US & Canada Archives - Page 71 of 174

September 18, 2014

A Premature Party for Poroshenko

From Leon Aron, Director of Russian studies at the American Enterprise Institute:

…By withholding military assistance to Ukraine — the only thing that could have changed Putin’s mind by giving Kiev a chance to turn the tide on the battlefield — the West has greatly contributed to [Ukrainian President] Poroshenko’s decision to accept a very bad deal. No amount of ovation, not even a standing one, during Poroshenko’s address to the joint session of Congress today can obscure this grim reality.

Read more at A Premature Party for Poroshenko.

September 18, 2014

Defence With A “C”: The Russian Bear Cometh!

From Chris at Defence with a C:

Russia has spent the last decade talking about programs to upgrade its armed forces and spend more money on things like training, logistics and maintenance. The fruits of this investment, or even just the investment itself, appear to be taking a very long time to actually materialise.

This is not to say that NATO shouldn’t sleep with one eye open, or that NATO should stop investing in its collective defence. Vigilance is the first stage of preparedness after all. But to say that Russia is an imminent threat to NATO is over egging the pudding I feel….

September 18, 2014

Poroshenko: ‘Today Ukraine is bleeding for its independence and territorial integrity’

From Ukrainian President Petro Poroshenko’s speech to the Canadian parliament in Ottawa on September 17:

Today Ukraine pays a very high price for defending what we believe in – democracy and freedom to choose our own future. For more than two decades we proudly stated that Ukraine gained its independence without shedding a single drop of blood.

Today Ukraine is bleeding for its independence and territorial integrity.

September 16, 2014

S&P 500 healthy bounce

The S&P 500 bounced off support at 1980/1985 and is once again testing resistance at 2000. Follow-through above 2010 would confirm a primary advance, targeting 2100*. Failure of short-term support at 1980 remains unlikely, but would warn of a correction to 1950.

S&P 500

* Target calculation: 2000 + ( 2000 – 1900 ) = 2100

CBOE Volatility Index (VIX) retreated below 13, indicating low risk typical of a bull market.

VIX Index

Dow Jones Industrial Average breakout above 17150 would strengthen the bull signal, offering a target of 17500*. Rising 21-day Twiggs Money Flow suggests buying pressure. Reversal below support at 16950 is unlikely, but would warn of a correction.

Dow Jones Industrial Average

* Target calculation: 16500 + ( 16500 – 15500 ) = 17500

September 16, 2014

Canada: TSX threatens breakout

Canada’s TSX 60 consolidating in a narrow range below resistance at the 2008 high of 900 is a bullish sign. Breakout would offer a medium-term target of 935*. 13-Week Twiggs Money Flow oscillating high above zero indicates healthy buying pressure. Reversal below 890 would warn of a test of support at 865/870, but penetration of the rising trendline is unlikely.

TSX 60

* Target calculation: 900 + ( 900 – 865 ) = 935

September 16, 2014

Dow finds support

Dow Jones Industrial Average found short-term support at 16950/17000. Follow-through above 17050 would indicate another attempt at 17150. And breakout above 17150 would offer a target of 17500*. Recovery of 21-day Twiggs Money Flow above 20% would indicate buying pressure. Reversal below support at 16950 is unlikely, but would test the rising trendline around 16700.

Dow Jones Industrial Average

* Target calculation: 16500 + ( 16500 – 15500 ) = 17500

The S&P 500 is testing support at 1980/1985. Monday’s long tail suggests short-term buying pressure; strengthened if 21-day Twiggs Money Flow starts to rise. Recovery above 2000 would indicate another rally. Follow-through above 2010 would signal an advance to 2100*. Failure of short-term support at 1980 is unlikely, but would warn of a correction to 1950.

S&P 500

* Target calculation: 2000 + ( 2000 – 1900 ) = 2100

CBOE Volatility Index (VIX) readings remain low, typical of a bull market.

VIX Index

The Nasdaq 100 is retracing to test its new support level at 4000. Respect of support is likely and would suggest an advance to 4250*. Failure of support at 4000, however, would warn of a correction to the primary trendline, around 3850. Completion of another 13-week Twiggs Money Flow trough above zero would strengthen the bull signal.

Nasdaq 100

* Target calculation: 4000 + ( 4000 – 3750 ) = 4250

September 14, 2014

Bad Has Never Looked So Good

Energy Burrito writes that gasoline prices have fallen nearly 30 cents from their Summer highs:

Why is this good? Because of the one-penny-to-one-billion spending rule. The rule of thumb is that a one-penny change in the price of gasoline leads to a $1 billion increase in household consumption on an annualized basis….gasoline accounts for $2,500 of household spending each year.

September 12, 2014

Europe uneasy

Weekly highlights:

The Dollar is strengthening
Treasury yields (long-term) are rising
Gold and crude oil are falling
European stocks are bearish
US stocks remain bullish

The tenuous ceasefire in Eastern Ukraine appears to be holding, but Europe faces another challenge this week, with a Scottish referendum on independence. Predictions of financial mayhem in the event of a “Yes” vote are, I feel, exaggerated in an attempt to influence the outcome. The official position of the UK government is:

“If a majority of those who vote want Scotland to be independent then Scotland would become an independent country after a process of negotiations.”

The “process of negotiations” is likely to be comprehensive and would resolve most outstanding uncertainties in an orderly fashion. There has been much debate over economic issues, but it is no coincidence that the referendum is being held in the same year as the 700th anniversary of the Battle of Bannockburn, when Scots under Robert the Bruce defeated an English army led by Edward II to regain their independence.

Stock markets

Dow Jones Euro Stoxx 50 remains hesitant, retreating from resistance at 3300. Consolidation above 3200 would be a bullish sign, while breach of 3100 would threaten primary support at 3000. Another 13-week Twiggs Money Flow trough above zero would indicate buying pressure, but reversal below zero would warn of a down-trend.

* Target calculation: 3300 + ( 3300 – 3000 ) = 3600

The S&P 500 is edging lower and follow-through below 1980 would indicate another correction. Respect of support at 1950, however, would suggest that the up-trend is intact. Sideways movement on 21-day Twiggs Money Flow, reflects further consolidation.

S&P 500

* Target calculation: 2000 + ( 2000 – 1900 ) = 2100

CBOE Volatility Index (VIX) below 20 is typical of a bull market.

S&P 500 VIX

China’s Shanghai Composite Index breakout above 2250 signals a primary up-trend. The monthly chart, however, reflects further resistance at 2450/2500*. Rising 13-week Twiggs Money Flow indicates accelerating buying pressure. Reversal below 2250 is most unlikely, but would suggest further consolidation between 2000 and 2250.

Shanghai Composite Index

* Target calculation: 2250 + ( 2250 – 2000 ) = 2500

The ASX 200 broke support at 5540/5560, warning of a correction. Bearish divergence on 21-day Twiggs Money Flow indicates medium-term selling pressure. Respect of support at 5440/5460 would indicate that the primary up-trend is intact, while a fall below 5360 would warn of a down-trend.

ASX 200

* Target calculation: 5650 + ( 5650 – 5450 ) = 5850

September 9, 2014

US stocks find support

Dow Jones Industrial Average is consolidating in a narrow band above 17000. Sideways drift on 21-day Twiggs Money Flow reflects hesitancy. Breakout above 17150 remains likely, however, and would offer a target of 17500*. Reversal below 16950, while unlikely, would test the rising trendline around 16700.

Dow Jones Industrial Average

* Target calculation: 16500 + ( 16500 – 15500 ) = 17500

I still expect the Nasdaq 100 to retrace to test its new support level at 4000. A 13-week Twiggs Money Flow trough above zero indicates buying pressure. Respect of support is likely and would offer a target of 4250. Reversal below 4000 is unlikely but would warn of a correction.

Nasdaq 100

* Target calculation: 4000 + ( 4000 – 3750 ) = 4250

Russell 2000 small caps is once again headed for a test of resistance at 12.00 on the monthly chart. Completion of a second 13-week Twiggs Momentum trough at the zero line would suggest a healthy up-trend. Breakout above 12.00 would signal an advance to 13.00*. Breach of support at 11.00 is unlikely, but would warn of a down-trend.

Russell 2000

* Target calculation: 12 + ( 12 – 11 ) = 13

September 7, 2014

Financial reform: Call to arms | FT.com

Martin Wolf on how much capital banks should be required to hold:

The new regulatory regime is an astonishingly complex response to the failures of this model. But “keep it simple, stupid” is as good a rule in regulation as it is in life. The sensible solution seems clear: force banks to fund themselves with equity to a far greater extent than they do today.

So how much capital would do? A great deal more than the 3 per cent ratio being discussed in Basel is the answer. As Anat Admati and Martin Hellwig argue in their important book, The Bankers’ New Clothes, significantly higher capital – with true leverage certainly no greater than 10 to one and, ideally, lower still – would bring important advantages: it would limit the implicit subsidy to banks, particularly “too big to fail” ones; it would reduce the need for such intrusive and complex regulation; and it would lower the likelihood of panics.

An important feature of higher capital requirements is that these should not be based on risk-weighting. In the event, the risk weights used before the crisis proved extraordinarily fallible, indeed grossly misleading…..

There is no magic in the number of 10 times leverage (or 10% Tier 1 Capital to Total Assets) but the larger the buffer, the greater the protection against fluctuations in asset values. The Basel III minimum leverage ratio of 3% is too low to offer adequate protection, even with the highest quality assets, and while 10% is not readily attainable in the short-term, it makes a suitable long-term target.