Saturday, August 18, 2012

China heading to a soft landing according to the IMF

This, so far, is a interesting read. It is a July 2012 staff report from the IMF detailing their view on the Chinese economy and the outlook for continued growth. Some quick takeaways....

- The economy is heading for a soft landing.
- Economic growth has been focused primarily on capital investment funded via debt.
- This has led to a situation of high excess capacity or said the other way, low capacity utilization.
- However, the Chinese authority should continue to ficus on shifting their focus on achieving more domestic spending. (Interesting considering a previous story I posted stating that is far more likely that additional Chinese stimulus will be focused on the Chinese consumer)
- Chinese authorities have ample fiscal levers to pull to engineer a soft landing in the economy.

What is the holdup withi QE3 via The Big Picture

Insight from Jim Bianco (via The Big Picture Blog) providing thoughts on where is QE3

My thoughts...... with money slow accelerating and the market rising (and yes, the total amount of loans rising) puts the Fed on hold.

More municipal bankruptcies

A report stating there are more Californian municipal defaults coming. In my opinion and without looking at the data, I would guess it is not just focused in California.

Friday, August 17, 2012

All that glitters 8/17/12

I will be up front here and tell you that I am unsure of what to do at this juncture. I continue to hold a position in gold and precious metal miner stocks, representing past gains, but I am on the sidelines wondering if I want to increase my exposure again.
Currently, my precious metal timing model remains in a weaker buy range while the MACD and RSI's are rising for various gold and precious metal miner stock indexes and ETF's. That said, these same said indexes are overbought on the stochastics and the A/D line is trending down, albeit still positive. I also think there is limited chance of a QE3 or QE to infinity program being enacting this coming September.
The above graph is one of models I use gauging the odds of a monetary stimulus action by the Fed. This model takes into account the annualized 13-week change in money supply and the S&P 500. The measure was negative earlier this year (when talk of an expanded QE program began anew and when the Fed expanded the operation twist program), but has rebounded. In my mind, this reduces the odds that another round of monetary easing is in the offing. I guess we will find out come early September. In any event, I am worried that the lack of any monetary stimulus program will take any budding wind out of the gold miner stock sails. As of this writing, I am leaning towards being conservative and give up any potential gains for either a strong buy signal or a sign of significant strength in the indexes.