Something Is Cooking

 

By now it has made the rounds that both Super Mario and Thomas Jordan, chairman of the 'Zimbabwe of the Alps' (h/t Jim Grant) suddenly have found out they are either too busy with urgent work or have prior engagements that keep them from appearing at Jackson Hole.

This is potentially quite significant, as whenever these guys postpone long awaited public appearances at important meetings, they are hatching out something big, which they then spring on us mere mortals at the earliest opportunity. The Jackson Hole pow-wow certainly qualifies as an important meeting, as all the CB bigwigs tend to go there, accompanied by a gaggle of academic apologists for central monetary planning who give them new ideas. Everybody gets to hold a speech or present a paper, and we can be fairly sure that the informal gatherings are inter alia used to talk about policy coordination.

 

So it is definitely meaningful when a number of the more prominent CB chiefs are too busy to put in an appearance. The only ECB governing council member planning to show up is actually BuBa chief Jens Weidmann of all people, presumably because he would only get in the way of whatever Draghi is cooking up.

In a recent interview in German news magazine Der Spiegel, Weidmann continued to strongly argue against any type of sovereign bond buying by the central bank, so he obviously would have nothing to contribute to whatever the ECB is setting into motion (we already know more or less what the plan is after all). On September 6, he will be outvoted again, and his German colleague Jörg Asmussen will be one of those voting against Weidmann (we plan to soon write about Mr. Asmussen in more detail).

 

Credit Markets and 'Risk' Assets in Pregnant Pause

In anticipation of Heli-Ben's Jackson Hole speech and the upcoming ECB and FOMC rate setting meetings, markets have gone into a kind of pregnant catatonia. This usually means that big moves are imminent.

For stock market bulls there are a few obvious problems: speculators hold the  largest net long position in stock index futures in 16 months and there is a plethora of technical divergences in evidence (the latter has been the case for some time, but that does not detract from the importance of this observation – on the contrary, a lot of potential energy has now built up).

Of course growing doubts about technical dubiousness could yet give way to short term enthusiasm in the event of the Helicopter pilot intimating the imminence of a sizable money drop. However, we lean toward expecting him to resort merely to rehashing the usual platitudes about how he stands ready to drown us in more money from thin air as occasion demands.

Which as it were is what he has been doing since practically forever, so he might as well refrain from mentioning it over and over again. Lately there seems to be a bit of a consensus emerging that he will actually disappoint on that score, but we're not sure what to make of that.  Obviously it is quite a tricky juncture.

 





5 year CDS on Portugal, Italy, Greece and Spain – CDS on Spain and Italy have caught a bid, but there is not yet a lot of oomph behind it.


 





Our proprietary unweighted index of 5 year CDS on the senior debt of eight major European banks (BBVA, Banca Monte dei Paschi di Siena, Societe Generale, BNP Paribas, Deutsche Bank, UBS, Intesa Sanpaolo and Unicredito) – (white line), compared to 5 year CDS on the senior debt of Goldman Sachs (orange), Morgan Stanley (red), Citi (green) and Credit Suisse (yellow) – a smallish rebound in this group as well– click chart for better resolution.






The Russel 2000-SPX ratio – small caps are still lagging badly – click chart for better resolution.


 




The NYA-SPX ratio – the broader market is lagging even more– click chart for better resolution.




 

SPX, long term – wedges R us– click chart for better resolution.






SPX daily – the pregnant pause – click chart for better resolution.







The dollar value of the commercial hedger stock index position (inverse scale) plus a stochastic oscillator – this is the biggest net short position since early 2011 – click chart for better resolution.


 



Nomura's nine-component leading index for China (CLI, white line), the Hang Seng Index (orange line) and the Shanghai Composite (yellow line), a very long term version of the chart we have shown in the last chart update.- click chart for better resolution.





 


Addendum: An Interesting Chart Analog


Market Anthropology is following an interesting chart analog – an overlay of the 2007 market action with the current market. It is downright eerie at first glance, but it is well known that patterns in the stock market often repeat – note that this does not necessarily mean the analogy will persist. There are a number of other interesting charts there as well.






Charts by:


 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • No results available

Support Acting Man

Item Guides

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!
 

Diary of a Rogue Economist