The Big Picture

WEF: Global Risks 2015
Nikkei 225: Breaking Out into New Secular Bull Market?
Fed Gives Congress Room to Shirk Resposibility
10 Thursday AM Reads
TDS: Better Call Foul

WEF: Global Risks 2015

Posted: 27 Feb 2015 02:00 AM PST

Nikkei 225: Breaking Out into New Secular Bull Market?

Posted: 26 Feb 2015 12:30 PM PST

Nikkei 225: Potential breakout into a secular bull market

Source: Bank of America Merrill Lynch

We continue to favor Japan's Nikkei 225. The Nikkei 225 is pushing above the 2007 high of 18,300, which has the potential to end the secular bear market for Japan that began in 1989. This is a focus chart in our 2015 Year Ahead and our February Monthly Chart Portfolio. A sustained breakout above 18,300 would confirm a secular double bottom for the Nikkei 225 off the 2003 and 2008/2009 lows and point to longer-term upside toward 28,000-30,000. Resistances come in at 20,900-21,575 and 22,750 (mid 1996 peak). Key 2015 support for the Nikkei is 16,700-16,300 with the October and April 2014 lows additional support at 14,530-13,885 (Chart 1). Nikkei 225 shows a base even when priced in USD Given the recent weakness of Japanese Yen, the Nikkei 225 has lagged and has yet not broken out above the May 2013 peak in USD terms. However, the big picture base or bottom is intact for the Nikkei regardless of whether it is priced in Japanese Yen or US Dollars. The potential is for a big breakout the Nikkei 225 in both JPY and USD (Exhibit 1). New highs for A-D line confirm the highs in the Nikkei 225 The strength in the Nikkei 225 advance-decline (A-D) line reflects strong breadth within the Nikkei 225 and supports the case for sustained breakout above 18,300 and continued upside for Japan's equity market (Exhibit 2).

Fed Gives Congress Room to Shirk Resposibility

Posted: 26 Feb 2015 08:30 AM PST

One of my favorite thought experiments is the careful-what-you-wish-for scenario. I was reminded of its utility during Federal Reserve chief Janet Yellen’s Congressional testimony the other day.

Consider the critique of the Fed by some members of Congress. As the New York Times described it, the three-hour hearing was "testy" as "Republicans on the House Financial Services Committee accused Janet L. Yellen, chairwoman of the Fed, of using her office to advance liberal policy goals."

I find it rather surprising that the Fed's mandated goals of containing inflation (check!) and reducing unemployment (check!) are deemed liberal. That is how topsy-turvy the partisan world of Washington has become during the past decade.

"You've already made monetary policy a partisan political exercise," declared Representative Scott Garrett, a New Jersey Republican, in a partisan political response to Yellen's House testimony yesterday.

The upside-down worldview that statement reflects seems to be lost on the Congressman. It’s an exercise in massive projection. No wonder Congress’s approval ratings keep breaking all sorts of record lows.

I suspect the contingent in Congress that wants to audit the Fed really hasn’t thought through its goals. As we shall see below, the Fed bashers might not be happy with the results.

Continues here

10 Thursday AM Reads

Posted: 26 Feb 2015 03:56 AM PST

I can tell you one thing: It’s good not to have a job that requires annual testimony in front of idiots. Selecting 10 bulleted morning train reads is much less stressful:

• Can stocks rise in spite of weak earnings growth? (SKrisiloff)
• What is Google's Market Share for Search? (Priceonomics) see also YouTube: 1 Billion Viewers, No Profit (WSJ)
• On Scarcity (TRB)
• New-Home Sales Are Surging. Why Aren't Existing Homes As Hot? (Real Time Economics) see also America's Fixer-Upper Housing Market (WSJ)
• The Popular (But Risky) Habit Of Cherry-Picking Economic Data For Business-Cycle Analysis (The Capital Spectator)