Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17
7 Signs You Should Add Gold To Your Portfolio Now - 19th Jun 17
US Bonds and Related Market Indicators - 19th Jun 17
Wireless Wars: The Billion Dollar Tech Boom No One Is Talking About - 19th Jun 17
Amey Playing Cat and Mouse Game with Sheffield Residents and Tree Campaigners - 19th Jun 17
Positive Stock Market Expectations, But Will Uptrend Continue? - 19th Jun 17
Gold Proprietary Cycle Indicator Remains Down - 19th Jun 17
Stock Market Higher Highs Still Likely - 18th Jun 17
The US Government Clamps Down on Ability of Americans To Purchase Bitcoin - 18th Jun 17
NDX/NAZ Continue downward pressure on the US Stock Market - 18th Jun 17
Return of the Gold Bear? - 18th Jun 17
Are Sheffield's High Rise Tower Blocks Safe? Grenfell Cladding Fire Disaster! - 18th Jun 17
Globalist Takeover Of The Internet Moves Into Overdrive - 17th Jun 17
Crazy Charging Stocks Bull Market Random Thoughts - 17th Jun 17
Reflation, Deflation and Gold - 17th Jun 17
Here’s The Case For An Upside Risk In The Global Economy - 17th Jun 17
Gold Bullish on Fed Interest Rate Hike - 16th Jun 17
Drones Upending Business Models and Reshaping Industry Landscapes - 16th Jun 17
Grenfell Tower Cladding Fire Disaster, 4,000 Ticking Time Bombs, Sheffield Council Flats Panic! - 16th Jun 17
Heating Oil Bottom Is In.(probably) - 16th Jun 17
Here’s the Investing Reason Active Funds Can’t Beat Passive Funds—and It Worries Me a Lot - 16th Jun 17
Is There Gold “Hype” and is Gold an Emotional Trade? - 16th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

Markets, Economies, Central Banks - All Out of Power!

Stock-Markets / Financial Markets 2012 Jul 07, 2012 - 12:38 AM GMT

By: Sy_Harding

Stock-Markets

Best Financial Markets Analysis ArticleHaving topped out into corrections in March and April, most global markets rallied back some in June, fueled by hopes that June’s unusual schedule of promising events would provide rescues for the eurozone and the U.S. economy. As those events arrived, if one or two failed to produce results, the rally only paused momentarily as there were still remaining events that might produce results.


But now we’re out of promising events for a while.

June’s first hope was that Spain would receive its requested bailout loans for its banks and Spain would go away as a worry. Next was the scheduled election in Greece that might prevent it from exiting the euro-zone. Then the G-20 summit on June 19 was hoped to produce a big coordinated global stimulus effort, and the Fed’s FOMC meeting was anticipated to result in new QE3 stimulus efforts for the U.S. economy. That was closely followed by the EU summit meeting and hope that it would result in a promising plan to control the eurozone debt crisis. This week it was that the European Central Bank and the Bank of England would cut interest rates at their meetings.

Markets won some, lost some.

Spain did receive the bailout loans for its banks. But the market’s euphoria lasted less than a day before it was realized that Spain’s government debt crisis was worse than its banking crisis.

The G-20 summit produced nothing except an agreement to continue to monitor conditions. The Fed’s FOMC meeting produced only an extension of the current ‘operation twist’ (which was already failing to halt the economic slowdown).

However, it seemed to get a big win last week from the EU summit, a major agreement to allow European banks to borrow directly from the established rescue programs, for the bailout funds to be used to buy the bonds of individual countries having difficulty selling their bonds to investors, and giving the European Central Bank more control over the rescue funds.

Unfortunately, the excitement over the agreement was short-lived when it was realized that much of the promised action would be delayed until the details are worked out later in the year.

But both the Bank of England and the European Central Bank came through with the hoped for interest rate cuts on Thursday. The Bank of England even included a degree of QE3 stimulus by adding to its bond-buying program. And China’s central bank chimed in with an unexpected rate cut of its own.    

Unfortunately, markets had apparently already factored those central bank actions into prices since they declined on the news, apparently also concerned about the next event, Friday’s U.S. monthly employment report.

And that jobs report was a disappointment. Only 80,000 new jobs were created in June. New jobs therefore averaged only 75,000 a month in the 2nd quarter, down  a big 66% from the average of 226,000 in the first quarter. That’s on top of all the other economic reports showing the 2nd quarter to have been much worse than the 1st quarter.

So the economy continues to run out of steam at a worsening pace.

The lack of positive response to the further monetary easing by central banks, and the biggest effort yet from the EU summit to contain the euro-zone debt crisis, indicates that central banks have also run out of firepower.

Can markets be far behind?

Consider also that ultimately stock prices are driven by corporate earnings, and Thomson/Reuters reported this week that warnings from corporations that their 2nd quarter earnings will not meet estimates are at the highest level in ten years.  

Bullish analysts are confident the dismal jobs report will force the Federal Reserve to rush in with the additional QE3 type of stimulus program they failed to produce at their FOMC meeting two weeks ago.

But the Fed was already reluctant to try to come to the rescue. In testimony before Congress Fed Chairman Bernanke denied that it was because the Fed has run out of ammunition, even though the positive effect of QE2 in 2010, and ‘operation twist’ last year, each lasted only six months before the economy ran into trouble again.

Now it faces the fact that the additional monetary easing by central banks in Europe on Thursday seems to have had no effect in reassuring markets, at least so far, with markets down two days in a row after the actions. That may have the Fed even more reluctant to follow with similar action. After all, if the Fed fires off what ammunition it may have left and it fizzles, what if more is needed down the road? It may be better to wait and keep markets hoping they still have something left for down the road “if needed”.

My forecast at the beginning of the year was for the market to top out in April into a tradable summer correction, and then launch into a substantial rally in the market’s favorable season beginning in the October/November time-frame.

I could be wrong. But so far, short-term rally attempts notwithstanding, it seems to be working out that way. June’s rally is beginning to look like a rally to be sold into, another opportunity for short-selling and profits from downside positioning in inverse etf’s.

Stay tuned!

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2012 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife