Gold and Silver Charts
As we said earlier, options expiry in equities has now become the most boring day of the month. It used to be different….
Meanwhile Silver is putting on some strong moves lately. Will the silver pop make the shorts nervous here?
Precious charts below.
Investor Sentiment
Guest Post by Macro Story.
AAII Investor Sentiment for the week ending January 18, 2012 remained net bullish. Those with a bullish view over the next six months fell to 47.2% from 49.1% the prior week. Those with a bearish view over the next six months rose to 23.6% from 17.2% the prior week.
Historic data has shown that since 2008 falling bearish sentiment is typically a good indicator of rising equity prices contrary to “Wall St wisdom.”
It is worth noting that over the past three weeks bearish sentiment did take a rapid fall to a multi year low registering 17.2% for two consecutive weeks down from 30.8% the prior week. As the chart shows often spikes versus gradual moves lower in bearish sentiment (chart is inverted) have preceded market corrections but not enough to draw firm conclusions on this occasion.
When will the Government Bubble burst?
Marc Faber on the Government Bond bubble. Outlook on stocks, bonds, currencies.
Prepare for the “everything needs to reset” world.
Low Approval ratings for the (troubled EU) Leaders
Bad economy, debt, austerity does not create popular leaders. Some of the European leaders should start job hunting soon. From Gallup.
Residents in the EU’s most troubled economies give their leaders some of the lowest approval ratings in the region. Gallup’s surveys conducted throughout 2011 reveal Greeks and Romanians, in particular, were among the least likely in the EU to approve of their leaders’ job performance.
Recent violent protests in Bucharest, Romania, against government austerity measures are visible signs of Romanians’ frustration with their leaders. Gallup’s data from May 2011 confirm that even before announcing cuts to salaries and benefits, tax increases, and partial privatization of the country’s healthcare system, President Traian Basescu was the least popular among EU leaders. About 1 in 10 Romanians approved of his leadership and 8 in 10 disapproved. Other unpopular leaders such as George Papandreou, Silvio Berlusconi, Jose Socrates, and Jose Luis Rodriguez Zapatero, all with approval ratings ranging between 21% and 25%, have already resigned or have not been re-elected in the meantime.
In contrast, majorities in most of northern and western Europe approved of their heads of state or government. Luxembourg’s Prime Minister Jean-Claude Juncker and Finland’s President Tarja Halonen were especially popular, with 87% and 85%, respectively approving of their job performance. A notable exception was French President Nicolas Sarkozy, who is running for re-election in April and May this year, with a relatively low approval rating of 29% in June 2011.
Dark side of Austerity
We have almost forgotten about the Greek Dilemma. With all focus on LTROs, Spanish and Italian bond auctions, Greece has certainly lost focus. Today the Troika & Co are back in Athens in order to try fixing the Greek mess. With all the political interest, sometimes we tend to forget what austerity means for the average Joe. Austerity sucks. From Ekathimerini;
So this is what it’s come down to. The negotiations over wages in Greece due to take place over the next few days will be a defining moment of this crisis, not because a reduction in the minimum wage or cuts to private sector salaries will make a huge difference to the economy but because it is a test of whether those involved in the process – labor unions, employers, the government and the troika – are prepared to face the truth. It is test of whether someone is willing or able to step forward with some kind of coherent plan.
It doesn’t take long to think of several good reasons why reducing private sector wages during a deep recession seems a suicidal idea. They include the fact that it would further undermine withering domestic demand and likely precipitate the closure of more businesses on top of the 38,000 that have shut down over the last two years. The more fiscally minded might point out that lower wages means lower tax revenues, which has a heightened relevance at the moment given that recent figures showed Greece raised 50 billion euros in revenues in 2011 compared to 50.8 in 2010 despite imposing a raft of new taxes.
Taleb-2012 : WHAT IS YOUR FAVORITE DEEP, ELEGANT, OR BEAUTIFUL EXPLANATION?
As the market has been rising over the past weeks, it is easy to get “fooled” into the long trade, and justifying the position by “everybody is long”. Whatever the positions you are running, spend a few minutes reviewing a couple of thoughts on risk. By Taleb;
Nature is the master statistician and probabilist. It follows a certain logic based on layers of redundancies, as a central risk-management approach. Nature builds with extra spare parts (two kidneys), and extra capacity in many, many things (say lungs, neural system, arterial apparatus, etc.), while design by humans tend to be spare, overoptimized, and have the opposite attribute of redundancy, that is, leverage—we have a historical track record of engaging in debt, which is the reverse of redundancy (fifty thousand in extra cash in the bank or, better, under the mattress, is redundancy; owing the bank an equivalent amount is debt).
Now, remarkably, the mechanism called hormesis is a form of redundancy and statistically sophisticated in ways human science (so far) has failed us.
Full article here.
Chart Update as market tries pushing resistance levels.
Another no volume early session in Europe. Markets are slowly waking up to reality.
The Santa rally is losing steam, although this is premature to start shorting aggressively.
Many indices are pushing channel/wedge tops. Below 30 day charts of the most important indices.
News That Matters
Ft.com
Federal Reserve officials are waiting to see how the economy performs before deciding whether to launch another bond-buying program, the WSJ says. The Fed meets again next Tuesday and Wednesday, and officials are preparing to roll out a new communications strategy that is on track to include two key elements: http://ftalphaville.ft.com/thecut/2012/01/20/842161/fed-holds-off-on-new-bond-buying/
The International Monetary Fund has slashed its global growth forecast for this year and exhorted the European Central Bank to boost liquidity to stave off a deeper eurozone crisis, The Telegraph says, http://ftalphaville.ft.com/thecut/2012/01/20/842011/imf-cuts-world-growth-forecast/
Italy’s banks, led by UniCredit, were the biggest users of the special three-year funding mechanism launched by the European Central Bank in December, according to a new research report, writes the FT. http://ftalphaville.ft.com/thecut/2012/01/20/842021/italy%e2%80%99s-banks-tap-ltro-for-e50bn/
Bank of America pledged to accelerate the pace of building capital buffers to absorb future shocks as its fourth-quarter results helped drive its battered share price to the best level since October, the FT reports. The bank reported improved fourth-quarter net income of $2bn, http://ftalphaville.ft.com/thecut/2012/01/20/841981/bofa-swings-to-2bn-profit-in-fourth-quarter/
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