Watch The European Bastard Child

EuroStoxx 50 future is trading below 2780-ish as I type, and the European star-performer DAX is below 6900-ish. Click on chart to enlarge, courtesy of Commerzbank.

Power Of Hope And Dream

Excellent chartology from the US equity strategy team at Goldman Sachs today. Click on charts to enlarge, courtesy of Goldman Sachs.

While the hopes and dreams may be strong for cyclical cheer, only fools are asking where the growth comes from, if the average hourly earnings growth is so weak in the private sector, while corporate profit margins are only growing ever sweeter? Not in this report, but earlier in the week Goldman Sachs presented it clearly, see the chart below.

Strange neighbourhood does not matter in America, just because the cult of corporate profits (sweet spot of efficient frontiers dream?) has failed to lead any US recovery (see here and here) since World War II? Though, why not to spend money on such a bet?

Americans In Strange Company

Comfortable about the neighbourhood? Click on chart to enlarge, courtesy of Raiffeisen.

Strange, assuming what the markets are pricing in ...???

Inflation Scare And Lack Of Private Income Growth

Some forward looking thoughts by Chris Wood today:

Still GREED & fear will admit that there is a real risk of more of an inflation scare from a tactical standpoint. Such an inflation scare in Asia is likely to be manifested, as was also the case in 2008, in a focus on inflation driven by rising food prices and a price spike in other commodities. But the other important point to remember is that the more commodity prices rise in a correlated fashion, a process driven in the current environment of QE2 to a significant degree by financial speculation, the more the spike creates the seeds of its own destruction given the resulting demand destruction. This is because the higher commodity prices, be it petrol prices or food prices, are deflationary in terms of their impact in the West given the lack of income growth. Thus, average hourly earnings growth of all US private employees fell to 1.6% YoY in November, down from 3.6% YoY in February 2009 (see Figure 1). This is why the oil price does not have to rise very far from here to start hitting current growing optimism on the US recovery.

Click on charts to enlarge, courtesy of CLSA Asia-Pacific Markets.
 

 
Seeds of its own destruction? And then also to realize gains from asset appreciation one should be selling?

Visualizing The Vision For Year 2050

As "covered" by The Telegraph today, HSBC sees China and America leading global mega-boom. While not exactly as hyper-ventilated, but though optimistic, here are some visualizations from HSBC.

Click on charts to enlarge, courtesy of HSBC.

This, though, may be different at the time ...

From Greek To Eurozone Sovereign Crisis

The analysts at Societe Generale imag-ine three periods so far. Click on chart to enlarge, courtesy of Societe Generale.

It is not over just yet ... but interestingly, the equity volatility (see previous post) ignores the bond market stress right now. Easily explained by capitalism of silent bailouts at the expense of manipulated bond markets...

Realized Volatility For Major Equity Indices

Click on chart to enlarge, courtesy of Goldman Sachs.

Citi: America's Economic Demise Seem Premature

US equity strategist Tobias Levkovich at Citigroup Global Markets defends the America's place:

For the last several years, investors have heard and thus have been worried about the world’s superpower losing its mojo and that its place in the global economy has diminished given the financial crisis and a decade of underperformance. Yet such views may be a bit too severe when one looks at the most recent 40 years, which include both the challenging 1970s and 2000s. Indeed, the US economy has slipped only modestly from 30.4% of worldwide real GDP in 1970 to 28.4% in 2009.

Click on Citi's January 2011 Chart of the Month, courtesy of Citigroup Global Markets.

EU 15 seems to be on obvious decline ...

Capitalism Of Silent Bailouts And Return On No Capital

Look no further than Bank of America (BAC), that gets the full return on no capital again, in the country of expected surge in organic growth and nationalized credit ... more on that see the comments:

BofA Freddie Mac Putbacks Resolved for 1¢ on $

For B. of A., mortgage ‘put backs’ aren’t over

Chart du jour, BofA edition

Goldman Sees "Surge In Organic Growth" In US

This message from Jan Hatzius gets broad coverage today:

For the first time in five years, our one-year-ahead forecast for real GDP growth is well above the published consensus. The main reason is a slowdown in the pace of private sector deleveraging, which has become evident in a sharp improvement in the economic data despite the loss of growth support from fiscal policy and the inventory cycle. The enactment of the fiscal compromise has also helped.

Fed rate hikes should be "long way off", while the "surge in organic growth" does matter more than deficits ... click on charts to enlarge, courtesy of Goldman Sachs.

But here Jan Hatzius does the explaining of bullish details himself ...