Friday, September 16, 2011

China to 'liquidate' US Treasuries, not dollars


pullout:
The Chinese are clearly vexed with Washington, viewing the Fed's QE as a stealth default on US debt. Mr Li came close to calling America a basket case, saying the picture is far worse than when Ronald Reagan and Margaret Thatcher took over in the early 1980s.
Mr Li, one of three outside academics on China's MPC, described the debt deals on Capitol Hill as "just trying to by time", saying it will not be enough to stop America's "debt dynamic" turning dangerous.

Chart of the Day


With second-quarter earnings largely in the books (99% of S&P 500 companies have reported for Q2 2011), today's chart provides some long-term perspective to the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low which brought inflation-adjusted earnings to near Great Depression lows. Since its Q1 2009 low, S&P 500 earnings have surged (up over 1000%) and currently come in at a level that is greater than what occurred at the peak of the dot-com bubble and very near what occurred at the peak of the credit bubble. It is interesting to note that the original run up in real earnings from Great Depression lows to credit bubble highs took over 78 years. The current spike has taken 26 months.

Thursday, September 15, 2011

Ciovacco Capital Management

http://www.ciovaccocapital.com/sys-tmpl/ccmbmsipublic/ -- new market analyst I'm going to track for a while.  Lots of interesting charts and stuff.  Today's post (TA re. Euro spdr compared to US '08) One recent chart:

Wednesday, September 14, 2011

Effects of Glass-Steagall repeal

All eyes still on Europe, but once the calamity happens there, we get our turn & we have 4 TBTF banks.


from groovygirl:


"Very clearly shows the impact of the repeal of Glass–Steagall Act of 1933 (was signed into law in 1999). Internet Bubble burst early 2001 compounded by 9-11. Final creation of formal “too big to fail” banks happened in 2008-2009. Chart also shows that 1990′s were not as productive as once thought. Financial industry just consolidated, they didn’t really expand."





Tuesday, September 13, 2011

Truth & rumors


Dutch Finance Ministry Says Greek Default Is Unavoidable, Immediately Retracts


Moody’s has downgraded French banks Société Générale andCrédit Agricole, citing their exposure to Greek debt.


China Premier Wen Jiabao Dampens Speculation on China Saving Europe with Statement "Debt-Laden Economies Must First Put Their Own Houses in Order"



Serious recession threat for U.S.


When do you expect the economic growth to rebound and stabilise?
The slowdown pressure will definitely remain till December across the spectrum. There can only be a rebound early next year but that will largely depend on the policy decisions the large economies take in the next few weeks.
The problem is this slowdown is happening within couple of years of huge recession and the world has not recovered fully from the 2008 crisis.
And, the ECRI Weekly Leading Index from last week: WLI Ticks Up, but Growth Weakens





Europe -- CDS and yields

PIIGS credit default swap info, from MarketTicker: "CDS spreads on the PIIGS (composite), ...is up an astounding 60% today"

And from Mish, bond yields:
"On a spread-basis, the only country whose yields have collapsed is Ireland.
Italy, Belgium, France and Spain are at or close to spread highs. Also note how France is creeping up.

On 1-year spreads, Italy, Spain, and Belgium are at new highs, suggesting the ECB is losing the containment war on Italian bond yields."


Monday, September 12, 2011

past, present, future


A NEW book, discussed in this week's Economics focus, by Arvind Subramanian of the Peterson Institute for International Economics argues that China’s economic might will overshadow America’s sooner than people think. Mr Subramanian combines each country’s share of world GDP, trade and foreign investment into an index of economic “dominance”. By 2030 China’s share of global economic power will match America’s in the 1970s and Britain’s a century before. Three forces will dictate China’s rise, Mr Subramanian argues: demography, convergence and “gravity”. Since China has over four times America’s population, it only has to produce a quarter of America’s output per head to exceed America’s total output. Indeed, Mr Subramanian thinks China is already the world’s biggest economy, when due account is taken of the low prices charged for many local Chinese goods and services outside its cities. China will be equally dominant in trade, accounting for twice America’s share of imports and exports. That projection relies on the “gravity” model of trade, which assumes that commerce between countries depends on their economic weight and the distance between them.