Category: US & Canada

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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.

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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

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S&P 500 and Nasdaq 100 correction

The S&P 500 broke support at 1340 to confirm the correction. Initial target is 1300. Reversal of 21-day Twiggs Money Flow below zero confirms medium-term selling pressure signaled by an earlier bearish divergence . Recovery above 1360 is most unlikely but would warn of a bear trap.

S&P 500 Index Daily Chart

* Target calculation: 1360 – ( 1420 – 1360 ) = 1300

A similar 21-day Twiggs Money Flow signal on the Nasdaq 100 warns of medium-term selling pressure. Retracement respected resistance at 2630, confirming a correction. Initial target is 2500*.

Nasdaq 100 Index

* Target calculation: 2630 – ( 2760 – 2630 ) = 2500

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CNBC: Is the US headed for another recession?

Lakshman Achuthan of ECRI sticks to his forecast of a double-dip:

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The Real Reasons People Drop Out of the Workforce

“Labor force participation for unskilled men has dropped off the table the last few decades,” [Timothy Taylor, managing editor of the Journal of Economic Perspectives] said. “Wages for that group aren’t high enough to encourage them to work. For a lot of those men, going on disability may be a better option. Working off the books may be going on. The benefits of working at $10 or $11 an hour just isn’t enticing 50-year-old men into the labor force,” he said.

Another factor in play: there were an estimated 2.3 million people in U.S. prisons at the end of 2010, the highest rate of incarceration in the world. That’s quadruple the number imprisoned in 1980. The rate of imprisonment has gone from 100 per 100,000 people in the mid-1970s to 500 per 100,000 today.

via The Real Reasons People Drop Out of the Workforce.

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Dimon in the Rough: JP Morgan Loses $2B on Failed Trade

JPMorgan Chase & Co lost $2 billion on a failed hedge, an unexpected revelation that hit hard the bank that had been seen as the smartest and safest player through the credit crisis that began to erupt in 2007.

via Dimon in the Rough: JP Morgan Loses $2B on Failed Trade.

Comment: Writing good headlines is an art. Occasionally you find a gem like this. It wins my vote for headline of the week.

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Consumer Credit – Worse Than You Think | The Big Picture

Take out government-owned student loans and there has been virtually no rebound in consumer credit since the Great Recession ended. Restated, the consumer has not been borrowing since the Great Recession has ended. Rather, students took advantage of below-market rates on loans provided by the government starting in 2009…….“Most of the improvement in credit is a function of the explosion student loan debt,” said Neil Dutta, an economist at Bank of America Corp. in New York. “The reason student loan debt is exploding? Because the youth population is having difficulty finding work. Hardly a good reason for credit extension.”

via Consumer Credit – Worse Than You Think | The Big Picture.

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Forex: Australia, Canada and South Africa

Weakening commodity prices are dragging the Australian Dollar lower against the greenback. Breach of support at $1.02 indicates another test of primary support at $0.96. Reversal of 63-day Twiggs Momentum below zero already warns of a primary down-trend. Failure of primary support at $0.96 would confirm, offering a long-term target of $0.84*.

Australian Dollar/US Dollar

* Target calculation: 0.96 – ( 1.08 – 0.96 ) = 0.84

Canada’s Loonie is strengthening against the Australian Dollar, having penetrated its long-term descending trendline and with 63-day Twiggs Momentum recovering above zero. Breakout above parity would signal the start of a primary up-trend.
Canadian Dollar/Australian Dollar

The Loonie retreated against the greenback, testing support at $0.995 after a false break above $1.01. Failure of support would confirm a bull trap and test primary support at $0.95. Recovery above $1.01 remains as likely, however, and would signal a primary advance; respect of zero by 63-day Twiggs Momentum would strengthen the signal.

Canadian Dollar/US Dollar

* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06

The Aussie found support at R7.90 against the South African Rand. 63-Day Twiggs Momentum remains weak and reversal below zero would indicate a primary down-trend. Failure of support at R7.90 would warn of a correction to R7.50*. Recovery above R8.30, however, would signal a fresh primary advance.

Australian Dollar/South African Rand

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

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Commodity prices and the S&P 500

The CRB Commodities Index is testing primary support at 295 and respect of the zero line (from below) by 63-day Twiggs Momentum warns of another primary decline. Target for a breakout would be 265*. Divergence between commodities and the S&P 500 suggests that stocks are over-priced, with the Fed doing its best to depress bond yields and pump up stock prices ahead of the November election.

CRB Commodities Index and S&P 500 Index

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

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Fannie Mae Profit Signals a Stabilizing Housing Market – NYTimes.com

[Fannie Mae] reported quarterly net income of $2.7 billion, up from a $6.5 billion loss in the first quarter of 2011……..Across the country, there are signs that the housing market is stabilizing. Home prices have continued to fall, but at a much slower pace. More Americans are buying houses than they were a year ago. Housing starts have climbed more than 10 percent in the last year, as home builders pick up construction of new homes and apartment buildings.

via Fannie Mae Profit Signals a Stabilizing Housing Market – NYTimes.com.

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