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Blog Posts in Market Commentary

Euro’s reaction to Greek elections

Over the weekend, Greece voted in the Syriza party which is overtly opposed to the austerity measures imposed on the country by the ECB (read Germany).  The reaction in the currency markets has been interesting.  Common sense says the Euro should be weakendd by such an event.  However, the Euro put in what many technical analysis would say is a textbook reversal bar by opening significantly lower and then closing up and high in the range.  If this behavior by the currency markets is valid, the Euro should make some sort of bottom versus the USD that may last a while.  Does this mean the...Read more

The Swiss decouple the Franc

Huge news from Switzerland this morning as they have decided to decouple the Franc from the Euro to end the three year-old experiment.  I can't understand all the reasons why they orginally established the link and not sure why they are decoupling now.  Obviously, its not a vote of confidence for the Euro and their German-run central bank. 

But from a technical standpoint, it means something more to the USD.  The USD has experienced a parabolic rise over the past year.  And anyone familiar with markets knows how parabolic rises play out - Eventually they crash...everytime, no...Read more

"What will the next 5 years hold?"

Yesterday I had a meeting with Greg Brucher of Altegris Investments.  (Altegris Investments is one of the foremost authorities on Managed Futures strategies and other kinds of alternative investments.)  In the meeting, he proposed a thought provoking sequence of questions and I thought I’d share them with you.

Initially, he asked, “What will the next five years hold?” 

My response with a shrug, “I have no idea, I don’t think many do.”

And he continued, “Will the next five years be like the last five years?”

And I...Read more

Is the PetroRuble coming?

The crashing Russian Ruble has been the big story line from the past couple of weeks.  From here, there are only two options for the currency.  Continue to crash on its way to zero or breakout out of the parabolic downtrend and rebound.  While the fundamentals of the Russian economy may not be all that tantalizing, I don't see their currency going to zero.  After all, who's economy is doing all that well?  And while Russia's economy has had its bumps and bruises, it has quite a bit going for it.  The government is running surpluses (what a novel idea) and they still produce quite a bit of...Read more

Will US sanctions against Russia backfire?

Today, President Obama imposed further sanctions on various Russian entities for their government's continuing support of Ukranian seperatists.  Whether further sanctions are merited or not, I'm not sure.  But the specific details of this round of sanctions seem's potentially foolish.  The US government is now going to restrict specific Russian entities from buying US Treasury debt in excess of 90 days maturity (among other things).  Isn't the FED's ability to contiue QE predicated on the fact that investors will continue to buy US Treasury debt and other US government backed debt?  Are...Read more

Recently, the only moves in excess of 1% in the SPX have been to the downside

This morning, the SPX (i.e. ETF ticker IVV) opened down more than 1%.  Since mid May, the SPX has only seen interday moves in excess of 1% on three occassions.  All three have been to the downside (assuming today closes down).  Is this significant, I'm not sure?  I know there have been two camps in the markets.  One was waiting for a melt-up which typically comes at the end of a parabolic move.  The other was the "5 - 10% correction" camp.  The sentiment for both sides has been so overwhelmingly strong so I suspect neither will be correct.  Could the parabolic curve in the price for the...Read more

In yellen we trust...

The headline story on Bloomberg yesterday was titled, "In yellen we trust is Bond Mantra as Inflation Dismissed.”  This story line is obviously a play on the American patriotic motto “In God we Trust”.  So in the minds of investors, has the FED replaced God?  Or is the FED god?  Is the FED an omnipotent force for good in capital markets? (I use FED in all caps for the Federal Reserve Bank). 

Currently, the bond and equity markets are priced as...Read more

Why the Muni Bond Market is Unsalvageable

Disclosure:Our firm is short AGO, MAV, MUB and PCK and is currently looking for additional ways to bet against the Muni-bond market.

With the downgrade in Puerto Rico's debt yesterday, it appears another nail has been driven into the coffin that is the Muni Bond market.  The following is a partial list of the many reasons why the muni market cannot be bailed out like AIG or Greek sovereign debt.

Why...Read more

Why the Glass-Steagall Act of 1933 was so critical to Banking Stability

He who loves money will not be satisfied with money...

- Ecclesiastes 5:10 -

For nearly 70 years, the US economy ran relatively smoothly without a signficant hitch from the banking sector.  Aside from a few S&L's that got sideways in the 80's, the US banking sector was the model of effeciency from the mid-1930's until 1999.  The reason -- A simple act of legislation known as the Glass-Steagall Acts.Read more

Why there is little Hope for Homeowners

Why there is no real solution for the housing market…

There is no quick fix for the housing market for two reasons. First, the investment/speculative demand created over the past decade for homes and mortgage notes caused a massive oversupply of homes which has resulted in their being simply more homes than there are people to live in them. Second, since homes are an extremely durable good, it will be several decades if not generations before the excess supply is worked off.Read more

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