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Carlos X. Alexandre
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Carlos X. Alexandre is a Stock Trading Tactician (far more impressive than being a mere trader) and has managed investments privately — stocks, bonds, commodities and currencies — for over two decades. An investment industry outsider and politically independent, he developed proprietary trading... More
My company:
CXA Markets
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CXA Markets BroadView
My book:
The Strategic Truth about Investing
  • CXA Markets Digest: Global Economic Picture Weakens 0 comments
    Dec 1, 2012 10:07 AM | about stocks: SPY, DIA, QQQ, VTI, IWM, AGG, OIL, USO, GLD, SLV, UUP, FXE, FXY

    A deal to release the long-delayed €34.4 billion aid payment to Greece was reached, and the eurozone finance ministers agreed to freeze interest payments on Greek loans for 10 years, extend the maturity of loans 20 years or longer, and work on a buyback program. Germany's parliament gave its blessing to the process, as if they have a choice, and while the rhetoric will continue, let's pay attention to actions, not words. Although the headlines look pretty, the underlying details are not, and without going off the deep end, Christoph Well, an economist with Commerzbank, summarized the condition well for those without time or patience.

    The whole structure of the Greek aid deal intentionally concealed from the taxpayers...We will highly likely need to negotiate the sustainability of the Greek debt again in 2014, but a clear haircut now would have been much better with regard to the transparency for the taxpayers.

    The Organization for Economic Cooperation and Development revised its growth forecast for the world's advanced economies in 2013 and warned that "the risk of a serious global recession cannot be ruled out." The OECD now expects growth of 1.4%, down from 2.2% forecasted in May. Brazil's economy grew a meager 0.6% in the third quarter, far short from the 1.9% forecast, while India's GDP registered 5.3%, the lowest growth in a decade. The BRIC story continues to unravel.

    Then the French showed their true colors, and in an effort to prevent job losses Mr. Hollande used the "nationalization" threat against ArcelorMittal. The issue is not whether the French government will move forward with the nationalization of Florange, but rather how the Socialists have no boundaries.

    Market TrendsWith the fiscal cliff story providing volatility and every political word being dissected, all indices remain short-term positive. The long-term picture has improved and only the Dow Industrials is negative, while the others are neutral. The dollar is still short-term negative and long-term neutral, while the euro is short and long-term positive. Despite a short lived bounce, the yen's decline continues. WTI and Brent oil are both short-term positive, and their long-term trends are still negative and positive respectively. Gold and silver's volatility increased, and their short-term trends are now negative and neutral respectively. Copper is the metal that has found a new bid, and has turned short and long-term positive, living in a world of its own, especially as manufacturing data is less than stellar. The 10-year Treasury rate reversed course again, this time declining to 1.60% from 1.69%. Short-term trends turned positive for the 10-year note and 30-year bond while their long-term trends remained positive. Next week we'll get U.S. unemployment numbers, ECB rate decision, PMI numbers, and Chinese data over the weekend.

    InvestmentsYTD2011
    CXA Markets Nimble41.38%77.75%
    S&P 500 ETF (SPY) - including dividends14.97%1.04%

    (click to enlarge)

    U.S.A.Durable goods were unchanged, and core goods increased 1.5%. Excluding defense, orders increased 0.1%. Richmond Fed's latest survey of manufacturing activity rose to 9 from October's reading of -7. Shipments rose twenty points to 11, new orders moved up seventeen points to finish at 11, and the jobs index rose eight points to 3.

    The S&P/Case-Shiller Home Price Indices showed a continued rise in home prices, with the 10- and 20-City Composites showing annual returns of 2.1% and 3.0% respectively. New home sales declined 0.3% in October to an annual rate of 368,000, with the previous month revised down 5% to 369,000 from 389,000. The median home price dropped 4.2% to $237,700, with the home supply increasing from 4.7 to 4.8 months. Pending home sales rose 5.2%. The Mortgage Bankers Association' mortgage application activity index declined 0.9%. Refinancing applications declined 1.5% and home purchases increase 2.6%. Freddie Mac's average 30-year mortgage increased to 3.32% from 3.31% and the 15-year rose to 2.64% from 2.63%.

    The Conference Board Consumer Confidence Index increased from 73.1 in October to 73.7 (1985=100). Student loans, the "other debt," rose to $956 billion in the 3rd quarter from the previous quarter's $911 billion, with delinquencies above 90 days rising to 11.1% of all borrowers, up from 8.9% a year ago. The Fed's Beige Book tried to establish a connection between the fiscal cliff and the fact that "seven of the 12 Fed regions reported weak factory activity." We shall see.

    Third quarter GDP was revised up to 2.7% from 2.0%, helped by higher inventories that must be consumed at some point and are pilling up. Meanwhile, household purchases rose only 1.4%, the smallest gain in over a year and down from a previously reported 2% increase. Consumer spending declined 0.2% in October while personal income was unchanged - and Hurricane Sandy is still being blamed.

    Jobless claims came in at 393,000, a decrease from 416,000. The 4-week moving average was 405,250, an increase of 7,500 from the previous week. The insured unemployment was 3,287,000, a decrease of 70,000 from the preceding week's revised level of 3,357,000, and the 4-week moving average was 3,296,250, an increase of 6,250.

    GlobalEurozone lending to households and companies contracted for a sixth month in October, declining 0.7% from one year ago. German unemployment increased for the eighth consecutive month, rising by 5,000 people to 2.94 million. The unemployment rate was unchanged at 6.9%. German retail sales tumbled 2.8% and French consumer spending declined 0.2%. Eurozone CPI dropped to 2.2% from 2.5% and unemployment rose again to 11.7%, a new record. The Eurozone retail sector continues to head south, with the Markit's PMI registering 45.8, an increase from 45.3.

    Retail sales in Japan dropped 1.2%, and manufacturing is still in contraction mode with the PMI registering 46.5. Preliminary industrial production rebounded 1.8% after a drop of 4.1% the previous month. Japan's CPI was unchanged and unemployment remained at 4.2%. China's PMI registered 50.6, up from 50.2 in October, but hardly a reason to celebrate.

    Themes: Market Outlook Stocks: SPY, DIA, QQQ, VTI, IWM, AGG, OIL, USO, GLD, SLV, UUP, FXE, FXY
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