Monday, June 22, 2009

Trend Trader for June 23, 2009

Nightmarish Financial Numbers By The Mogambo Guru

06/22/09 Tampa Bay, Florida had the headline, “Velocity of Money Comes to a Standstill.” The report starts off with the news that “Current consumption, which at $8.2 trillion is around 70% of GDP, has fallen $150 billion from last year,” and that investment, which represents things like building factories, is $1.3 trillion or 11% of GDP, and down 23.3% from last year.”

This is certainly bad news, although I am always leery of the concept of velocity, as it is just the plug number that makes Fisher’s famous equation (MV = PQ) work out, namely that the Money supply times the turnover of the money (Velocity) equals the Quantity of things sold times the Price of those things that were sold. Simple. (more)

Insiders Exit Shares at the Fastest Pace in Two Years

June 22 (Bloomberg) -- Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years. (more)

Russia Stocks Fall 20% in World’s First Bear Market Since March

June 22 (Bloomberg) -- Russia’s Micex Index tumbled more than 20 percent from its 2009 peak, becoming the world’s first benchmark equity index to enter a bear market since global stocks began rallying in March.

The index of ruble-denominated shares slid 5.9 percent to 957.56 as of 5:58 p.m. in Moscow, bringing its decline since June 1 to 20.6 percent, according to data from the Micex exchange’s Web site and Bloomberg. The 30-company gauge led a worldwide retreat in stocks this month on concern the global recession will persist for longer than investors anticipated. The MSCI All-Country World Index slid 5.6 percent from its 2009 high, paring its gain from a six-year low on March 9 to 39 percent. (more)

U.S., Europe Stocks Fall, Commodities Drop on Recession Concern

June 22 (Bloomberg) -- U.S. and European stocks tumbled, extending losses from the first weekly decline for global equities in more than a month, as the World Bank said the recession will be deeper than previously forecast. Treasuries rose, while oil fell below $67 a barrel and metals slumped.

Freeport-McMoRan Copper & Gold Inc., Alcoa Inc. and BP Plc lost more than 3.7 percent amid a 2 percent retreat in the Reuters/Jefferies CRB Index of 19 raw materials. Bank of America Corp., the biggest U.S. bank by assets, dropped 3.4 percent as two board members resigned. Walgreen Co., the second-largest U.S. drugstore chain, declined 3.8 percent after reporting earnings that trailed analysts’ estimates. (more)

The Economist, June 20, 2009

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Wall Street Journal, June 22, 2009

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Technically Precious with Merv

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The Truth About Unemployment Numbers

Nowadays, it is often wise to step away from business news sources, and look at original data sources, in order to learn the truth.

If we look carefully at the original information published by the U.S. Department of Labor, we see some surprises. The news stories which have run in CNBC, Marketwatch and Bloomberg, hailing "good unemployment numbers" were not conveying accurate information. Here is the real truth (more)

How The Gold Bull Market Ended (in 1980)

TUESDAY, 22nd JANUARY was a day like any other, only more so, as 1980 got under way.

"Car production fall forecast," said a headline in the Financial Times. "Bleak future for North," said another. "Economic policy deepens pessimism over future," added a third.

It wasn't all doom and gloom in the pink pages. "Lazy millionaire will back energetic individual," said one classified advert; "Property investment opportunity, 18% by 1982," another promised. But the casual investor reading the broadsheet at breakfast, or the professional trader struggling to flick open his FT on the Tube, would be forgiven for feeling as bleak as the weather. (more)


There can be no doubt that the global economy is undergoing a massive transformation and we have now entered an era of 'Big Government'.

After decades of excess credit and over-consumption, the developed world is finally being forced to deal with private-sector deleveraging. However, the governments seem to have other plans and they've decided to fight these deflationary forces tooth and nail. Their solution - even more credit and even more consumption! (more)