What’s going on with that Golden Cross?
Only time will tell…
The future of the “Greenspan Put”
Are we up for a Goat Rodeo?
This rather extreme prolonged Santa Rally has made people frustrated over the last weeks. The many conflicting themes of the Economy, the Euro mess, the collapse in volatility etc, is contributing to people’s frustration over where the market should be going. Currently we see great accumulation of a bigger move coming up due to “skewed” psychology of the market. Meanwhile some fundamentals from Hussman.
Goat Rodeo – Appalachian slang for a chaotic, high-risk, or unmanageable scenario requiring countless things to go right in order to walk away unharmed.
Over the years, of the most frequent phrases in these weekly comments has been “on average.” Most of the investment conditions we observe are associated with a mix of positive and negative outcomes, so rather than making specific forecasts about future market direction, we generally align our investment position in proportion to the average return/risk outcome, recognizing that the actual outcome may be different than that average in any particular instance.
Don’t fight the Fed
The Fed is simply too powerful to fight. PIMCO’s view on the subject of fighting the Fed.
- We are skeptical that fiscal austerity alone is sufficient for all eurozone countries to grow and remain solvent. We thus expect the ECB to continue supporting the euro area with liquidity in 2012.
- Recent central bank policy in China is oriented toward stabilizing growth in a political succession year, while balancing lingering inflation and medium-term systemic risks.
- Investors may want to hedge portfolios by looking to select emerging markets with the ability and willingness to cut policy rates both from a cyclical as well as structural perspective.
News That Matters
Ft.com
US state attorneys general have until Friday to join a potential national settlement of alleged foreclosure abuses, the WSJ says, citing a document. The deadline, set by negotiators trying to pull together an agreement with the federal government, http://ftalphaville.ft.com/thecut/2012/01/31/859291/friday-deadline-for-states-on-mortgage-settlement/
RBS is scrambling to overhaul its pay systems to head off a repeat of its executive pay fiasco, says the FT. Sir Philip Hampton, RBS’s chairman, and Penny Hughes, head of the board’s remuneration committee,http://ftalphaville.ft.com/thecut/2012/01/31/859251/rbs-in-talks-to-revise-bonus-system/
European banks are preparing to tap the ECB’s emergency funding scheme for up to twice as much as the ECB supplied in its debut €489bn auction last month, the FT says, citing three chief executives of unidentified eurozone banks who said they would increase their participation two- or threefold in the auction on February 29.http://ftalphaville.ft.com/thecut/2012/01/31/859091/banks-preparing-to-tap-ltro-more-on-second-round/
Twenty-five of the EU’s 27 countries have signed up to a German-inspired treaty enshrining tougher fiscal rules to help underpin the euro, with the Czech Republic announcing it would join the UK by not agreeing to the pact.http://ftalphaville.ft.com/thecut/2012/01/31/859031/merkel-victorious-on-fiscal-treaty/
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