For some outside perspective...

Many of you have known me since the days of Trade-Guild.net and before WOWS, so you probably know I DO NOT WATCH CNBC unless I'm waiting for a F_O_M_C announcement, you know that while I believe in being a lifelong student of the markets, I like to do my own homework and not let the pundits tell me what to expect. The reason is that even the most disciplined mind will tend to let outside influences, especially emotional ones, enter the picture and I don't want that. So even though I am and alway will be a faithful husband, I simply don't put myself in situations in which there's temptation. While I am a diligent student of the market, I try to keep outside influences from interfering with my analysis which I have specifically crafted to be "out of the box" and away from the main stream.

However, one in a while there are things that can be learned, they don't have to take the shape of market opinions, but general learning experiences.

I have found some of Graham Summers articles to be insightful and many of the issues that I watch and pay attention to, he addresses in a more direct way then I can. So it's with this in mind that I give you another perspective from Phoenix Capital's Graham Summers.

For certain, all eyes are on Europe where Merkel and Sarkozy continue to claim they have reached new agreements, only for it to be revealed that in point of fact they haven’t come up with anything new, nor are their proposed solutions A) viable or B) palatable to other EU members. It should be pointed out the nature of this next EU summit this week, it is obviously, unlike all of the others, a German-Franco led game and it seems they don't care who doesn't like it. I said the other day, "It seems that Germany is about to accomplish what it couldn't over two world wars, exept instead of using bullets, they are using the EU Crisis, which reminds me of one Rahm Emmanuelle and his statement that one should never "Let a good crisis go to waste".


There is a price for kicking the can time and again: every day Germany continues to play with the idea of backstopping Europe is a day it creeps closer to losing its AAA rating. Germany already sports a real Debt to GDP of 200% (when you include unfunded liabilities) and has yet to recapitalize its banks. Again, the concept of kicking the can down the road, where has all the F_E_D intervention got us? An equity market that is artificially inflated? What about unemployment, what about credit, what about falling wages, what about the growing gap between the have and have nots, what about shrinking GDP? What has the F_E_D really done with a trillion plus dollars that has bettered our economic situation. This reminds me very simply of the multi-day 3C charts that show the market in a place that is about as ugly as any I have seen in all the tops of the last century I have studied.




Moreover, the German populace will not tolerate either Eurobonds or money printing from the ECB. So all proposed ideas so far won’t fly with German voters anyway (to say nothing of other EU members who will not be too excited about a German-lead Europe).What can be said, the Germans don't want to return to the inflation of the Weimar Republic, it is seemingly more haunting to them then any event in Germany over the last century and why would the Germans want to see their standard of life dragged down in trying to maintain governments that they largely don't like? In the same breath, why would the US tax payer want to send their hard earned money to Europe? 

In other words: so far no one has any REAL solutions. So unless someone is about to unveil a REAL new proposal, stocks are misguided in their enthusiasm here. 

Regardless, this is a very dangerous market environment and one that needs to be traded with extreme caution. Only those in the know can guess the Fed’s day to day moves. We’re not in that crowd.

However, big picture, nearly every indicator is pointing towards trouble ahead. The issue is whether we’re going to see another intervention before the stuff hits the fan. But things have reached a critical point in Europe. And we’re now getting some staggeringly bad data out of China as well. Barring more interventions, the trend will likely be down.