Monday, January 12, 2009

More Bad News

From the (London) Times Online comes a column titled "Leading economist fears decade of weakness in the U.S.", link courtesy of Naked Capitalism, featuring comments by Robert Shiller that the U.S. could indeed have a Japan-style "lost decade".

This echoes the post here on Jan. 6, 2009 titled "Land of the Setting Sun". This post begins, "We are Japan".

Brad Setser, the economist at the Council for Foreign Relations, posted yesterday that "This Really Doesn't Look Good" and described the sharp downturn in exports from Taiwan and Korea (link also with thanks to Naked Capitalism).

Stock markets are turning down. In the U.S. the pattern has been for rallies to crest a bit above the 50 day moving average (ma) and then move down and set a lower high before moving to a new, lower low. The feeling amongst many bearish traders was to respect the enthusiasm for the new Administration and the charismatic incoming President and then short the market either on Inauguration Day or on signing of a stimulus package. Perhaps Mr. Market will frustrate these would-be short-sellers by moving down from here?

Given Dr. Setser's observations about Taiwan, and noting its emphasis on high-tech, one might want to look

For those interested in gold, it is down today despite financial turmoil, having set a recent peak marginally above its down-sloping 200 day ma. In the fall, it also peaked in the same fashion before a sharp break.

The video interview "indicator" has turned more neutral lately, having looked buoyant and therefore bearish as the market was peaking. However, "Portfolio Matters" today shows S&P's Mr. Stovall expecting an "18% rise in Health-Care Earnings". As this blog has mentioned, this is more or less the only healthy sector of the economy, bankruptcy-related matters further excepted. This title looks a bit forlorn given all that it does not say about the carnage almost everywhere else.

If Dr. Roubini, Dr. Shiller and others who actually predicted the economic mess we are in are correct, then Mr. Ambrose Evans-Pritchard, who reflects conventional wisdom, is at best early and at worst just plain wrong in today's column at the Telegraph online when he says that "The bond bubble is an accident waiting to happen". If we really are Japan, then the 10 year T-note can go under 2% and stay there.

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