Sunday, August 28, 2011

Market Thoughts for Week of Aug 29

First of all, I hope that all of my fellow traders on US East Coast are safe after the monster hurricane.

I would like to begin my outlook for next week by expressing my deep dissatisfaction with two of the most influential central bankers on planet. I am not a blind basher, constant critic, or central bank hater. I am a trader with simple view of economics. These two gentlemen were at the helm when hell broke loose in 2008, and I should say absolutely missed what was developing for years right under their noses. They are the ones who then pushed the "panic" button while they were totally unprepared to deal with collapse of the financial system. Obviously, printing their way out of the problem was not the solution, and has now created even bigger problem with govt debt. Now they are sounding all academic and informative about the steps their respective governments need to take to get out of that debt and restore the growth, while they are telling us they have yet more tools left in their tool box. Shame on you gentlemen! Your tool box is full of Monopoly money. You just change the color of the paper and add another 0 at the end.
This brings me to next week's outlook.

On Monday Trichet is in Brussels to explain what mess Europe is in. Yet another one of useless meetings is going to take place while there is absolutely no solution to utter and unmitigated calamity. With DAX trading in bear market territory, it is just a matter of time before the "market solution" brings confused European central bankers and politicians to the eventual decision to recapitalize their insolvent banks. They are definitely running out of that time fast.
Dear traders, please read Madame Lagarde's speech at Jackson Hole. Somehow I think it becomes Europe's Bible for the next year or so.

On Tuesday it will be a total circus moment when FOMC minutes are released. Hold on to your chairs, so you do not fall off of them, when you read ludicrous explanation why only after a few short months since Chairman's press conference, where he stated that easy monetary policy may be reversed in two meetings, we now get 0% rates for 2 years. I know I will be keeping my hands away from my computer so I do not press "sell" button ten times over. Remember my comment about dissatisfaction? This is the most confused Fed I have ever seen.

US econodata will dominate the rest of the week. Housing, consumer confidence, ADP, factory orders, Chicago PMI, ISM Mfg PMI, and weekly claims, will all be a precursor to the most important event of the week - NFP. I have to tell you a scary dream I am having - NFP went negative in August. Please hit me on the head so I wake up and do not have this nightmare. By the way, anything less than 50K will be considered in the same manner as negative. This said, market may interpret this development as a positive (can you imagine?) due to expectation of another "glorious" stimulus package from US govt, which may be announced in September, starting with Obama's speech right after Labor Day. Market has done funnier things before...

Good luck next week!

No comments:

Post a Comment