Commentary: It’s Lack of Reform, Stupid! (Part 2)
There is one key culprit in obvious global
economic weakness in spite of major QE
© 2015 ROHR International, Inc. All International rights reserved.
COMMENTARY: Saturday, January 24, 2015
As noted on Monday, for the first time in five years 2015 may be much riskier for equities.
The reason for this lies squarely with the developed economy political class. Yet they are aided and abetted by central banks. The ECB headquarters picture is not to highlight ECB as a primary culprit. If anything, the ECB has been among the most vocal critics of their political class for ducking the necessary reforms to really return the Euro-zone economy to more acceptable and sustainable growth. Yet in the wake of the massive intervention of the Fed that has masked the true extent of the US political class’ dysfunction, the central banks are burdened with not wanting to be the naysayers who are tarred with the blame for any overt failure they might have prevented. Maybe.
We were originally going to publish this after Tuesday’s Close. Yet consideration of how much central bank influence was coming down the pike this week after President Obama’s totally lame State of the Union address, we decided to wait. And for many reasons, we are glad we did. Before getting into the central banks’ dilemma merely touched on above, a brief bit of follow up on the dysfunction in the political class noted in part 1 on Monday is in order.
Not least of which is rightfully directed at Mr. Obama. While a great orator that also leads to his serial success as a campaigner, the highly promoted ‘bringing together’ of the USA never happened. In fact, just the opposite. America is now a more highly polarized, ethnically and economically contentious place by far than when he took office. That can be explained in large measure by his party’s wholly political (versus practical) approach to electoral gain versus effective governance.
The examples are rife, and the Democrats and Mr. Obama don’t even bother to do much to hide it. Take the example of their “do nothing Congress” claim.
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2015/01/26 TrendView VIDEO: Global View (early)
2015/01/26 TrendView VIDEO: Global View (early)
© 2015 ROHR International, Inc. All International rights reserved.
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TrendView VIDEO ANALYSIS & OUTLOOK: Monday, January 26, 2015 (early)
Syriza Wins!! That’s right, Greece has a new anti-austerity government. Yet that doesn’t seem to be a bad thing for the equities after initial overnight nervousness had them under pressure. And the govvies do not seem to like it. In fact, after previous rounds of Greek turmoil fed a significant premium ‘haven’ bid in the German Bund, the opposite seems to be the case this morning. Maybe the Bunds are getting the feeling that the new Greek government will be successful in either receiving some austerity concessions, or possibly outright debt forgiveness that will not be very good for the rest of the world’s overall view of Euro-zone debt.
The fresh concerns about Greece likely already contributed to the weakness of the euro into the later part of last week. Yet that was likely only accelerant for the ECB capping off a week we dubbed Central Bank-O-Rama. Certainly the major euro currency expansion by the ECB to expand its balance sheet was the major driver for the extension of the already severe weakness of the currency. That will also raise fears of inflation, however poorly founded based on all previous QE programs’ impact. Nonetheless, the Greek moves are going to elicit a storm of protest from the fiscally conservative forces in northern Europe, led by Germany of course. Yet for now the greater storm that might impact the markets is the atypically major blizzard headed into the US Northeast over the next couple of days.
And as far as the economic data, who cares? In the wake of these significantly forward looking central bank influences and the political situation in Europe not to mention turmoil in the Middle East, the ‘rearview mirror’ data is typically less important.
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Video Timeline: It begins with macro (i.e. fundamental influences) discussion of some of the key factors noted above along with the continued mixed data out of Asia and Europe on global Advance PMI’s and other influences. Yet the prominence of the ‘macro’ factors leaves the data a bit less important, especially with less data today.
It moves on to DECEMBER S&P 500 FUTURE short-term view at 03:00 and intermediate term at 06:15, then the OTHER EQUITIES from 07:30, with GOVVIES analysis beginning at 12:30 and SHORT MONEY FORWARDS 18:00. FOREIGN EXCHANGE begins with the US DOLLAR INDEX at 21:00, jumping over to EUROPE at 22:45 and ASIA at 27:20, followed by the CROSS RATES at 30:50 and a return to DECEMBER S&P 500 FUTURE short term view at 35:15 for a final look and additional perspective. As this is an especially extensive analysis due to the need to discuss some broader factors, even more so than usual we suggest using the timeline cursor to access the analysis most relevant for you.
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Authorized Gold and Platinum Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion and TrendView Video Analysis and General Update. Silver and Sterling Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion.
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