Tim Mazanec's  Instablog

From a trading point of view I've been a believer that today's markets most resemble those from the '70s.  High volatility, too much politics impacting our lives, energy concerns, (Pittsburgh Steelers)...

The chart below overlays the equity runs from 1968 to 1979 and 2003 until today.  Often times these charts are doomed for failure if you expect a complete deja vu but nevertheless the periods are quite similar.  And of course if there is a repeat of the '75 to '76 equity move then 2011 may be a year for the bulls.




All that said if risk is poised for a bull run then usually you can see that being on display in EURUSD.  The chart below shows that there is no such gap between the Euro and equities right now.  If anything it appears that EURUSD may be forming another lower-high on a monthly basis.



If the string of lower-highs is broken and EURUSD quietly runs higher then equity bulls should take notice as it may be a return to the '70s.


This report is for your information only and does not constitute investment or business advice or an offer to buy or sell securities.

Another slight uptick in US Capacity Utilization for the month of December.  Excluding this past September (post revisions) Cap. U. has increased every month since July of 2009.  Not a bad streak.

The chart below overlays US Capacity Utilization to the Fed. Funds rate since 2000.  Clearly a gap is being created, one that looks to be replicating the gap from the post 2002 recession.  As we all know when that gap closed the outcome was quite ugly.

So what is the Fed waiting for?  Have the odds decreased yet for QE III?  This should only add to the argument that the Fed should only have a single mandate  similar to the ECB.  Btw didn't the ECB warn us yesterday on the outlook for inflation (and not deflation). 





This report is for your information only and does not constitute investment or business advice or an offer to buy or sell securities.

The December Treasury Statement shows why the US consumer remains so resilient.  In fact it appears that for the month of December the Treasury withheld record tax revenue from individuals (yet they still posted a deficit).

Accumulated income withholding taxes were up 11.2% y/y and Total individual income withholding taxes were up 5.8% y/y.

By comparison the Dec. '09 figures were -14% y/y and -19.8% y/y respectively thus quite a turnaround in 2010.

The chart below illustrates the latest rebound:



Also note that this chart does not include the revisions as necessitated by the Social Security Act.  Those revisions would further flatter the rebound that occurred in 2010.



This report is for your information only and does not constitute investment or business advice or an offer to buy or sell securities.