“Something is Rotten in the State of Denmark” or the US Economy for that Matter

Expect more of this.  Not the executions, but the "bird" that China flipped toward the UK.  They’ll probably be more directed at the US for the next decade.  They are close to passing Japan for the second largest economy in the world.  Next target, the US.  Although it will take a while, I see this happening in our lifetime.

More signs of Protectionism.  As far as the ruling mentioned in the previous link, here is the result, not pretty.

ZZZ…. oh it’s nothing…just another few billion going into another black hole.  Sure guys lets prevent Capitalism from working and then say it’s a failed system… >:-(

And on that subject, check this and this out.  The leaks are sprouting up from the dam of sticks that gov’ts have built.  This is a global problem looking to get worse over the next 5 years as debt and water and more water weighs on the dam (See Pics).  Exactly Japanese style.  Guess what happened to the Nikkei?  It’s down 75% from their peak about 20 yrs ago.  Bad Bad Bad strategy UNLESS, me covering all my bases, the global economy pulls out of recession and the exit strategy is done to perfection — a VERY small window of success in my view.  If rates rise and this debt comes due, I fear what would happen.  This is why Gold is a good L-T buy in my view.  Gov’ts are going to be forced to stop recklessly spending to prop up economies or raise taxes.  If they become fiscally responsible a double dip will be in the cards.  But if they keep spending to prop up economies and if economies begin showing strength, bank on higher interest rates and inflation fears (stagflation) and……double dip.  All in all, stuck between a rock and hard spot…you can only hide the truth for so long.  March lows, here we come.

On the bright side, take a look the Chicago PMI.  Tells me that the Auto Sector inventory bounce is ongoing with good help from China and I think this can continue into Q1 and even Q2 ’10. As a side note, check the first comment at the end of report. Pretty dramatic don’t you think?…jeez!  Also, the last comment kinda contradicts the PCE numbers we’ve been getting regarding increasing salary and wages.  Although it is only one comment (although I’ve heard lower wages and wage freezes all over the place for regular folks), it just shows the discombobulated nature of this recovery, one that is very vulnerable to any outside shock in my view.  Overall the surveys leaned on the positive end for December but the Empire and Richmond surveys did show a little weakness.  An “American Truckers Association” economist pointed out that he believes we are coming to the end of the inventory bounce (I really didn’t think there was much of one in general to start with).  Given that the impact of the stimulus is beginning to wane, I will have my eyes wide open for the Survey reports come February through April, if the surveys show continued strength during this time, the case for a double dip not occurring could gain credence (assuming no further outside shocks take place… once again a tall order in my view).

Lots of Conflicting reports on whether retailers did well or not.  Whichever is the case, there is clearly a lot of hope tied up in this holiday shopping season.  In my view I think that the result will have a large influence on spending budgets for companies for 2010.

Lots of Complacency out there, despite the “everyone is bearish” talk… surely a recipe for fireworks in 2010.

A dull week in the markets in general but interesting stories popping up. Looks like people are starting to wonder what will happen when the stimulus begins to wane and gov’t support is taken away. I wonder I wonder…no I don’t.

Happy Holidays

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