Guest post by Peter Tchir.
At 1,410 I am much more nervous about a big rally than I was earlier in the week. But this has been a great week to be a nimble bear.
Last Thursday, exactly a week ago, futures were higher overnight, only to fade once $GOOG rained on the parade.
Then on Friday, they creeped up a bit, only to take a big hit.
On Monday, up for awhile, and didn’t finish a lot worse as market rallied into the close PPT style.
Tuesday, tried to go higher, then sold off hard as there wasn’t a buyer.
Yesterday, up early again, before taking it on the chin.
So who knows what today will holds, but making the call that we hold early gains seems too bold.
Maybe we should throw the next Olympics in Spain? From Bloomberg.
Britain exited a double-dip recession in the third quarter with the strongest growth in five years as Olympic ticket sales and a surge in services helped boost the rebound. Inflation cooled to the slowest in almost three years in September, while retail sales increased more than forecast. Britain’s economy resumed growth in the third quarter by more than economists forecast, boosted by Olympic ticket sales and a surge in services.
Gross domestic product rose 1 percent from the three months through June, the fastest growth since 2007, the Office for National Statistics said in London today. That exceeded the highest estimate in a Bloomberg News survey for growth of 0.8 percent. The median forecast of 33 economists was 0.6 percent. The pound rose after the data were published.
The growth surge reflects a boost from the Olympics and a rebound from the second quarter, when GDP was affected by an extra public holiday. While the data may give some short-term relief to Prime Minister David Cameron’s struggling government, Bank of England Governor Mervyn King said this week that the recovery is “slow and uncertain.” That suggests the figures mask underlying weakness that could warrant further stimulus from the central bank. (Full article here)
Edward Hugh is one of the Economists that truly understands the European situation, especially the Spanish economy and the problems on the Iberian Peninsula. Below is an excerpt from a must read piece via A Fistful of Euros.
Legendary hedge fund supremo Ray Dalio is in ebullient mood. Following a series of moves by Mario Draghi to underpin European government financing Dalio told Bloomberg that, in his opinion, the euro will now “likely” stay together because existing growth-constraining austerity measures will henceforth be balanced by money printing over at the European Central Bank. His statement was, of course, a response to ECB President Draghi’s save the Euro pledge.
This story starts back in July, when Mario Draghi calmly informed a London investors conference that, “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” Since that time, of course, this gamechanging statement has been qualified and clarified, and re-qualified and re-clarified innumerable times, but still the essence remains unchanged. The ECB President wasn’t talking, remember, about any specific programme of bond purchases or exceptional liquidity measures, he was talking about doing “whatever it takes”, and Ray Dalio for one is taking him at his word.
What Bridgewater’s founder was getting at when he made this assessment is that there is now no meaningful limit being placed on what the ECB might eventually do. Naturally there is the mandate to work around, but the mandate can always be changed if Europe’s political leaders see fit, and who at this point in the crisis still doubts that if needs must they will see fit.
Biderman on portfolio managers that only know of being long the market.
If you ask portfolio managers why stocks have not gone down? The answer can be bottom lined as the Bernanke Put. A key truth for those who believe in today’s School of What Works is that the Bernanke Put has been and will keep on saving the stock market.
For those of you who have been hibernating from the financial markets over the past few years, the Bernanke Put means that Wall Street believes that Fed Chairman Ben Bernanke is omnipotent; and that he can do whatever is takes to keep stock prices at around double the March 2009 lows. That is why most portfolio managers believe that any and all bad news cannot ultimately hurt stock prices.
In case you missed the interview with Eric Hunsander of Nanex a few days ago, we suggest reviewing it again.
Mr Hunsander shares his views on crashes, system overloads and killer Algos.
Comments before the Fed meeting, via Marc to Market.
Guest post by Jessie.
“All war is based on deception. Of all those close to the commander, none is more intimate than the secret agent; of all rewards none more liberal than those given to secret agents; of all matters none is more confidential than those relating to secret operations.”
“Let Hercules himself do what he may,
The cat will mew, and dog will have his day.”
William Shakespeare, Hamlet
There is a currency war underway.
The international trade clearing mechanisms are tottering. Countries are using their economic power, their banks and currencies, as a part of overall foreign as well as domestic policy.
This is a huge source of the tensions and problems which are are seeing both economically and militarily in the world today.
The current trade system based on the US dollar reserve currency is not sustainable. It has had a good long run, but like the euro it has reached the end of its rope. The US cannot continue to print enough money and increase its debt balance through trade any further. See Triffin Dilemma. Yes I am familiar with Eichengreen’s counter argument.
Guest post via Gold Silver Worlds.
The author does a terrific job again, this time in summarizing the most important thoughts about the current economic effects on the monetary policy of the US government (in casu QE3). Although a lot has been written about QE3, it can be difficult for people with no economic background, to connect the dots between monetary actions, economic effects, personal risks. Furthermore, with a limited understanding of monetary matters, it can be difficult to distinguish the benefits that are argued by policymakers versus the real benefits / risks. From that point of the view, the following article succeeds in bringing an understandable summary of what really is happening in our economy as a result of monetary policies.
Some essays or market commentaries contain too much jargon to easily read and understand. This article keeps things simple and understandable. And we love it at GoldSilverWorlds as it links Gold & Silver as being the ultimate ways to protect oneself, although still an extremely low percentage of the population is aware of it.
Guest post by Azizonomics.
The waistline bubble began to expand at just about the same time as the debt bubble:
First, it’s important emphasise that correlation is not causation — more than 99% of murderers have consumed water in the twenty four hour period preceding a murder. But it is clear that the effects of globalisation are at play in both cases (simply because globalisation has transformed the American economy) – far fewer Americans have to do physically demanding manufacturing work, and thanks to the mechanisation of agriculture and food production there are far more calories-per-American available to consume.
The interesting difference between debt and obesity is that while it is possible from historical evidence to construct a fairly coherent model linking excess outgrowth in debt with recession and depression — for example, I conjecture that a depression becomes inevitable when debt service cost growth consistently outpaces income growth — there is no such historical evidence available for obesity, because there has never in known world history been an obesity epidemic of such proportion. To what extent do the healthcare overheads of an obesity epidemic act as a drag on economic growth?According to an estimate by the CDC, $147 billion.