43 Anniversary Sayings

my usual mustard on the current market situation 17:10:10

Hi,
will not stop me at the moment prefer to macro analysis seems currently to be not really relevant to the stock market. (Only so much. Play me grad around with the OECD Leading Indicators and their growth rate looks especially for the euro zone is very unfavorable, but more about it at another time that is again more about the markets.) The only thing currently one is: QE2. So Bernanke's (Helkicopter Ben's) promises Notenpesse after the next Fed meeting on 3 November, again to throw and his helicopter to make ready. The weak labor market data before last Friday did not matter, because they only increased the chance of QE2. Retail sales increased again on Friday, however, the matter was less useful, most Risky assets tended weaker. Ben's speech on Friday in which he practically guaranteed QE2, then could not move too much.
The question now is, well, how much is already priced into the market for the QE2, and what brings a sale of government bonds for the fact-Risky Assets? In the latter, I'm so in the past have often expressed my skepticism. In my opinion, especially as the Fed meeting on 10 August that this can even be very counterproductive and only the purchase of risky assets (eg MBS, corporates, as it makes the Bank of Japan at the moment) is really worth while. That might be an issue but for now, as the credit market is considered healthy. But this one is probably on 3 November see.
to the point, how much is already priced in, I find the positioning in USD interesting. In the "Currency Wars" (actual title of the Economist cover), in which each country tries to devalue its own currency seem that the U.S. currently to keep ahead. QE2 is expected thanks to the USD, despite the crisis in the euro zone a lot of pressure, much to the delight of the United States. However, the position thus risen to an extreme level. CFTC figures for the positioning of non-commercials (Mainly hedge funds) in the major foreign currency futures (blue line):

After the record-USD Long position led in June to a turning point, we are now within a few months back in an extreme situation at the other end so short were the non-commercials the USD has never! Since the correlation between the USD and the Risky Assets is still massively negative, would be a negative turning point for equities, commodities, etc.
principle is the seasonal end of the year but clearly bearish USD:
http://www.seasonalcharts.de / classic_usdindex.html

In the case of extreme positions like last year Turn but they are also used to be. Last year, some already in early December.
interesting recent developments in the main carry trade and a measure of risk tolerance, the AUD / USD. Which is like 2008 just before the skip the parity to the USD (red line). That would be the first time since the early 80s (and the end of the last great commodities bull market), that 1 Australian dollar would be worth more than U.S. $ 1.

keeping with the theme nor the current stock-Online survey:
http://www.boerse-online.de/vote/486517.html?todo=detail&voteid=617254

Naturally, in the current environment USD very bearish.

the Dollar, I have a brief technical analysis of my favorite technical analysis side, http://blog.kimblechartingsolutions.com / (a "spin-off of dshort.com):
http://blog.kimblechartingsolutions .com/2010/10/long-downside-wick-dollar-testing-support /

Otherwise, I can think of nothing more than to the third to wait for November. The strength of the markets in the hope that the new round of quantitative easing, admittedly, surprised me. Although I had long been expected to QE2, but believed that Bernanke would not just wait with the uncontroversial step until the economic downturn clearly is escalating and the recent housing crisis. His determination to create inflation was stronger than I thought. Now he must also still show that he succeeds as well. In the long term this is certainly possible when running the printing press is only strong enough. Short term, I'm holding my doubts, especially when one is content with the "Riskless" government bonds. But well, after 3 November is perhaps clearer.

And so until next time!
Greetings
Franz

Should You Wear Clothes In A Sauna Suit

my usual mustard on the current market situation 2:10:10

Hello, register me after a short hiatus back.
Friday was first of the month and thus ISM day. For me, every time the most important day in the macro data calendar.
The most decisive for me is in principle but not the headline, the rush on the media. Much more interesting is the composition of the Index:

The most important I've marked in bold, namely the change. Too much attention will be given to the level and the question of whether over or under 50 How do I after the last ISM data at 5.9. (Apparently not entirely successful, when I think of some question I got last month) have tried to explain, the subcomponents are terribly gebiased, as the company shows in the survey generally too optimistic and New Order's obviously generally high and inventories generally low state. Nevertheless, the use of the data makes sense if you are the bias is conscious, as shown below.
(Previous ISM comment at 5.9. http://franzlischka.blogspot.com/2010/09/mein-ublicher-senf-zur-aktuellen.html )

So now, but the general trend. ISM was a little weaker, as expected. That alone is not the problem. Looking at just the change in the sub-components of, we see that just two factors increased precisely to those in which one would rather see no increase, namely, pricing and inventory levels. Everything else is massively weakened. This results in the 4th Consecutive increase in the inventory growth (the highest level since 1984!) While the 4th Decline in a row for the New-order growth and backlog orders (backlog of orders). And that is absolutely not a good sign for the future. Thus, the often-used New Orders / inventories ratio (green, right scale) has dropped dramatically. So far, as in the last decades, only in advance of a recession. This shows the image of an economy that increasingly lack of new jobs produced more and more to dump. One time was good because were dismantled after the severe recession, the stocks, but slowly things get tight. (For Bias: not the data would be gebiased, the ratio would vary by 1 If it does not bother clearly now but not really...)


Personally, I've recently (see 5.9.) Pleased at the difference of the New Order to headline number, as this New Order / Inventory Ratio runs slightly ahead. Statement at the time: A value of below -3 since the late 60's was always a recession. (And in the decades before it came to such a mismatch between orders and the current industry growth also needs to a massive economic downturn, although in average growth rates of around 5% pa was in the 50s and 60s, some recession avoided. But here we are now Unfortunately not.) This difference is very volatile, but this month remained at -3, even fell slightly. (Again, the bias to see clearly: The series does not fluctuate around 0, as it should not matter,..)

Both confirmed to me what I fear for some time: The U.S. economy is expected soon (perhaps in the 4th quarter) slip back into recession. (And Europe will follow sometime in 2011, I guess.)

The stock market's stage appears to be no matter. The S & P 500 has broken through 1130, however, depends now on the January high at 1150 for now.

Still's order was the best September for the stock markets in 70 years. More was modified only in September 1939 (just the month in which the outbreak of World War 2. Hopefully not a bad omen.)
The bond market sees the moment everything obviously something different. Update the chart of 31.7. ( http://franzlischka.blogspot.com/2010/07/mein-ublicher-senf-zur-aktuellen_31.html ). At that time I was referring to the divergence between rising stock prices and falling bond yields in the long run seems to me not to go well. In fact, it came in August after the Fed meeting will be a price drop. This has changed at the mismatch, however little, the last few days has increased the divergence clear again:

The stock market is hoping for the Bernanke Put, and thinks with a new quantitative easing (QE) Program at the next Fed meeting on 3 November will get all asset classes. This has been after the decision on 10 August out to be wrong, even though the decision of the Fed to buy government bonds has been unexpectedly time. (See my last comment QE from 29.8. http://franzlischka.blogspot.com/2010/08/mein-ublicher-senf-zur-aktuellen_29.html )
is interesting addition to the development in government bonds but the last few days even those with the corporates. In the U.S., the spreads of AAA corporates in the last few days and have increased massively risen to its highest level this year. (Blue, left scale, inverted) usually not a good sign for the stock market.

Another thing about the current mood. The next is extremely bullish. The current stock market online survey is stung me there again in the eye:
http://www.boerse-online.de/vote/486517.html?todo=detail&voteid=616744

The fact that the DAX has the year not quite over the resistance at 6340 and it comes out the last 3 weeks has failed, the mood seems to do no harm apparently.


This has not changed my assessment of the situation: Very bullish mood continues significantly increasing risk of recession. This can not end well.

And so until next time!
Greetings
Franz