US & Canada Archives - Page 158 of 176

November 28, 2011

S&P 500 breaks 1200

The S&P 500 index broke medium-term support at 1200 and is headed for a test of the primary level at 1100. Failure would offer a target of 900*. The 63-day Twiggs Momentum peak below zero warns of a primary down-trend.

S&P 500 Index

* Target calculation: 1100 – ( 1300 – 1100 ) = 900

NASDAQ 100 index is similarly headed for the band of primary support between 2000 and 2050. Bearish divergence on 13-week Twiggs Money Flow warns of strong selling pressure. failure of support would signal a primary decline to 1600*.

Nasdaq 100 Index

* Target calculation: 2000 – ( 2400 – 2000 ) = 1600

Dow Jones Industrial Average monthly chart shows the index testing medium-term support at 11000. The 63-day Twiggs Momentum peak below zero again warns of a primary down-trend. Breach of support would test the primary level at 10400; and failure of that level would remove any doubt regarding a bear market.

Dow Jones Industrial Average

* Target calculation: 10400 – ( 12300 – 10400 ) = 8500

November 26, 2011

NY Fed Issues Mea Culpa That Nobody Saw at 6PM on Black Friday | ZeroHedge

The 3 big reasons the Fed had gotten it wrong:

Misunderstanding of the housing boom. Staff analysis of the increase in house prices did not find convincing evidence of overvaluation (see, for example, McCarthy and Peach [2004] and Himmelberg, Mayer, and Sinai [2005]). Thus, we downplayed the risk of a substantial fall in house prices. A robust approach would have put the bar much lower than convincing evidence.
A lack of analysis of the rapid growth of new forms of mortgage finance. Here the reliance on the assumption of efficient markets appears to have dulled our awareness of many of the risks building in financial markets in 2005-07. However, a March 2008 New York Fed staff report by Ashcraft and Schuermann provided a detailed analysis of how incentives were misaligned throughout the securitization process of subprime mortgages–meaning that the market was not functioning efficiently.
Insufficient weight given to the powerful adverse feedback loops between the financial system and the real economy. Despite a good understanding of the risk of a financial crisis from mid-2007 onward, we were unable to fully connect the dots to real activity until 2008. Eventually, by building on the insights of Adrian and Shin (2008), we gained a better grasp of the power of these feedback loops.

[The author of the NY Fed report] then added that perhaps the biggest reason for the failure was “complacency,” with which I heartily concur, but to which I would also add hubris and stupidity.

via NY Fed Issues Mea Culpa That Nobody Saw at 6PM on Black Friday | ZeroHedge.

November 25, 2011

A radical redistribution of income undermined US entrepreneurship | Bill Mitchell – billy blog

All components of private debt grew significantly in the decade leading up to the financial crisis which consumer debt leading the way. The household sector, in particular, already squeezed for liquidity by the move to build increasing federal surpluses during the Clinton era, were enticed by lower interest rates and the vehement marketing strategies of the financial engineers to borrow increasing amounts…..While this strategy sustained consumption growth for a time it was unsustainable because it relied on the private sector becoming increasingly indebted. ……With growth being maintained by increasing credit the balance sheets of private households and firms became increasingly precarious and it was only a matter of time before households and firms realized they had to restore some semblance of security by resuming saving.

via A radical redistribution of income undermined US entrepreneurship | Bill Mitchell – billy blog.

November 24, 2011

Commodities drag Aussie and Canadian dollar lower

Commodities are weakening and dragging the Aussie and Loonie lower. The Aussie dollar shows a similar iceberg pattern on 63-day Twiggs Momentum, warning of a primary down-trend. Breakout below primary support at $0.94 would offer a long-term target of $0.80*.

AUDUSD

* Target calculation: 0.94 – ( 1.08 – 0.94 ) = 0.80

Canada’s Loonie is also headed for a test of $0.94 against the greenback. The peak below zero on 63-day Twiggs Momentum indicates a strong down-trend. Failure of primary support (0.94) would offer a target of $0.87*.

CADUSD

* Target calculation: 0.94 – ( 1.01 – 0.94 ) = 0.87

November 23, 2011

S&P 500 continues to mimic early 2008

Looking at the S&P 500 weekly chart, it continues to follow the same pattern as in early 2008. There is a similar false recovery above medium-term resistance at 1200 (compared to 1400 in 2008) followed by reversal below the new support level. Also, a similar 63-day Twiggs Momentum peak below the zero line warns of a strong primary down-trend.

S&P 500 Index Weekly Chart

* Target calculation: 1100 – ( 1300 – 1100 ) = 900

November 23, 2011

ICI – Exchange-Traded Fund Assets, September 2011

Assets of all exchange-traded funds fell in September by $89.29 billion, or 8.6 percent, to $951.46 billion.

Over the past 12 months, ETF assets increased $68.71 billion, or 7.8 percent. Assets in domestic equity ETFs increased $55.08 billion since September 2010, and global equity ETFs assets fell $13.78 billion during this period.

via ICI – Exchange-Traded Fund Assets, September 2011.

November 23, 2011

ICI – Trends in Mutual Fund Investing, September 2011

The combined assets of the nation’s mutual funds decreased by $582.3 billion, or 5.0 percent, to $11.040 trillion in September, according to the Investment Company Institute’s official survey of the mutual fund industry.

via ICI – Trends in Mutual Fund Investing, September 2011.

The fall in Stock Funds was far greater, at 9.5%, compared to only 1.3% in Taxable Bond Funds and 0.1% in Taxable Money Market Funds.

November 23, 2011

Menzie Chinn » “Solving America’s Debt Crisis”

In principle, solving the nation’s debt problems is easy. Almost all experts agree that a combination of reduced spending and increased tax revenues is needed. Cuts in spending and increases in tax revenues equal to about 5 percent of GDP are required to prevent an increase in the debt-to-GDP ratio. If a constant debt-to-GDP ratio were achieved with spending cuts alone, annual non-interest government spending would have to be reduced by about 20 percent. Alternatively, if a constant debt-to-GDP ratio were achieved by relying solely on increased tax revenues, taxes would have to be raised by about 33 percent. It is impossible to imagine that Congress would ever adopt spending cuts or tax increases of these magnitudes.

The logical conclusion is that only a balanced approach to solving our debt crisis, one that includes both spending cuts and increased taxes, is feasible. That being said, neither spending cuts nor tax increases will be politically easy to enact.

via EconoMonitor : EconoMonitor » “Solving America’s Debt Crisis”.

November 22, 2011

Consumers May Be Spending More, but They’re Not Happy About It – Real Time Economics – WSJ

The percentage of Americans saying they were cutting back on their spending rose from 66% at the start of the year to 72% in September, where it has stayed for nine straight weeks. Spending, however, was up 5% in September from a year ago…..[it could be] that, more than two years into an anemic economic recovery, Americans are simply settling into a new routine, somewhere in between the forced austerity of the recession and the heady days that came before. Asked by Gallup whether they are watching their spending “very closely,” 88% of Americans said yes. That figure has hardly moved in two years.

via Consumers May Be Spending More, but They’re Not Happy About It – Real Time Economics – WSJ.