Looking at the S&P 500 weekly chart, it continues to follow the same pattern as in early 2008. There is a similar false recovery above medium-term resistance at 1200 (compared to 1400 in 2008) followed by reversal below the new support level. Also, a similar 63-day Twiggs Momentum peak below the zero line warns of a strong primary down-trend.
* Target calculation: 1100 – ( 1300 – 1100 ) = 900
The role which the European Central Bank needs to be allowed to play in resolving the European sovereign debt crisis needn’t amount to sustained financing of government deficits. It is perhaps better conceived of as being akin to central bank intervention in the currency markets.
When, in moments of one-sided speculation, or panic, foreign exchange markets push a currency to what by any reasonable yardstick appears to be extremely over- or under-valued levels, it’s not unusual for central banks to sell or buy that currency in sufficient volume to push it back in the opposite direction. If the central bank concerned is perceived as ‘credible’, the volume of purchases or sales required to achieve its objective will often be quite small. And if its judgement as to what constitutes ‘reasonable’ is correct, it will usually end up making a profit.
via Germany’s economic and political generals are fighting the wrong war – On Line Opinion – 24/11/2011.
A German government debt auction drew some of the weakest demand since the introduction of the euro, signaling diminishing investor appetite for even the safest euro-zone assets amid Europe’s worsening debt crisis….The German government was able to sell only €3.644 billion $4.92 billion of the €6 billion in 10-year bunds on auction for an average yield of 1.98%. Interest rates on Germany’s 10-year bonds rose sharply after the auction to 2.09%, their highest level in three weeks, leapfrogging the yield on the U.S. 10-year note.
Assets of all exchange-traded funds fell in September by $89.29 billion, or 8.6 percent, to $951.46 billion.
Over the past 12 months, ETF assets increased $68.71 billion, or 7.8 percent. Assets in domestic equity ETFs increased $55.08 billion since September 2010, and global equity ETFs assets fell $13.78 billion during this period.
The combined assets of the nation’s mutual funds decreased by $582.3 billion, or 5.0 percent, to $11.040 trillion in September, according to the Investment Company Institute’s official survey of the mutual fund industry.
via ICI – Trends in Mutual Fund Investing, September 2011.
The fall in Stock Funds was far greater, at 9.5%, compared to only 1.3% in Taxable Bond Funds and 0.1% in Taxable Money Market Funds.
The Prime Minister on Monday conceded that tackling Britain’s debts was “proving harder than anyone envisaged”, raising the prospect that the Coalition would be unable to close the deficit by 2014-15……Debt is “a drag on growth”, Mr Cameron told business leaders. “We are well behind where we need to be,” he said.
via David Cameron: our plan to cut debt is failing – Telegraph.
In principle, solving the nation’s debt problems is easy. Almost all experts agree that a combination of reduced spending and increased tax revenues is needed. Cuts in spending and increases in tax revenues equal to about 5 percent of GDP are required to prevent an increase in the debt-to-GDP ratio. If a constant debt-to-GDP ratio were achieved with spending cuts alone, annual non-interest government spending would have to be reduced by about 20 percent. Alternatively, if a constant debt-to-GDP ratio were achieved by relying solely on increased tax revenues, taxes would have to be raised by about 33 percent. It is impossible to imagine that Congress would ever adopt spending cuts or tax increases of these magnitudes.
The logical conclusion is that only a balanced approach to solving our debt crisis, one that includes both spending cuts and increased taxes, is feasible. That being said, neither spending cuts nor tax increases will be politically easy to enact.
via EconoMonitor : EconoMonitor » “Solving America’s Debt Crisis”.
Compared with debt-saddled Greece, Spain and Ireland, Italy is much less reliant on foreign investors to finance its debt. And more so than in any other euro zone country, Italian citizens have been active buyers of government debt, with such bond holdings representing 10 percent of household assets. So far, the evidence suggests that Italian households are not panicking.
HSBC issued the preliminary “flash” version of its monthly manufacturing purchasing managers index survey – a closely watched non-government view on how China’s economy is faring. The survey fell to a contractionary reading of 48 for November, compared to a mildly expansionary reading of 51 last month. A reading of 50 separates expansion from contraction.
via Australian sharemarket extends losses after weak China survey | The Australian.
Deposit levels at five of Spain’s top six banks declined in the third quarter, while five of Italy’s largest lenders also reported declines, according to a report by analysts at Citigroup. In some cases, individuals pulling their money out of a bank are instead buying the bank’s bonds, which have offered hefty interest rates lately. But corporate clients, who find it relatively simple to move cash from one international bank to another, appear to have been especially aggressive in scaling back their deposits at southern European banks. Spain and Italy’s largest banks each reported declines of at least 10% in the quarter that ended Sept. 30.
