Daily Reading – Wednesday, August 3, 2011

Hussman Funds: More Than Meets the Eye

Our overall impression is that the weakness we observed in the markets last week, particularly given the heavy damage to market internals, may convey more information than simply concern about the debt ceiling. There seems little doubt that investors will take a measure of relief from a favorable resolution of that situation. A failure of that advance would suggest that there is more to recent market weakness than meets the eye, and would contribute to more significant concerns about the economy itself.

The Big Picture: Sell the Bounce

Yesterday saw a short term selling climax on strong volume as market participants disgorged their wishful thinking over the progress of the US economy, political system and corporate profits.

The Big Picture: Trannie Swan Dive to Take Down Crude Oil

The Dow Transportation Index was down almost 4 percent Tuesday and if there is any silver lining in the current market turmoil is that Trannies usually lead crude down, which will drop gas prices. The chart below shows the 12.2 percent swan dive in the Dow Transports since July 7th with crude oil barely moving. We’re expecting a catch-up trade to the downside for crude oil in the next few days.

The Big Picture: Another day of disgust with fiat currencies

Another day of disgust with fiat currencies has gold rising to another record high. This time ironically is with the ‘safe haven’ currency of the Swiss Franc after the SNB unexpectedly cut rates to zero from .25% and said they will pump the Swiss money markets with a lot more cash as they fight a record high level in its currency and deal with the growing uncertain global economic outlook where “the outlook for the Swiss economy has deteriorated substantially.”

FT Alphaville: Le plan, negatifs taux d’intérêt

On Wednesday, the SNB unleashed it’s ultimate Swiss franc depreciation plan — le plan, negatifs taux d’intérêt – a.k.a the strongest signal yet that it is prepared to take interest rates negative to curb Swiss franc strength.

FT Alphaville: Eventually, French Spreads Fail (E.F.S.F.)

Or — when markets really do go straight to the senior tranche.

FT Alphaville: The US’s Greece-y new debt dynamics

Some debt doom and gloom from Independent Strategy’s Bob McKee…

… a man who, quite literally, wrote the book on sovereign debt crises.

FT Alphaville: Dagonged! Again

Take that, S&P.

A Chinese rating agency has gone were others fear to trend and downgraded US debt (again).

Macro Man: Are they Alone?

As per yesterday’s post we are trying to stand clear, but the SNB action today has been a shot of adrenalin into the arm of the patient.

Economix: Is Deflation Back?

Deflation has returned.

Dollars to doughnuts.For the first time in a year, consumer prices fell in June, according to a new report from the Commerce Department released Tuesday.

Inside-Out China: Who Is the Guilty Party?

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