Friday, July 31, 2009

Oil "Well Overpriced" and Will Keep Falling; Gasoline to Follow

fter rallying nearly 50% this year, crude prices hit a major speed bump this week as the dollar has firmed up and inventories have risen.

Oil prices were "well overpriced" in the $70s and will continue to weaken in the weeks and months ahead, says James Cordier, President of Liberty Trading Group and co-author of The Complete Guide to Option Selling.

Rather than increased demand, the recent rally was based mainly on speculative demand driven by government stimulus packages, Cordier says. Most notably, a flood of liquidity in China found its way into commodities and China's economy now "looks like a bubble," he says, joining a growing chorus. (video)

U.S. States Face Ongoing Deficits

U.S. states have identified more than $51 billion in revenue deficits for the next fiscal year less than a month after wrapping up their annual budgets, the Nelson A. Rockefeller Institute of Government reported.

Among the worst projections for fiscal 2011 are California at $15 billion, New Jersey at $6 billion and Florida at $5 billion. In the current fiscal year, U.S. states totaled $160 billion in budget gaps, the report said.

“States push large parts of fiscal problems into later years,” Donald J. Boyd, senior fellow at the institute, told a Governmental Research Association convention in Washington, D.C., July 27. “It can take three or four years before finances recover, even if economic recovery comes sooner.” (more)

Financial Sense Newshour

click here for audio links

Marc Faber the recent rally is the result of excess liquidity The worst is still to come

The Road to Financial Serfdom

On Thursday with the S&P 500 inching closer to the 1,000 mark it is near impossible to silence the “recession is over” media hype. Of course, this is the same media that missed the biggest economic collapse since the Great Depression but here they are predicting the end of the recession. The problem of course is they do not define the end of the recession clearly. In their mind’s eye, the end of the recession means Wall Street profits and largesse pouring into the banking coffers. What about jobs? What about $14 trillion in lost household net worth? The U.S. Treasury and Federal Reserve are suddenly neo-Keynesians but only when it comes to saving themselves which is convenient. If you think of the stimulus plan for example, it was passed in February and had a price tag of $789 billion. This may seem gigantic but compared to the $13.5 trillion banking and Wall Street bail out it is relatively small. (more)

Faber: China Really Growing At 2 Percent

China's economy is growing at 2 percent, not the 7.8 percent its government claims, says economist Marc Faber, publisher of the Gloom, Boom and Doom report.

“The Chinese government is one of the few governments in the world that knows its GDP numbers three years in advance,” Faber told CNBC.

“I’d be a bit careful about China.”

A growing number of investors turned bullish on China after its markets began to rise last March, Faber notes, adding that it’s possible Chinese markets will continue to rise for a while. (more)

Dead banks walking

In recent weeks, the financial world has been dazzled by strikingly high earnings reported by our leading investment banks, or at least what we used to call investment banks. The numbers are reminiscent of another era, the one that came to a crashing end last September.

The euphoria is keyed to the record US$3.44 billion second-quarter profit announced by that branch office of the Treasury Department also known as Goldman Sachs. Wells Fargo, JP Morgan Chase, and State Street also chipped in with strong numbers. (more)

PBS: Bernanke On The Record


6 part video series

click here to watch

Thursday, July 30, 2009

Peter Grandich is the guest


click to listen to the audio

Seven Ways to Score Big When Stores Go Bankrupt

"Thank you and farewell," read the somber subject line in my email. The sender was Smith & Hawken, purveyor of pricey garden tools.

I guess I lost that game of chicken. I'd been waiting for a mid-summer sale to replace my cheesy plastic garden chairs with some of that fancy teak "outdoor furniture" they sell… or used to sell.

Smith & Hawken, a subsidiary of Scotts Miracle-Gro (SMG), just bit the dust -- so to speak. (more)

McAlvaney Weekly Commentary: An Interview with G. Edward Griffin: Author of The Creature from Jekyll Island

icon for podpress < href="http://www.mcalvany.com/podcast/#" onclick="javascript: podPressShowHidePlayer('1','http://www.mcalvany.com/podcast/wp-content/uploads/ica2009-0729.mp3',300,30,'true'); return false;">Hide Player | Play in Popup | Download Mp3

Weak U.S. 5-year debt auction raises worries

The U.S. Treasury sold $39 billion in five-year debt on Wednesday in an auction that drew poor demand, raising worries over the cost of financing the government's burgeoning budget deficit.

Demand overall was below average, measured by the bid-to-cover ratio of 1.92, the weakest in almost a year.

In a further sign of weakness, yields at the auction were well above expectations, known as a "tail" by market participants. (more)

A One World Currency Is Inevitable

I know it sounds impossible, but the world is being forced to a point of having to implement a one world currency. Or at least a one world currency among the major economies - maybe Tunisia might escape.

Started with the USD

Why do I say that? Well, if you follow the evolution of the USD since roughly the end of WW2, it gradually became the world reserve currency, and that was intended. It started with the Breton woods agreement, and also during WW2 when the European allies currencies were collapsing as Hitler was conquering Europe. (more)

ARIZONA:Desperate state may sell Capitol buildings, others

Call it a sign of desperate times: Legislators are considering selling the House and Senate buildings where they've conducted state business for more than 50 years.

Dozens of other state properties also may be sold as the state government faces its worst financial crisis in a generation, if not ever. The plan isn't to liquidate state assets, though.

Instead, officials hope to sell the properties and then lease them back over several years before assuming ownership again. The complex financial transaction would allow government services to continue without interruption while giving the state a fast infusion of as much as $735 million, according to Capitol projections. (more)

Foreign Investment in the U.S. - Going Down, Down, Down


Here at Casey Research, we've been watching the actions of foreign holders of U.S. dollars as closely as a Las Vegas pit boss watches a card player on a $1 million winning streak.

Many of those in the deflation camp largely, or entirely, ignore the potential role these foreign holders may play in the drama now unfolding. But in fact, foreigners have, over the last decade, been by far the single most important source of buying for U.S. Treasuries.

Given the Treasury's need to flog on the order of $3 trillion worth of its unbacked paper this year just to keep the government's doors open - and that is a four- or fivefold increase over 2008 - the foreign buyers not only have to show up for the Treasury auctions, they have to show up in droves. (more)

A Fed Inflation Hawk Speaks

“I think we will probably have to begin raising rates sometime in the not-too-distant future,” Federal Reserve Bank of Philadelphia President Charles Plosser told Dow Jones Newswires and the Wall Street Journal in an interview.

A renowned inflation hawk at the Federal Reserve is at it again, trying to pull more dovish Fed officials under his wingspan of influence to get them to do more to battle incipient inflation.

And the timing of Plosser’s comment is interesting, notes Charles Brady, senior editor of the Fox Business Network.

The Fed is selling a record amount of weekly debt, $115 billion now coming up, a sum that tops the previous weekly record of $104 billion set just last month. The bond glut pushes yields higher because so many bonds means a lot of competition, which means the Treasury has to offer enticing, come-hither yields to lure investors in. (more)

BNN: TOP PICKS John Stephenson


click here to watch

Dow Sends Buy Signal That’s Worked Since 1921: Chart of the Day

The Dow Jones Industrial Average is sending a buy signal that has foreshadowed gains of 18 percent during the past nine decades.

The 30-stock gauge climbed to more than 10 percent above its mean level from the previous 200 days, rebounding from 34 percent below the so-called 200-day moving average in November, according to data compiled by Bloomberg. Eighteen of the last 21 times the Dow rallied from at least 10 percent below the 200-day level to 10 percent above, it posted gains during the next 12 months, Bloomberg data since 1921 show.

The CHART OF THE DAY tracks the difference between the Dow’s last price and its 200-day average since 1989. The lower panel displays the measure’s price, along with the buy signals it sent near the start of rallies in 1991, 1999 and 2003. (more)

Wednesday, July 29, 2009

Commodities sell off amid 'perfect storm'

A perfect storm made up of bad economic data, a sell-off in Shanghai and hearings on curbing speculation in energy trading sent most commodities sharply lower and also pressured stocks on Wall Street Wednesday.

The Reuters/Jefferies CRB Index /quotes/comstock/11j!i1:cr\y (CRB 243.55, -6.66, -2.66%) , a benchmark that gauges the prices of major commodities, fell 2.7% to 243.55 points.

Overnight, stocks in Shanghai tumbled 5% on some disappointing Chinese corporate profits and fears of possible central-bank moves to tighten lending. See full story.

"The big sell-off there put us in a bearish mood," said Phil Flynn, senior energy-market analyst at Alaron Trading. "We've been living on China time in the oil market and were still celebrating their economic rebound." (more)

Stocks: Detached from Reality

The stock market has abandoned rationality. Sure, it usually rallies ahead of evidence of measurable progress in the economy, but the rally from March to May had already priced in a strong ‘V-shaped’ recovery, which will, obviously, not happen. At best, we’re in for years of stagnation and lower living standards as society inflates away, pays down or writes off bad debts.

The recent rally, starting on July 13, has raised the bar for corporate earnings over the next few quarters even higher, setting market participants up for another round of disappointment.

In the financial, REIT and consumer discretionary sectors, the market completely detached from reality. Part of this can be explained by the growth of program trading based on backward-looking statistical inputs, part by the triumph of technical analysis over critical analysis, and part by the herd behavior of fund managers. (more)

What’s Really Happening in Housing


Here’s a headline we can’t resist: “Home Prices Rose in May,” trumpets The New York Times this morning. We understand… they’ve got papers to sell and a hell of a mortgage. But in reality, the U.S. housing market is only decaying at a slower pace. Today’s S&P/Case-Shiller home price index reading is par for the course for the last quarter… home prices and sales are still falling, just no longer accelerating into the abyss.
(more)

The collapse in world trade has stopped, but there is no sign of a recovery

WORLD trade has been one of the worst casualties of the global economic slowdown and the source of some particularly startling figures. Towards the end of last year trade all but collapsed. According to the World Bank, the value of exports from a sample of 65 countries accounting for 97% of world trade rose by 20.2% in September, compared with a year earlier. But by November exports were worth 17.3% less than a year earlier, before slumping by a whopping 32.6% in the year to January. In March the managers of South Korea’s Busan port, long one of the world’s busiest, said that it had run out of space to store nearly 32,000 empty containers. The Baltic Dry Index, which measures demand for the ships that transport bulk goods such as iron ore or coal, fell from 11,793 at the end of May last year to a pitiful 663 in early December. (more)

Insiders are selling

Corporate insiders have recently been selling their companies' shares at a greater pace than at any time since the top of the bull market in the fall of 2007.

Does that mean you should immediately start lightening your equity exposure?

It depends on whom you ask.

But, first, the data.

Corporate insiders are a company's officers, directors and largest shareholders. They are required to report to the SEC whenever they buy or sell shares of their companies, and various research firms collect and analyze those transactions. (more)

U.S. Economy: Home Prices Rise, Confidence Declines


A gauge of U.S. house prices posted its first monthly gain in three years, providing some solace to consumers shaken by rising joblessness.

The S&P/Case-Shiller home-price index rose 0.5 percent in May from the prior month, the first gain since July 2006 and biggest since May of that year, the group said today in New York. A Conference Board report showed consumer confidence this month fell more than forecast.

(more)

Platinum to Rise 16% as Car-Sales ‘Whammy’ Ends

The price of platinum, used mainly in jewelry and auto pollution-control devices, may rise 16 percent to $1,400 an ounce as demand for new cars gains in the U.S. and China, according to Citigroup Inc.

The CHART OF THE DAY shows platinum lagged behind the recovery in auto sales in China, where car demand surged after purchase incentives were part of the government’s $586 billion economic stimulus program. Vehicle sales on the mainland rose 48 percent in June from a year earlier. The chart also shows U.S. vehicle demand, which increased sequentially three of the past five months, according to data compiled by Bloomberg. (more)

Copper Peaking as Inventories Signal China’s Demand Slowing

Copper’s 80 percent rally this year may soon end on signs that China has stockpiled more than it can use in new homes, cars and appliances.

Inventories monitored by the London Metal Exchange posted their first back-to-back weekly gains since February, increasing 8.6 percent from an eight-month low. Sumitomo Metal Mining Co., Japan’s second-largest smelter, said Chinese imports are slowing after record purchases boosted domestic supplies, and U.S. copper-scrap exporters report shipments to Asia are dropping.

(more)

Tuesday, July 28, 2009

Hourly Action in Gold


The US Dollar managed to bounce precisely near the critical 78.40 support level on the weekly price chart just in time for the Chinese delegation’s arrival in Washington. Even an avowed cynic such as myself has to marvel at the temerity of the US monetary authorities intervention foray this morning. The fact that the pop higher in the Dollar came at a major chart support level makes the stunt even more obvious. Were the Dollar to have broken below 78.40 and taken out this swing low made early last month, there was a very real danger of a sharp meltdown all the way to 76 before any buyers would have be anticipated to show up. That would have made the US lose face in front of China and strengthened the hand of the Chinese as they voiced their dismay at US profligacy and runamok spending. (more)

977,000 Mortgages in California are Toxic Waste: The Misleading Headline Numbers and New Home Sales Increase because of a $13,000 Price cut


With any more spinning we would be in a financial carousel. New home sales data was released on Monday and showed a “whopping” increase in sales. This is the primary headline on all mainstream reports. Little is mentioned that the median price of a new home fell to $206,200 in June from $219,000 in May (small caveat). A drop of over $13,000 in one month apparently is not important enough to discuss. (more)

The Commercial Real Estate Bust: Gearing up for a $3 Trillion Headache

The commercial real estate bust is going to be legendary. We are talking trillions of dollars. The attention of Americans is being pulled away by massive market volatility that has seen the S&P 500 shoot up 44 percent in four months. Yet the U.S. Treasury and Federal Reserve have kept their eye on this market and have started examining a “Plan C” focused on bailing out this industry even before major problems occur. The new preemptive doctrine of bailouts. That is, they want to saddle the taxpayer with further burdens on some of the most speculative bets known to humankind. (more)

Animal Farm 2009

“All animals are equal, but some animals are more equal than others.”

George Orwell – Animal Farm

The United States has gradually degenerated from a Republic based on individual liberties to a socialized oligarchy run by an exclusive few. The country was founded upon the platform of individual rights. We declared our independence from Great Britain because of excessive regulation and taxation. Americans fought for the right to live their lives free from the subjugation of an overbearing governmental body. The Founding Fathers declared our independence with these immortal words:

We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. (more)

Peter Schiff explains why he was right about free-markets

Introduction: Peter Schiff is one of the few non-biased investment advisors to have correctly called the current bear market before it began and to have positioned his clients accordingly. He has been quoted in many of the nation's leading newspapers, and appears regularly on CNBC, CNN, Fox News, Fox Business Network, and Bloomberg. His best-selling book, "Crash Proof: How to Profit from the Coming Economic Collapse" was published by Wiley & Sons in February of 2007. His second book, "The Little Book of Bull Moves in Bear Markets: How to Keep your Portfolio Up When the Market is Down" was published by Wiley & Sons in October of 2008. An expert on money, economic theory, and international investing, Peter is a highly recommended broker by many leading financial newsletters and investment advisory services. He is also a contributing commentator for Newsweek International and served as an economic advisor to the 2008 Ron Paul presidential campaign. (more)

CNBC nonsense Positives of a Down Dollar












Gold, Silver, Oil & Nat Gas Technical Trading Setups


Commodities are trying to hold their ground and could go either way quickly. There is a lot of chatter going on about gold and silver. I am hearing extreme theories from everyone I talk with. Generally when I see the market get jumpy we tend to see volatility increase which translates into sharp rallies or sell offs. (more)

Real Treasury Yields Highest In History

The highest inflation-adjusted yields in 15 years are helping provide the Treasury with record demand at auctions as the U.S. prepares to sell $115 billion of notes this week.

Treasuries are the cheapest relative to inflation since 1994 after consumer prices fell 1.4 percent in June from a year earlier. The real yield, or the difference between rates on government securities and inflation, for 10-year notes was 5.10 percent today, compared with an average of 2.74 percent over the past 20 years. (more)

Another Credit Crisis

The next shoe to drop… credit cards?

By the time this is all over, another 14% of the $1.9 trillion U.S. consumer debt market will default, the IMF predicted over the weekend. That’s another $266 billion in coming losses for American mega banks. The IMF (not known for their worst-case scenario forecasts) expects $172 billion in similarly soured loans in Europe.

Of those bad consumer loans, credit card defaults are rising fast. Credit card charge-offs, loans that banks don’t expect to ever be repaid, have risen to a record 10.7%. Moody’s, the steward of this particular data, says charge-offs will continue to rise until unemployment begins to abate. By their estimate, joblessness will peak at 10% next year and credit card charge-offs will top 13%… both rosy projections. (more)

Don’t Trust Economists Over 30

The new issue of The Economist magazine has a cover showing a book titled “Modern Economic Theory” melting into a puddle of what looks like chocolate-coated vanilla ice cream, and with the caption “Where it went wrong – and how the crisis is changing it,” which refers to how nobody in their right mind trusts any egghead “economists” anymore, and even Paul Krugman, one of the worst of the worst of them, now admits that the last 30 years of macroeconomics as practiced by these econometric, computer-head lunatic savants was “spectacularly useless at best, and positively harmful at worst” which is still sugar-coating it, as far as I am concerned, and it has been disastrously, cataclysmically harmful in a huge inflection-point kind of way and the future will be dramatically different, as in Much, Much Worse (MMW). (more)

Monday, July 27, 2009

BNN : Interview re: IOUSA The Movie


Click here to watch

Technically Precious With Merv

FREE weekly precious metals newsletter click here

"The End of Wall Street"

Part 1 - In the first of 3-part series, Wall Street Journal explains how the housing bubble inflated & burst, & why easy money led to the collapse..

Part 2 - What was going through the minds of CEOs, corporate boards, fund managers & mortgage lenders as they created derivatives that Warren Buffett called “financial weapons of mass destruction"?

Ultimate Depression Survival

... interview with author Martin Weiss... discusses the nature of the unfolding depression, how it came about & where it is going, how to prepare & survive - tips on getting rid of debt ... thinks the real bottom in the depression is still ahead... thinks govt bailouts are bad, inhibiting recovery... short-term recommends certain types of bonds & safe cash investments, inverse ETFs, precious metals... longer-term sees opportunities in foreign investments... inflation vs. deflation, sees benefits in deflation over inflation. Click to listen to audio Windows OR MP3

Recession End Near????

Stock Trading Slowdown Is Steepest in Two Decades

Stock trading in the U.S. hasn’t slowed this much midyear in at least two decades, causing some investors to worry that the steepest Standard & Poor’s 500 Index rally since the 1930s will fizzle.

The CHART OF THE DAY shows 84 percent as many shares changed hands daily on the New York Stock Exchange between May 1 and July 20, compared with the average from Jan. 1 to April 30. That’s the steepest slowdown since at least 1989, according to data compiled by Harrison, New York-based research firm Bespoke Investment Group LLC.

Trading on the NYSE was the slowest of the year on June 12 as the S&P 500 climbed to a seven-month high. The benchmark index for U.S. stocks then dropped 7.1 percent through July 10, when investor optimism on the equity market fell to the lowest level since March, according to data compiled by Bloomberg. The S&P 500 is up 44 percent since March 9. (more)

China May Press Geithner on Dollar, Economy in Washington Talks

The dollar may be the focus of Chinese-U.S. talks starting in Washington today as China presses the Obama administration on how it will tame the fiscal deficit and protect the U.S. currency’s value, Morgan Stanley said.

Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton will host two days of meetings spanning topics from the economic crisis to North Korea. The Strategic and Economic Dialogue is the Obama administration’s first with China. (more)

Bernanke: This may be worse than Great Depression

Federal Reserve Board Chairman Ben Bernanke discussed the economy with average Americans on Sunday, saying the current financial crisis could be even more virulent than the Great Depression.

"A lot of things happened, a lot came together, [and] created probably the worst financial crisis, certainly since the Great Depression and possibly even including the Great Depression," Bernanke said at the start of a town-hall meeting in Kansas City.

Bernanke defended the Fed's extraordinary moves, which have included slashing interest rates to zero, pumping billions of dollars to keep credit markets open, and buying Treasurys and mortgage debt to keep long-term interest rates low.

"I was not going to be the Federal Reserve chairman who presided over the second Great Depression," he said. (more)

Trend Trader for Monday July 27, 2009

Rolling Stone: The Great American Bubble Machine PT.1 of 5



Part #2, Part #3, Part #4, Part #5

Saturday, July 25, 2009

What Will it Take for Gold to Overcome $1000

In our articles and newsletters we regularly highlight gold’s solid fundamentals.
  • World financial/economic crisis may have culminated and greatest risks have been averted but it is still very far from over
  • US dollar continues in its multi-year downtrend
  • World governments are committed to issue huge volume of government debt for many years to come
  • Quantitative easing – debt monetization – are becoming a routine practice of the Fed
  • President Obama’s plans for government spending are making Bush deficits seem like child’s play (more)

Business Week - August, 03 2009


FREE download click here

We're In the Early Stages of a Depression - BNN



Click here to watch video














World Financial Report July 24, 2009



Click here to listen

Friday, July 24, 2009

The Wall Street Journal USA July 24 2009


FREE download click here

Poll: Americans lacking in emergency funds

Many Americans are badly lagging in their emergency funds
even as rising unemployment increases the odds they will need to rely on them to get by, a new survey released Tuesday shows.

Forty-nine percent of employed adults interviewed in a nationwide poll conducted for Country Financial said they wouldn't be able to pay their bills on time if they went more than a month between jobs.

Half of those surveyed said they would tap their savings to cope with a shortfall in income if they lost their jobs, according to the poll results. Another 16 percent said they would use their retirement accounts, while 8 percent said they'd need bank loans and 7 percent would rely on credit cards. (more)

Gerald Celente on Alex Jones July 22, 2009



Part 2, Part 3, Part 4

Americans: 3X More Miserable Than Previously Calculated

Economists like to call their profession "The Dismal Science," so you'd think they would have a monopoly on, or at least competence in, measuring dreariness. But it turns out they're not even measuring our misery properly. So claims the Huffington Post, which recently debuted its own Misery Index -- the sum of unemployment and inflation -- to account for the millions of Americans who've been pushed to part-time, or simply given up looking for jobs altogether, but don't appear in the official unemployment rate. (more)

US Dollar Collapse Imminent

We don't like to make bold predictions. But this time, it is different (famous last words).

You might have seen that we at Crossroads FX tend to trade in a very systematic way, using signals of our proprietary trading system without asking too many questions. But you know, from time to time patterns emerge where you cannot resist.

If you take a look at a 300min chart of the EUR/USD Future, everything looks like "normal business". The Euro is trading well above the green buy line in bullish territory, and the line of least resistance is safely pointing to the upside, predicting higher prices in the near future. (more)

Energy Demand In Canada & USA Expected to Drop


Retail sales of electricity in the industrial sector continue to decline, having fallen by 12 percent during the first quarter of 2009 compared with year-ago levels. Total consumption of electricity is projected to fall by 2.0 percent for the entire year of 2009 and then rise by 0.8 percent in 2010.
(more)

Buying Opportunity In Corn?

Bubble Deniers

Two important headlines this morning, both of them fraudulent:

“Chinese economy bounces back,” says one headline in the International Herald Tribune.

“JPMorgan profit soars despite downturn,” says another.

The average reader or TV viewer will go no further. “Ah,” he says to himself, “good news; the worst is over. China is a green shoot as big as the Amazon. And JPMorgan is a leader in the financial sector. If the financial sector is doing well, the whole world economy must be doing well.”

But here at the Daily Reckoning, we can’t help ourselves. If we see a silver lining, we look for the cloud. We see garbage... we look for the rat... (more)

Roubini Sees Risk of ‘Double Dip’ Global Recession

The global economy may fall back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth, said Nouriel Roubini, the New York University economist who predicted the credit crisis.

A “perfect storm” of fiscal deficits, rising bond yields, “soaring” oil prices, weak profits and a stagnant labor market could “blow the recovering world economy back into a double-dip recession,” he wrote in a research note today. “It is getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented.”

Roubini, chairman of Roubini Global Economics and a professor at NYU’s Stern School of Business, predicted that the global economy will begin recovering near the end of 2009. The U.S. economy is likely to grow about 1 percent in the next two years, less than the 3 percent “trend,” he said. (more)

How Much Is a Trillion Dollars?

Skating on Thin Ice

As 2009 moves past its midpoint, many market participants are briskly trying to forget the carnage of 2008 and the first quarter of 2009. But, before we get lost in the euphoria of the 36% Dow rally in the Spring/Summer of this year, a little hindsight is in order. In March, the Dow had plunged to 6,547, or some 53 percent down from its nominal 14,164 high in 2007. Despite the recent gains, we are still nearly 40% below the 2007 peak. This is a brutal truth that everyone seems to be ignoring.

Last week, Merrill Lynch, that storehouse of economic sagacity, announced that the recession was over. Even the bearish NYU economist Nouriel Roubini was reported as saying "the worst is behind us." However, wishing earnestly for something does not make it so.

Admittedly, the financial meltdown that threatened in late 2008 appears to have been contained. In addition, the Fed's actions in the credit markets have held interest rates down and turned the yield curve positive. The credit markets also have started to ease. In addition, the federal government's injection of trillions of dollars into the economy has "boosted confidence" for those too short-sighted to know the consequences. This welcome news has provided impetus to equities. (more)

U.S. Stock Futures Fall on Microsoft, American Express, Amazon


July 24 (Bloomberg) -- U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will slump after climbing to an eight-month high, as Microsoft Corp., American Express Co. and Amazon.com Inc. posted disappointing quarterly results.

Microsoft retreated 6.9 percent on lower profit and sales than analysts estimated. American Express slipped 5 percent after saying earnings decreased as the recession made it harder for cardholders to keep up with payments. Amazon.com lost 6.6 percent following price cuts that caused the online retailer’s revenue to miss projections.

S&P 500 futures expiring in September declined 0.4 percent to 965.20 at 9 a.m. in Tokyo. Dow Jones Industrial Average futures dropped 29 points, or 0.3 percent, to 8,962. U.S. stocks surged yesterday, sending the Dow above 9,000 for the first time since January, as EBay Inc., Ford Motor Co. and AT&T Inc. beat estimates and home resales increased more than forecast. (more)

Has housing hit bottom?

Resales of U.S. single-family homes and condos rose 3.6% in June to a seasonally adjusted annual rate of 4.89 million, the highest level since October, the National Association of Realtors reported Thursday.
Resales have risen for three straight months for the first time in more than five years.
The increase was higher than expected. Economists surveyed by MarketWatch expected sales to rise to 4.85 million. Sales are down 0.2% on a year-on-year basis.
The housing market appears to be healing, said Lawrence Yun, NAR's chief economist.
Inventories of unsold homes are still elevated and putting pressure on prices. And the damage from the housing bubble's collapse is still having an impact. Distressed properties accounted for 31% of sales in June. (more)

Thursday, July 23, 2009

US Stocks Rally On Earnings, Housing; Dow Back Over 9000

A mix of good news about profits and housing sparked a broad-based stock rally in the U.S. Thursday, with the Dow Jones Industrial Average up nearly 200 points and crossing above 9000 for the first time since January.

The blue-chip average was recently up 172 points, or 2%, at 9054. AT&T rose more than 3% and 3M was up 6%. Both announced declines in second-quarter profits that were smaller than analysts expected. Microsoft was up 2.8% and American Express was up 2.7%. They are due to report after the closing bell.

Earnings have largely been at the crux of the Dow's more than week-long crusade back above 9000. While the index snapped a 7-day winning streak on Wednesday, it is up more than 5% this month and has tacked on nearly 1000 points in two weeks. Should the Dow close at its current level it would mark a new high for 2009. (more)

The Wall Street Journal USA July 23 2009


FREE download click here

Coasttocoastam July 21, 2009 Web Bot Predictions

George Ure & 'Clif' discussed their web bot technology which has continued to give archetype descriptors of future events. Their method captures changes in language patterns within Internet forums. This aggregated data is then processed with software to determine various keywords, which they interpret in a predictive fashion. They foresee a number of negative cycles/events converging over the next few years:
  • A big crisis is kicked off on October 25, 2009. It could be that Israel bombs Iran, or that Swine Flu goes into a level of extreme lethality. 10 days later, in relation to this crisis, the Obama administration will be thrown into chaos.
  • When Israel bombs Iran, they'll use a nuclear-tipped bunker buster that will hit something unforeseen underground. As a result, a radioactive cloud will form that will pollute and sicken Southeast Asia. This will cause much of the world to turn against Israel.
  • The "Death of the Dollar" will be a continuing trend, with a hyper inflationary period in 2010, and banking crises/confidence losses that will begin in August 2009 and escalate by November 2009.
  • "Global Coastal Phenomena" will be gradual, yet by March/April 2011 the situation could be disturbing for many people. Unusual movements of the Moon brought on by anomalies in the magnetosphere could cause coastal disruptions.
  • The magnetosphere problems could lead to ultraviolet scorching of food crops. Grain crops will fail, mainly in the Northern Hemisphere, leading to food riots in the winter of 2010/spring of 2011. Specifically, they'll be riots in Rome that will spill over into the Vatican.
  • In South America, they'll be large or mass sightings of UFO-related phenomena. In the summer of 2010, a video crew will interview an escapee from an internment facility. The young bald man will later be revealed to be a "non-Terran" human. (more)
listen to audio segment #1, segment #2, segment #3.

McAlvany Weekly Commentary: The Panic of 1907 and the Legacy of the Federal Reserve

icon for podpress < href="http://www.mcalvany.com/podcast/?p=87#" onclick="javascript: podPressShowHidePlayer('1','http://www.mcalvany.com/podcast/wp-content/uploads/ica2009-0722.mp3',300,30,'true'); return false;">Hide Player | Play in Popup | Download Mp3

Why Gold Should Anchor A Portfolio

Recently I discussed some of the reasons investors often fall short. Today I want to help bring clarity to your investment goals and also explain why gold should hold a central place in your portfolio. If you succeed in these two areas, you'll not only prosper, you will also be prepared for the incredible changes and shocks that I believe are coming.

As Richard Russell always stresses, succeeding in the stock market is a lifetime learning process. At age 84 or so, he is still working diligently at it. As we have all learned, making money in the stock market is not as easy as the hucksters would have us believe. Success comes not just from market knowledge but from learning from our mistakes. And it is critical to acknowledge that we all make mistakes. To succeed also includes knowing ourselves, especially the emotions which often rule our decisions. It can be just as important to avoid a disaster or to get out of a potential one than to have a successful trade. Just as in baseball, we aim to have a high batting average and to avoid deep slumps. And as an aside, (speaking from experience), this invariably means making sure your spouse is comfortable with your finances. (more)

Bernanke Terrified Over Commercial Real Estate, Seeks Still More Power Over Consumers


Federal Reserve Chairman Ben S. Bernanke said a potential wave of defaults in commercial real estate may present a “difficult” challenge for the economy, without committing to additional steps to aid the market.

Bernanke, testifying before the Senate Banking Committee today, urged lenders to modify “problem” mortgages to avert defaults. Christopher Dodd, the Connecticut Democrat who chairs the panel, told Bernanke that “some have suggested” the commercial market “may even dwarf the residential mortgage problems” in the U.S. (more)

US foreclosure crisis spreads to new states

America’s foreclosure crisis – which has been concentrated in Arizona, California, Florida, and Nevada – is beginning to spill over to neighboring states.

As a result, the fallout from the housing bubble looks increasingly likely to spread, pushed by a worsening economy, rising unemployment, and what appears to be a “bubble thy neighbor” effect.

Nationally, foreclosure filings rose 9 percent to reach 1.5 million in the first six months of 2009, according to a report released Thursday by RealtyTrac, an online marketplace for foreclosure properties. That’s the highest total since the Irvine, Calif., firm began reporting the figures in 2005. (more)

Economist Shiller Sees 'Bad Recession,' Stocks Could Drop Again

Esteemed economist Dr. Robert Shiller was among the very few to warn of a housing bust before it happened.

Now he tells Newsmax and Moneynews.com that, although the housing market could be approaching a bottom, prices might remain in the “doldrums” for years to come as the United States remains in a “liquidity trap” comparable to the one it faced during the Great Depression. (more)

Rent vs. Buy Comparison Pushing People into Homes

For Aaron Carter, a musician who was struggling to fit a drum set, a piano and three guitars into his 600-square-foot apartment in Phoenix, the math on owning a home finally began to work in his favor.

Rent for the apartment he shared with his wife: $615. Mortgage payment for a home with twice the space: $760. And the interest on a mortgage is tax-deductible. So they jumped at the chance to buy some elbow room.

"We figured that everything together, getting more space, getting out of the apartment life and also just the prices right now, it just was the perfect time for us as a couple" to buy, said Carter, 20. (more)

Riding out the Recession and whatever else is thrown your way

One of the arguments against stockpiling food. First off.... why bother? The supermarkets are always full, aren’t they? Why spend the extra money? If you are reading CFP, you must have some sense that the world has changed--and not for the better.

Even the Government is encouraging us to have “Three Days” supply until you can be “Relocated.” Maybe I’d rather not sleep at a stadium and stand in line for a bowl of soup with my 20,000 new “best friends?”

Another reason in one word? KATRINA? The US Government couldn’t handle ONE large population center being hit by a hurricaine. (more)

Preparing for the coming Economic Tsunami

As discussed in parts 1 though 3of this series, the global demand for energy, and fossil fuels are expected to increase. At the same time, the supplies to meet that demand are declining. We examined how the gap between supply and demand is at risk of becoming too large and making the current economic crisis far worse. Finally we examined how a comprehensive policy that includes increasing U.S. supply and decreasing U.S. demand for fossil fuels can help ensure that we have access to a cost-effective and reliable source of energy for the foreseeable future.

The unfortunate fact is that the U.S. government seems unwilling, or unable to develop a comprehensive Energy Policy that could help prevent this economic collapse. Indeed, many members of the Senate and Congress, as well as the Obama Administration, seem bound and determined to attack our industry and make it all the more likely to create a significant gap between supply and demand. (more)

Wednesday, July 22, 2009

US financial market bailout tab hits $4.7 trillion

WASHINGTON – The federal government has devoted $4.7 trillion to help the financial sector through its crisis, a level of assistance equal to about one-third of the overall U.S. economy, a watchdog report said Monday.

Under the worst of circumstances, the report said, the government's maximum exposure could total nearly $24 trillion, or $80,000 for every American.

The figures are part of a tough new quarterly report to Congress from special inspector general Neil Barofsky, who accuses the Treasury Department of repeatedly failing to adopt recommendations aimed at making one component of the government financial rescue effort more accountable and transparent. (more)

Rep. Grayson VS. Bernanke

Global Exposure in Financial Derivatives Surpasses One Quadrillion Dollars (Update)

When I posted the lowest responsibly sourced figure for global exposure in financial derivatives, $592 trillion, published May 19, 2009 by the Bank of International Settlements, all sorts of hoodoo apologists for Obama, Geithner, Summers, and Goldman Sachs crawled out the woodwork to claim that this figure is ridiculously exaggerated, there's really nothing to worry about, it's just a few bucks, and so on.

All the same hoodoos unfailingly claimed that it's stupid to consider worst-case scenarios when you calculate risk, because...

They have learned absolutely nothing from the ongoing financial meltdown which annihilated some of the oldest and largest investment banks in the world, and plunged the global economy into an almost vertical downturn. (more)

Are Banks Really on the Mend?

You can rest easy today… the financial crisis is over.

CIT Group, the new epicenter of systemic financial risk, got thrown a lifeline this week from its bondholders. As we reported Friday (link), the company needed $3 billion — fast — in order to stay afloat. It was rightfully denied a government bailout, but was able to strike a last-minute deal with holders of its debt. Of course, the market rejoiced… the S&P 500 rose 1.1% yesterday largely on the news.

But again, we’re calling the market’s bluff. Anybody read the fine print of this deal? The loan was secured by “substantially all unencumbered assets.” That lawyer talk means CIT will have no collateral left over for a similar deal in the future. What’s more, the company will have to pay 13% annually on the $3 billion loan… no small order. (more)

What's the Biggest Bargain In Commodities?


Biggest Bargain... is natural gas says Sean Brodrick...natural gas prices have been driven lower by over-supply & weak demand recently, also US liquid natural gas imports have more than doubled from Nov through April, & huge initial production rates in shale have added to supplies... but longer-term "I think that more U.S. buses, trucks and cars will run on natural gas. So it could be a very good play for the long-term"... (more)

Unlimited Debt is Likely to Lead to Unlimited Consequences

The world today seems to be spinning faster on its axis than ever as humanity scrambles to stay afloat in a world drowning in debt. It all seemed like such a good idea back in the day, as the credit-based US economy seemed to create prosperity out of thin air for decades. The economic alchemists explained that the more we consume, the more the economy will prosper. And because of easy and abundant credit, we didn’t have to pay until later!

Unfortunately, later has arrived. Growth built on the sandy foundation of debt-based consumption (instead of saving and investment) was fun while it lasted. But now the economic party glass has been filled to overflowing with debt, and we are all getting wet. The great global debt party must now be wound down and cleaned up, but no one seems willing to face the inevitable hangover. The US has more than doubled its debt burden, relative to GDP, since the 1980’s and the consequences are beginning to crash the party. (more)

The coming government debt default

We have always assumed that governments would surreptitiously default on their debt via inflation, but recently we've come to the conclusion that a direct default is a distinct possibility. Here's why.

Under the current monetary system there is no limit to how much debt a government can take on, provided that the debt is denominated in its own currency. The reason is that the central bank stands ready, willing and able to be the bond-buyer of last resort, and the central bank's pockets are infinitely deep (there is no limit to the amount of new money that the central bank can create). As a result, if it chose to do so the government could continue to issue new bonds until the currency became worthless. At the point where the currency had lost almost all of its purchasing power the surreptitious default would essentially be complete because any debt denominated in this currency would be almost worthless. (more)