The cleverly titled Wall Street Journal column, “Gazprom Drills Deeper Into Europe,” explains how the Russian energy giant (Gazprom) is invading Western retail energy markets. While Russian bombers and warships conduct war exercises in the Atlantic, the real 2008 Russian Winter Offensive is along economic lines.
Unless you were sheltered from all media, you know the global stock markets plunged on Monday, January 21, reportedly on fears of recession in the U.S. MSCI's All Country World Index dropped $979 billion that day (Reuters).
It's clear that in addition to reacting to equities, the credit markets themselves have been leading the Fed by the nose directionally in recent months. The drop in short term yields on the Treasury curve just begging the Fed to fall in line has been nothing short of astounding, but we need to remember that a good portion of this drop in short term yields has been related directly to credit market distress of the last half year or so.
Economic growth decelerated sharply from the 4.91% annualized growth rate seen in the Q3 2007 to 0.64% in Q4, nearly coming in at only half of the 1.2% consensus growth rate reported by Thomson Financial.
Being hit by a bus is usually an act of fate which with hindsight can be seen as avoidable. Standing in front of a bus on a dark, rainy night and watching it barrel down the highway towards you at high speed is an act of either suicide or stupidity. It doesn't happen often yet this is precisely what is happening to the great housing bubble Down Under!!
Last week global capital markets gyrated in a fashion I’ve never seen before. Intra-day business-cycle-in-a-day movements in equity markets included disparaging collapses as well as stunning “flagpole” rallies.
While housing prices deflate, energy and food prices continue to rise. Statistics from last year show what has happened. During 2007 gasoline prices rose 29.6 percent and food was up almost 5 percent.
As I have watched many of the mainstream financial shows over the last week or so it is obvious that confusion reigns at even the highest levels in regard to the state of the financial markets. Yet, the answer is very clear and I have been warning about this for some time.
After Wall Street’s dismal start in 2008, there is a growing unease within the Republican Party that this election year could be one of scanty returns. The highly accurate “January Barometer” states that as goes the stock market in January, so goes the year.
OOPS! The secret is out. The Fed knows about and follows the Danielcode! Really? In fact YES, even if they don't know it themselves.