Guest post by Doug Short.
The previous week’s rally turned into a rout last week, except for China. The Shanghai Composite was the top finisher with a 0.90% gain with Hong Kong’s Hang Seng close behind with a 0.59% weekly close. The other six markets on my watch list finished deep in the red, ranging from the third-place FTSE 100 at -1.32% to the Nikkei 225 in distant last place at -3.71%. The S&P 500 finished sixth at -2.21%, just fractionally ahead of the DAXK at -2.24%. It was a grim week!
This week two indexes on the watch list are in bear territory — the traditional designation for a 20% decline from an interim high — unchanged from last week. See the table inset (lower right) in the chart below. At the bottom of the Bear Zone is, of course, the Shanghai Composite, which is a sobering 39.36% off its interim high of August 2009. The other bear-zone index is Japan’s Nikkei, which slid deeper into the red, 24.43% from its interim high of April 2010. At the other end of the inset, the S&P 500 is now 2.54% off its interim high.
The New Yorker has a piece on Nigel Farage worth reading. Below is an excerpt and a few videos worth reviewing over the weekend.
But Farage had come not so much to flatter supply-side sympathies as to embroider his contention that the euro is toast. “I’m not anti-European at all. I’m married to a German, for goodness’ sake, so I know the dangers of a German-dominated household.” But, he said, “The idea that we should take all these different countries in Europe, force them together against their democratic will, and put them under the control of people like Herman Van Rompuy is, frankly, beyond belief
“These are very, very dangerous, bad people,” he went on. “They want to stop nation-state democracy.” The consequence, in his view, will likely be violent revolution and political extremism. (A few days later, after hearing that the E.U. had won the Nobel, he said, “I thought it was a joke. I thought it must be April the 1st. The timing is absolutely bizarre. And, anyway, what has kept the peace in Europe since 1945 is not a bunch of overpaid bureaucrats but, rather, nato, with no small contribution by the United States.”) (Full article here).