S&P Target 1600: The P/E Decompression Stampede - Part VI [View article]
I agree with you JH. In 2005, I was asked to come up with a reasonable strategy for a mutual fund to be invested in publicly listed "Renewable Energy" equities. I did... suffice it to say, 20% were utilities, and only 20% were "pure plays". I have long opposed ethanol and solar - even though I am a founding member of ACORE. Actually, I wrote an Instablog on the next Solyndra, Crescent Dunes. These, together with fuel cells, are the best example of macro gone crazy. That's when you put Wall Street in the middle, to raise the money the government won't spend. Remember Verasun, Aventine, Earth Biofuels - I wrote a big chapter on this in my book. Right now, it's AONE's turn. ACORE is up in arms about a bill introduced in Congress called the "No More Solyndra Act". I computed the Government loan guarantee program has a cost per job created of $605,000... http://bit.ly/N1HMXD
S&P Target 1600: The P/E Decompression Stampede - Part VI [View article]
OK. This is Tuesday July 31st. @ 13:00 EST. This move does not qualify as a Stampede - yesterday was low volume, no follow-through, and so is today. As a result, and as logic implies, the Dow Model momentum is weakening, and the weakness is mainly in Industrials. I am starting to reduce exposure - we are at DJII 13035 and S&P 1381. This is not a flip-flop, it's a short term hedge in front of news that I can't put odds on. In addition, there are 7 stocks testing support. If the news is "bad", they will undoubtedly break. If the news is "good", this means there is enough room on the upside to jump back on board. Right now, it's 50-50, and I am not paid to play this kind of odds.
S&P Target 1600: The P/E Decompression Stampede - Part VI [View article]
Thanks for the comment. I don't see much of a correlation between copper and stocks. There is a good one between copper and gold, certainly since April, but they have not participated in this two months rally. And I am not sure what you mean by crashing. If anything, the 90-day copper at 3.45 is higher than in mid-may at 3.40. I don't follow commodities much, let me know if I am missing something.
Monday Market Movement: More Mario Momentum? [View article]
Phil, good stuff as usual. I have my own Dow Industrial Model, which has been quite helpful in this volatile period - it usually works best at tops and bottoms, and maybe a gremlin or something got it to work better. Personally, I see 14 stocks having broken resistance when the overall Dow was at 13000, so my new upside target is revised to 13309, with support at 12888 -I look at each stock individually, with my own gizmos, because the standard deviation of individual returns is so large that I find it statistically irrelevant to just look at the index. My momentum indicators do not call for a major loss of momentum here, so if there is a sell-off, it will news driven - duh! Then I will need for my new individual trading ranges to be broken by a majority of stocks - usually 10 or so - for me to change my objective.
Your analysis of Draghi is of course on the mark, so is your allusion to the Multiplier. Funny enough, Lagarde used the same argument to support the ECB policy. I say funny enough because in this country, the M1 MULT is still in the 2009 doldrums, at 0.87.
I wrote way earlier that Europe was seing the return of the Zaibatsu:
"I have long held the view that in Europe, there was an incestuous interlocking relationship between banks, industry and politics. If you think we are bad, check over there [...] this EIB story was the missing link to the European version of such Japanese pre-WWII conglomerates called Zaibatsu, now Keiretsu. They all centered on a bank. Germany has Deutsche Bank; Europe now has the EIB."
This may be the reason why jawboning does not work here, but it may work there... Queen Christine may have a point.
S&P Target 1600: The P/E Decompression Stampede - Part VI [View article]
aarc, I truly appreciate your contribution. Thank you very much for taking the time, and clearly the technique. EW is one of my unknowns, but Fibo I can understand! I am all ears, and I think the readers will appreciate as well.
Weekly Outlook: Market At Risk Of A Blow-Off Top? [View article]
Price,
I have a different approach to indexes given the usual large standard deviation of thier components relative returns. You may want to check my articles entitled "The Dow Jones Industrials Model - A view from the Inside". Last one published last week, with a sequel today. http://bit.ly/Mu8DL4
The net of it: in the Dow,14 stocks broke their resistance levels, and another 6 are testing it. My own Momentum indicators, which are short term, still indicate a a positive trend, and the overall index is still below the middle of the trading ranges of the individual components.
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
Roger, very interesting article. If other readers look at it, I suggest going directly to the whole PDF file at the end. I agree with the trade conclusion, i.e. a weaker euro. Somewhere above I suggest in the end, once the "Instable" becomes "Stable", the loaf of bread might be worth 50 in Japan, 100 in the US and 250 in Europe. Actually, I have to question the validity of the use of the trade weighted index in Woo's argument - he says we are still 10% ahead of the 2000 level. By my book (literally, page 45) the absolute value of the dollar reached 0.85 in the 2001-2002 period, at the bottom of the Internet Bust - so, as far as I am concerned, the downside could well be far greater than 10%.
Actually, I do not think Draghi's statement last week implies a stronger euro. Woo is totally correct, a weaker euro is the only way to stimulate overall European growth since its internal consumption is collapsing, to include Germany's exports to its own block.
I also agree that Eurobonds won't happen - Woo talks about fiscal union as a concept. I think it's easier to understand it as a reality: fiscal union can't happen because, from a practical standpoint, no country is going to relinquish its taxing authority to fund its own Defense and Social programs.
I finally agree on the Game Theory conclusion: the odds favor no cooperation, and there is a huge economic, social and political risk to a breakup of the zone. The best way I found to illustrate the point is the fact that the Ode to Joy has no official lyrics, but Merkel said it sometimes last year: "this is worse crisis since WWII".
However, here is where I disagree, picking up on Merkel's comment. We know all of the above, and so do the smart bankers over there - I am not talking about the Trichets, I am talking about the Draghis. So do the students of history, and fortunately, so far, we have not seen the emergence of an internationally backed nationalist movement - like the National Socialist party in 1920 financed, yes, by the UK and the US. In fact, it is interesting to note that Woo mentions the Five Star Party - it may be eurosceptic, but Green is usually peacenik.
Now, this is clearly a long process, meaning years. Already, we have avoided the 1930 shock scenario. And Draghi has only been head of the ECB since last November. If you remember, at his first meeting, he lowered rates, something Trichet had resisted for years. Then a number of things had to happen - government changes (Greece, Italy, France), debates, posturing, trial ballons, waiting for the lagged impact of policy decisions and jawboning statements. It looks like, contrary to his predecessor, Draghi wants to act, and sooner rather than later. He is going to formulate the obvious alternatives laid out in Woo's piece - and mine :): sInk or reflate, without the rethoric. If I read him right, he does what any politician does - let's first meet in executive session. If this does not work, he will go public. Last thursday he was just testing the microphone. It worked pretty well. Let's now see who volunteers to break up the party. Tough to fight a two-day 4% rally, in front of a week-end and despite anemic GDP numbers...
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
funny, I am sure I'll use your dictionnary at some point... If this thing stampedes - we will know by next wednesday, we need higher highs on higher volume, then it will take a new external thinggy to bring it down. Could happen. People take it for granted that Iran is not a question of if, but when - personally, since they are Russia's satellite, I don't see Putin giving its approval until I understand what he would have to gain by indirectly engaging the US. Same thing for Israel, or North Korea. So this leaves us, short term, with the elections. Again, personally, I would think a Romney win would be very positive, but it's not a shoe in at this time. Curiously, I might add.
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
pankaj123, on gold I frankly don't know. I can argue both ways, and it's not necessarily full proof - see John Paulson. I personally prefer Real Estate. And I usually try to keep away from worrying about past performance. I was showing a teenage friend of my sons who likes the market some charts on housing stocks - PHM, TOL. We won't get to the 2007 highs, for obvious reasons, but while these stocks have tripled or quadrupled since their 2011 lows, in my mind they can still double.
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
Eric, thanks for the comment. In my scenario, liquidity will mean solvency - buying the debt with "fiat" money. This is the monetization step. If it does not work, we go to the nationalization step - the taxpayers foot the bill directly. No banks failed during Weimar, to my knowledge.
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
Thanks! I agree with you, certainly over the long term. I started writing this on Thursday, but got carried away by this new theory... I have not been a gold bug before, which is why I don't write about it, but I have to come to the same conclusion. Thanks for LOL.
It's 3:55 Thursday 8/2 - I Am Covering Shorts @ SnP 1365 And DJII 12880 [View instapost]
S&P Target 1600: The P/E Decompression Stampede - Part VI [View article]
S&P Target 1600: The P/E Decompression Stampede - Part VI [View article]
http://bit.ly/N1HMXD
S&P Target 1600: The P/E Decompression Stampede - Part VI [View article]
S&P Target 1600: The P/E Decompression Stampede - Part VI [View article]
Monday Market Movement: More Mario Momentum? [View article]
http://bit.ly/T21vJB
Your analysis of Draghi is of course on the mark, so is your allusion to the Multiplier. Funny enough, Lagarde used the same argument to support the ECB policy. I say funny enough because in this country, the M1 MULT is still in the 2009 doldrums, at 0.87.
I wrote way earlier that Europe was seing the return of the Zaibatsu:
"I have long held the view that in Europe, there was an incestuous interlocking relationship between banks, industry and politics. If you think we are bad, check over there [...] this EIB story was the missing link to the European version of such Japanese pre-WWII conglomerates called Zaibatsu, now Keiretsu. They all centered on a bank. Germany has Deutsche Bank; Europe now has the EIB."
This may be the reason why jawboning does not work here, but it may work there... Queen Christine may have a point.
S&P Target 1600: The P/E Decompression Stampede - Part VI [View article]
Weekly Outlook: Market At Risk Of A Blow-Off Top? [View article]
I have a different approach to indexes given the usual large standard deviation of thier components relative returns. You may want to check my articles entitled "The Dow Jones Industrials Model - A view from the Inside". Last one published last week, with a sequel today. http://bit.ly/Mu8DL4
The net of it: in the Dow,14 stocks broke their resistance levels, and another 6 are testing it. My own Momentum indicators, which are short term, still indicate a a positive trend, and the overall index is still below the middle of the trading ranges of the individual components.
Zynga Earnings Recap: Should Have Bet The FarmVille [View article]
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
Actually, I do not think Draghi's statement last week implies a stronger euro. Woo is totally correct, a weaker euro is the only way to stimulate overall European growth since its internal consumption is collapsing, to include Germany's exports to its own block.
I also agree that Eurobonds won't happen - Woo talks about fiscal union as a concept. I think it's easier to understand it as a reality: fiscal union can't happen because, from a practical standpoint, no country is going to relinquish its taxing authority to fund its own Defense and Social programs.
I finally agree on the Game Theory conclusion: the odds favor no cooperation, and there is a huge economic, social and political risk to a breakup of the zone. The best way I found to illustrate the point is the fact that the Ode to Joy has no official lyrics, but Merkel said it sometimes last year: "this is worse crisis since WWII".
However, here is where I disagree, picking up on Merkel's comment. We know all of the above, and so do the smart bankers over there - I am not talking about the Trichets, I am talking about the Draghis. So do the students of history, and fortunately, so far, we have not seen the emergence of an internationally backed nationalist movement - like the National Socialist party in 1920 financed, yes, by the UK and the US. In fact, it is interesting to note that Woo mentions the Five Star Party - it may be eurosceptic, but Green is usually peacenik.
Now, this is clearly a long process, meaning years. Already, we have avoided the 1930 shock scenario. And Draghi has only been head of the ECB since last November. If you remember, at his first meeting, he lowered rates, something Trichet had resisted for years. Then a number of things had to happen - government changes (Greece, Italy, France), debates, posturing, trial ballons, waiting for the lagged impact of policy decisions and jawboning statements. It looks like, contrary to his predecessor, Draghi wants to act, and sooner rather than later. He is going to formulate the obvious alternatives laid out in Woo's piece - and mine :): sInk or reflate, without the rethoric. If I read him right, he does what any politician does - let's first meet in executive session. If this does not work, he will go public. Last thursday he was just testing the microphone. It worked pretty well. Let's now see who volunteers to break up the party. Tough to fight a two-day 4% rally, in front of a week-end and despite anemic GDP numbers...
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]
There Will Be No European Liquidity Crisis: The Instable Equilibrium (Part IV) [View article]