WASHINGTON
(MarketWatch) Commentary…
Euro crisis brings world to brink of depression - Parallels to 1930s’
missteps unmistakable. “The financial volatility in Europe may have created a
situation that is now beyond the capacity of policy makers to control or curb…The crisis has now gone
well beyond the prospect of breaking up the euro to the threat of a
full-fledged financial and economic collapse in Europe that could plunge the
world into a second Great Depression…German economist Fabian Lindner drew the
parallel to 1931 in an op-ed last fall when he compared his country’s intransigence
toward southern Europe now to the misguided harshness of the U.S. and France
toward Germany in the earlier crisis.”
Full commentary at…
MORE
FED ACTION
WASHINGTON (MarketWatch) – “Federal
Reserve officials are moving closer to taking new action to try to spur the
economy, according to a report Tuesday by the Wall Street Journal. Officials at
the central bank are growing impatient with the sluggish growth and high
unemployment and worried that growth is too slow. The report said that
conversations inside the Fed had turned toward how and when to move but did not
find a consensus for what steps the Fed might take at its meeting next week.” From Market watch at…
NOT
EVERYONE AGREES WITH THE FED
Money
Magazine (August 2012) - John Taylor of Stanford said in an interview in Money
magazine this month that according to his research, short term attempts to
juice the economy lead to higher unemployment and slower growth. He was
critical of both the Bush and Obama administrations so his comments are not “political”. He pointed out that the Fed bought 77% of the
US debt in 2011. “By doing so, the Fed has created great uncertainty about the
impact of its actions on inflation, the dollar, and the economy.” He argues that “uncertainty” is bad for the
stock market and the economy. If I see a
link on this subject, and we probably will see one in a few weeks, I’ll post
it.
MARKET
Tuesday
the S&P 500 finished down almost 1% to 1338. The VIX was up 8% to 20.15.
The
S&P 500 fell below its lower trend line by about 1%. After writing about taking a long trading
position I decided that I have enough exposure to stocks at this point. (Cue
the chicken: bwak, bwak, bwak.) Bottom
line, chicken or not, I have plenty of exposure without taking on
even more risk. There’s too much going
on in the US economy (to the downside) let alone all the bad news out of
Europe.
NTSM
The NTSM analysis remains
HOLD at the close on Tuesday.
MY INVESTED POSITION
Based on the BUY signal, 6
July, I moved back into the market on 9 July (after the weekend) at S&P 500
1352. I now have a 50% stock allocation
overall. I am underweight my usual
aggressive allocation for stock because there’s a lot of risk now.
