ColinTwiggs, Author at the patient investor

September 5, 2013

Fed’s Fisher Slams Congress Over Fiscal Policy | WSJ

Rob Curran at WSJ reports on a speech by Dallas Fed President Richard Fisher:

Speaking at a luncheon hosted by financial-industry trade group the Dallas Estate Planning Council at the Dallas Country Club, Mr. Fisher said the central bank has done all it can to stimulate the U.S. economy. He said members of Congress–both Republicans and Democrats–have failed to do their part. Elected officials have “sold our children–and our grandchildren–down the river,” Mr. Fisher said. “We haven’t had a budget for five years; no one knows what their taxes are going to be; no one knows what spending is going to be.”

The Dallas Fed president has long maintained that the missing ingredient in the economic recovery is a sound fiscal policy.

via Fed’s Fisher Slams Congress Over Fiscal Policy – Real Time Economics – WSJ.

September 5, 2013

Gold hesitates as the Dollar strengthens

Spot gold is testing support at $1380/ounce. Breach would indicate a test of the rising trendline and support at $1350. Penetration of the trendline would warn that the rally is slowing and another test of primary support at $1200 is likely. But respect of the trendline remains as likely, and would offer a target of $1500*.

Spot Gold

* Target calculation: 1425 + ( 1425 – 1350 ) = 1500

Dollar Index

The Dollar Index encountered resistance at 82.50. Narrow consolidation or a short retracement would suggest a breakout — and another test of the July high at 84.75. Recovery of 63-day Twiggs Momentum above zero favors this, but respect of resistance would again test primary support at 80.50.

Crude Oil

Nymex WTI light crude retreated below its new support level at $108/barrel, suggesting a test of the rising trendline and support at $103. Brent crude, however is advancing on the back of rising Middle East tensions and falling Libyan production. Expect resistance at the 2013 high of $118/119. Breach of the rising trendline is most unlikely for both Nymex and Brent — expect the up-trend to continue.

Brent Crude and Nymex Crude

* Target calculation: 108 + ( 108 – 98 ) = 118

Commodities

The Shanghai Composite Index [green line] continues its gentle rise, helping to support commodity prices. But tall shadows on the last two candles indicate selling pressure on Dow Jones-UBS Commodity Index. Reversal below 130 would warn of another test of primary support at 124/125.

Dow Jones UBS Commodities Index

* Target calculation: 130 + ( 130 – 125 ) = 135

September 4, 2013

The BRICs party is over | Anders Aslund | Vox

Anders Åslund:

From 2000 to 2008 the world went through one of the greatest commodity and credit booms of all times. Goldman Sachs preached that the BRICs were unstoppable….

However, Genesis warns that after seven years of plenty, “seven years of famine will come and the famine will ravage the land”. Genesis appears to have described the combined commodity and credit cycle, from which the Brazil, Russia, India and China have benefited more than their due….

Read more at The BRICs party is over | vox.

September 3, 2013

Saul Eslake: 50 years of housing policy failure | | MacroBusiness

Leith van Onselen quotes Saul Eslake:

Research by Judy Yates of the University of NSW shows that home ownership rates among younger age groups declined dramatically between the 1991 and 2011 Censuses – from 56% to 47% among 25-34 year olds; from 75% to 64% among 35-44 year olds; from 81% to 73% among 45-54 year olds; and 84% to 79% among those over 55…

Eslake also nails one of my pet hates: federal/state intervention in the housing market to boost demand, driving up prices and fueling the housing bubble:

Eslake puts the recent failure of housing supply to keep up with demand down to two main factors, namely:

The decline in the provision of social housing; and

Restrictive state and local government planning schemes and upfront charging for development and infrastructure.

Eslake is particularly scathing of policies that boost demand, such as FHB Grants and negative gearing.

September 3, 2013

Sarah Palin: ‘We’re bombing Syria … and I’m the idiot?’ | Washington Times

Jessica Chasmar at The Washington Times:

“So we’re bombing Syria because Syria is bombing Syria? And I’m the idiot?” Mrs. Palin asked on Friday. “President Obama wants America involved in Syria’s civil war pitting the antagonistic Assad regime against equally antagonistic Al Qaeda affiliated rebels. But he’s not quite sure which side is doing what, what the ultimate end game is, or even whose side we should be on.”

September 3, 2013

GM and Toyota may follow Ford’s lead and shut plants in Australia – Quartz

Nandagopal J. Nair writes:

The biggest drag is is a strong Australian dollar, which is making local manufacturing uncompetitive compared to imports. Over the past 12 months the currency has traded about 30% above its three-decade average. Its strength has pushed up manufacturing costs, making Australia the third most expensive country to do business in, according to the IMF.

September 3, 2013

Global markets bearish but ASX, India find support

US markets are closed for Labor Day. The S&P 500 ended last week testing its rising trendline and support at 1630. Breach would reinforce the bearish divergence on 21-day Twiggs Money Flow, indicating a test of primary support at 1560. Recovery above the descending trendline is unlikely at present, but would warn the correction is ending. In the long-term, failure of primary support would offer a target of 1400*.

S&P 500 Index

* Target calculation: 1550 – ( 1700 – 1550 ) = 1400

VIX below 20 suggests a bull market.
S&P 500 Index

The FTSE 100 closed above initial resistance at 6500. Follow-through would suggest the correction is over and another attempt at 6750 likely. Strong bearish divergence on 13-week Twiggs Money Flow, however, warns of selling pressure and breakout above 6750 is unlikely. Reversal below 6400 would warn of a test of primary support at 6000.

FTSE 100 Index

Germany’s DAX encountered stubborn resistance at 8500. Reversal below 8000 would test primary support at 7600, while breakout above 8500 would offer a target of 9000*.

DAX Index

* Target calculation: 8400 + ( 8400 – 7800 ) = 9000

Japan’s Nikkei 225 recovered above 13500 and follow-through above the descending trendline would suggest the correction is over and another test of resistance at 15000 is likely. Reversal below 13200, however, would indicate a test of primary support at 12500. Earlier bearish divergence on 13-week Twiggs Money Flow warns of long-term selling pressure.

Nikkei 225 Index

China’s Shanghai Composite is testing resistance at 2100/2120. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Reversal below 2050 would indicate another test of primary support at 1950. Breakout above 2200 and the descending trendline is unlikely, but would suggest that the down-trend is ending.

Shanghai Composite Index

India’s Sensex encountered strong support at 18000/18500, evidenced by the long tails on the weekly candles and rising 13-week Twiggs Money Flow. Expect another test of resistance at 20500. Follow-through above 19000 would strengthen the signal.

BSE Sensex Index

The ASX 200 is headed for a test of 5250 after breaking resistance at 5150. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Breakout above 5250 would be a welcome sign, suggesting another primary advance, but respect of resistance and a lower peak on Twiggs Money Flow would warn of a reversal.

ASX 200 Index

* Target calculation: 5250 + ( 5250 – 4750 ) = 5750

August 31, 2013

John Mauldin: Effect of the taper

The last two times the Fed has ended a period of quantitative easing, the air has come out of the market balloon. Has this coming move been so telegraphed that the reaction will be different than in the past, or will we see the same result? Want to bet your bonus on it? Or your retirement?

~ John Mauldin

See graph at Mauldin Economics

August 29, 2013

The Qatar Problem – By Jeremy Shapiro | The Middle East Channel

Jeremy Shapiro at Foreign Policy discusses the role played by Qatar in the Middle East, their expansion of Al-Jazeera into the US, and their support for the Muslim Brotherhood:

On the face of it, Qatar has been one of the United States’s most valuable allies in the Middle East over the last decade. Qatar hosts a large U.S. Air Force base in the Persian Gulf and has often provided political and financial support for U.S. initiatives in the Middle East. Indeed, Washington has often encouraged Qatari activism to legitimize U.S. diplomacy, including its political support at the Arab League of a potential U.S. strike against Syria.

But Qatar’s role in the United States’s Middle East policy is far more problematic than is commonly recognized. The tiny yet ambitious Gulf emirate has sought to use its immense hydrocarbon wealth to finance and arm civil wars in Libya and Syria, to support Hamas in Gaza, and to mediate disputes in Sudan and Lebanon. Its interest sometimes align with the United States’s — but too often, they do not. The launch of Al-Jazeera America, the news network its government owns, should redirect attention to Doha’s goals and means……

August 29, 2013

The true cost of drones: Unending war?

James R. Holmes at The Naval Diplomat describes how the function of drones has evolved from artillery spotting to armed UAVs capable of waging war without direct human intervention. Whether armed, or merely used for surveillance and accurate delivery of independently-launched (naval, aerial or land-based) weapons, the low cost of drone warfare raises the prospect of an unending conflict:

…..Two, Clausewitz urges senior leaders to let the value of the political object determine how many national resources they expend to obtain that object, and how long they expend those resources for. Professor Byman appears to define success — again, whether drones work — partly in terms of how much drones cost the United States and its allies. Drone warfare is cheap relative to keeping expeditionary forces on the ground, projecting force inland from the sea, or otherwise prosecuting operations via traditional, resource-intensive methods. But flip the relationship around. By Clausewitzian cost/benefit logic, holding down the magnitude of the effort may let Washington continue with drone strikes more or less indefinitely, even if U.S. leaders are only tepidly committed to the endeavor. A forever war, even an inexpensive one, is an unsettling prospect.