Category: Countries & Regions

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The RBA gets hawkish on asset prices – macrobusiness.com.au

I believe that the RBA is determined to prevent any reinvigoration of the Australian housing bubble……. yesterday we had [] confirmation that the bank is structurally remodelling itself as an asset price hawk, with the appointment of Phil Lowe to the deputy governorship. In 2002, whilst working at the BIS [he] wrote a defining paper on the identification and targeting of asset prices….his history shows both the intelligence and fearlessness needed to be an effective senior governor. Bravo.

via The RBA gets hawkish on asset prices – macrobusiness.com.au | macrobusiness.com.au.

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China’s manufacturing sector under contractionary pressure – Westpac: Phat Dragon

Well, the official November manufacturing PMI, a more reliable survey than the private sector alternative [once seasonally adjusted], saw finished goods inventories rise to their highest reading ever in November. Along with across the board weakness in order books….. and a deceleration in output, import weakness, a steep decline in the new orders-to-inventories ratio and a depleting work backlog, the manufacturing sector looks to be under contractionary pressure. The moment of discontinuity has not yet arrived, but the odds of such an unwelcome appearance manifesting in the near term from this enfeebled jumping off point have certainly shortened.

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Romer: Expectations Wallop Needed to Avert 40-Year Recovery

The Federal Reserve should set a “nominal target” for growth in the nation’s gross domestic product that is well above its current low rate for coming out of a recession, said Christina Romer, now an economics professor at the University Of California, Berkeley.“One thing I think it would do is pack a really big expectations wallop,’’ said Romer, speaking at the Super Bowl of Indexing wealth management conference here. “A new operating strategy is something that could really break through and affect people’s behavior.” Such a “new operating strategy” is needed to get the economy on the kind of course normally seen after a recession. In the first nine quarters after the 1982 version, the economy grew at an annual rate of 6.3 percent. In the first nine quarters of this edition, the rate has been 2.4 percent, barely at the nation’s historical rate of growth. And if a new approach is not taken, it could be decades before the nation is back at full employment.

via Romer: Expectations Wallop Needed to Avert 40-Year Recovery.

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Japan & India

Dow Jones Japan Index is headed for a test of the descending trendline but 63-day Twiggs Momentum remains deep below zero, indicating a strong primary down-trend.

Dow Jones Japan Index

Dow Jones India 30 Titans index found support above 150 and is headed for another test of resistance around 170. Bullish divergence on 13-week Twiggs Money Flow favors a primary trend reversal. Breakout above 172 would confirm.

Dow Jones India 30 Titans Index

* Target calculation: 170 + ( 170 – 150 ) = 190

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China weakens

Dow Jones Shanghai Index respected resistance at 320 and is now testing support at 285. Failure would offer a target of 260*. 63-Day Twiggs Momentum deep below zero continues to signal a strong primary down-trend.

Dow Jones Shanghai Index

* Target calculation: 290 – ( 320 – 290 ) = 260

DJ Hong Kong index is testing medium-term support at 360. Failure would mean a re-test of the primary level at 320; respect is less likely but would indicate another test of 410. Declining 13-week Twiggs Money Flow below zero warns of selling pressure.

Dow Jones Hong Kong Index

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ASX buying pressure

The ASX 200 index is once again testing resistance at 4350. Rising 21-day Twiggs Money Flow indicates medium-term buying pressure. Breakout would signal a primary advance to 4700*. Respect of resistance is less likely, but would suggest another test of primary support at 3850.

ASX 200 Index

* Target calculation: 4350 + (4350 – 4000 ) = 4700

The All Ordinaries is similarly testing resistance at 4400, while rising 13-week Twiggs Money Flow indicates long-term buying pressure. Breakout would offer a target of 4800*.

All Ordinaries Index

* Target calculation: 4400 + ( 4400 – 4000 ) = 4800

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Footsie and Euro Stoxx 50 shows signs of resurgence

The FTSE 100 index is headed for resistance at 5700. Breakout would signal an advance to the 2011 highs at 6100. Rising 13-week Twiggs Money Flow indicates buying pressure.

FTSE 100 Index

* Target calculation: 5700 + ( 5700 – 5200 ) = 6200

The Dow Jones Euro Stoxx 50 also shows signs of recovery, heading for a test of the descending trendline and resistance at 2500. Breakout would signal a primary advance to 2900* and the end of the bear market. Momentum is rising but remains a long way below the zero line. Respect of 2500 would be a bear signal not only for the euro-zone, but for the global economy.

Euro Stoxx 50 Index

* Target calculation: 2500 + ( 2500 – 2100 ) = 2900

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Canada TSX 60

The TSX 60 index is headed for a test of the descending trendline and resistance at 720 on the weekly chart. Upward breakout would signal a primary advance to 790* and the end of the bear market. Respect of zero by 13-week Twiggs Money Flow would strengthen the signal, indicating strong buying pressure.

TSX 60 Index

* Target calculation: 720 + ( 720 – 650 ) = 790

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US markets show promise of recovery

We are not out of the woods yet, but the S&P 500 weekly chart is starting to diverge from its mid-2008 pattern. Headed for a test of the descending trendline and resistance at 1300, an index breakout would signal a primary advance to 1450* and the end of the bear market. Recovery of 63-day Twiggs Momentum above zero would support this.

S&P 500 Index

* Target calculation: 1300 + ( 1300 – 1150 ) = 1450

Dow Jones Industrial Average, however, displays short-term resistance between 12000 and 12300 on the daily chart. Reversal of 21-day Twiggs Money Flow below zero would warn of rising selling pressure.

Dow Jones Industrial Average

* Target calculation: 12300 + ( 12300 – 11200 ) = 13400

Nasdaq 100 Index is headed for resistance at 2400. Upward breakout would offer a target of 2750*. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure, but breakout above the descending trendline would negate this.

Nasdaq 100 Index

* Target calculation: 2400 + ( 2400 – 2050 ) = 2750

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Would all those who are unemployed please raise their hand

US unemployment fell to 8.6 percent in November, the lowest level in more than 2 years. But let’s take a look at the real figures — without the spin. The unemployment rate only includes those who have actively looked for work in the prior 4 weeks. That excludes anyone who has abandoned hope of finding a job and is no longer seeking work. The Jobless Rate below paints a far bleaker picture, reflecting all unemployed, either full-time or part-time, whether or not they are seeking work. The chart is restricted to males aged 25 to 54 in order to minimize demographic factors that could cause wider variations among females, youth under the age of 25, or 55 or older.

US Males 25 To 54 Jobless Rate

There is a visible improvement, with a fall below 18 percent, but we are a long way from the lows of 12 percent recorded in the last boom. Apart from the massive spike in 2008, what is also evident is the long-term up-trend: the jobless rate has increased steadily over the last 60 years — from a low of just 3.6 percent in 1953. We are a long way from being able to congratulate ourselves on the recovery.

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