In this business, you must stay humble or the market will do it for you.
A whole lot of debt destruction and/or reorganization— lies ahead of us,that is the only true medicine.
"There's a real danger of a disorderly default," billionaire investor George Soros said in a speech in Budapest. Without support for Greek lenders, "you're liable to have a run on the banks in other countries as well. That's the danger of a meltdown."
THIS WEEK...............
Next week is going to be all about Europe. You don't have earnings. You don't have central banks. You don't have the jobs report. You have a bunch of 'B' level economic indicators. Next week is likely to be a cooling off period.
In this vacuum, headlines out of Europe are likely to get magnified, for lack of anything else, and investors could react with extreme moves.
As for the coming week in the U.S., there are some major earnings, with retailers and media companies the highlights. Disney, Viacom, Macy's and Nordstrom are all reporting. The economic data highlights are the usual weekly claims, but also trade data and consumer sentiment. The government auctions $72 billion in Treasury notes and bonds Tuesday through Thursday.
There is also the Republican candidate debate, which will air on CNBC Wednesday at 8 p.m.
What to Watch in the Week Ahead (all times EST)
Monday
Earnings: Sysco, Priceline.com, Sotheby's, Dish Networks, Echostar
0300 p.m. Consumer credit
Tuesday
Earnings: Toyota Motors, Vodafone, Fossil, International Flavors and Fragrances, Liberty Media, Progressive, Rockwell, Scotts Miracle Gro, ActivisionBlizzard, Take Two Interactive, Weight Watchers
0730 a.m. NFIB (small business) survey
1000 a.m. JOLTS survey
0100 p.m. U.S. Treasury auctions $32 billion 3-year notes
Wednesday
Earnings: Anheuser Busch InBev, General Motors, HSBC, Anglo Gold Ashanti, Macy's, Computer Sciences, Dean Foods, Rockwell, General Growth Properties, Ralph Lauren, Wendy's, Sodastream, Cisco, Green Mountain Roasters, Lionsgate Entertainment, Advance Auto Parts
1000 a.m. Wholesale trade
0100 p.m. U.S. Treasury auctions $24 billion 10-year notes
Thursday
Earnings: Viacom, Disney, Siemens, Kohl's, Deutsche Telekom, Nordstrom, Molycorp
0830 a.m. Initial weekly employment claims
0830 a.m International trade
0830 a.m. Import prices
0200 p.m. Federal budget
0100 p.m. U.S. Treasury auctions $16 billion 30-year bonds
Friday
Earnings: Petrobras, DR Horton, Telefonica, Brookfield Asset Management
*Bond market closed for Veteran's Day
09:55 a.m. Consumer sentiment
You can't outguess this broken market....................
The current events are nothing short of amazing; we are defining world history, and our children will one day read about this in their schoolbooks. I'm not prone to hyperbole; if anything, I'm understating the significance of what's going down in the world.
Still, for those of us living through these times, it often feels surreal, as if we're watching a movie.
The financial industry (read: Europe) is undergoing a seismic rebalancing and once it's done, some of those tickers (countries) on your screen will be left standing on others will not (consolidation or bankruptcy).
Most people—including the Federal Reserve, Treasury and politicians—wait for something bad to happen before paying attention to the obvious. And others are conditioned to believe that no matter what, the market—or government—will bail them out.
The markets themselves appear to be structurally broken. The public is out of the market. You really have a bunch of high-frequency traders and hedge funds trading back and forth.
No wonder we see such huge moves in either direction on such light volume. And no wonder traditional value investors are struggling, while investors-turned-traders speculate in ridiculously risky vehicles like leveraged exchange traded funds.
That's why we should all be hesitant to look at charts and make comparisons to times past. The old rules no longer apply and never will again and we haven't learned what the new rules are yet.
This time is different. Really!
IF YOUR INVOLVED IN FINANCE IN ANY WAY SHAPE OR FORM YOUR FUTURE IS VERY UNCERTAIN!
A "gigantic bank run" is imminent, so says
As for the coming week in the U.S., there are some major earnings, with retailers and media companies the highlights. Disney, Viacom, Macy's and Nordstrom are all reporting. The economic data highlights are the usual weekly claims, but also trade data and consumer sentiment. The government auctions $72 billion in Treasury notes and bonds Tuesday through Thursday.
There is also the Republican candidate debate, which will air on CNBC Wednesday at 8 p.m.
What to Watch in the Week Ahead (all times EST)
Monday
Earnings: Sysco, Priceline.com, Sotheby's, Dish Networks, Echostar
0300 p.m. Consumer credit
Tuesday
Earnings: Toyota Motors, Vodafone, Fossil, International Flavors and Fragrances, Liberty Media, Progressive, Rockwell, Scotts Miracle Gro, ActivisionBlizzard, Take Two Interactive, Weight Watchers
0730 a.m. NFIB (small business) survey
1000 a.m. JOLTS survey
0100 p.m. U.S. Treasury auctions $32 billion 3-year notes
Wednesday
Earnings: Anheuser Busch InBev, General Motors, HSBC, Anglo Gold Ashanti, Macy's, Computer Sciences, Dean Foods, Rockwell, General Growth Properties, Ralph Lauren, Wendy's, Sodastream, Cisco, Green Mountain Roasters, Lionsgate Entertainment, Advance Auto Parts
1000 a.m. Wholesale trade
0100 p.m. U.S. Treasury auctions $24 billion 10-year notes
Thursday
Earnings: Viacom, Disney, Siemens, Kohl's, Deutsche Telekom, Nordstrom, Molycorp
0830 a.m. Initial weekly employment claims
0830 a.m International trade
0830 a.m. Import prices
0200 p.m. Federal budget
0100 p.m. U.S. Treasury auctions $16 billion 30-year bonds
Friday
Earnings: Petrobras, DR Horton, Telefonica, Brookfield Asset Management
*Bond market closed for Veteran's Day
09:55 a.m. Consumer sentiment
Italian Yields Are Shooting Through The Roof
All of Europe and possibly the world watches in horror as Italy seemingly goes the way of Greece, despite being so large that it will take everyone else down with them.
Its yields have been surging for weeks, and it's getting worse again today.
Italian 10-year yields are shooting through the roof.
No surprise: As a corollary to that Italian yield surge, equities are diving.
US futures pointing to a lower open on the tune of 1.5%.
Germany off 2%.
You can't outguess this broken market....................
The current events are nothing short of amazing; we are defining world history, and our children will one day read about this in their schoolbooks. I'm not prone to hyperbole; if anything, I'm understating the significance of what's going down in the world.
Still, for those of us living through these times, it often feels surreal, as if we're watching a movie.
The financial industry (read: Europe) is undergoing a seismic rebalancing and once it's done, some of those tickers (countries) on your screen will be left standing on others will not (consolidation or bankruptcy).
Most people—including the Federal Reserve, Treasury and politicians—wait for something bad to happen before paying attention to the obvious. And others are conditioned to believe that no matter what, the market—or government—will bail them out.
The markets themselves appear to be structurally broken. The public is out of the market. You really have a bunch of high-frequency traders and hedge funds trading back and forth.
No wonder we see such huge moves in either direction on such light volume. And no wonder traditional value investors are struggling, while investors-turned-traders speculate in ridiculously risky vehicles like leveraged exchange traded funds.
That's why we should all be hesitant to look at charts and make comparisons to times past. The old rules no longer apply and never will again and we haven't learned what the new rules are yet.
This time is different. Really!
IF YOUR INVOLVED IN FINANCE IN ANY WAY SHAPE OR FORM YOUR FUTURE IS VERY UNCERTAIN!
A "gigantic bank run" is imminent, so says
Nobel Prize winner economist Paul
Krugman.
In his Nov. 1 post, the economist states that he believes the endgame for the euro lies in the breadbasket of the European sovereign debt market, Italy, collapsing first, leading to France, collapsing next. Then, it's bedlam.
"The question I'm trying to answer right now is how the final act will be played," Krugman writes. "At this point I'd guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France."
"The question I'm trying to answer right now is how the final act will be played," Krugman writes. "At this point I'd guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France."
HERE'S THE REAL PROBLEM................
What's driving the market today are decisions made not by entrepreneurs and managers who know their businesses best but by government officials and appointed central bankers. Politicians are primarily interested in getting re-elected while central bankers are focusing on the preservation of their own bureaucratic power.
And in Europe, the U.S. and Japan, we have a dearth of political leaders bold and skillful enough to navigate this crisis in a way that inspires the confidence of citizens and investors.
MARKETS FOCUS MAY SHIFT BACK ON WASHINGTON................
As Washington edges towards a Nov. 23 deadline, traders are likely to start handicapping the work of the bipartisan Congressional Super Committee, tasked with reducing the deficit by $1.5 trillion. Analysts have been concerned that as the Super Committee comes down to the wire on its plan, tensions will run high and the acrimonious tone surrounding the debt ceiling debate last summer could again dominate headlines.
If the committee does not reach a deal by the deadline, there are $1.2 trillion in spending cuts that will automatically be triggered across government agencies, starting in 2013.
They're not going to get any grand bargain. They'll probably meet the minimum standard.
The timing of the committee's deadline for late November may be a factor that could help derail a Santa rally this year. We are running out of time for a year end rally and the outlook for the beginning of the year is not that great.
Israel sends out A loud warning to Iran
Through a number of leaks and well-publicized war exercises, the Israeli government has dramatically increased its threats against Iran in the past days. Since the Israeli military likes to act by surprise, it seems this specific escalation is a bluff designed to help pass tougher diplomatic measures against the Islamic Republic at the United Nations Security Council, specifically following the anticipated publication of an important report by the International Atomic Energy Agency (IAEA) next week.
However, given the exceptionally high and rising regional tensions (not all of which involve Israel directly), a larger war in the Middle East is a distinct possibility. Thus, the Israeli rhetoric can be interpreted in two additional ways (all three are not mutually
exclusive): as an attempt to deter a possible first or second strike by Iran and its allies, and as a campaign to prepare public opinion, both at home and abroad, for hostilities.
According to a widely circulated if anonymous assessment (presumed to have come directly from high-ranking Israeli officials), the window of opportunity for striking the Iranian nuclear sites this year will close in a matter of weeks, with the coming of the winter.
The urgency implied in this argument is not necessarily very real – according to most assessments, if Iran were to choose to produce a nuclear bomb, it would need several years at the current rate of enrichment to have enough weapons-grade uranium or plutonium.
In the worst-case scenario, if the Iranian leaders choose to dash headlong toward a bomb, they would need at least a few months. There is some controversy about the precise time frame, but the Institute for Science and International Security estimates six months. [1]
However, it was not very difficult to twist the assessment into a powerful sound bite ("the window of opportunity for a strike against Iran is closing") and to put it to use to justify and amplify an impressive Israeli show of force. In the space of a week or so, Israel conducted a simulation of a long-distance air strike together with Italy, tested what was allegedly an upgrade of its Jericho 3 intercontinental ballistic missile, and conducted a home front drill centered around the scenario of a chemical weapons attack delivered by a missile.
What's driving the market today are decisions made not by entrepreneurs and managers who know their businesses best but by government officials and appointed central bankers. Politicians are primarily interested in getting re-elected while central bankers are focusing on the preservation of their own bureaucratic power.
And in Europe, the U.S. and Japan, we have a dearth of political leaders bold and skillful enough to navigate this crisis in a way that inspires the confidence of citizens and investors.
MARKETS FOCUS MAY SHIFT BACK ON WASHINGTON................
As Washington edges towards a Nov. 23 deadline, traders are likely to start handicapping the work of the bipartisan Congressional Super Committee, tasked with reducing the deficit by $1.5 trillion. Analysts have been concerned that as the Super Committee comes down to the wire on its plan, tensions will run high and the acrimonious tone surrounding the debt ceiling debate last summer could again dominate headlines.
If the committee does not reach a deal by the deadline, there are $1.2 trillion in spending cuts that will automatically be triggered across government agencies, starting in 2013.
They're not going to get any grand bargain. They'll probably meet the minimum standard.
The timing of the committee's deadline for late November may be a factor that could help derail a Santa rally this year. We are running out of time for a year end rally and the outlook for the beginning of the year is not that great.
Israel sends out A loud warning to Iran
Through a number of leaks and well-publicized war exercises, the Israeli government has dramatically increased its threats against Iran in the past days. Since the Israeli military likes to act by surprise, it seems this specific escalation is a bluff designed to help pass tougher diplomatic measures against the Islamic Republic at the United Nations Security Council, specifically following the anticipated publication of an important report by the International Atomic Energy Agency (IAEA) next week.
However, given the exceptionally high and rising regional tensions (not all of which involve Israel directly), a larger war in the Middle East is a distinct possibility. Thus, the Israeli rhetoric can be interpreted in two additional ways (all three are not mutually
exclusive): as an attempt to deter a possible first or second strike by Iran and its allies, and as a campaign to prepare public opinion, both at home and abroad, for hostilities.
According to a widely circulated if anonymous assessment (presumed to have come directly from high-ranking Israeli officials), the window of opportunity for striking the Iranian nuclear sites this year will close in a matter of weeks, with the coming of the winter.
The urgency implied in this argument is not necessarily very real – according to most assessments, if Iran were to choose to produce a nuclear bomb, it would need several years at the current rate of enrichment to have enough weapons-grade uranium or plutonium.
In the worst-case scenario, if the Iranian leaders choose to dash headlong toward a bomb, they would need at least a few months. There is some controversy about the precise time frame, but the Institute for Science and International Security estimates six months. [1]
However, it was not very difficult to twist the assessment into a powerful sound bite ("the window of opportunity for a strike against Iran is closing") and to put it to use to justify and amplify an impressive Israeli show of force. In the space of a week or so, Israel conducted a simulation of a long-distance air strike together with Italy, tested what was allegedly an upgrade of its Jericho 3 intercontinental ballistic missile, and conducted a home front drill centered around the scenario of a chemical weapons attack delivered by a missile.
November 07, 2011 "The Australian" - ISRAELI President Shimon Peres has warned that an attack on Iran was "more and more likely," ahead of tomorrow's release of a report by the UN nuclear watchdog, which is expected to say Tehran has tested nuclear triggering technology and modified ballistic missiles to carry nuclear warheads.
Mr Peres told Israeli television's second channel: "The intelligence services of the different countries that are keeping an eye on (Iran) are worried and putting pressure on their leaders to warn that Iran is ready to obtain the nuclear weapon."
"We must turn to these countries to ensure that they keep their commitments . . . this must be done, and there is a long list of options," Mr Peres declared.
Mr Peres told Israeli television's second channel: "The intelligence services of the different countries that are keeping an eye on (Iran) are worried and putting pressure on their leaders to warn that Iran is ready to obtain the nuclear weapon."
"We must turn to these countries to ensure that they keep their commitments . . . this must be done, and there is a long list of options," Mr Peres declared.
THERE IS NO FIXING THIS................
Congress now has a negative approval rating somewhere in the low teens, the lowest in recorded history. It's become clear to Main Street that their government doesn't represent them or advocate for them. It does so for shareholders, but if you are not a shareholder, you are out in the cold. The irony is that the American tax payer -- through our government -- bailed out the corporations, but there has been no quid pro quo for Main Street's economic conditions. The government hasn't done much for its own people. They never get at the root cause of the demise, which is personal indebtedness and low wages.
One thing that has remained a mystery to so many of us is why something effective hasn't been done for the foreclosure crisis, because an effective solution would be so salutary for the economy. But if the legislative body has no interest in the everyday affairs of Americans and is solely devoted to lobbyists and corporate interests, that inactivity becomes clear.
The effective economic solutions for our economy are a gradual improvement in wages and salaries, a return to higher tax rates for corporations, massive refinancing of mortgage debt for all Americans at lower rates, and realistic spending cuts in social services. The idea that lowering taxes for corporations is the solution is ludicrous. The solution that will work for 80% of Americans means that corporate profits should go down, not up, because more of their profits will go into the US treasury and into Main Street instead of corporate coffers. But given the effect of money on elections, it seems hopeless that an effective common-sense solution would ever improve fiscal policy.
If there ever was a time for America to return to its 19th century "Isolationist ways" and take care of its own problems, it's now.
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