The collision of global markets and social mood

Monday, April 29, 2013

The Hook

The quickest way to be perceived as a nutter in today's world is to mention deflation. But since I mention a lot of nutty things from time to time (full moons, doves that look me in the eye, hawks that fly over me, etc. etc.) I can take it.

The morning headlines provide yet another example why deflation is something that will likely fool a majority of people. Bloomberg cheerfully notes that Ebbing Inflation Means More Easy Money as if the headline alone will cause investors to keep hitting the buy button. But dig a little deeper (that means actually reading the story) and it's all about deflation. Yet the premise remains that, as a former Federal Reserve economist notes: “For central banks, this increases the pressure to maintain super-easy monetary policy.”

This is the hook that keeps the unwary on the line.

Elsewhere Bloomberg reports: Nokia Betting on $20 Handset as It Loses Ground on IPhone. ". . . in the market for smartphones costing $500 or more, it’s counting on a bare-bones handset that sells for just $20 to give it an edge." That's deflationary strategy by Nokia brought on by deflationary behavior by consumers.

One headline leads us off into the promise of never-ending rising assets prices while another directly contradicts it. Perhaps this is another example of bifurcated social mood.

How do futures looks this morning? They're up. 1577.90 was indeed broken last Friday, but in such a way as to make me want to buy any deeper pullback. 1571 is the 38% buy retracement, and ideally, it stays above 1563.03, the mini flash crash level. But there is a large range over the last month, and lower levels are possible. I remain a buyer of calls against my short position (long SPXU).

Facebook deserted by millions of users in biggest markets. With stats like the ones the Guardian is reporting, the Facebook may never get above the 33.45 level I've been patiently awaiting. 4.5% fewer UK visitors last month and 9 million fewer in the U.S. Yikes.

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