Keen to be heard | BRW

In 2008, private debt in the US grew $4.1 trillion but in 2010 shrunk $2.85 trillion as banks decreased their lending as a result of the housing crash. When subtracted from GDP, this fall in debt equated to a 38 per cent reduction in aggregate demand, leading directly to the “great recession” and unemployment hitting its highest level in almost 30 years. “This is what people find so confusing,” says Keen. “When you look at GDP numbers in the US, they’re not bad. At the beginning of 2008, US GDP was $14.25 trillion and today it has GDP of $14.75 trillion. That’s stagnant growth but doesn’t explain the enormous depths of the US downturn. It only begins to makes sense when you look at the fall in aggregate demand.”

via Keen to be heard.

Bad news for Canadian stocks

Canada’s TSX 60 index broke through primary support at 650, confirming the primary down-trend signaled by 63-day Twiggs Momentum. Expect a decline to 580*. Recovery above 650 is unlikely at present, but would warn of a bear trap.

TSX 60 Index

* Target calculation: 650 – ( 720 – 650 ) = 580

US: S&P 500 and Nasdaq rally

The S&P 500 rallied off support at 1290/1300, the 50% Fibonacci retracement level. Respect of resistance at 1350/1360 would indicate a strong correction. Likewise a 21-day Twiggs Money Flow peak below zero would be a strong bear signal. The primary trend remains upward, with support a long way off at 1150.

S&P 500 Index

On the weekly chart, the Nasdaq 100 displays a solid bounce off support at 2500 and the rising trendline. Respect of resistance at 2650 would indicate a test of 2400. A 63-day Twiggs Momentum trough above zero would reinforce the primary up-trend, but momentum is falling fast and penetration of the zero line would warn of reversal to a down-trend.

Nasdaq 100 Index

Forex: Australia, Canada, South Africa

Canada’s Loonie broke support at $0.995 and the rising trendline against the greenback, indicating another test of primary support at $0.95. Reversal of 63-day Twiggs Momentum below zero warns of a primary down-trend. Failure of support at $0.95 would confirm.

Canadian Dollar

The Australian Dollar is expected to follow commodities lower, testing primary support at $0.96. 63-Day Twiggs Momentum below zero warns of another primary decline. Recovery above $1.02 is unlikely but would indicate an advance to $1.08.

Australian Dollar

The Australian Dollar strengthened against the South African Rand, but respect of resistance at R8.30 would warn of a decline to R7.50*. Breach of support at R7.90 would confirm. 63-Day Twiggs Momentum oscillating close to zero indicates uncertainty, however, and breakout above R8.30 would test long-term resistance at R8.50.

Australian Dollar/South African Rand

* Target calculation: 8.00 – ( 8.50 – 8.00 ) = 7.50

Commodities point to lower stock prices

The CRB Commodities Index broke support at 295, warning of another primary decline. Respect of zero by 63-day Twiggs Momentum strengthens the signal. Divergence between the S&P 500 Index and commodities warns that stocks are over-priced and likely to fall.

CRB Commodities Index and S&P 500 Index

* Target calculation: 295 – ( 325 – 295 ) = 265

Alan Simpson: No Solution to Debt Without Crisis – WSJ Online

Former Senator Alan Simpson, Co-Chair of President Obama’s Fiscal Commission, doesn’t believe the national debt can be solved without a financial or political crisis. He speaks with WSJ’s Alan Murray at the latest Wall Street Journal Viewpoints panel.

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FedEx CEO on China's Effect on Global Market – WSJ Online

FedEx CEO Frederick W. Smith talks about how exports to China remain stagnant given China’s recent protectionist policies and its focus on “indigenous innovation.” He speaks with WSJ’s Alan Murray at Viewpoints West.

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FedEx CEO on How Tax Policy Weakens U.S. Economy – WSJ online

FedEx CEO Frederick W. Smith talks about how capital investment and lowering corporate tax rates are the main solutions to creating U.S. jobs. He speaks with WSJ’s Alan Murray at Viewpoints West.

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Dimon may be ‘stupid,’ but he’s right on banks – MarketWatch

David Weidner: A return to Glass-Steagall in the U.S. would effectively force the world to separate traditional banking from casino banking.

That system would be attractive to both sides. The banking system that holds our loans, our deposits, debts and assets would be separate from a Wild West free market unfettered by bank regulators and their constant worries about risk.

So why can’t the big financial institutions get behind this one? Simple. They want to gamble your money in the casino.

via Dimon may be ‘stupid,’ but he’s right on banks – David Weidner’s Writing on the Wall – MarketWatch.

Canada: TSX 60

The TSX 60 is testing primary support at 650. Failure would signal a primary down-trend, already indicated by 63-day Twiggs Momentum reversal below zero. 13-Week Twiggs Money Flow, however, continues to reflect reasonable buying pressure so we need to guard against a bear trap.

TSX 60 Index
TSX 60 Index Twiggs Money Flow

* Target calculation: 650 – ( 725 – 650 ) = 575