Thursday, July 2, 2009

Wall Street Journal July 2 ,2009

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'We're in the Middle of a Crash': Black Swan

The financial system is crashing and action must be taken by the US government to convert debt into equity to produce a more stable environment, Nassim Taleb, author of "The Black Swan," told CNBC Thursday.

"You may have green shoots, whatever you want to call them, you may have temporary relief, but you are still in a world that's breaking," Taleb said on "Squawk Box." (more)

Martin Weiss says California is going to default

NEW YORK (Fortune) -- Known for his early warnings on Bear Stearns and Lehman Brothers, analyst Martin Weiss of Weiss Research is now sounding the alarm about state of California municipal bonds.
In a new report, Weiss has some rather blunt advice for California muni investors: "Sell all California paper now!" His reasoning? California is facing a $24 billion budget gap with no obvious way to close it.
The state has appealed to Washington for a federal bailout, but it got a cool response from the Obama Administration. The next step is draconian cuts in state services and payroll, but Weiss says that will only deepen the "depression" in California, where the unemployment rate is 11.5%, by further cutting into tax revenue. (more)

Special Report Gold 2009: "In Gold we trust"

- Outstanding risk/return ratio for gold investments
- Wall Street discovers gold
- Austrian School of Economics: massive expansion of money supply as basis for a gold bull market?
- Gold is still in the early stages of a bull market - rise with the biggest momentum is yet to come
- A strong case for gold mining shares
- CoT Report indicates massive short concentration
- First target price 1,300; longterm target: inflationadjusted all-timehigh of USD 2,300

Tech Talk for Thursday July 2nd 2009 Daily Reports

U.S. equity index futures are lower this morning. The June employment report released at 8:30 AM EDT confirmed that economic green shoots in the U.S. are wilting. S&P 500 futures are down 11 points in pre-opening trade.

Data from the June employment report was disappointing. Consensus for June non-farm payrolls was a decline of 325,000 versus a decline of 345,000 in May. Actual was a decline of 467,000. Consensus for the June unemployment rate was 9.6% versus 9.4% in May. Actual was 9.5%. Consensus for June hourly earnings was an increase of 0.2% versus 0.1% in May. Actual was no change. (more)

Manhattan Apartment Prices Drop as Lehman Effect Hits Home

July 2 (Bloomberg) -- Manhattan apartment prices dropped for the first time since 2002 in the second quarter as the collapse of Lehman Brothers Holdings Inc. and Bear Stearns Cos. caught up to property owners in the nation’s most expensive urban market.

The median price fell 18.5 percent from a year earlier to $835,700, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. The number of sales plunged by half, the most since Miller Samuel began keeping data in 1989. (more)

Payrolls Fall More Than Forecast, Unemployment Rises

July 2 (Bloomberg) -- Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor market.

The payroll decline was more than forecast and followed a 322,000 drop in May, according to Labor Department figures released today in Washington. The jobless rate jumped to 9.5 percent, the highest since August 1983, from 9.4 percent.

Unemployment is projected to keep rising for the rest of the year just as the income boost from the stimulus package fades, undermining prospects for a sustained rebound in household purchases, analysts said. As companies from General Motors Corp. to Kimberly-Clark Corp. cut costs, the lack of jobs will restrain growth. (more)