Japan's central bank announced unlimited QE efforts last night, similar to the U.S. Fed's announcement in December of ‘QE for as long as it takes'. The Bank of Japan will purchase 2 trillion yen in Japanese treasury bonds and 10 trillion in T'bills monthly going forward. The Japanese market reacted about as the U.S. market reacted to the Fed's announcement. A big ho-hum yawn. The Nikkei closed down 0.35% last night.
India, one of the world's largest users and hoarders of gold, announced it has raised its import tax on gold from 4% to 6% in another attempt to discourage demand for gold which it blames for 80% of its current account deficit.
In Europe, the ZEW economic expectations index, which measures investor sentiment in Germany, jumped a big 24.6 points to 31.5 in January, the second big monthly gain. It jumped out of negative territory to 24.6 in December.
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The Chicago Fed's National Activity Index (CFNAI) declined to +0.02 in December, down from +0.27 in November. But the more important 3-month m.a. improved from minus 0.13 in November to minus 0.11 in December, moving a little further away from the minus 0.7 that the Fed considers to be showing the economy is in recession.
Global markets are still somewhat overbought short-term above 50-day moving averages.
A few casual observations.
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Is the Ben Bernanke economists are now worried might not accept another term as Federal Reserve chairman the same Ben Bernanke that was so vilified with every move the Fed made in attempts to help pull the economy out of the 2008 meltdown?
The economy continues to improve and Congress is on the verge of delaying the decision over raising the debt ceiling for a couple of months. Will those two situations not minimize to some degree the concerns over the effect that spending cuts would have on a tepid economic recovery, and give Washington its best shot in three years at reaching a budget agreement?
Are most investors really still in denial regarding technical analysis? Apparently. Here are a few comments from J.C. Parets, president of Eagle Bay Capital":
"I'm always so amazed at how quickly a form of market analysis gets dismissed by certain members of the investing community. . . It's amazing how misinformed some people are about what technical analysis is and what it isn't. . . . Let's go over one more time what technical analysis actually is. As I mentioned before, it is NOT looking at one indicator and making all trading decision based off it. It is NOT looking for cup and handles and head and shoulders patterns. It is NOT voodoo with circles and lines. It IS the study of the behavior of the market and its participants. I am a technician. At our shop, we look at all asset classes, not just stocks, but commodities, currencies and fixed income markets. There is information that I promise you will not be found in a balance sheet, income statement or company conference call. We look at market sentiment, and not just retail investors, but institutions, sell side analysts, commercial hedgers and financial advisors. There are trends in seasonality that if you ignore, you're only hurting yourself. And all this before we've even looked at the most basic form of securities analysis: supply and demand. . . . I know this argument will never end. We're all human and stuck in our ways. I for one, will never have any respect for the Florida Gators or the New York Jets. I just won't. Never have, never will. I guess those journalists, fundamental analysts, and academics that have criticized the act of analyzing price to manage risk are going to continue to do so. There's nothing anyone can do about that. . . . But please, for goodness' sake, do yourselves a favor and at least get it right when you criticize it. Do your homework about what it is that you're even talking about before you start arguing against it."