Jack the Pipper

We got some good feedback from our article on Friday. Below are a few reader comments and our responses. Enjoy. (And keep the comments coming.)

When I hear someone mention China in the midst of a political discussion aimed at understanding our future economic path, I shake my head.

Once the government stops increasing the quantity of dollars artificially or even slows down the rate of artificial increase in the quantity of dollars, producers supplying goods and services to the spenders of newly created unearned dollars lose a large number of their customers.

Interestingly, the news that Japan has finally recorded its first year-on-year trade deficit since 1980–ending an incredible streak of 31 years of surplus (the Miami Marlins, formerly known as the Florida Marlins, could use some of that magic)–fits into the theme of falling global liquidity.

I recently succinctly summarized my view of stocks with the Wily Coyote analogy. I got one very good succinct comment, and I am paraphrasing; I agree with you Jack but you have missed a lot of profit along the way. I can’t argue with that. Neither technically nor fundamentally did I expect stocks to break above intermediate-term highs, measured by the S&P 500 cash index at 1292 back on October 27, 2011. But we sure have.

While China is by no means the only large consumer of crude oil, the country’s growth trends have been reason enough to be bullish.

Throughout much of the last two to three years, a key component in our analysis has been the simmering social tension and the potential for one of hundreds of thousands of “mass incidents” occurring each year to escalate beyond the control of Communist Party officials.

I think we are nearing a major Wiley Coyote moment for Mr. Market. Despite recent joy over some of the economic numbers, recession in the US is still very much in play; if so, S&P 500 Index and Crude Oil, seemingly joined at the “risk on” hip joint, seem extended, to say the least.

Michael Pettis is a professor at Beijing University, and one of the best global macro analysts out there, in my opinion. His recent piece, titled, “If no trade reversal now, then when,” should be required reading for anyone who wants a clear summary of Eurozone problems without becoming mired in all the stuff of breaking news.

Quotable The Morning Star paled slowly, the Cross hung low to the sea And down the shadowy reaches the tide came swirling free. The lustrous purple blackness of the soft Australian night Waned in the grey awakening that heralded the light; Still in the dying darkness, still in the forest dim The pearly dew of …