Colin Twiggs, Author at the patient investor

July 31, 2012

The Dinged-Up, Broken-Down, Fender-Bended Economic Recovery Plan – NYTimes.com

ADAM DAVIDSON highlights that consumers’ cars have aged as they postponed replacement purchases during the GFC. This has led to pent-up demand which is getting auto-makers excited:

New-car sales, which collapsed to less than 11 million in 2009, are expected to surpass 14 million this year. And forecasters believe that they will increase by around a million annually for the next couple of years. In 2015, we could eclipse 16 million vehicles sold, which is near the precrisis peak…….This optimism is also embodied in the number of new models about to hit the production line. A few years ago, the industry introduced only around 50 new models. This year, it is planning 94; next year, there will be another 101.

via The Dinged-Up, Broken-Down, Fender-Bended Economic Recovery Plan – NYTimes.com.

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.

July 31, 2012

No End To Long-Term Unemployment – Business Insider

J BRADFORD DE LONG, professor of economics at University of California at Berkeley, argues for expansionary monetary and fiscal policy.

At its nadir in the winter of 1933, the Great Depression was a form of collective insanity. Workers were idle because firms would not hire them; firms would not hire them because they saw no market for their output; and there was no market for output because workers had no incomes to spend.

I have been arguing for four years that our business-cycle problems call for more aggressively expansionary monetary and fiscal policies, and that our biggest problems would quickly melt away were such policies to be adopted. That is still true. But, over the next two years, barring a sudden and unexpected interruption of current trends, it will become less true.

But private sector deleveraging means expansionary monetary policy is as effective as pushing on a string. And fiscal policy needs to focus on productive infrastructure investment, not just stimulus spending that runs up public liabilities without any assets to show for it on the other side of the balance sheet.

via No End To Long-Term Unemployment – Business Insider.

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.

July 31, 2012

STEPHEN ROACH: America Can't Keep Relying On Spending To Drive The Economy – Business Insider

STEPHEN ROACH highlights the importance of capital investment in any US recovery:

Over the last 18 quarters, annualized growth in real consumer demand has averaged a mere 0.7%, compared to a 3.6% growth trend in the decade before the crisis erupted…… Consumption typically accounts for 70% of GDP (71% in the second quarter, to be precise). But the 70% is barely growing, and is unlikely to expand strongly at any point in the foreseeable future. That puts an enormous burden on the other 30% of the US economy to generate any sort of recovery.

Capital spending and exports, which together account for about 24% of GDP, hold the key to this shift. At just over 10% of GDP, the share of capital spending is well below the peak of nearly 13% in 2000. But capital spending must exceed that peak if US businesses are to be equipped with state-of-the-art capacity, technology, and private infrastructure that will enable them to recapture market share at home and abroad. Only then could export growth, impressive since mid-2009, sustain further increases. And only then could the US stem the rising tide of import penetration by foreign producers.

via STEPHEN ROACH: America Can't Keep Relying On Spending To Drive The Economy – Business Insider.

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.

July 31, 2012

China: Why the Recovery Has Begun | PRAGMATIC CAPITALISM

A bullish outlook on China from Citi Research:

The key drivers of growth recovery are that de-stocking is near its end, the hard landing risk of the property sector is contained, and investment, consumption and exports had shown signs of improvement in June. In our view, given more policy supports in the near term, 3Q GDP growth will likely be flattish…….the planned Rmb360bn infrastructure investment will be fully implemented.

via China: Why the Recovery Has Begun | PRAGMATIC CAPITALISM.

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.

July 31, 2012

Olympic highlights: Le Clos touches out Michael Phelps in Mens 200m butterfly

Chad Le Clos touches out Michael Phelps in Mens 200m butterfly:

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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.

July 31, 2012

FT Alphaville » Negative rates as a precursor to the death of banking

Izabella Kaminska: The [European research] team at Morgan Stanley concludes:

Banks earnings have already come under significant pressure from the flattening of the yield curve. Unless negative real rates came with a material steepening of the curves (not our rates colleagues’ view), banks earnings would come under even greater pressure. In fact, the greatest risk our rates colleagues see would be for negative rates 2-3 years down the curve, in which case banks would need to re-price credit further. In our view, as banks’ confidence in loan growth and margins fell, so would their confidence on their capital plans and so lending would remain weak. We see Japan’s experience as good case study in this.

via FT Alphaville » Negative rates as a precursor to the death of banking.

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.

July 31, 2012

Beijing pushes to improve air pollution – FT.com

Not a good sign for thermal coal prices (and miners):

In a multibillion dollar bid to clean up air pollution, Beijing is shutting down its coal-fired plants and replacing them with natural gas-fuelled power stations by the end of next year.

via Beijing pushes to improve air pollution – FT.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.

July 31, 2012

Olympic highlights: Mens 4x100m freestyle relay

Highlight of the Olympics so far is France’s performance in the Mens 4x100m freestyle relay:

[vodpod id=Video.16517080&w=425&h=350&fv=%26embedCode%3DxsbWlpNTpkvRvtD0HFIqoWYfQO4GN67h%26videoPcode%3DBhdmY6l9g002rBhQ6aEBZiheacDu]

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.

July 31, 2012

Australia: Housing credit slows

From the Westpac Bulletin:

Housing credit has lost momentum under the weight of past tight monetary policy and with the sector facing a number of headwinds.

Housing credit grew by just 0.30% in the month of June. This is the weakest monthly result on record (back to 1976), with the exception of a one-off fall of -0.38% for June 1984. Annual housing credit growth has now slowed to 5.1%, moderating from 6.0% a year ago.

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.

July 31, 2012

Europe: DAX and Footsie buying pressure

Germany’s DAX is headed for a test of resistance at the 2012 high of 7200. A trough above zero on 13-week Twiggs Money Flow indicates strong buying pressure. We should see stubborn resistance at 7200 but also strong support at 6500 if there is a retracement.

DAX Index

The FTSE 100 is testing resistance at 5700 while 21-day Twiggs Money Flow bottoming above zero indicates (medium-term) buying pressure. Breakout would offer a target of 5900*.

FTSE 100 Index

* Target calculation: 5700 + ( 5700 – 5500 ) = 5900

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.