Market Montage

No surprise that we are seeing a big change in attitudes towards housing ownership among the younger generation.  There are a lot of things stacked against them – global wage arbitrage has pushed down wages for many, new college grads who enter the job market tend to have lower wages then those who do not [May 9, 2009: The Curse of the Class of 2009 - Lower Wages for Up to a Decade], and they are graduating with far more debt then their parents [Oct 19, 2011: Student Loan Debt Continues to Hit New Records].  Not to mention many see what happened to their parents in the "can't lose" housing market during the past half decade.  That said, it appears renting is going far beyond just housing (furniture, clothing) as lower wages conspire with the American need/desire to consume. …

While hard to jump immediately on the bandwagon with so many stocks suddenly overbought, the rotation similar to what was seen in January 2012 appears to be here.   All the trades working the past few months are being sold off and money is flowing furiously into cyclical areas of the market.  Some of the moves have been breathtaking – it is simply amazing how central bankers own the psychology of this market.   Random example:

…

At this point it seems the S&P 500 can just be renamed the Euro.  Looking at the intraday charts yesterday it is remarkable the symmetry of patterns.  That last 20 minute selloff in the markets was essentially a 1:1 parallel to a selloff in the Euro.  There is really no other need for analysis.   …

Last week's high profile trading debacle has put the focus on high speed algo programs once more.  Like all the other times there is a dislocation of such sort, after a few days, all the fuss will die away and business as usual (70% of all trades now computerized) will continue.  There appears to be no end to it as these folks create so much volume, and exchanges make money off that.  Frankly if there was no real push back after the frightening flash crash of 2010, I don't know what will ever cause real reform.  Whatever the case there is a nice write up in Wired Magazine that interested readers may want to go read for more on the subject and what is coming down the pike – both real and theoretical.   …