Saturday, March 6, 2010

World Financial Report, March 5, 2010

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Mark Mobius, Executive Chairman, Templeton Asset Management

The Economist - 6 March 2010

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Hourly Action In Gold From Trader Dan

Gold put in a decent performance today which coming on a Friday with a jobs report being released is actually encouraging. Over the years we have seen so many of these payroll report days in which gold gets pummeled for no other reason than the bullion banks decide to beat up on the metal. That strength, even in the face of very obvious orchestrated selling such as today’s, is impressive.

Gold rallied just shy of yesterday’s session high before the attack began which further illustrates my recent point that the gold selling Banshees at the Comex are furiously attempting to prevent this week’s high from being taken out since that will trigger a tremendous amount of new buying which will take price up to the last level of resistance just above $1,150 that stands between gold and a retest of $1,200. (more)

Consumer Credit in U.S. Rises for First Time in Year

Borrowing by U.S. consumers unexpectedly rose in January for the first time in a year, led by auto and student loans, a sign Americans are gaining confidence in the economy.

Consumer credit increased $5 billion, or 2.4 percent at an annual rate, the Federal Reserve said today in Washington. Borrowing dropped $4.6 billion in December, more than first estimated. The figures track credit card debt and non-revolving loans, including those for automobile purchases.

Stocks rose after the report indicated that some banks may be more willing to lend as the economy recovers from the worst recession since World War II. Growth may get a bigger lift from consumer purchases that account for about 70 percent of the economy when companies start to hire. (more)

Double top for stocks or double trouble?

The drawback of writing a newsletter with relatively strong opinions in market direction is the substantial risk of being wrong...or in this case just early (we think). Unfortunately, our crystal ball was a bit cloudy earlier this week. We were right about the rally, but didn't anticipate it moving quite this far.

Our 1125 objective in the S&P has come and gone and while we still feel like the market will see a reversal sooner rather than later, we cannot overlook the possibility of a retest of the January highs. This would put the S&P just under 1150...or even moderately higher. The Russell on the other hand, has already surpassed its recent highs and is now trading in territory not seen since late 2008.

There are very valid arguments for the bear camp that are being overlooked (or over run) by this rally, but sometimes fundamentals simply don't matter. The market is panicked...shorts are panicking and being squeezed out and the last of the sidelined cash is panicking to get in. (more)

UN to produce bullion coins as world currency

The announcement by the United Nations this week that it will license the minting of silver and gold bullion coins bearing the UN logo may be the button that launches metal prices into orbit.

In its wide-ranging report this fall, the UN Conference on Trade and Development (UNCTAD) stated that the system of currencies and international banking practices within today’s economies were inadequate, and responsible for the present economic crisis. The report advocates that the present monetary system, wherein the dollar acts as the global reserve currency be re-examined “with urgency”. (more)

BusinessWeek - 15 March 2010

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The Moral Dimension of Things: Why are Political Leaders Lying Most of the Time?

Why do political leaders seem to be lying most of the time?

Why is uncontrolled greed so prevalent in corporate rooms?

Why do wicked men wage wars of aggression and become indifferent to the killing of innocent people?

Why does materialism seem to trump everything else?

Why do we have the uneasy feeling that our society is going in the wrong direction?

The very fact that we have to raise such questions may be a sign of the times.

Indeed, when the stench of moral decay becomes overwhelming, bad things inevitably follow. Historically, it can be shown that when the moral environment in a society is deteriorating, problems tend to pile up. (more)

Jobless rates rose in every state in ‘09

All 50 states were hit with increases of more than one percentage point in their unemployment rates last year, according to the U.S. Bureau of Labor Statistics.

The sharpest rise occurred in Michigan, where the average jobless rate for 2009 was 13.6 percent, up 5.3 points from 2008’s average of 8.3 percent.

The only other state with an increase of more than five points was Nevada, which soared from an average unemployment rate of 6.7 percent two years ago to 11.8 percent last year.

North Carolina’s increase was 4.4 points — from an annual jobless rate of 6.2 percent in 2008 to 10.6 percent in 2009. The average number of individuals employed during 2009 was 4.06 million, down from 4.29 million in 2008. The average number of unemployed rose to 484,000 from 283,000. (more)

Nasdaq at 18-month high

Stocks rallied Friday, with the Nasdaq ending at an 18-month high, after a government report showed employers cut fewer positions last month than had been expected, in the latest sign that the pace of job cuts is slowing.

Treasury prices slumped, raising corresponding yields, as investors pulled money out of the supposedly safe haven and put it into stocks. (more)

Peter Schiff on Fast Money 3/4/10 - "We don't have 10 years"

Our world balances on a sea of debt

In 1994, there resided in the cell next to mine a certain “Tommy”. He had been imprisoned for counterfeiting Dutch Guilders to such a high standard that he had fooled the banks themselves.

As was customary among prisoners who became friends, Tommy allowed me to read his legal papers and I became fascinated by the judge’s sentencing speech, the gist of which was that his activities had been parasitical. By creating money out of thin air he had reduced the purchasing power of more deserving members of society. What would happen if everyone behaved like him? (more)

Kiplinger's Personal Finance - April 2010

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