Excellent Reuters graphic on China’s new leadership.
The Washington Post opines on China’s new leadership,
Those hoping this week-long party congress would send a clear signal in favor of openness and change were largely disappointed that the final Standing Committee lineup consists of mostly older, conservative establishment figures.
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OK, folks, our posts are a little too gloomy tonight. Therefore, we leave you with a little gallows humor. Now let’s see if he is a good trader.
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The hits just keep on coming. Forget what is happening in the markets, the Euro street is truly hurting. And that, our friends, is where the ultimate risk lies.
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Gov. Jerry Brown has always been and shall always be “Governor Moonbeam” to us. A true economic idiot, his only saving grace as far as we’ve been concerned is that back-in-the-day he dated Linda Ronstadt.
– Dennis Gartman, The Gartman Letter – Nov. 14, 2012
Ouch! There’s more,
However, he really does not understand anything at all about economics and is convinced that higher taxes will have little if any impact upon high income earners in California, despite the fact that several thousand high income earners…and low, for that matter… are leaving his state monthly.
Speaking to the press earlier this week, when queried about the effect of higher taxes upon his citizenry, Gov. Brown said this:
High-paid individuals have more to fear from their spouse than they do from the state of California. Most of them, when they do leave, leave because they have just gone through a nasty divorce. And so I would say, if they all work on their relationships, we’ll take care of spending their money wisely.
Simply put, no he won’t…and we’ll bet large on that. Let the exodus out of California continue…and it will.
Yikes!
Well, fellow Californians, at least we still have this from the Mamas and Papas to soothe our souls if the Golden State slides off into the economic abyss. Wasn’t Michelle sooooo fine?
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Wow! Times they are a-changin’!
The Egyptians used Facebook to topple their Pharaoh and now the Israeli’s commence their offensive against Hamas using Twitter. What would King David think?
At 9:29 Eastern this morning, the Israeli Defense Force announced via Twitter that it would be attacking targets in Hamas today, as part of an ongoing mission “to protect Israeli civilians and to cripple the terrorist infrastructure in the#Gaza Strip.” Here is that first tweet announcing the operation:
The IDF tweet wasn’t just an idle threat either. Within minutes, the IDF spokesperson tweeted that forces had actually already carried out an attack on a target, the “head of the #Hamas military wing,” Ahmed al-Jabari. IDF is live-blogging the attacks, too.
If that level of transparency isn’t astounding enough, the IDF even tweeted a video of the attack less than three hours later, along with the hashtag #PillarOfDefense. Pillar of Defense is the name of the IDF operation, reports Reuters.
Stunning.
Now it gets interesting.
Fiscal Cliff Monitor (FCM)
Stocks down 1-2 percent with the Russell down 50 bps more than the S&P5oo; defense down 2.38%; VIX up 6 1/2%; dollar and bond flat, which is interesting on the back of a big equity sell-off.
We added the financial ETF to our Fiscal Cliff Monitor indicators.
Negotiations
President Obama met with business leaders today, including execs from General Electric, American Express, and Wal-Mart. The President plans to meet with Congressional leaders on Friday.
Very little focus on the expenditure side these days and looks like the first fight will be over the tax rate on high income earners. Here’s the Prez at today’s news conference,
But when it comes to the top 2 percent, what I’m not going to do is to extend further a tax cut for folks who don’t need it, which would cost close to a trillion dollars. And it’s very difficult to see how you make up that trillion dollars, if we’re serious about deficit reduction, just by closing loopholes in deductions. You know, the math tends not to work.
And I think it’s important to establish a basic principle that was debated extensively during the course of this campaign.
I mean, this shouldn’t be a surprise to anybody. This was — if there was one thing that everybody understood was a big difference between myself and Mr. Romney, it was, when it comes to how we reduce our deficit, I argued for a balanced, responsible approach, and part of that included making sure that the wealthiest Americans pay a little bit more.
I think every voter out there understood that that was an important debate, and the majority of voters agreed with me, not — by the way, more voters agreed with me on this issue than voted for me.
So we’ve got a clear majority of the American people who recognize if we’re going to be serious about deficit reduction, we’ve got to do it in a balanced way.
Some think the President was too confrontational at his press conference today and hell-bent on extracting a pound of flesh from high income earners. This may be one reason the market took a dive today.
Last week’s election, which we perceive as a swing to the left, was not, in our opinion, positive for stocks, capital formation, and the economy. Hope we are wrong.
What would a real fiscal cliff panic look like?
Stocks down hard; Russell 2000 down harder; consumer discretionary down hard; gold up; dollar down; VIX spiking; and defense stocks in the tank.
Bonds? Tough to extract a clear signal with the Fed’s financial repression, but, initially, the cowboys would most likely be in buying on recession fears and increased worries about going over the cliff.
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“Enormous Angst”
‘Over 50% chance for Iran conflict in coming year.’ This was the headline in yesterday’s Jerusalem Post quoting David Gergen, one of our favorite nonpartisan political analysts, who has worked for both Republicans and Democrats.
Speaking to the annual General Assembly of The Jewish Federations of North America, Gergen said the chances of a conflict with Iran in the next two to 24 months are greater than 50 percent, and possibly, as high as 90%. Here’s the JPost,
Shortly after the Israeli elections, he ventured – assuming, as expected, that Netanyahu will continue in office – the prime minister is likely to ask the United States for a green light to take military action against Iran. This, he said, will create enormous angst, as the two countries differ significantly in regard to the point at which intervention becomes necessary.
Gergen on dealing with the Iranian issue,
President Barack Obama will be focused during his second term on domestic issues, he predicted, but would nevertheless not be able to avoid the Middle East even if he wanted to. There is simply too much unresolved and too much at stake, he said.
And the central conundrum he will have to deal with is Iran. “In my 30 years in and out of politics,” he reflected, “this is the toughest problem I have ever seen.”
This morning Israel launched an air operation called Pillar of Cloud against Hamas leaders and their military infrastructure, including rocket stockpiles in the Gaza Strip. Could this be the beginning of the conflict with Iran that Gergan spoke about?
Some seem to think so. The Weekly Standard writes,
Israel’s last large campaign against Hamas, Operation Cast Lead, was waged shortly before Obama’s 2009 inauguration. The timing of the current campaign should allow the Israelis much more flexibility in achieving their goals, which in addition to eliminating Hamas figures also includes degrading the military capacity of Gaza’s ruling authority. Presumably, the Iranians will be watching very closely how the White House treats the situation, whether it tries to restrain the Netanyahu government or encourages and even assists Jerusalem in a campaign against what are effectively Iranian assets.
Seriously, folks, can P/E multiples expand in an environment of fiscal instability in the U.S. and growing political instability in the Mideast?
Stay tuned.
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Stratfor discusses the importance of Venezuela’s oil reserves and its relations with the United States.
For more analysis, visit: http://www.Stratfor.com
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As in Head and Shoulders and the long-term technical pattern that is being hammered out in the NYSE index. We stumbled across this chart over at Bikini Analytics via SocialTrade.
We like how they premise the chart.
Major Technical Principal: The significance of a trendline is a function of its length, the number of times it has been touched, and the angle of ascent or descent. – Martin Pring, Technical Analysis Explained Fourth Edition.
Though the horizon is a little long for our trading style we are definitely keeping it on our radar.
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Global Macro Monitor 