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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (86435)	1/26/2012 3:02:31 AM
From: elmatador	Respond to of 217906

"fed has rung the bell, japan murmuring, and china may just strike the gong" How can we absorb all that money? We will try hard... FED money will copiously flow into Brazil China easing fires commodities bulls Message 27905458 Japan? They will surely will resume carry trade.

To: TobagoJack who wrote (86435)	1/26/2012 7:19:29 AM
From: dalroi	Respond to of 217906

and dont forget europeans :-) lagrange imf said not too much austerity more stimulation which means printing as we are already highly taxed if taxed more some peeps could get feet and relocate which would drop state revenues even more as the smartest and the best move out

To: TobagoJack who wrote (86435)	1/26/2012 8:30:52 PM
From: 2MAR$	Respond to of 217906

Still focussed on earnings we had some big reports out today from CAT NVR BMY AMGN etc ...notice MCD had already pulled back & AAPL ran into more profitaking after beautiful report & saying before leaning to even shorting AAPL pop (near $460) which has marked the top before and they did get the SPY into nice overbought territory in premarket today $133.5 ... In fact these are the times look for shorts the most for hardly see yet the econ reasons for stocks not be prone to selling off reaching near term "nose bleed" territories and former top resistance . Much the same when i started mentioning the H&S chart pattern last spring when the S&P hit $1370 , again after an AAPL report and XOM was right where it has landed again today & pulled back from "$87" . Even went after CAT for the short at $114 pop today knowing the proftaking has to set in which we've already seen happen for AAPL & MCD but anything that has squeezed up past sustainable overbought levels just going in for the short and like last spring ...its working nearly 95% of the time now . Beauty of this is risk is very small and can maximize the trade with large size , can see CAT for instance sold down 3pts from am gap , these trades have been taking many of since last week though you catch the momo into earnings switch hats right after or into the report . Here you have XOM going into earnings next week back up to $87 , exactly where it was last spring when SPY was topping @ 1370 and today we saw the pullback . This was the midday headline that bought things down even more , the homebuilders all looking toppy US new-home sales fell in December to make 2011 worst sales year on record http://finance.yahoo.com/news/home-purchases-fall-2011-worst-152532656.html U.S. stocks lose some traction on home sales http://www.marketwatch.com/story/us-stocks-open-up-on-earnings-and-data-2012-01-26?siteid=yhoof2 NEW YORK (MarketWatch) — U.S. stocks lost much of Thursday’s gains after new-home sales unexpectedly declined last month, marking the slowest year for builders since the government began tracking the data. The market’s disappointment in the Commerce Department data showed the “enthusiasm we’re seeing is not complete insanity yet,” said Bruce McCain, chief investment strategist at Key Private Bank. “Investor enthusiasm and optimism seems to be as high as [they’ve] been for years, and it just doesn’t seem to be justified in terms of the economic and fundamental realities,” McCain said contd

To: TobagoJack who wrote (86435)	1/27/2012 9:09:14 AM
From: 2MAR$	Read Replies (3) \| Respond to of 217906

Living In A QE World By James Bianco - January 27th, 2012, 8:15AM All Central Bank Balance Sheets Are Exploding Higher, Or Engaged In QE The degree to which central banks around the world are printing money is unprecedented. The first eight charts below show the balance sheets of the largest central banks in the world. They are the European Central Bank (ECB), the Federal Reserve (Fed), the Bank of Japan (BoJ), the Bank of England (BoE), the Bundesbank (Germany), the Banque de France, the People’s Bank of China (PBoC) and the Swiss National Bank (SNB). Noted on the charts are significant events or growth rates. Shown is the size of each respective balance sheet in its local currency. Note that all are exploding higher as every chart goes from the lower left to the upper right. Most are still making new all-time highs. If the basic definition of quantitative easing (QE) is a significant increase in a central bank’s balance sheet via increasing banking reserves, then all eight of these central banks are engaged in QE. > Click to enlarge: ˜˜˜ ˜˜˜ ˜˜˜ ˜˜˜ ˜˜˜ ˜˜˜ > Comparing Central Bank Balance Sheets For comparison’s sake, we converted the eight balance sheets above into dollar terms. The four largest, the PBoC, the Fed, the BoJ and the ECB are shown in the first chart below. The second four, the Bundesbank, Banque de France, the BoE and SNB are shown in the second chart below. We split them up because of their vastly different scales. In the first chart, note that the balance sheets of the PBoC and the ECB are larger than the Federal Reserve when converted to dollars. The BoJ used to be the largest balance sheet in dollar terms until 2006. When shown in dollar terms below, the Bundesbank is the largest of the “second four” central banks. Further, its growth rate over the last five years has been among the highest. This is surprising since the Bundesbank is considered the “hard money” central bank. Combining Central Bank Balance Sheets The next chart below adds up the eight largest central bank balance sheets in dollar terms. It is only current through October as that is the latest number from the PBoC. The combined size of these eight central banks’ balance sheets has almost tripled in the last six years from $5.42 trillion to more than $15 trillion and is still on the rise! Central Banks Equal To One-Third Of World Equity Values As noted above, QE is an expanding of balance sheets via increasing bank reserves. The purpose of QE, as explained by this Bank of England video, is to increase bank reserves through purchases of fixed income securities in order to lower interest rates. This makes fixed income securities relatively unattractive/overvalued and pushes investors out the risk curve. This should increase buying for riskier assets such as stocks, pushing them higher in price. Theoretically these higher prices should lead to a wealth effect and increased economic activity. Given this definition and purpose, it is fair to compare the size of these balance sheets (now $15 trillion) to the capitalization of the world’s stock markets (now $48 trillion). This is shown in the chart below. Prior to the 2008 financial crisis, the eight central bank balance sheets were less than 15% the size of world stock markets and falling. In the immediate aftermath of Lehman Brothers’ failure, these eight central bank balance sheets swelled to 37% the capitalization of the world stock market. But keep in mind that the late 2008/early 2009 peak was due to collapsing stock market values combined with balance sheet expansion via “lender of last resort” loans. Recently, the eight central bank balance sheets have spiked back to 33% of world stock market capitalization. This has come about not by lender of last resort loans, but rather by QE expansion (buying bonds with “ printed money“) even faster than world stock markets are rising. What Does It All Mean? In our conference call earlier this month we said (page 12): 2011 was so difficult because all stocks seemingly moved together. It was as if every S&P 500 company had the same chairman of the board that knew only one strategy, resulting in a high degree of correlation between seemingly unrelated companies. Massive central bank involvement in the markets risks returning us to a de facto centrally planned economy. Those S&P 500 companies all have the same chairman; it is Ben Bernanke because his policies are affecting everybody. That is what makes money management so difficult. Correlations will ebb and flow; they always do. But what makes them go away? This will only happen when governments and central banks go away. But if they go away, then does that not mean things get ugly? Maybe they do get ugly, but it also means that we sort out the excesses in the market. We reward the people that do the right thing and we punish the people that do the wrong thing. And we have an adjustment process that may be ugly, but then we have a period of long expansion. Central banks are ruling markets to a degree this generation has not seen. Collectively they are printing money to a degree never seen in human history. So how does this process get reversed? How do central banks pull back trillions of dollars of money printing without throwing markets into a tailspin? Frankly, no one knows, least of all central banks as they continue to make new money printing records. Until a worldwide exit strategy can be articulated and understood, risk markets will rise and fall based on the perceptions and realities of central bank balance sheets. As long as this is perceived to be a good thing, like perpetually rising home prices were perceived to be a good thing, risk markets will rise. When/If these central banks go too far, as was eventually the case with home prices, expanding balance sheets will no longer be looked upon in a positive light. Instead they will be viewed in the same light as CDOs backed by sub-prime mortgages were when home prices were falling. The heads of these central banks will no longer be put on a pedestal but looked upon as eight Alan Greenspans that caused a financial crisis. The tipping point between balance sheet expansion being bullish for risk assets versus bearish is impossible to know. Given the growth rate of central bank balance sheets around the world over the past few years, we might not have to wait too long to find out. Enjoy it while it is still bullish.