Wednesday, November 30, 2011

Daisy Cutter Wednesday

Insane day today as news came hot and heavy before the market open. I will discuss below, but I did want to take a second to say a few things. Much more so than on a blog where I think writers put things out that are more calm, Twitter allows for instant transmission of what people are thinking. Obviously this has great advantages, but along with that the avenue comes one where emotions and words can pour out pretty fast. That can be a bad thing at times. I saw some things today that disappointed me very much, and I gather my questioning the actions this morning of all the intervention going on was none too popular either. It is what it is. As always, my email is at the top right and I will discuss anything with anyone at anytime.

Daisy Cutter Wednesday
Major bombs dropped today on the market!

What's easy tonight is that I have already covered the helping hands lent to the markets. All the major Central Banks agreed to currency swap lines with open ended commitment. Of course this happened before on September 15, 2011:
Central banks to provide dollar liquidity

I dubbed this "The Unlimited Dollar Funding Machine" and covered what it meant in this post:
Hope is Not a Strategy, But is it Tradeable?
This move allows Euro banks access to basically free dollars and as they are ready to lend out into the economy (snark) this will help them in that effort. All in all, it buys time for them with less stress in finding overnight funding. It's possible a major bank was in serious trouble, but it matters little now.

Today the Bank of China also eased on money rates, first time in three years. The reason is probably that China is seeing inflation there fall below target and want to heat things up with loans for more ghost cities(snark). The key word is easing.

Economic data has started to come in not only better than expected (small beats meaningless to me), but significantly so. Home sales (pending is dangerous but ok), jobs and some PMI numbers have come in well over expectations.

And last, I discussed the final piece to the puzzle Monday night in the post:
Ghosts of V - Shaped Recoveries
If this is not the picture you want to set up a year end run into next year then it's just not going to happen.

Markets are extreme overbought here. Overbought can be worked off by meandering sideways for a bit, but with jobs numbers on Friday any beat may well push this higher again. Tough spot.

Robert Sinn, who is just killing it with his writing, hits the right notes after a day like today so please stop on by:

The Three Reactions to a Massive Rally
A little fun?

Already long:

Neutral/No spots:

Short, maybe since Friday:

Have a good night.


David Batista said...

Heh, heh . . . that last pic is commonly captioned "GET TO DA CHOPPA!" in a jab at pre-adolescent and overly excitable online multiplayer FPS gamers.

Saw the news about the markets while running on the treadmill today. I just knew your reaction would be decidedly different to the clueless news anchors who were gushing like faucets. I was not disappointed. :)

EconomicDisconnect said...

It's a mixed bag; things had to be very serious for this kind of intervention. That said, it's working! Memory in markets can be short, and I just wrote about this in September, the same thing. Hopefully it holds up this time, got plenty of ideas.

Jennifer Hillier said...

Why do I get the impression that David does a mean Arnold impersonation? I do a pretty good Jesse the Body Ventura: "I ain't got time to bleed!"

I saw some of your Twitter feed and it sounds like today was crazy. I think it must be very interesting to watch the markets like you do, but how do you handle the stress?

Watchtower said...

Does this mean buy more PM's?

Did you see this today?

Digging into China’s nuclear tunnels

"The Chinese have called it their “Underground Great Wall” — a vast network of tunnels designed to hide their country’s increasingly sophisticated missile and nuclear arsenal."

I'm afraid it's going to be on like Donkey Kong one of these days.

EconomicDisconnect said...

It's really not too stressful most of the time. Big moves like today are different and much goes on. Thanks for following my boring market tweets!

intervention is here to stay, more so than even I thought. You know I am a PM holder and continue to see them as long term winners.

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