Archive for November, 2013

At first look there is nothing to signal…alignment with the upper crescent tunnel.

But the Bollinger movement spooked me – so I started digging.

In the next 5 days there is the end of the triangular pattern that I shown on an earlier on the NYSE.

At this point the institutional investors (that have been watching by the sidelines the market the last 10 days) will have to re align their portfolio starting a rally or bring the market down selling.

One of the “what if” day is Thursday (NYC time).

Tomorrow there is the official confirmation of the next Fed Chairman Yellen and in her speech the market will try to gauge her intention about QE (the market now thinks March 2014) or a potential move from Tea Party Senator Paul to delay her nomination (as he wants a vote on auditing the Fed balance in exchange).

Plus there is an issue on the 10 and 30 years T Bond which are pushing yields (2.73% and 3.83% respectively with long term resistance at 3.4/3.5% and 4.1% / 4.2%). A breach of these long term resistances would make all the major research houses decrease the growth projection for the US.

I still think there is a while to go before we are in real danger on the yield sise (January/March) and I am still positive as a bias

The first round of negotiation between the US and Iran have ended with a “no deal” – but everyone is much more positive than ever, A solution is in sight.

This is another leg of the revolutions are happening around the world that will shape the world as we know it in the next decade, but most too narrow focus to see.

A re-alignment between Iran and the USA have consequences directly in Syria, Lebanon, Iraq and indirect consequences on Israel, Saudi Arabia (and satellites) and Turkey. Saudi Arabia is already said to be in talks to acquire nuclear warheads from Pakistan, if Tehran is allowed to go nuclear.

It is almost funny to see how Iran and US have much more in common than US and the Saudis.

Other geo political revolutions are the neo-isolationism of the US (practically letting mini regional superpower battle out for regional supremacy) while still maintaining a technological advantage in case of all-out war, the resurgence of Japan (also in military terms) and Russia and the European decadence.

US republican battles

Posted: November 6, 2013 in Uncategorized

Chris Christie (Republican, moderate) wins in New Jersey and Cuccinelli (Rep, tea Party) lost. This could be the win needed by the normal Republican to claim back the Party!

European Union considerations

Posted: November 6, 2013 in Uncategorized

On 5th November the European Union released some economic projections which highlight that, even if the media outlet focus on the European resurgence, the issues are still large and unresolved.

-The Eurozone will grow at 1.1% pace (1.2% was the forecast in may 2013)

-Unemployment is still at record high and actually rising in Italy, France, Finland and Netherlands

-France and Spain will not meet their 3% GDP targets

-Public Debt will reach 95.5% of GDP in 2014 (it was 79.9% in 2009)

-Credit will remain tight for at least 1 more year

– UK will hold a referendum in/out of Europe in 2017

– Poland is reconsidering its European tilt versus a re-emerging Russia

-Rising anti-establishment, anti European Parties

-Rising of political terrorism (specially in Greece with the killing of 2 Golden Dawn members, but also in Italy)

-Rising of nationalistic agendas within the EU members

So, notwithstanding the media, the financial crisis is more and more becoming a social-political crisis that it is still in its infancy.

 

The 9th November there will be the Third Plenum Meeting.

The outcomes of this meeting will define China for the next 10 years at least.

Going back in history,  China as we know it is a product of Chairman Deng that, in 1978, 2 years after the death of Mao, took the reign of China and steered it in the current direction.

Most of the readers will not know, but China is 1978 looked like on the brink of collapse.

Then Deng made a series of reforms, accelerated after Tienanmen in the late 1990 that gave us China as we know it.

Now a series of issues (One Child Policy consequences, bureaucracy, nepotism, bribery, high wages, criticism of the Party, rise of the internet, lack of consumer confidence) will be addressed by Xi, but they do present formidable challenges.

President Xi will have to change the relationship between the Party and the citizen.

-He will try to strengthen his position as President of the Party

-He will try and decrease the levels of bureaucracy and interference in the economy

-He will try to free the financial markets (currency and allowing foreign investments in China and from China to the international share markets

-He will try to make the economy more market competitive

-He will try and create a more nimble Government

As you can see these reforms will not be easy and there is no assurance it will be a smooth transition.

But the outcome of the transition will be fundamental, for China, the entire world and in particular Australia.

US: Republican wars

Posted: November 4, 2013 in Uncategorized
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In the US there is a showdown between Republicans, Normal VS Tea Party. 

This time the battleground is an immigration law, which practically gives an easier pathway to citizenship for the millions of illegal immigrant, specially from South America,

Yes this is an all American problem, but it is interesting to see who will be the winner as the winner will have control over the Republican Party in the next January battle US Government Shutdown and US Debt Ceiling.