GDP = C + I + G + (X – M) and the Illusion of Wealth
By World Complex.
A few weeks ago we discussed the growth of the “virtual” economy. The argument was that metal consumption (in particular copper and zinc) grew in accordance with global GDP until the mid ’70′s, after which metal consumption grew markedly more slowly than did global GDP. Our thesis was that global GDP (the “official” economy) has at least partially increased by management of perceptions and addition of a lot of economic “activity” which does not increase wealth.
It has troubled me in the past that I could file lawsuits against present and past associates, who in turn might file suits against me. In the very best scenario all that would happen is a redistribution of existing wealth, yet all the legal fees would be additive to GDP. Yet no wealth would be created (except from the lawyers’ perspective) and a great deal would be lost. It has always seemed to me that economic activity of this type forms a component of GDP the magnitude of which is unknown.
Weekend Recap Chart
Probably the Best Chart explaining this Market. Greed and Fear.
Chart Update (before you go long over the weekend)
Before you consider going all in long over the weekend, check out some charts below. After the Markets rallied hard over the past week, many shorts have been covering in this brutal squeeze. We know of many smart investors absolutely crushed this week. Some hedge funds have had a real nightmare, after the fundamental positions have been squeezed out totally.
The whole market has actually not done anything in two months, but building a consolidation pattern, with volatile swings. We are currently trading in no trend market, but the squeeze should start diminshing. Maybe putting on some shorts for the weekend….?
SPX hitting resistance levels.
Greek Austerity
Hudson on Austerity.
Remember SPX 30 days ago?
Quick snapshot of the 30 day chart of ES Futures. A month ago, we traded at the same levels, we tried breaching the resistance, but the market reversed and plunged heavily. With many smart shorts very wrong over the past weeks, this squeeze has legs…Let’s see if we make or break this chart.
HFT-zero or negative economic value to stock pricing (as nobody can react to 10000 quotes per second per stock)
From Nanex.
We have spent the last 24 years working with real-time market data on a tick-by-tick basis. We monitor our commercial datafeed in real-time to stay on top of market changes or issues. This past year, we have spentconsiderable time and effort studying the relentless growth of equity quotes. Based on our findings, virtually all of the additional quotes contribute zero or negative economic value to stock pricing, because they are either way outside the market or end up expiring before any investor or trader could possibly act on them. Furthermore, we can’t find any self-limiting mechanism in place that will ever put a stop to this unnecessary andexpensive growth of misinformation. The only thing that prevents a sudden explosion in quote traffic is the capacity limitation set by SIAC which runs the Consolidated Quote System (CQS) for the exchanges.
What is going on in France?
European markets are threading water in no trend market. While we have focused on EFSF votes out of Slovakia lately, we seem to forget some of the spreads still widening. What is going on in France. Is France the next casualty?
and French spreads over German spreads…
Risk On in low volume melt up
Yes, Google was great, and the HFT bashing continues. Markets are in a risk on mood today. Oil, gold, futures all point higher. Let’s see if the shorts will panic, and force the ES futures above 1220. Meanwhile, two charts showing the stress has not eased.
ECB Emergency Lending remains at elevated levels.
and the Fed’s Operation Twist below.
US Demographics and Budget Planning
By DShort.
At present those of us who follow the economy and financial markets are looking for evidence that European sovereign debt issues won’t trigger another international financial crisis. How that plays out in the short term remains an uncertainty. In contrast, we can be very certain that our accelerating demographic shift will continue to increase the political debate on entitlement expenditures, especially on the eve of a presidential election year.
The U.S. faces demographic changes that will ultimately impact the financial planning of federal, state and local governments. The process will also affect individuals as we adjust our retirement expectations and strategies for insuring income during our elder years.
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