BEWARE THE CONSENSUS VIEW!

Here's a chart from a recent update from David Rosenberg

Dont forget Bob Farrell's rule No. 9:

"When all the experts and forecasts agree -- something else is going to happen"

CURRENCY WARS – INTERVENTION & MANIPULATION

As Warren Buffett recently said, the world economy is being administered medicine by the cupful, not the spoonful; so there may be side effects, but no one's worried about them at the moment.

The Swiss National Bank intervened in the currency markets yesterday, in order to weaken the strengthening Swiss Franc that was hurting exports to Europe, (the Swiss Franc has been strengthening vs the EURO.)

The Europeans feel that the weak GBP is subsidizing and supporting the weak UK economy. The Bank of England is manipulating ( sorry make that intervening in ) the UK Bond market to keep GILT yields down, as the financial centre in London has been hard hit by the financial tsunami.

Currencies in Eastern Europe that are stuck with ‘Swiss Franc’ loans and rapidly slowing economies are looking for an EU/ECB led bailout!!!

Central Banks in Asia, are quite content to see their local currencies weaken vs. the USD, as exports to the ‘West’ are collapsing. Asian Multinational companies with USD denominated debt are going to be next in line for a handout or ‘temporary suspension’ of mark to market rules as Forex Loss adjustments threaten to destroy any profitability that’s left.

The Chinese continue to voice concerns about USD T Bonds, even as they continue their shopping spree in the industrial Commodities market. Are the Australians going to be cool with the Chinese holding controlling stakes in their mining companies!!!!

In the US, the big banks are claiming to be profitable for 2009, but given what they did in 2007 and 2008, I’m not taking their word for it! Bernanke is still unwilling to release the names of ‘Leper Banks’, so I guess we have a few more surprises in store.

Some are intervening, some are manipulating but most have no clue what they are doing!!

One thing’s for sure, they are damaging whatever credibility they have left and more and more people are starting to realise that the clowns in the hot seat are perpetually behind the curve and that they have also been consistently wrong.

The average Joe may not understand the complexities of the derivative webs on Wall Street, but he has heard the story of ‘ the boy who cried wolf’ and thus can no longer believe the empty promises. He has been lied to over and over again and can no longer believe that ‘its going to be all right’

GOLD tested levels under $900 this week and has recovered somewhat over the last couple of days. Yesterday was especially curious as Gold, Crude Oil and the Stock Markets all rallied together. In these choppy markets, day traders are as confused as long only investors!

The Equity markets rallied from extremely oversold levels, and short covering probably also contributed to part of the rally. We have not had a decent dead cat bounce thus far as any attempted bear market rallies have been repeatedly stamped out by the unending flow of bad news.

Clearly there’s more manipulating and intervening left to be done!!

CURRENCY VOLATILITY !!-----CHARTS

This is a vertical drop on the USDX chart; which seems to have accelerated after the FED rate cut announcement.

The currency charts below are 3month and 1year charts of the respective currencies, with the 1 year chart commencing mid December 2007

The charts are from the CNBC Currency webpage: http://www.cnbc.com/id/15839178/

The Japanese Yen strengthened consistently through 2008, as carry trade unwinding and the sell off across asset classes intensified.

The EURO and the Swiss Franc (CHF) have rebounded strongly this past fortnight. Is the ECB going to be next in line with aggressive rate cuts? Also now that the Fed is ready to buy anything and everything, (by doing whatever it takes to sort things out) is the ECB too going to get into the act?

The British Pound (GBP) has struggled this year, and as the UK housing market continues to deteriorate; 2009 is going to be particularly difficult for the British economy.

REAL ESTATE MELTDOWN : SPAIN

Rising unemployment, high household debt, and a sharp slowdown in the property market has crushed economic growth in Spain.
http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=e822190b-210e-4af8-8cb1-d520be63ccb2

The weightage of the Financial Services and Real Estate sector in the Madrid Stock Exchange General Index (IGBM) is 40.55% !!! http://www.bolsamadrid.es/ing/contenido.asp?menu=4&enlace=/ing/indices/igbm/igbm2002.htm
As bank lending tightens, large real estate developers could face funding problems and as the ‘sales slump’ continues, the meltdown could intensify.

Deleveraging is going to be a long and painful process.
http://www.moneyweek.com/news-and-charts/economics/why-spains-banking-sector-could-be-facing-a-death-blow-22425.aspx
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSL2990999120080429

UK REAL ESTATE

Real Estate prices in the U.K are headed down. The FTSE 350 Real Estate Index has also corrected sharply, returning to levels last seen in 2004-2005.
Tightening credit conditions and looming job cuts at London banks are contributing to negative sentiment in the housing market.

Consumer Debt levels in the UK remain high and as prominent homebuilders struggle to raise capital, property prices are declining to new lows.

http://www.cnbc.com/id/25488999

http://www.bloomberg.com/apps/news?pid=20601068&sid=aFs.PFqy8CEk&refer=home