Global Macro Monitor

Issues in the French presidential run-off

Posted on May 3, 2012 by macromon

(click here if video is not observable)

Posted in Black Swan Watch, Euro, Politics | Tagged France, Hollande, Merkozy, Presidential Election, Sarkozy | Leave a comment

Milken Institute: Is It Time to Invest in Europe?

Posted on May 2, 2012 by macromon

This is a must view panel discussion, folks.

Panel Detail:
Is It Time to Invest in Europe?

Tuesday, May 1, 2012
11:00 AM – 12:15 PM

Speakers:
Wolfgang Alkier, Co-Founder and Managing Director,
Absolute Return Consulting GmbH
Francesca Carega, Co-Head, Absolute Return and Buyouts, Wellcome Trust
Bernard Connolly, CEO, Connolly Insight LP
Hugh Hendry, Chief Investment Officer and Co-Founder, Eclectica Asset Management
James Zelter, Managing Partner, Apollo Capital Management;
CEO, Apollo Investment Corp.

Moderator:
Liam Kennedy, Editor, Investments & Pensions Europe

(click here if video is not observable)

Posted in Black Swan Watch, Euro, Sovereign Debt, Sovereign Risk | Tagged Bernard Connolly, Hugh Hendry, Milken Institute | Leave a comment

Bonjour Two Tier Euro?

Posted on May 2, 2012 by macromon

We’ve always held the end game in Europe will be the stronger northern countries eventually pulling out of the Euro. The path to the end game we do not know.

Sunday’s election in France, may, or may not, be the event that pulls the curtain and reveals the true nature of the Wizard of Oz. The Germans and their austere northern brethren will likely become increasingly isolated with an Hollande victory, in our opinion. This could trigger a political crisis in the north.

An orderly split of the Euro with the creation of a stronger northern currency must also allow for a mechanism that allows financial institutions and European companies in the stronger Euro a “cushioning mechanism” to fund and mark their assets in a devaluing weaker euro without severe balance sheet hits. This, of course, assumes an orderly transition, will be very complicated, and loaded with uncertainty.

It is tough to see, however, the north funding a “growth pact” which the European street is clamoring for and still difficult to imagine the Germans saying yes to monetizing bad sovereign debt. Make no mistake, direct central bank financing of sovereign debt which has no or few buyers is not quantitative easing in the U.S., U.K., Japanese, or LTRO sense. Evidence from history shows money demand becomes increasingly unstable during periods of monetization in a sovereign crisis.

We could be way off base in our view but throw it out there for our readers to contemplate.

Stay tuned.

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Posted in Black Swan Watch, Euro, PIIGS, Sovereign Debt, Sovereign Risk | Tagged Elections, Euro, France, Gemany, Hollande, Two Tier Euro | Leave a comment

Crude Breaks Out of Bullish Flag

Posted on May 1, 2012 by macromon

Check out the good work from our friends over at Trend-Wise.com. They have some excellent technical analysis of the price action in crude.

(click here if chart is not observable)

Posted in Crude Oil, Technical Analysis | Tagged Crude Oil, Technical Analysis, Trend-Wise.com | 3 Comments

Apple Gives Up Gains To Close Lower

Posted on May 1, 2012 by macromon

Apple traded up almost $14 only close lower on the day. The stock led the S&P500 and other major indices off their highs of the day to cut their intraday gains in half. The Russell gave up almost a 2 percent gain to close down for the day.

Apple has been trading very poorly after the earnings pop last week. It could be just consolidating the large gains for the year or…..it could be some of the big players getting out before taking the summer off. We’re always nervous. Stay tuned.

(click here if chart is not observable)

Posted in Apple | Tagged Apple, Dow, Russell 2000, S&P500 | Leave a comment

Shorts Send Out Mayday As ISM Surprises

Posted on May 1, 2012 by macromon

Wow!

Check out the market reaction to the ISM this morning. Many were caught off guard and even shorting just minutes before the number expecting a weaker print on the back of the weaker regional PMIs. We were surprised, but, at least, not short.

This is a strong number and given the the weaker global environment we believe the market narrative through the summer is the U.S. is the place to be. The only negative in the ISM report is that input prices continue to rise. Even if global equity markets don’t move higher, we expect the U.S. to outperform.

The perspective of strong and flexible companies with the best management in the world and relatively stable politics should continue to attract capital flows into the U.S. markets through the rest of the year. Take a look, for example, how poorly Brazil is trading over the past few months after bolting out of the gate earlier in the year.

We do suspect the animal spirits will remain somewhat depressed by the bad macro, however.

Though nominal new highs are likely for most indices (Dow already there) our base case is for a directionless markets for the next few months. We’re not going to chase, but a big beat on nonfarm payroll on Friday will force us to repress our inner bear even as Mr. Hollande takes the helm in France. Intrade has Mr. Hollande at an 88 probability of become France’s next President.

Trying to trade the noise is a mug’s game but we’ll never learn. Stay tuned.

(click here if charts are not observable)

Posted in Economics, Equities, Uncategorized | Tagged Brazil, Dollar Index, Hollande, ISM, May Day, PMI, S&P500, U.S. | Leave a comment

Manufacturing Employment in the U.S.

Posted on April 30, 2012 by macromon

Here’s an interesting data series we thought you might find enlightening.

Note the peak in manufacturing jobs in June 1977, which represented 22 percent of all nonfarm payrolls, then, to fall to less than 9 percent of total employment today. It’s too earlier to claim victory with the current recovery in the manufacturing sector, but it is the the first positive slope since mid-1990’s.

There are many reasons for the secular decline, including: 1) the strengthening of the dollar during the 1980’s; 2) globalization; 3) entry of China and India into the global labor force; 4) the internet; 4) productivity; 5) technological innovation; 6) demographics and worker preferences; and 7) all of the above.

We’ll leave it to the academics to debate it and the politicians to place blame or take credit.

Click on chart to and for better resolution.

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Posted in Employment, Manufacturing | Tagged Manufacturing Employment, U.S. Manufacturing Jobs | 3 Comments

Where are all the German shoppers?

Posted on April 30, 2012 by macromon

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Posted in Economics, Euro | Tagged Demand, German Consumption, Germany, Shoppers, Unemployment | Leave a comment

Sell in May?

Posted on April 30, 2012 by macromon

We don’t know.

What we do know: 1) May has bad seasonals as illustrated in the chart by our good friends at the Chart Store; 2) Apple, the leader of 2012, is trading like dog dirt after the huge pop after earnings last week; 3) Merkozy will die (most likely) after Nicolas is defeated in the France’s Presidential election on Sunday, increasing market uncertainty; 4) The Greeks may, though not likely, elect to eject in their elections, which is also this Sunday; 5) U.S. regional PMIs are slowing; and 6) U.S. unemployment claims have been disappointing.

Again, we don’t know the future and will change our minds when the facts change, but looks like we’re setting up for some choppy action into the summer. We get ground up in the chop and try to stay out. Good luck out there.

(click here if charts are not observable)