Category: UK & Europe

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Europe: Selling pressure

Dow Jones Euro Stoxx 50 is testing support at 3200/3230. Declining 21-day Twiggs Money Flow indicates medium-term selling pressure. Breach of 3200 and the rising trendline would warn of a correction and weakness in the primary up-trend. Recovery above 3300 is less likely, but would suggest another advance.

Dow Jones Euro Stoxx 50

* Target calculation: 3200 + ( 3200 – 3000 ) = 3400

DAX again retreated below the psychological barrier of 10,000. A sharp fall on 21-day Twiggs Money Flow indicates strong medium-term selling pressure. Expect further consolidation between 10000 and 9700. Failure of support would warn of a correction to the primary trendline at 9500. Recovery above 10000 is unlikely at present, but would indicate an advance to 10500*.

DAX

* Target calculation: 9750 + ( 9750 – 9000 ) = 10500

The Footsie also shows selling pressure on 21-day Twiggs Money Flow. Expect another test of 6700. Recovery above 6870 is unlikely at present, but would signal an advance to 7200*.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

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One-size-fits-all alcohol policies fail to help problem drinkers |IEA

From the Institute of Economic Affairs:

The cornerstone policies of Britain’s alcohol strategy are failing to reduce heavy drinking amongst the most vulnerable. New research from the Institute of Economic Affairs outlines the significant flaws of advertising bans, licensing restrictions and higher taxes, which not only fail to help problem drinkers, but punish the majority of responsible consumers.

The government and health campaigners have long favoured policies which aim to reduce per capita alcohol consumption to reduce heavy and harmful drinking. This outlook is based on a blunt model devised in the 1950s, and ignores countless studies which have demonstrated that particular subgroups drink at extremely varied levels. Attempting to reduce a national average ignores the obvious: that heavy drinking amongst a minority drastically pushes up the average.

In Punishing the Majority, authors John Duffy and Christopher Snowdon examine how a relatively small number of drinkers consume a disproportionately large amount of alcohol, with close to 70% of alcohol consumed by one fifth of the population. Using several examples, the authors show the extent to which per capita consumption depends on the drinking patterns of a minority.

The paper calls for politicians and campaigners to wake up to the complex reasons behind problem drinking. Instead of favouring political interventions on price, availability and advertising, the health lobby should pursue harm-reduction and rehabilitation.

Read more at Punishing the Majority – The flawed theory behind alcohol control policies, by John C. Duffy and Christopher Snowdon | Institute of Economic Affairs.

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Ukraine should sell its gas pipeline to stabilize the region

From OilPrice.com

Gas supply, and the threat to that supply for Europe, is what has forced Russia to move aggressively on multiple fronts to defeat Ukraine in its efforts to modernize and westernize its economy, its future, and its way of life.

So, how to start the liberalization process? Ukraine has argued that its gas transportation system is a strategic asset. Business-minded people take issue with this interpretation, which ignores the commercial potential of the pipeline system. Now that we have come full circle in a long-brewing Ukraine-Russia gas war, perhaps the pipeline should be considered “strategic” — if not in the way the Ukrainian authorities have long understood. The pipeline system, worth $20 to $30 billion, can indeed play a strategic and tactical role in resolving Ukraine’s crisis with Russia, but only if it’s sold off.

Ukraine should sell 50 to 75 percent of it for cash to a consortium involving the EU, U.S. and Russia and operated by a U.S. business enterprise, preferably based in Houston. This can only happen if Russia agrees to remove troops and other proxies in eastern Ukraine and then works with Ukraine to secure the border and cease all low-intensity conflict efforts, including on the ground, and in cyberspace and the trade arena….

Read more at EconoMonitor : EconoMonitor » 5 Things Ukraine Must Do to Become Energy Independent.

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Europe: Mild selling pressure

DAX again retraced to test support at 9750/9800. A small decline on 13-week Twiggs Money Flow indicates mild (medium-term) selling pressure. Failure of support would warn of a correction to the primary trendline. Respect is less likely, but would suggest a fresh advance; confirmed by breakout above 10000.

DAX

* Target calculation: 9750 + ( 9750 – 9000 ) = 10500

The Footsie shows similar selling pressure to the DAX, with a mild decline on 13-week Twiggs Money Flow. The long tail on last week’s candle suggests support at 6700 and the rising trendline. Recovery above 6900 would signal an advance to 7200*. But reversal below 6700 is as likely and would warn of a correction to primary support at 6400/6500.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

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Aussie Dollar threatens breakout, Euro tests support

The Aussie Dollar continues to test resistance at $0.94. Recovery of 13-week Twiggs Momentum above zero suggests continuation of the up-trend, testing resistance at $0.97. Reversal below $0.92 is unlikely at present, but would warn of a decline to the band of support between $0.87 and $0.89.

Aussie Dollar

The Euro respected primary support at $1.35 and the rising long-term trendline. Recovery above $1.37 would suggest a rally to $1.39/$1.40, but descending 13-week Twiggs Momentum crossed below zero, warning of weakness. Breach of $1.35 would signal a decline to $1.31*.

Euro/USD

* Target calculation: 1.35 – ( 1.39 – 1.35 ) = 1.31

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DAX and Footsie bullish

DAX is testing the psychological barrier of 10000. Recovery of 13-week Twiggs Money Flow above the descending trendline indicates medium-term buying pressure. Breakout above 10000 would signal an advance to 10500*. Reversal below 9750 is unlikely, but would warn of a correction.

DAX

* Target calculation: 9750 + ( 9750 – 9000 ) = 10500

The Footsie is gathering strength for another attempt at resistance around 6850/6880. Rising 13-week Twiggs Money Flow troughs above zero indicate long-term buying pressure. Breakout would signal an advance to 7200*. Reversal below 6740 is less likely, but would warn of a correction to primary support at 6400/6500.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

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Margaret Thatcher’s free market legacy | Charles Moore

Margaret Thatcher’s biographer Charles Moore discusses the former Prime Minister’s legacy. Moore provides insights as to how Margaret Thatcher’s stance on the market economy developed and how she popularised it. He seeks to outline her approach to foreign affairs, in relation to the EU, the US, and her broad approach to the Cold War.

http://vimeo.com/85613703

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The inequality debate | Thomas Piketty and Ryan Bourne IEA

The inequality debate: Thomas Piketty and Ryan Bourne, of the Institute of Economic Affairs.

http://vimeo.com/98715433

One mistake Piketty makes: he uses a marginal tax rate of 80% in the US in the 1920s and 1930s on incomes over $1 million to justify higher taxes on incomes over $1 million today. This fails to consider inflation. Adjusted for the CPI, an income of $1m in 1920 equates to an income of $12m today.

High marginal tax rates in the 1920s in the US were introduced to pay back war debt from WWI. They had the opposite effect of that intended and reduced tax collections. Treasury secretary Andrew Mellon subsequently increased tax collections by reducing maximum tax rates, with the famous quip: “73% of nothing is nothing.”

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European stocks’ strong Ichimoku trend

Weekly charts of Ichimoku Cloud show European stocks in an up-trend. Dow Jones Euro Stoxx 50 displays healthy separation above a green cloud. The signal is further strengthened by blue (Tenkan) holding above the red (Kijun) line for the last 6 months.

Dow Jones Euro Stoxx 50

* Target calculation: 3200 + ( 3200 – 3000 ) = 3400

The DAX is consolidating below the psychological barrier of 10000, while displaying healthy separation above a green Ichimoku cloud. Breakout would confirm the recent buy signal where blue (Tenkan) crossed above the red (Kijun) line. Target for an advance would be 10500*. Reversal below 9700 is unlikely, but would warn of a correction.

DAX

* Target calculation: 9750 + ( 9750 – 9000 ) = 10500

The Footsie is struggling to break resistance at 6850/6880 and getting squeezed against the rising green cloud. Ichimoku still signals an up-trend but this is markedly weaker than the other two indices. Breakout would signal an advance to 7200*, but reversal below 6800 warns of another correction — likely to find support at the upper border of the cloud.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

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