Bill Moyers interviews investment banker and former Reagan budget director, David Stockman:
Crony capitalism: the revolving door between Washington and Wall Street. A 53-minute video, but worth the time.
Forex: EUR, GBP, AUD, CAD, JPY, ZAR
The euro remains in a strong primary down-trend. The current rally is testing resistance at $1.32, but 63 -day Twiggs Momentum continues to trend downwards. Breach of support at $1.26 would signal a down-swing to $1.20*.
* Target calculation: 1.26 – ( 1.32 – 1.26 ) = 1.20
Pound Sterling has breached its declining trendline against the greenback, warning that a bottom is forming. Breakout above $1.62 would complete a double bottom reversal, testing the 2011 high at $1.68.
* Target calculation: 1.62 + ( 1.62 – 1.53 ) = 1.71
Canada’s Loonie also signals that a bottom is forming. Breakout above $1.01 would indicate the start of a primary up-trend, with an initial target of $1.06*.
* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06
The Aussie is testing resistance at $1.08. Breakout would similarly signal a primary up-trend with an initial target of $1.18*.
* Target calculation: 1.08 + ( 1.08 – 0.98 ) = 1.18
The greenback is testing primary support at 76 against the Japanese yen. Breakout would offer a target of 72*. Recovery above the declining trendline, however, would suggest that a bottom is forming — confirming the large bullish divergence on 63-day Twiggs Momentum — while breakout above 80 would signal a primary up-trend.
* Target calculation: 76 – ( 80 – 76 ) = 72
The South African Rand is strengthening against the US Dollar, while encountering resistance at R8.50 against its Australian counterpart. Downward breakout from the ascending triangle would warn of a correction to test the long-term trendline at R7.50, while breakout above R8.50 would indicate another primary advance, with a target of R9.50*.
* Target calculation: 8.50 + ( 8.50 – 7.50 ) = 9.50
The economy’s lousy but stocks still look good – Barry Ritholtz
Central banks are flooding the market with liquidity. It is hard for stocks not to go up, despite lousy economic data.
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Barry Ritholz on Yahoo.com
Canada: TSX 60
Canada’s TSX 60 index is stronger,with rising 13-week Twiggs Money Flow indicating buying pressure. Breakout above resistance at 715 would complete a higher trough, signaling a primary up-trend. Target for the initial advance would be 770*.
* Target calculation: 710 + ( 710 – 650 ) = 770
Dow and S&P bearish divergence
Dow Jones Industrial Average is already in a primary up-trend, having completed a higher trough late last year, and is now testing the 2011 high of 12800. Retracement to 12300 and the rising trendline is likely. Respect would confirm the new up-trend, but a large bearish divergence on 13-week Twiggs Money Flow warns of failure and a cross below zero would indicate reversal to a primary down-trend.
The Nasdaq 100 displays a similar bearish divergence on 13-week Twiggs Money Flow, warning of strong selling pressure. Retreat below 2400 would indicate a bull trap.
* Target calculation: 2400 + ( 2400 – 2150 ) = 2650
The S&P 500 has not yet reached its 2011 highs but retreat of 13-week Twiggs Money Flow below zero would warn of strong selling pressure and a primary trend reversal.
Bill Moyers: How power and influence helped big banks rewrite the rules of our economy
Bill Moyers talks with former Citigroup Chairman John Reed and former Senator Byron Dorgan to explore a momentous instance: how the mid-90’s merger of Citicorp and Travelers Group — with help from Alan Greenspan, Robert Rubin and Bill Clinton — brought down the Glass-Steagall Act and sowed the seeds of the GFC.
Business Sector Is More Open for Business – Real Time Economics – WSJ
The business investment momentum is continuing into 2012. New orders for nondefense capital goods excluding aircraft–a proxy for future business spending–increased 2.9% in December, reversing the two previous monthly drops. The backlog of unfilled orders is also on the rise. Fulfilling that pent-up demand means more industrial production in 2012.
via Business Sector Is More Open for Business – Real Time Economics – WSJ.
The winners and losers of QE3 – macrobusiness.com.au
The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.
That’s a clear declaration of intended QE3 if conditions are met. The two conditions are price stability and inadequate employment growth. Price stability now has a number with the Fed also announcing a new inflation target of 2%. Anything under that number potentially triggers QE3.
via The winners and losers of QE3 – macrobusiness.com.au | macrobusiness.com.au.
What’s Going on With Debt in U.S.? – Real Time Economics – WSJ
The chart shows clearly the build up of debt heading into the bust, and the subsequent deleveraging. Overall public and private debt, by this measure, peaked at 302% of GDP in the first quarter of 2009. Since then, it has fallen to 279% as the economy has grown and some private players have lightened their debt loads.
via What’s Going on With Debt in U.S.? – Real Time Economics – WSJ.
Comment: ~ The Financial sector can be ignored as this merely acts as a conduit for, and mirrors, the other sectors. My concern is that Government debt is growing at a faster rate than the fall in Household and Nonfinancial Corporations debt. That is unsustainable and is likely to reverse after the November elections. At which point the economy will contract.
Canada, Brazil and South Africa
Resources markets are recovering, with Canada’s TSX 60 index testing resistance at 715 after breaching the descending trendline. Breakout would complete a higher trough, signaling a primary up-trend. Target for the initial advance would be 800*. Rising 13-week Twiggs Money Flow indicates buying pressure.
* Target calculation: 720 + ( 720 – 640 ) = 800
Brazil’s Bovespa broke through 60000, signaling a primary up-trend with an initial target of 65000*.
* Target calculation: 60 + ( 60 – 55 ) = 65
South Africa’s JSE Overall Index broke clear of 33000, signaling a primary up-trend. Bullish divergence on 13-week Twiggs Money Flow strengthens the signal. Initial target for the advance is 35000*, with a long-term mark of 37000.
* Target calculation: 33 + ( 33 – 31 ) = 35