Budget experts from both political parties warned at a Business Roundtable forum on Tuesday that the congressional Super Committee preparing for its first meeting later this week needs a long-term vision that goes beyond cutting $1.2 trillion from the federal deficit over the next decade.
“These guys have only a 10-year window. They can get $1.2 trillion fairly easily. But don’t think that’s success,” said Alice Rivlin, founding director of the Congressional Budget Office and a senior fellow at the Brookings Institution. “Success is putting in place longer-term reforms that are going to stabilize the debt… it means a lot more than $1.2 trillion, and it means ultimately what would come out of this would be more like $4 trillion or $5 trillion.”
Europe consolidates
Dow Jones Europe Index ($E1DOW) recovered above 230 and is expected to consolidate between 230 and 250. The bear market remains strong, with 13-week Twiggs Money Flow below zero indicating selling pressure. Reversal below 230 would test the 2010 low of 205, though the calculated target is lower*.
* Target calculation: 230 – ( 265 – 230 ) = 195
Denial is not a river in Egypt
Dow Jones Industrial Average rallied, suggesting a second higher low above primary support at 10600/10800. Expect a test of 11900/12000, but this does not mean the bear market is about to reverse. We are still in the early “denial stage” of the bear market, identified by sporadic bargain-hunting, high volatility and a general lack of direction. Declining volume indicates a lack of enthusiasm from buyers and sellers. Failure of primary support would change that, leading to a sharp fall to 10000*.
* Target calculation: 11000 – ( 12000 – 11000 ) = 10000
Number for the day is 45.0%
The percentage of containers that were shipped empty from the Port of Los Angeles during the 2011 financial year was 48.42% (or 1.8 million twenty-foot units). Incoming containers received empty were a mere 3.42%. Our number for the day is the net 45.0% of incoming containers that are returned empty to their port of destination.
Shippers attempt to fill containers on their return journey, even at super-low rates, in order to offset the cost of completing the round-trip. Empty containers indicate failure to locate manufactured goods that can compete in these export markets. This affects not only the shipper, but the entire economy. You see, those containers leaving the West Coast are not really empty. They contain something far more valuable than the goods being imported. They contain manufacturing jobs — and the infrastructure, skills and know-how to support them.
In 2012, if you need an independent gauge of how successful the President’s jobs program has been, check this number.
ASX 200 threatens support
The ASX 200 is headed for another test of support at 4000. Declining volume displays no evidence of bargain-buying. Failure of support is likely and would offer a target of 3500*.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
Flight to safety
10-Year Treasury yields fell to a new low on Friday, warning of further falls in the stock market as investors seek save havens in Treasurys and precious metals.
JSE Overall Index retreats
The JSE Overall Index retreated below the former primary support level of 30000, strong volume [R] warning of selling pressure. Breach of the rising trendline would indicate another test of support at 28400. Failure of support would offer a target of 26000*, but this is not yet a foregone conclusion, with an up-tick in volume [S] indicating some buying support.
* Target calculation: 28.5 – ( 31 – 28.5 ) = 26
Bovespa
The Brazilian Bovespa Index encountered strong resistance at 58000, the spike in volume [R] warning of selling pressure. Breach of the rising trendline would warn that the rally is fading and another test of support at 48000 is likely. Failure of support would offer a target of 38000*.
* Target calculation: 48 – ( 58 – 48 ) = 38
Australia Investor Confidence at Lowest Level Since 2009 – WSJ.com
Australians face rising electricity bills, fuel prices and mortgage rates, and the increasing cost of living has been exacting a toll on the economy.
Neither consumers nor businesses are in the mood to borrow in a major way. Veda’s quarterly Consumer Credit Demand Index, released Monday, showed consumer credit demand has dropped 5.1% since March. Business credit growth was flat in July, after having not posted growth for four straight months, St. George Bank economist Janu Chan said. In the year to July, business credit contracted 1.9%. “Lackluster growth in business credit is consistent with softening business confidence, and adds to evidence that certain sectors of the economy are doing it tough,” Ms. Chan said in a note.
via Australia Investor Confidence at Lowest Level Since 2009 – WSJ.com.
Fighting Australia’s “hot money” problem – macrobusiness.com.au
Australia is a large net borrower from the rest of the world. A large deficit in a capital account along with a deficit in the balance of trade while the currency is rising are all strong evidence that Australia has a problem with currency speculation.
Currency speculation, sometimes called “hot money” , needs to be controlled because it can cause some serious imbalances in the local economy both on the way in, and on the way out. There are a number of well-known symptoms for hot money in-flows, these include:
• Asset bubbles
• Currency appreciation
• Inflation
via Fighting Australia’s “hot money” problem – macrobusiness.com.au.