Rhode Island is trying to boost its finances and fend off downgrades as it passes a broad reform of its pension system, with Gina Raimondo, Rhode Island general treasurer. The way to solve fiscal problems is to leave politics aside, she says. Here is the direct link.
Today stock markets are springing back on low volume from a streak of losses in December and year to date. Big bursts of headline-hope is a recurring feature of on-going bear markets. Today there is another wave of relief inspired by the idea of magic in the next bail-out plan in Europe. The meaningful test will come after the tinsel and holiday cheer as we move into the first quarter of 2012 and Europe continues to list in recession and financial crisis, China continues to slow and the US enters into the next and third recession since this secular bear began in 2000. The Chinese stock market has led global markets over the past few years and has recently broken below another level of downside support, now at 2215. This is down 30% from the most recent peak and a full 60% below the 2007 peak. Most importantly there is no bottoming evidence so far in sight.
With few participants, and money managers scampering for year-end window dressing, everything can happen day to day over the next couple of weeks. But so far, lumps of coal seem the most likely present left to Santa Claus believers this year.
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
Two charts worth noting today. One courtesy of John Williams via John Hussman showing the dramatic decline in the hard-to-fudge totals for Federal Withholding Tax deposits over the past six months. Whereas payroll earnings numbers have improved over the past year, they are heavily guesstimated based upon BLS assumptions which are usually revised in retrospect. Tax receipts on the other hand, are cash in hand and are typically a much more accurate reflection of reality. This chart suggest that official estimates of payroll and earnings have been overstated the past 6 months and are likely to be revised lower shortly. More evidence that the US economy is weakening faster than some official data suggests.
And the other (courtesy of Zerohedge) showing the ongoing contraction in the US M2 Money Velocity (shown in black–money moving through the economy) and the ominous spread which is now gaping beneath the current price level for the S&P 500 (purple line). This space is likely to close with a further decline in the price of stocks over the next few months.
