JS Global Macro Notes
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Yet despite the significant public resources being
deployed to the periphery, private sector confidence
has remained low. Concerns over a possible euro area
breakup have led to extreme fragmentation between
funding markets in the core and the periphery (Figure
1.8). The announcement of the OMT program in
early September has helped address such concerns
and reduce sovereign spreads between the periphery
and the core. However, periphery bank and corporate
spreads have narrowed less, which may act as a brake
on recovery. Banks, insurers, and nonfinancial corporations
are trying to match assets, liabilities, and collateral
in each country of the periphery as protection
against redenomination risk. In turn, liquidity in core
economy banks is not being recycled to the periphery
but is instead being deposited at core ..this statement on page 4 suggested to me that the economy won't be stimulated anytime soon and the banks at the moment are boxed in,if they continue to tighten the amount of money going out..what happens..this grand plan , as little as i understand it, is not working and only increasing risk..does that suggest that they will wane on the buying of corporations,stocks
deployed to the periphery, private sector confidence
has remained low. Concerns over a possible euro area
breakup have led to extreme fragmentation between
funding markets in the core and the periphery (Figure
1.8). The announcement of the OMT program in
early September has helped address such concerns
and reduce sovereign spreads between the periphery
and the core. However, periphery bank and corporate
spreads have narrowed less, which may act as a brake
on recovery. Banks, insurers, and nonfinancial corporations
are trying to match assets, liabilities, and collateral
in each country of the periphery as protection
against redenomination risk. In turn, liquidity in core
economy banks is not being recycled to the periphery
but is instead being deposited at core ..this statement on page 4 suggested to me that the economy won't be stimulated anytime soon and the banks at the moment are boxed in,if they continue to tighten the amount of money going out..what happens..this grand plan , as little as i understand it, is not working and only increasing risk..does that suggest that they will wane on the buying of corporations,stocks
Yep, no real argument there...
If you want to know all the way things could go wrong, check out this white paper, "Ultra Easy Monetary Policy and the Law of Unintended Consequences" by William R. White at the Dallas Fed.
It's one of the best white papers I've ever encountered.
Logical, written in plain English (for the most part), and thorough in its treatment of Austrian objections to the Keynesian case.
Further off-the-cuff exposition on why the US fiscal situation does not spell doom just yet (final section, beyond the poker stuff):
http://www.mercenarytrader.com/2012/10/of-poker-and-balance-sheets/
http://www.mercenarytrader.com/2012/10/of-poker-and-balance-sheets/
"Winter is Coming"
Proverbial winter may be descending on heretefore "risk on" central-bank-driven markets. This would make sense given:
* central bank stimulus fade via law of diminishing returns
* corporate cost-cutting / fat-trimming profit boost used up
* record corporate profit margins in mean reversion jeopardy
* mounting concerns for earnings quality and top line revenue
* fresh crisis concerns emanating from Europe
* major bellwethers like AAPL showing meaningful weakness
* technical deterioration hitting the major indices
* potential bottom and resurgence in $USD
Read more: http://www.mercenarytrader.com/2012/10/winter-is-coming/
Proverbial winter may be descending on heretefore "risk on" central-bank-driven markets. This would make sense given:
* central bank stimulus fade via law of diminishing returns
* corporate cost-cutting / fat-trimming profit boost used up
* record corporate profit margins in mean reversion jeopardy
* mounting concerns for earnings quality and top line revenue
* fresh crisis concerns emanating from Europe
* major bellwethers like AAPL showing meaningful weakness
* technical deterioration hitting the major indices
* potential bottom and resurgence in $USD
Read more: http://www.mercenarytrader.com/2012/10/winter-is-coming/
So You're Telling Me There's a Chance...
"False trend or true, this move could have legs if no major macro whackage hits markets in the next few weeks. We have responded to such by aggressively increasing our long-side allocation to energy-related names..."
Read more: http://www.mercenarytrader.com/2012/10/so-youre-telling-me-theres-a-chance/
"False trend or true, this move could have legs if no major macro whackage hits markets in the next few weeks. We have responded to such by aggressively increasing our long-side allocation to energy-related names..."
Read more: http://www.mercenarytrader.com/2012/10/so-youre-telling-me-theres-a-chance/
Tech Albatross and China Ponzinomics
Earnings whiffage is starting to pile up... multiple bellwether names are coming in light or otherwise missing estimates. Microsoft (MSFT), McDonald's (MCD) and General Electric (GE) three of the latest offenders...
It's GOOGLE (GOOG), though, that could really weigh heavily on speculative spirits after Thursday's earnings release debacle and ugly slide. GOOG is considered a market champion, a tech juggernaut perhaps second only to AAPL, and this kind of follow-up to the recent run has to be disconcerting indeed...
Read more: http://www.mercenarytrader.com/2012/10/tech-albatross-and-china-ponzinomics/
Earnings whiffage is starting to pile up... multiple bellwether names are coming in light or otherwise missing estimates. Microsoft (MSFT), McDonald's (MCD) and General Electric (GE) three of the latest offenders...
It's GOOGLE (GOOG), though, that could really weigh heavily on speculative spirits after Thursday's earnings release debacle and ugly slide. GOOG is considered a market champion, a tech juggernaut perhaps second only to AAPL, and this kind of follow-up to the recent run has to be disconcerting indeed...
Read more: http://www.mercenarytrader.com/2012/10/tech-albatross-and-china-ponzinomics/
Dude, Where's My Revenue?
Earnings season thus far is starting to feel like a bad Ashton Kutcher movie titled "Dude, Where's my Revenue?"
Even with the endless asshattery that is Europe taking a hiatus -- and for how long one wonders -- you just have a whole bunch of bad juju either sitting on the horizon or getting baked into the cake here and now...
Read more: http://www.mercenarytrader.com/2012/10/dude-wheres-my-revenue/
Earnings season thus far is starting to feel like a bad Ashton Kutcher movie titled "Dude, Where's my Revenue?"
Even with the endless asshattery that is Europe taking a hiatus -- and for how long one wonders -- you just have a whole bunch of bad juju either sitting on the horizon or getting baked into the cake here and now...
Read more: http://www.mercenarytrader.com/2012/10/dude-wheres-my-revenue/
What if Recovery is Actually Bearish?
A few years back, top value investor Seth Klarman called this a "Twinkie" market -- an unnatural concoction stuffed with artificial ingredients.
The twinkie manufacturers, of course, are the world's central banks. Whenever things have looked terrible, the CBs stepped in with stimulus and jawboning. (Hence the "artificial ingredients.")...
Read more: http://www.mercenarytrader.com/2012/10/what-if-recovery-is-actually-bearish/
A few years back, top value investor Seth Klarman called this a "Twinkie" market -- an unnatural concoction stuffed with artificial ingredients.
The twinkie manufacturers, of course, are the world's central banks. Whenever things have looked terrible, the CBs stepped in with stimulus and jawboning. (Hence the "artificial ingredients.")...
Read more: http://www.mercenarytrader.com/2012/10/what-if-recovery-is-actually-bearish/