The Fed is trapped – Gold is the exit
Guest post by Gold Silver Worlds.
On September 13th, the Fed announced QE3, a policy of open-ended bond purchases which would add $1 trillion annually to the Fed’s balance sheet. The Fed’s decision to provide liquidity ad infinitum, i.e. QE etc, was framed in reasonable and carefully chosen language:
…These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative…
http://www.federalreserve.gov/newsevents/press/monetary/20120913a.htm
The measured wording gave the Fed sufficient cover to mask its increasingly desperate condition, i.e. how to keep its fatally-wounded credit and debt ponzi-scheme functioning while searching for a solution that doesn’t exist.
CAPITALISM’S CONSTANTLY COMPOUNDING DEBT IS THE DEVIL’S WHIP OF GROWTH
In capitalist economies, capital, i.e. money, is introduced by central banks into the economy in the form of loans; and because interest constantly compounds, economies must constantly expand in order to pay down and/or service those loans. This is why economists in capitalist systems are obsessed with growth.
World Market Review – Asia declining….
Guest post by Doug Short. All eight of our benchmark world markets contracted last week. Germany’s DAXK, the best performer, came ever so close to a gain, but at the Friday bell the index closed fractionally below zero, down 0.004%. The S&P 500 was second best, down 0.32%. The Asia-Pacific markets all lost 2% or more with the Nikkei as the worst performer, down 2.54%.
Three indexes on the watch list are in bear territory — the traditional designation for a 20% decline from an interim high. That’s one more than last week. The selloff in the Nikkei 225 dropped Japan below the benchmark level, joining the Hang Seng and Shanghai Composite, the latter of which has taken a long lease on its “bear market” designation. See the table inset (lower right) in the chart below. In our gang of eight, the S&P 500 remains the closest to an interim new high, down a fractional 0.88% from its April 2nd peak. At the other end, the Shanghai Composite is 41% off its interim high of August 2009.
The Rally Slows
Guest post by Doug Short.
The world market rally slowed last week, except for the Nikkei 225, which remained in the top spot with a 3% gain. The indexes of the two eurozone nations, France and Germany, came in a distant second and third, with 1.5% and 1.4% gains, respectively. The S&P 500 beat out the Mumbai SENSEX in a close race for an equally distant fourth place. The UK’s FTSE 100 kept one nostril above water with a 0.1% gain. China sank into the Red Sea, with the Hang Seng down 0.1% and the Shanghai Composite down 2.5%.
Only one of the eight markets in my weekend basket, the Shanghai Composite, is in bear territory — the traditional designation for a 20% decline from an interim high. This is one less than last week, with Nikkei’s strong performance lifting it above this market stigma. See the table inset (lower right) in thechart below. In our gang of eight, the S&P 500 remains the closest to an interim new high, down fractionally a from its April 2nd peak. At the other end, the Shanghai Composite is over 39% off its interim high of August 2009.
World Markets Update
Weekend market review, courtesy Doug Short.
Last week, the first week of the 3rd quarter, was a mixed bag for the eight world markets on my weekly watchlist. Half posted gains, half losses, with the average of the eight in the modest green at 0.32%. The fractional positive skew is attributable to the top performing Hang Seng and the close runner-up FTSE 100. Second thoughts in the aftermath of the previous week’s EU summit put the German index just below break-even and sent the French index to the bottom of the list. The S&P 500 finished next to last on ghostly post-holiday trading volume and disappointing employment data.
The table inset in the chart below shows that four of the eight markets are in bear territory — the traditional designation for a 20% decline from an interim high, unchanged from last week. However, the German index is only fractionally above the bear stigma. In our gang of eight, the S&P 500 remains the closest to an interim new high, down 4.54% from its April 2nd peak. At the other end, the Shanghai Composite is nearly 36% off its interim high of August 2009.
Chart Update Asia
China has had a rather bullish start to the year. The Shanghai Index has climbed almost 6% in two days, but how does the long term picture look like?
Below charts of Asian Indices.
Comparison Charts on the way to March 09 lows
Quick recap of the Q3 performance. As we see it was a very bad quarter with much damage done to all indices. Let’s see what Index will be the first to revisit those March 09 lows, China, Nikkei or why not the CAC? By DShort;
The 3rd quarter saw wretched performances in all of the world markets in this series. The best quarterly performer, the Nikkei 225, lost 10.3% of its value, followed by the SENSEX, which was down 11%. At the other extreme the DAX, CAC 40 and Hang Seng all lost about 25% of their value. The middle ground was occupied by the Shanghai, FTSE and S&P 500, which lost 14%, 14.4% and 15.9% respectively. Let’s hope next month sees some improvement. Certainly a bounce is due. But the ongoing stresses in Euro land, the nasty bear market in China, and ECRI recession call in the U.S. suggest a cautious outlook.
Mega Bear Charts
With absolutely no volume traded on the Markets, despite the Markets down between 2-3%, with the biggest underperformer, Athens at -3.4%, let’s review some bearish charts. Courtesy DShort;
Long Term Investing
Two self explanatory charts by DSHort;
Major Indices and performance since that 666 Bottom. Too bad the Stoxx 50 is not among these as we miss out on the great European Banks. Time to revisit the lows?
…and the fallacy of long term investing (with no risk management). Worth the risk? Hardly, at least not in the Western World.
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