On 27 Jan, 2012, at 2:25 PM, T wrote:
Nice summary. I would only add oil is a consideration at $100 a barrel. And a spike would only contribute to a slowdown for all the usual reasons.
I've put on a small short, the first in many months. Perhaps I'm early. My thinking is they would probably like to act at the next Fed meeting on March 13. That might be the ideal time to announce an 800 billion program, as 100 billion a month would certainly power the markets higher and carry the risk-on trade past the election. And it might be much easier for the Fed to announce it then if the market and oil have corrected.
I'm just being cautious and I'll cover quick if the tsunami of money becomes unleashed. Thanks for your opinion.
On 27 Jan, 2012, at 1:48 PM, H wrote:
Interestingly, gold and gold stocks still the only sector where sentiment looks supportive, but I don't think that will necessarily help much if/when the SPX craters again. The sector hasn't been able to decouple in ages.
On 1/27/2012 12:45 AM, H wrote:The stock market looks iffy to me. There is breath-taking complacency evident in many indicators. Huge inflows into leveraged bull ETFs, QQQ short interest at an 11-year low, NYSE short interest back to where it was at the late April top, AAII bears at a 6 year low, OEX-equity put/call ratio spread giving its biggest sell signal in all of history (i.e., the spread has never been wider than at the recent wides).
I could go on....but the short version is: people are seemingly more bullish than they were at the top, and that means the probability is very high that the recent rally in stocks (on terrible volume by the way) was a typical second wave correction that has trapped a great many unsuspecting bulls by now.
The caveat to this is that money supply growth has gone off the charts as well in December. Narrow many TMS-1 grew at nearly 34% annualized and broad money TMS-2 at nearly 21% annualized. In other words, instead of slowing down, US money supply growth has re-accelerated to one of its fastest rates of change in recent memory (and that is really saying something).
So maybe this combination of complacency and soaring money supply growth will only lead to some choppiness at first. However, I think that this recent state of affairs - I call it the LTRO-induced hopium trance - fails to take into account that a recession is looming in euroland and that the recent better US economic data may merely represent an anecdotal masking of underlying structural weakness as Hussman avers. The ECRI institute continues to insist that its leading indicators are forecasting a looming recession, and Achuthan and co. are normally not noted for their doom saying propensities. As to the Fed - all it has done is tell everyone how terrible things really are. As you say, no 'QE', just bla-bla essentially.
On Thu, Jan 26, 2012 at 8:54 AM, T wrote:
Why didn't Bernanke announce QE3 today?
We heard much talk about how they are ready, that only the blowing of the wind is required to launch it, and yet, why not today?
My hunch is that today was just jawboning. To actually launch QE the Fed will need some event. Politically the Republicans will go into full attack mode if he announced with the indexes at current levels.
I'm very suspicious.
Also, unless this is a massive program that will run 11 months, I would think the Fed timing would support maximum, "risk-on" in the Sept-Nov period. Bernanke wants to keep his job and be reappointed. An Obama second term would almost assure that. |
