Morning Reading – January 24, 2011

The Atlantic: Picture of the Day: Shanghai in 1990 and 2010

Market Folly: David Tepper Interview: “I Am Cautious But I Am Optimistic”

While he was there, he also of course shared his latest economic and market views. You’ll remember that last time Tepper appeared on CNBC in September 2010, he was bullish on equities and his rationale inspired what many are calling the ‘Tepper rally.’ Since his comments then, the market has rallied more than 13%. Appaloosa’s Thoroughbred fund returned 22% in 2010 and 100% in 2009. See how his numbers stack up against others in our post on 2010 hedge fund returns.

The Big Picture: Is China an ‘Enormous Tail-Risk’?

“The Chinese delegation has said all week that there will be double-digit growth for years to come and the Brits have lapped it up. But the data doesn’t add up. We think we’ve experienced credit bubbles over the past few years, but China is the biggest. And yet the global economy is looking to China as not just a crutch but a springboard out of the recession. It’s crazy.”

-Anonymous hedge fund manager in Mayfair. England

The Big Picture: There Goes the Neighborhood Correlation!

The WSJ has an article today looking at the ending of highly correlated asset classes. It seems that Equities are no longer correlated to the US Dollar and Gold as closely as they have been over the past 2 years. If history holds, this is positive for both the economy and markets longer term. It suggests a return to normalcy in investing.

The Big Picture: Gold net longs hit lowest since July ’09

Quantifying trader exposure to gold, which has started the yr with a clear correction, the CFTC said the net spec long position fell to the lowest level since July ’09.

FT Alphaville: Correlation trading and the WTI-Brent spread

Another day, and another widening in the WTI-Brent front-month future spread — this time to what looks to be approaching record wides.

FT BeyondBRICs: Why the market is wrong about China

China’s latest growth numbers were met with dismay by investors – equity markets plummeted across Asia on Thursday – many of whom believe that Beijing is losing control of an overheating economy.

But are these concerns fully justified? A closer look at the data suggests not only that the Chinese economy may be beginning to cool down, but that measures taken by authorities to rein in inflation are starting – and will continue – to pay dividends.

Forexlive: California Treasurer Says No Way States Enter Bankruptcy

State municipalities declaring bankruptcy wouldbe dangerous and could ultimately end up being devastating Bill Lockyer,the California state treasurer, said in a statement Friday.

The Slope Of Hope: Major Commodities Top?

I’ve been mentioning for a while that we’re in an area where we could see a very major commodities top, and I’m aware that my view is at best a minority view, but I’d like to put the case anyway, and to stress that I’m seeing this from the perspective of an chartist who mainly calls reversals on the basis of trendlines, and to show how impressive some of the trendlines are that commodities have recently reached and, so far, reversed at. I can only show a few of the commodities here so I’ve chosen copper, silver, oil as three of the most influential individual commodities and CRB to represent the commodities complex as a whole.

The Slope Of Hope: Commodities At 50% Retracement

Looks like Jack and I were thinking about the same area going into the weekend.

Just one chart to consider this weekend.  The weekly chart of Commodity Index is finally near its 50% retracement level of the 2008 market crash.  This level looks like a possible resistance area.



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