Tuesday, December 13, 2016
Do Larger Federal Budget Deficits Stimulate Spending? Depends On Where The Funding Comes From / Economics / US Debt
By: John_Mauldin
I’d like to share a counterintuitive argument against the concept that fiscal deficits and/or infrastructure spending consititute effective economic stimulus. It comes from Paul Kasriel (one of my favorite reads when he was at Northern Trust, before he retired). He always has a way of looking at things from different angles than everybody else does.
Paul notes that the post-election US stock market rally has been due in part to the expectation that the Trump administration will enact stimulative fiscal policies, which in turn will jumpstart growth. But Paul begs to differ on that last point.
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Tuesday, December 13, 2016
Trump’s Private Sector Appointments Signal A Rollback Of The Regulatory State / Economics / Market Regulation
By: John_Mauldin
BY JARED DILLIAN : I feel good about the nomination of Steven Mnuchin for Treasury Secretary. A banker (a not a political hack) in that seat is all right by me. Seriously. And Wilbur Ross as Commerce Secretary? Terrific.
I can’t tell you how happy I am to have private sector guys in these positions of power.
I’ll be candid—for eight years, under Obama, business was the enemy. That mindset is changing. It seems foreign because it’s been so long.
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Tuesday, December 13, 2016
Italy’s Banking Crisis Is Nearly Upon Us / Economics / Financial Crisis 2016
By: John_Mauldin
There is a high degree of probability (approaching 90%, I’d say) that Italy will experience a severe banking crisis in the next few quarters. Perhaps they can stave off the problem for a year, but something will have to be done about the banks.
Italian GDP per person lagging the rest of Europe
Italian citizens haven’t had much fun the past decade, judging from their GDP. You can see on the left side of the chart below that GDP per person has lagged the EU since 1995. Worse, it kept falling after 2009, even as Italy’s neighbors recovered.
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Tuesday, December 13, 2016
Will welcome bonuses become as prevalent in spread betting, as they are in sports betting? / Personal_Finance / Gambling
By: Submissions
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Tuesday, December 13, 2016
A Closer Look at Our Recent US Employment Numbers / Economics / Employment
By: Rodney_Johnson
Last week the Bureau of Labor Statistics reported that the U.S. economy created 178,000 jobs – with 156,000 in the private sector and 22,000 in government – which is right in line with the monthly average for 2016.But let’s dig a little deeper past the headline numbers. For years we’ve argued that there’s more to the story than just the number of jobs created. We want to know, and our economy depends on, how much money people are paid.
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Tuesday, December 13, 2016
Europe Crisis - Italy’s “No” Vote Is Just the Beginning / Politics / Eurozone Debt Crisis
By: John_Mauldin
BY ANTONIA COLIBASANU AND JACOB SHAPIRO : An important vote recently occurred in Italy. Italians said “No” to a referendum on government reforms. The vote was broadly viewed as a referendum on Prime Minister Matteo Renzi. He has since tendered his resignation.
The result of Italy’s referendum means three things. First, the slow devolution of the European Union rumbles on. Second, Italy has declared itself in open revolt internally and against the EU. This is a challenge not just for the EU, but for Germany in particular. Third, this is the beginning of a major political shift in the third largest economy in the Eurozone.
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Tuesday, December 13, 2016
Trump Got an Edge over China with a Single Phone Call / Politics / China
By: John_Mauldin
BY GEORGE FRIEDMAN : Donald Trump spoke on the telephone with the president of Taiwan, causing deep upset. It was counter to an understanding in place since Richard Nixon opened the door with China in 1972.
This understanding included an American endorsement of the one-China policy. This policy held that Taiwan is part of China, but would continue to behave as if it weren’t. The US agreed not to have diplomatic relations with Taiwan and pretend it isn’t a close ally.
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Tuesday, December 13, 2016
Stock Market Waiting for the FOMC? / Stock-Markets / Stock Markets 2016
By: Anthony_Cherniawski
Good Morning!
The SPX Premarket is higher, but the futures have not made a new high. Yesterday’s decline may be impulsive, but the test is whether a new high is made today or not. In addition, the Wave structure appears to be complete as of yesterday morning. We may see some residual bullishness at the open, but the jury is still pondering the verdict as of now.
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Tuesday, December 13, 2016
U.S. Oil Shale Faces A Reality Check / Commodities / Shale Oil and Gas
By: OilPrice_Com
The collapse of oil prices has forced the U.S. shale industry to slash production costs. In order to improve the “breakeven” costs for the average shale well, the industry has deployed three general strategies: improving techniques and technology, such as drilling longer laterals or using more frac sand; focusing drilling on the sweet spots; and demanding lower prices from oilfield service companies. All three of those strategies led to a decline in the breakeven price for a shale wells.
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Tuesday, December 13, 2016
WTO Debacle Heralds the End of Postwar Trade Regime / Economics / Global Economy
By: Dan_Steinbock
“China is not a market economy,” President-elect Donald Trump said in Iowa a few days ago. In the past few months, Trump has also pledged to undo the North-American Free Trade Agreement (NAFTA), beat back the Trans-Pacific Partnership (TPP), impose huge tariffs on China and Mexico, and rewrite the rules of trade.
Nevertheless, the Obama White House, the EU and Japan beat Trump in the reset of the international trading regime by refusing China its market economy status (MES). The key clause in China’s agreement for joining the World Trade Organization (WTO) expired on Sunday.
Tuesday, December 13, 2016
Nasdaq Leads Stock Market Lower... / Stock-Markets / Stock Markets 2016
By: Jack_Steiman
The market bulls are still in control of things, but we all know that there is this one gigantic red flag out there that will come into play at some point. The thing is, we don't know when that will happen, because there is no formula to tell us when it's coming, since every bull market is different. We can look back at history as a guide, but when folks do, it doesn't usually work out very well. The reason is simple. Nothing repeats perfectly, even though we'd like to believe it does. For instance, over the past year-plus we saw 35% on the bull/bear spread start a correction, but we also saw 46% start one.
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Monday, December 12, 2016
Stock Market Top?, Sucker’s Play / Stock-Markets / Stock Markets 2016
By: Brad_Gudgeon
The current rally from November 4 to December 12 (if indeed it was the top) was Minuette Wave Y of Minute Y. Minute Wave Y (of Minor Wave B) was a wxy inverted, irregular and strong bearish flat. Elliott called these B waves or irregular tops. The Trump rally is basically a "sucker's play". The internals of this rally are sick and very selective; the McClellan Summation Index is miles away from confirming it; the Dow Jones Industrials has far exceeded the SPX, which has far exceeded the NASDAQ creating a case of an inter-market bearish divergence. We also have a huge On-Balance-Volume divergence.
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Monday, December 12, 2016
Maps That Explain US Main Economic Strength Over Russia / Politics / GeoPolitics
By: John_Mauldin
BY JACOB L. SHAPIRO : Power is a relative concept. To say one nation is powerful means nothing. Power derives meaning only when assessed in comparison.
Two nations whose powers we constantly reevaluate are Russia and the United States. Much of our analysis is driven by how weak we believe the Russian Federation is.
There are different ways to evaluate this. Comparing US and Russian regional economies is particularly striking.
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Monday, December 12, 2016
2017 Will Be A Pivotal Year For Europe / Politics / European Union
By: John_Mauldin
Many people in the EU disapprove of EU economic policies. Greece is by far the unhappiest with Brussels. Italy is next, with France and Spain not far behind. The UK, where people are angry enough to have voted themselves out of the EU, looks even-tempered in comparison.
That suggests to me that if you offered these other countries a chance to ditch the EU and reassured them that they wouldn’t cause the sky to fall, there are some who might take the leap.
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Monday, December 12, 2016
The Robot Workforce is Coming - Here’s Why It's Best for Everyone / Economics / Employment
By: John_Mauldin
BY PATRICK WATSON : Every day brings a new warning: robots are coming to take our jobs. Soon we’ll all be unemployed… and unable to buy what the robots produce.
What good are robots if all they do is make stuff we can’t afford? I don’t know. But there's no doubt automation will replace some human workers—even (gasp!) writers and editors.
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Monday, December 12, 2016
The Bank of Japan Has Primed the Markets For a Crash / Stock-Markets / Financial Crash
By: Graham_Summers
This is getting outright ridiculous.
The Bank of Japan is now depreciating the Yen against the $USD on an almost hourly basis.
This is the Yen carry trade. And it’s the SINGLE BIGGEST DRIVER OF THE MARKETS TODAY. As you can see, in the last two weeks, the S&P 500 is following this pair almost tick for tick.
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Monday, December 12, 2016
The Yield That Breaks the Trump Rally's Back / Interest-Rates / US Bonds
By: Michael_Pento
In 2012 I wrote a book called "The Coming Bond Market Collapse", in that book I predicted that the bond market would begin to collapse by the end of 2016. Clearly, this prediction has started to come true. However, in all candor, I never dreamed that the Ten-year Treasury yield would plummet to 1.3%. Neither did I ever imagine that over thirteen trillion dollars' worth of global sovereign bonds would have a negative yield, as was the case this past summer.
Monday, December 12, 2016
Agri-Commodities: Birthing a New Bull Market? / Commodities / Agricultural Commodities
By: Ned_W_Schmidt
An investment reality is that neither bear nor bull markets last forever. From high, July 2014, to low, October 2016, the Agri-Food Price Index fell 23%. Since that low, this index of 18 Agri-Commodity prices has risen 19%, and is nearing a new 52-week high. If we accept the popular notion that a 20% rise from a low signals a new bull market, Agri-Commodity prices may be birthing a new bull market. Chart below is for Agri-Food Price Index over the past year.
Monday, December 12, 2016
Euro Crisis and Contagion Almost Certain In 2017 / Currencies / Eurozone Debt Crisis
By: GoldCore
A euro crisis and contagion is almost certain in 2017, Irish economist and writer David McWilliams has warned:
Read full article... Read full article...“It is almost certain that there will be another euro crisis in 2017. The last time we had a euro crisis, the focus of attention was Greece; today the vortex is Italy.
Monday, December 12, 2016
Stock Market Trading At New Record Highs As Investors' Sentiment Further Improves / Stock-Markets / Stock Markets 2016
By: Paul_Rejczak
Briefly: In our opinion, no speculative positions are justified.
Our intraday outlook is neutral, and our short-term outlook is neutral. Our medium-term outlook remains neutral, following S&P 500 index breakout above last year's all-time high:
Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): neutral