Colin Twiggs, Author at the patient investor

September 18, 2012

Job Creators in Chief | Global Macro Monitor

By Global Macro Monitor

Let us begin by saying we don’t like the title of this post and believe it is misleading.

The President cannot, in our opinion, directly create permanent jobs in the private sector. Of course, he can hire federal workers and/or direct taxpayer funds to, say, defense or infrastructure projects, which creates, though temporary, a derived demand for labor. More important, however, is the administration’s policies that incentivize private sector hiring through creating an environment that empowers businesses and entrepreneurs and gives them confidence to expand capacity.

….In the short term, however, quantitative easing and negative real interest rates can generate asset bubbles, which can affect the real economy and hiring. But the experience of the collapse of two major bubbles in just a little over a decade illustrates there is always pay back and the monetary induced artificial boom will eventually turn to bust.

via Global Macro Monitor | Monitoring the Global Economy.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

September 18, 2012

“This is No Way to Run a Government!” – Gates | The Fiscal Times

By JOSH BOAK

Nothing has stumped Gates [former Secretary of Defense and CIA director Bob Gates — who served eight of the last nine presidents], who oversaw the $700 billion military budget until last year, quite like the country’s current Congressional gridlock and the government’s ineffective efforts to stop runaway deficit spending.

“We’ve lost the ability to execute even the most basic functions of government,” he said.

via “This is No Way to Run a Government!” – Gates | The Fiscal Times.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

September 18, 2012

Why is China afraid of the Louisiana Purchase? | Foreign Policy

By Joshua Keating

The buying and selling of territory between states is a lot less common than it was in the days when European powers held vast overseas empires and there was significantly more terra nullius to be claimed….

On the other hand, given how many territorial disputes China is involved in at the moment, a study of how these conflicts have been resolved peacably in the past might not be a terrible idea.

via Why is China afraid of the Louisiana Purchase? | FP Passport.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

September 18, 2012

Dangerous Waters | Foreign Policy

BY STEPHANIE KLEINE-AHLBRANDT

The wave of anti-Japanese protests that swept across dozens of cities in China this weekend, prompted by Tokyo’s purchase of three disputed islands, has obscured a potentially more worrying development that risks drawing the two countries into a larger conflict: China’s adoption of a legal framework empowering it to expel foreign vessels in disputed waters in the East China Sea.

……More frequent Chinese patrols in the area, along with the Japanese Coast Guard continuing to patrol near the islands, raises the risk of maritime clashes higher than it has ever been. Although the two countries have dealt with past run-ins — such as when the Japanese Coast Guard arrested a Chinese skipper in 2010 after his boat collided with a Japanese vessel — and succeeded in cooling tensions, the current situation is of a different order. That act could be attributed to an overzealous Chinese fisherman. But now, a skirmish between official law enforcement vessels in the current context could prove irresolvable.

via Dangerous Waters – By Stephanie Kleine-Ahlbrandt | Foreign Policy.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

September 18, 2012

Europe’s Balance of Payments account shows sizeable portfolio inflow

By Marc Chandler

Look at the turn around in the current account. In the 12-months through July, the euro area recorded a seasonally adjusted cumulative current account surplus of almost 63 bln euros, which is about 0.7% of the region’s GDP. The comparable figure in the 12-months through July 2011 was a deficit of a little more than 22 bln euros….

The weakness of the euro area economies has slowed imports and several countries, including some in the periphery, have seen a pick up in exports. Growth differentials probably is the more significant explanation, but we do recognize that from last November through July, the euro had declined about 10% on a trade-weighted basis……

While the current account is intuitively clear, the financial account is surprising. As the euro was falling in July to multi-year lows, talk circulated of capital flight. Yet, the financial account showed a net inflow of 18 bln euros of combined portfolio and direct investment.

via Europe’s Balance of Payments account shows sizeable portfolio inflow.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

September 18, 2012

Europe strengthening

The FTSE 100 is headed for a test of primary resistance at 6000/6100. Rising 13-week Twiggs Money Flow indicates buying pressure. Expect strong selling at resistance, because of the number of previous peaks at this level, but breakout would offer a long-term target of 6750*.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5250 ) = 6750

Europe is recovering strongly, with Dow Jones Europe Index testing primary resistance at 260/265. Rising 13-week Twiggs Money Flow indicates buying pressure. Breakout above 265 would signal an advance to 310*.

Dow Jones Europe Index

* Target calculation: 260 + ( 260 – 210 ) = 310

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

September 18, 2012

Canada: TSX60 wedge

The TSX 60 is headed for the upper channel of its broadening wedge at 725 on the daily chart. Bearish divergence on 21-day Twiggs Money Flow warns of medium-term selling pressure. Retreat below 700 would warn of a swing to the lower wedge border.

TSX 60 Index

* Target calculation: 700 + ( 700 – 640 ) = 760

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

September 18, 2012

S&P 500 hesitates

The S&P 500 hesitated at its upper trend channel. Follow-through below 1460 would indicate a test of the lower channel and support at 1400. Bearish divergence on 21-day Twiggs Money Flow continues to warn of a correction.

S&P 500 Index

* Target calculation: 1420 + ( 1420 – 1280 ) = 1560

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

September 17, 2012

EU Commission Considering Splitting Up Banks to Avoid Future Bailouts – SPIEGEL ONLINE

By Martin Hesse and Christoph Pauly

EU Commissioner Michel Barnier has asked experts to examine the possibility of splitting up major European banks to avoid future bailouts at taxpayers’ expense. But even less radical intervention in the banking sector could have drastic consequences for the industry, and its powerful lobby is resisting any such change……

[Daniel Zimmer, head of the German Monopolies Commission] notes that Germany has already taken steps in the right direction. Under the new German restructuring law, when a bank is in trouble the most critical parts of the institution can be transferred to a bridge bank, allowing the remainder to be liquidated. In such cases, the shareholders and most of the bank’s creditors would not be compensated. A fund made up of contributions from banks would cover restructuring costs.

But there is a problem with the new system. “In a worst-case scenario, a bank has to be split up into vital and other parts within a single weekend,” says Zimmer. “This is only possible if there is already a clear separation between the two parts beforehand.” This is why Zimmer believes it makes sense to establish the dividing line in advance, in a manner similar to what Britain’s Vickers Commission envisions.

via EU Commission Considering Splitting Up Banks to Avoid Future Bailouts – SPIEGEL ONLINE.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

September 17, 2012

Earnings Outlook in U.S. Dims as Global Economy Slows – NYTimes.com

By NELSON D. SCHWARTZ

The boom in American corporate profits, which has far outpaced the gains in the broader economy since the end of the last recession, is faltering.

Giants like FedEx and Intel, two bellwethers of the global economy, are warning of lower quarterly profits because of weakness in worldwide demand. Overseas companies are feeling the pinch, too. Burberry, the British luxury retailer which had seemed immune to a slowdown, is offering a similar warning.

via Earnings Outlook in U.S. Dims as Global Economy Slows – NYTimes.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.