an end to the euroDo financials even matter to the stock market anymore?Three inconvenient truths for OWSEurodoomNew home sales stuck at low levels  US home sales and prices10 brands that will disappear in 2...

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Consumer Confidence and Personal Consumption Expenditures

With yesterday's much publicized jump in consumer sentiment, I thought I'd take a look at the relationship between consumer spending and consumer sentiment. The above chart shows the percentage change from last year of personal consumption expenditures (left side scale) and the University of Michigan's consumer sentiment (right side scale). ...

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The "Going Nowhere" Economy

For the last year, the economy has been stuck in the mud.  We're growing, but not at a fast enough pace to lower unemployment.  Consider the following charts:The Annualized GDP rate has been at or below 2.5% for the last 5 quarters.  Three quarters ago we were barely growing.  And while the last two quarters have seen some increases...

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Euro Hubris Pricked

The days of optimism and hubris about the Euro are long gone.Wolfgang Schauble, Germany's finance minister has admitted that Eurozone finance ministers, who are meeting in Brussels, cannot agree on the terms of the European Financial Stability Facility (EFSF). He went on to tell Handelsblatt that plans for the EFSF were too “intricate and complex” for investors to understand.Based on my experience of finance and fraud, when someone says that something is too complex for people to understand it generally means that either:1 They don't...

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Morning Market

Even though the SPYs have risen the last two days, notice that prices moved lower throughout the respective trading day.  In short, this is not a strong rally.The daily chart shows the latest action in more detail.  Notice the very small candles that have printed over the last two days.  In addition, prices have closed below the 10 day...

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Bonddad Linkfest

Italy pays record yields at auctionDemocrats seek to extend payroll tax cutGingrich's economic planSweden grows at 4.6% clipState budgets slowly improvingHousehold debt overhang continues to move lowerOECD warns of possible US recessionNew home sales tick up Consumer confidence picks upUS home prices decl...

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How to Solve the Economic Problem; and Why We're Not

A welcome to readers of Economists View -- and a thanks to Professor Thoma for the link.The economic situation really hasn't changed much in the last 12 months.  The US economy is still barely growing, meaning the high unemployment rate won't get much higher, but also won't get much lower.  The EU is still in the middle of a dire financial situation which is helping to keep a lid on economic growth, while China is still working at lowering inflation (although they are close to the end of the endeavor).So -- how do we actually end this...

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Busted Flushes

Eurozone finance ministers to meet in Brussels today to discuss ways to expand the European Financial Stability Facility (EFSF).Given that it has been proven to be a busted flush, this meeting will be a remarkable waste of time.Meanwhile, in the UK, George Osborne, will deliver his Autumn Statement.This will be a "jam tomorrow" speech, in which he attempts to create the UK's mini version of the EFSF by using a £5BN cash injection from the government to leverage a further £20BN or so in finance from UK pension funds and the Chinese.To give him...

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Morning Market

All the major equity indexes are caught between the 38.2% and 61.8% Fibonacci level of their respective charts.  However, all the shorter EMAs are now moving lower with the shorter below the longer.  My best guess is we're looking at a sideways consolidation until we get a firm read from the EU.Copper is still very bearish.  Prices are...

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A Few Chart Notes

Gold is in the middle of a multi-month, symmetrical triangle consolidation. Financial comprise about 13% of the SPYs.  Notice the financial sector is in very bad technical shape.  They are in a clear downward trend.  While they tried to rally at the end of October, the hit resistance at the 200 day E...

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Real wage deflation, savings rate decline raise yellow flags

- by New Deal democratPermabulls and permabears constantly change the data they highlight in order to justify their already-held conclusion. One way I try to keep myself honest is to look at the same data-sets over and over again - something I do every week in my "Weekly Indicators" posts. With the temporary lull in dramatic (US) economic direction,...

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Bonddad Linkfest

OECD warns of contagion riskOECD warns of slower economic growthEU in talks to create closer tiesBlack Friday sales were strong and encouragingEurope's banks feeling a funding freezeChina looking to invest in foreign infrastructureBlack Friday sales hit recordSPY looking negative in daily and weekly time frames EU spreads are pretty u...

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The Farepak Debacle V

Regular readers may well recall that I have written several articles (some years ago) about the collapse of the Christmas savings company Farepak.To add insult to injury of those who were robbed of their savings by its collapse, it now transpires that the cost of administering Farepak now stands at £8.2M in fees paid to BDO the administrator, lawyers and various others.As for the 120,000 people who lost money (an average of £400 per person) the most they can expect to receive in compensation is £5.5M, most are still waiting, which equates to roughly...

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The Abyss

Starting the week as it will most surely go on, the OECD has given an urgent warning that Europe, and by definition the global economy, is standing on the edge of the abyss.The OECD stated that the failure of EU leaders to stem the crisis could "massively escalate economic disruption" and end in "highly devastating outcomes"."The euro area crisis represents the key risk to the world economy at present."Needless to say, the Eurozone seems determined to dig its (and the global economy's) own grave, and continues to sow the seeds of confusion...

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Morning Market

When looking at the big picture, notice that SPY prices went slightly above previously established lows, fell back to the 200 day EMA, rose again, but couldn't maintain upward momentum and have since fallen back. The IWMs have followed a similar long-term trajectory.The 3 month charts shows the detail of the latest sell-off. Prices have dropped...

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Weekly indicators: hope for a good jobs report edition

- by New Deal democratIn the rear view mirror, second quarter GDP was revised down from 2.5% to 2.0%. The more forward looking durable goods orders declined for a second month, down -0.7%. Another leading indicator, the University of Michigan final consumer sentiment reading for November showed that consumer confidence has rebounded about halfway from its debt ceiling debacle collapse that began in July. Personal income was up 0.4%, while spending rose only 0.1%. The personal savings rate rose .2% to 3.5%.With the continuing exception of...

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The EFSF - The Busted Flush

On Monday I wrote that the European Financial Stability Facility (EFSF) was a "busted flush".Finally it seems that the reality of that has hit home to the Eurocrats, who are trying to sell this unwanted product from their bunkers in Brussels.The Eurocrats have now admitted that "plans" to leverage a fund of Euro250BN to over Euro1BN will fail, and that less than half of that now looks likely (ie it will not be fit for purpose).Unsurprisingly this failure is attributed to the fact that the markets simply don't believe anything that is coming out...

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Why I'm giving thanks to the Occupy Wall Street movement

- by New Deal democratThis Thanksgiving something like 99% of Americans owe a special thanks to the Occupy Wall Street movement. It is not a question of what the movement does next, or what agenda or specifics it needs to succeed. It already has succeeded, and the only question is whether its success will continue.Let's flash back nearly 5 months....

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Latvia, a Portent of the Future

Fitch has cut Portugal's credit rating to junk.It has downgraded Portugal from BBB- (its lowest investment grade rating) to BB+ (the highest non-investment grade), with a negative outlook.Meanwhile, in Latvia, people are queuing to take cash out of ATMs as stores now only accept cash. Is Latvia a portent of the EU's futu...

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Dexia Deal Unravels

In mid October I wrote that the rescue "plan" for Dexia was unravelling.Today (one month later) the media are awash with reports that Belgium is pressing France to pay more into an emergency facility for Dexia.For why? Because Belgium knows that if Dexia falls over, the collateral damage to France (wrt its exposure to Dexia) would be immense.France is less than amused, because if it pays more into the rescue fund it's AAA rating will be undermined.This "renegotiation" is of course going to send the whole deal "tits up". As I noted in October:THERE...

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Happy Thanksgiving

My father is in for the holidays, so I think this is a good time to sign off for the already holiday shortened week.  We'll be back next Monday.Until then, have a safe and happy Thanksgiving.  And just in case you need a little off-center humor for the week ... I couldn't resist this o...

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About The "Oursourcing Our Jobs" Argument

From the WSJ:U.S.-based multinational corporations added 1.5 million workers to their payrolls in Asia and the Pacific region during the 2000s, and 477,500 workers in Latin America, while cutting payrolls at home by 864,000, the Commerce Department reported. The faster growth abroad was concentrated in emerging markets, such as China, Brazil, India and Eastern Europe, according to economists Kevin Barefoot and Raymond Mataloni, of the U.S. Commerce Department."Judging by the destination of sales by affiliates in those countries," the economists...

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No Really -- CRA and the GSEs Weren't the Reason for the Collapse

For those of us in the economic blogsphere, Barry Ritholtz over at the Big Picture is a bit like a blogfather.  He was one of the first economic bloggers who I read regularly.  We've traded some occasional emails and he's always been very gracious.His latest Washington Post column illustrates why he has such a great reputation: his research is exhaustive, which appeals to the academic side of me.  His latest column for the Washington Post adds much more intellectual weight to the argument that the CRA and the other government GSEs...

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Morning Market

Yesterday, the market sell-off continued:The 5-minute charts clearly shows prices consolidating and then breaking support at the 123 level.  Prices are now moving lower in a downward sloping channel.When trading patterns -- like this topping triangle pattern -- the general rule of thumb is to measure the height of the pattern and the subtract...

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The Thomas Cook Affair

Today Thomas Cook announced the following:"Thomas Cook Group plc announces that as a result of deterioration of trading in some areas of the business in the current quarter, and of its cash and liquidity position since its year end, the Company is in discussions with its principal lending banks with regard to its facilities during the seasonal low period of cash in the business. While the Company currently remains in compliance with its financing covenants, it also intends to seek agreement from its lending banks to adjustments that will...

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Bonddad Linkfest

Job polarization is increasing in the USChina confirms spending plan of $1.7 trillionIs vocational training the answer?Eurozone prints a trade surplusAsian exports lower because of slower world growth Housing may be near a bottomWork sharing programs may be a good answerWheat prices may have reached a floorAgricultural commodities bear brunt of speculator pessimismNonferrous metal price declines conti...

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Getting deep into the weeds about Jobs, Jobs, Jobs

- by New Deal democratIt's been quite a while since I looked at detailed metrics of future job growth, something I devoted a lot of time to a couple of years ago. With a divergeance in forecasts between recession vs. continued growth, this is a good time to take another look. Some of the metrics have performed better than others. Many continue...

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