Germanys Economic Collapse as Stocks Trend Lower With Team Obama
Economics / Recession 2008 - 2010 Feb 12, 2009 - 09:22 AM GMTBy: Oxbury_Research
As of this writing, the short term trend of the market is decidedly down. Whether this lasts a day or two, or extends to a week or more is not knowable.
The reason? Timothy Geithner, President Barack Hussein Obama's choice for Treasury Secretary, was inadequate to the task given him. He said nothing concrete about the government's new proposals vis-à-vis the banking system, and the markets reacted (as markets do) when faced with ever more uncertainty: they collapsed.
Did no one instruct Mr. Geithner in the ways of the government con? Did no one explain that one must instill confidence at all costs? Wall Street would have reacted better to a series of well-crafted lies than the obfuscation proffered by Geithner.
In short, we have an Obama plan in the making. A plan to make a plan. This required a televised speech? Is there no one on the illustrious financial team who knows how markets work? Where was Buffet? What happened to the dream team?
I'm starting to worry.
We have written recently in this space about the need for the dramatic to instill confidence in investors. Confidence is all that lies between current market levels and the soaring heights that will be achieved when (if?) sideline sitters and their trillions are put into motion. Just confidence. Timothy Geithner failed to deliver that confidence. It's now the big man's job. And if he fails, so do we all.
In fact, it may already be too late. Expectations were building for a long time regarding this message, and the one to come next. We needed a show and we got a dud. A show, man! A show! Something crafted along the lines of the great American musical tradition. Give us Hair ; give us Cabaret ; give us Porgy and Bess ! Wrap them all into one, and make a stage, and set the lights, and give us a show!
Meanwhile, In Germany , a Factory Sector No-Show
The chart below shows the latest numbers for German Industrial production and factory orders, and it doesn't look good.
The Europeans, you see, know very little about American showmanship. And so, while we throw everything we can at the economic enemy we face, Europeans prefer a tepid, measured response. A response, incidentally, that isn't working. ECB Chief Trichet has held off on lowering interest rates in Europe for a number of reasons, none of which make any sense at all. Data show that the economy there is clearly deteriorating. Along with the Euro. Take a look:
The Chinese, on the other hand, do seem to get it. Not only have we seen two distinct and sizeable stimulus packages out of Beijing , but they have been working from the fiscal side as well and what! hey! they threw one heck of an Olympics back in the summer, didn't they.
China 's factory orders show a glimmer of hope:
The economy there appears to be responding well to both monetary and fiscal measures – even if the long-term trend still appears lower. Time will tell.
And that leaves America . The market will now begin to digest the news from abroad and domestically with a decidedly less positive spin. Whereas before, judgment was withheld when negative economic news was revealed, those days are likely over. No longer will traders be so long-suffering.
And that leaves us with a question: Can the President put on a show?
For want of a shred of confidence, will this market be lost?
Matt McAbby
Analyst, Oxbury Research
After graduating from Harvard University in 1989, Matt worked as a Financial Advisor at Wood Gundy Private Client Investments (now CIBC World Markets). After several successful years, he moved over to the analysis side of the business and has written extensively for some of corporate Canada's largest financial institutions.
Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.
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