DO ANYTHING YOU WANT BUT

You can drive my brand new car, drink my liquor from an old fruit jar, say whatever you want to say. Knock me down and step on my face, slander my name all over the place. Do anything you want. But please, please don't take the economic heroin away.

That's the message from this pundit and it should not surprise anyone. Easy money and if you're a big bank free money are addicting. Who doesn't like them? 

Half the globe tried a little mostly smoke-and-mirrors economic retrenchment for about a season but when the pain barometer started buzzing, as it will, the crying time started again. 

http://blogs.marketwatch.com/capitolreport/2013/07/10/fed-about-to-shoot-the-economy-in-the-foot-posen/

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EARNINGS SEASON

What happens when anemic earnings meet over-priced assets?

The answer remains to be seen. But a decent guesstimate: something not good.

According to one recent report, the trailing 12-month PE ratio for the S&P 500 jumped from over 15 to almost 18.5 in the last year. One reason: earnings growth has lagged price gains. Should earnings growth, as some pundits expect, increase, the PE ratio could fall toward the 15 level again.

But that's, some say, a big should. The point  here is valuations look expensive. Then there's the possibility the Bernanke Dog and Pony Easy-Money Show will hit the egress trail sooner rather than later. 

There's only so many fancy rabbits in any economic hat, notwithstanding the spate of stock buybacks and cost cuttings corporate USA has pulled off in recent years. These are old not new ploys. All the more reason perhaps to expect the unexpected.  

You might want to start your list today.

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CHINESE DEMAND FOR GOLD

Interesting chart. As pointed out previously demand for the yellow metal remains high in Asia.
http://moneymorning.com/2013/07/10/if-you-own-gold-you-must-see-this-chart/#.Ud2Zisu9KSM

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UPDATE ON EM

Recently we pointed out that investors were pulling capital out of emerging markets, those once hot places for them to make some money and pick up a little yield.

One explanation given is the threat of the Fed's turning down the easy-money spigot. Now adding to the problems these EM face is the recent report from the International Monetary Fund predicting slower global growth prospects, particularly for China and Russia. 

Many of these countries in 2012 rolled out higher taxes on foreign investments and lowered interest rates to decrease the torrent of hot money flowing there as a result of Big Ben's easy-come-easy-spread policies.

It just shows that what may happen in the US doesn't stay there.

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A DAY LATE

Most have heard the old saw a day late and a dollar short.

Well, when it comes to the Federal Reserve it's much worse than a day late and a lonely dollar short. The Fed is always behind the curve, a fact Sir Alan Greenspan, the former clarinet player, proved repeatedly. 

All the Bernanke easy money has done little to cut unemployment. The shrinking work force should get most of the credit for any drop in the unemployment numbers. If you check U 6, the comprehensive yard stick of unemployment, it's close to 14%.

Bubbles now forming in real estate, bond and equity prices threaten this artificial, phony, pumped-up recovery. And Bernanke has the look and demeanor of a guy getting ready to kick the can to the next poor bureaucratic slob who will sit on the chairman's throne.

In the case of this monetary charade, like one of those old grade B flicks, the bad stuff hits the fan after the last villain has hit the road. 
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WHAT SOME DISCARD

What some discard others presumably want.  Here's an interesting read. Know that the author, Frank Holmes, is a longtime gold fund manager.

http://www.futuresmag.com/2013/07/09/the-asian-giant-stampeding-into-gold?eNL=51dc3163fc746ffa44000213&ref=hp&utm_source=DailyMarketFocus&utm_medium=eNL&utm_campaign=FUT_eNL&_LID=287557&t=commodities&page=2

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THE SECOND HALF

So let's take a look at the so-called second half. 

There are some expected drags on the market like the EU mess, China slowdown concerns and the US where equities for the most part were on fire for much of the first half.

That first-half US performance could cool off more than many anticipate. Many see the possible tapering of QE as a threat to a stock market that's been artificially pumped higher by easy money. 

There is also trouble in several emerging markets of late that some believe are tied to the Federal Reserve when it begins cutting back on QE. Those markets until recently provided an economic lift to many investors, especially those searching for yield.

On the other hand, cutting QE sends a signal, right or wrong, the world's largest economy is well enough to start standing on its own. That translates into more demand and more demand translates into increased use of energy and other things like basic materials that have lagged during the SM's bull run.

So what's the point. In short, look to the laggards that have been the market orphans to date. As we've written before, the bargains, if any exist, aren't usually found where everyone's looking.
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GLOBAL BUBBLE BUSTERS

Central bankers everywhere else are watching these experiments closely, among them Ben Bernanke, chairman of the U.S. Federal Reserve. He and his counterparts around the world, seared by the worst financial crisis in 75 years, are searching for ways to halt borrowing binges before they morph into bubbles, and to push lenders to shore up their defenses before the next crisis arrives.

The above is a quote from today's WSJ. Economists, God love 'em, even have a new term for these acts of interference: "macroprudential tools."
http://online.wsj.com/article/SB10001424127887324069104578527683704380960.html?mod=ITP_pageone_0
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ONE PERSON'S SUPPER

One man's supper is another man's slop.

Contrary to that old saying about what's good for the gander is good for the goose doesn't seem to hold up well in today's economic global scene.

http://www.bloomberg.com/news/2013-07-08/what-s-good-for-u-s-china-japan-leaves-emerging-markets-losers.html
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                                                         IF THEY DON'T
If  they don't get you one way, they will find another. And that's what the rising trend in something called "forced arbitrage" is all about.

http://www.moneytalksnews.com/2013/07/08/forced-arbitration-when-your-rights-get-the-runaround/?utm_source=newsletter&utm_campaign=email-2013-07-08&utm_medium=email
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MEXICAN MARKET MAY OFFER KEY

Here's an interesting read one could with a little imagination label correlation.

http://www.minyanville.com/sectors/global-markets/articles/Mexico-Markets-Face-Impending-Risk-mexico/7/8/2013/id/50668?camp=newsletter&medium=email&from=recapemail
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