European Disunion, Part II: Anti-Austerity Strikes Back

The Euro Zone experiment is under fire. The weaknesses of the currency union were exposed in the wake of the financial crisis. And although policy makers have had the years since to devise practical and effective solutions to the many flaws plaguing the Euro Zone, they dithered under the delusion that the measured steps and patchwork solutions to the crises that presented themselves along the way were sufficient to tie the Union over until a sustainable growth trajectory finally returned. But such growth has yet to materialize, and debt levels have now ballooned to the point where the return of such robust growth is becoming unlikely. Perhaps more importantly, many Euro Zone participants that have fared worst in the aftermath of the crisis are increasingly agitating for either relief or change. The potential for social unrest is growing and the anti-austerity movement is on the rise across the region. And in the wake of the Greece debacle, the latest template for how to strike against the European creditors has now been formed.

Please click on the link to read more of my article on Seeking Alpha.

Stocks: Concerns About The Transports Are Overblown

Investors that rely upon the Dow theory have been signaling the stock market alarm over the last several months. For a while, the Dow Jones Industrial Average (NYSEARCA:DIA) has continued to set new all-time highs as recently as May, the Dow Jones Transportation Average has fallen into an accelerating decline since last November. According to the Dow theory, such a divergence is an early warning signal that a broader market reversal is likely to soon follow. For those who have followed my articles on Seeking Alpha over time, I have no shortage of reasons why investors should be concerned about the longer-term stock market outlook. But the recent performance of the Dow transports is not among them. While conditions among the transports could certainly deteriorate further from here, such concerns remain overblown to this point.

Please click on the link to read more of my article on Seeking Alpha.

 

We Are NOT Living In A Material World

In a post-crisis world awash with monetary stimulus, the performance of the actual global economy has been an afterthought. In fact, signs of a weakening economy have proven beneficial to stocks, because it raises investor hopes for additional stimulus. But at some point, the stock market will have to go out on its own without the crutch of monetary liquidity injections, and will instead, have to rely on the support of actual economic fundamentals. In fact, such a baton is currently in the process of being passed in the United States, as the Federal Reserve remains intent on raising interest rates. With this in mind, it is worthwhile to explore how the global economic outlook is really shaping up. And if the materials sector is any meaningful guide, the outlook may not be so good.

Please click on the link to read more of my article on Seeking Alpha.

Oil: After The Fire, The Fire Still Burns

The energy market is under heavy fire. For while nearly all eyes were fixated on the dual crises unfolding in Greece and China in recent weeks, the oil market stalled with prices rolling back over to the downside. This has taken an even greater toll on an already beleaguered energy sector. And perhaps more importantly, it is also sending many of the highest risk credits in the energy sector careening toward potential insolvency. Whether these negative forces eventually overflow into the broader stock market remains to be seen.

Please click on the link to read more of my article on Seeking Alpha.

Eternal Sunshine Of The Spotless Investor Mind

It is almost as if stock investor minds are completely erased. Nearly eight years ago today, global capital markets nearly imploded due to the collapse of the U.S. housing bubble that sparked a debt contagion that spread like wildfire around the world. But thanks to some repeated doses of quantitative easing by global central banks over the years since, it is as if the financial crisis has been completely erased from the market’s memory. For just this past week in the early morning hours on Monday, we nearly saw the beginning of the break up of the Euro Zone over fallout effects from the debt crisis from eight years ago that are not only still lingering today but also festering. But from the moment a deal was reached in Europe with literally no time to spare, never mind the recent events in the China stock market as well, investor minds were seeming erased once again. Ah yes, all is well and it is time once again for the stock market to rally just as it has so many times before from the brink over the past eight years. Despite what was an impressive +2.4% rally on the S&P 500 Index in the past week, some signals suggest that investors may finally be starting to wake up to some unsettling realities.

Please click on the link to read more of my article on Seeking Alpha.

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