August 15th, 2012
in Gary's blogging
Midday Market Commentary For 08-15-2012
By noon the markets have turned in another lackluster achievement of what happens when no one comes to the party. Even the HFT has been unable to move the averages from the 'unchanged line' in the previous 5 sessions. Needless to say, uncertainty from the EU, China, Japan and the BRICS in general has cause many investors to rethink their positions. The doubtful near-term prospects of the US markets moving up is not gathering much steam with a lot of traders either.
That and including The Dismal Earnings Season stating in part, “In the third quarter, earnings by companies in the S&P 500 are expected to shrink for the first time.” The author, James Bianco goes on to say, “Earnings so far are not good and the rally was all about Draghi’s “whatever it takes” (detailed below) comment and Hilsenrath’s story last week suggesting “more QE might be coming.”
Watch out for a sudden reversal from this sideways market. At this point it could go either way wiping out any position if you guess wrong. Waiting for the markets to swing back up, if you went long and the markets swooned, may be a reach in reality. The market weakness is apparent and most likely will continue a retreat once it is in motion. The markets are within 1% of the previous tops and risking going long for that 1% is very speculative.
The RRR** is too narrow to trade, risk factor is way too high. Swing short trading is neutral this morning.
The DOW at 12:30 is at 13172 up 0.22 or 0.00%.
The 500 is at 1405 up 1.85 or 0.13%.
The $RUT is at 802.20 up 5.33 or 0.67%.
SPY is at 140.95 up 0.16 or 0.11%.
The trend is neutral and the current bias is neutral.
WTI oil is at 93.70 trading between 92.68 and 93.95 and the bias is positive.
Brent crude is at 115.25 trading between 113.49 and 115.30 and the bias is positive.
Gold is up today at 1603 trading between 1589 and 1606 with a positive bias.
Dr. Copper is at 3.35 down from 3.37 earlier.
Earlier the USD rose from 82.50 to 82.84 and is currently at 82.74.
A VERY interesting read and the 'comments' are also fascinating depending on your own particular views.
The Consequences Of Financial Repression by Veritas Research
"Financial Repression" should be at the forefront of every investor's lexicon.
- Caps or ceilings on interest rates
- Government ownership or control of domestic banks and financial institutions
- Creation or maintenance of a captive domestic market for government debt
- Restrictions on entry to the financial industry
- Directing credit to certain favored industries
The Fed and Treasury have accomplished all of the above. This should not be surprising, given Bernanke's philosophy of activism.
Keynesian theory posits that governments should attempt to manage the business cycle by lowering rates during recession and raising them should the economy "overheat." (Counter-cyclical policy) Some suggest they should even actively pop asset bubbles.
The Austrian School of economics warns against such central planning. Interest rates are supposed to reflect the time preference of money.
** RRR = Risk Reward Ratio
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Written by Gary