Friday, May 21, 2010

Meredith Whitney Sees Bleak Second Half in Stock Market, Small Business Credit Crunch, Double Dip in Housing, Says European Banks in Worse Shape

Over the next 12 months, disappearing state and local government jobs will prove to be a meaningful headwind to an already fragile economic recovery. This is simply how the math shakes out. Collectively, over 40 states face hundreds of billions of dollars in budget gaps over the next two years, and 49 states are constitutionally required to balance their accounts annually. States will raise taxes, but higher taxes alone will not be enough to make up for the vast shortfall in state budgets. Accordingly, 42 states and the District of Columbia have already articulated plans to cut government jobs. (more)

Stocks to Tumble Another 20%, Cash the Safest Place: Roubini

Stocks are likely to continue their aggressive decline and shed another 20 percent in value as the world economy weakens, economist Nouriel Roubini told CNBC.

As the market slides into correction territory, Roubini said weakness in euro zone countries and a slowdown in the US and other developed countries will make things even more difficult for investors in the months ahead.

"There are some parts of the global economy that are now at the risk of a double-dip recession," said Roubini, head of Roubini Global Economics. "From here on I see things getting worse." (more)

Goldman Sachs Hands Clients Losses in ‘Top Trades’

Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse.

Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday. Clients who used the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar. (more)

Dow; S&P Break 200-day MA. ‘Flash’ Lows Were Real

Both the Dow Jones Industrial Average and S&P 500 Index are trading below their 200-day moving average. NASDAQ bucked the trend bouncing back above it 200-day MA.

Many analysts in the technical community were unsure if the ‘flash trade’ lows were actual prices which should be included in their analysis, or merely a ‘machine’ blip which can be ignored. As the days have progressed, however, it’s become increasingly clear that the flash trade lows registered in the major averages were indeed real prices and are close to being retested.

My opinion has been that the numbers were real and should be included. The charts of the Dow, S&P 500, and NASDAQ below show that even during those infamous 10 minutes of panic, buyers entered the market close to major support levels (the February lows).In all three examples, the February lows held. (more)

The Greek People are the Victims of a Carefully Engineered Financial Extortion Racket

What is happening in Greece concerns all of us. The people are paying for a crisis and a debt that are not their own. Today it is the Greeks, tomorrow it will be others, for the same causes will produce the same effects if we allow it.

First and above all, we express our full and unconditional solidarity with the people who are suffering from an austerity plan without precedent combined with contempt and an arrogance bordering on racism. The strikes and demonstrations are legitimate, and we support them. This is not the crisis of the Greek people, it is the crisis of the world capitalist system. What the Greek people are experiencing is revealing of today’s capitalism. The plan dictated by the European Union and the International Monetary Fund (IMF) rides roughshod over the most elementary rules of democracy. (more)

Pan-European Bank Run Is Now On: Capital Flight From UK To Switzerland, As GBPCHF Intervention Strikes Next

Yesterday we disclosed that the reason for numerous SNB interventions in the EURCHF was due to billions in deposits rushing out of Germany and seeking the relative stability of Swiss neutrality. A quick look at the trading pattern of the GBPCHF shows that it is now UK depositors who are panicking and shifting their money to unnamed (not so much anymore) Zurich bank vaults. The result: a 300 pip move in the GBPCHF as the SNB rushes to put out this particular capital flight fire. Too bad it only succeeded for about 12 hours. The run on the bank (to another bank) in Europe is now on. Zero Hedge.

Bob Chapman - International Forecaster

FREE investment newsletter, May 19, 2010 issue click here

Stocks Tumble as Investors See Europe’s Crisis Imperiling U.S.

Fears that the fragile economic recovery in the United States might be threatened by the financial and political crisis in Europe gripped Wall Street on Thursday, sending the stock market into a sharp decline and leaving anxious traders wondering where the pain might stop.

The 376-point drop for the Dow Jones industrial average punctuated what amounts to a slow-motion crash that began in late April. The Dow has now plunged more than 1,000 points in a matter of weeks, marking what is known as a market correction — a sort of mini-bear market characterized by a 10 percent decline in a short period of time. (more)

The correction is coming and it will be a bloodbath

The correction, soon to be crash, is here: the market had a bigger relative open to close move today than it did on May 6. We closed at the day’s lows on massive volume, despite definitive central bank intervention, regardless whether it was the SNB, the ECB, or the Fed. The central planners have lost control of the market, and all thanks to the inevitable collapse of hyper capitalist Keynesianism coming out of the formerly most communist country in the world. A day of ironies. And it’s not over. Futures are already down another 4 handles. The correction is coming, and it will be a bloodbath. The Fed can not push rates lower. It will print. It is inevitable. It is our destiny. (more)

Russia Palladium Stockpiles May Be Over, Norilsk Says

Russia, the world’s biggest palladium producer, may have exhausted state inventories of the metal, removing a key source of global supply, according to OAO GMK Norilsk Nickel.

Sales from state stockpiles reached 960,000 ounces last year, the third-biggest contributor to world supply after mine output from South Africa and Russia, according to Johnson Matthey Plc. The scale of the government’s stockpiles of the metal used in auto catalysts, electronics and jewelry are a state secret. Norilsk is the world’s biggest producer. (more)

BNN; Sit Down With Eric Sprott

click here for video #1

click here for video #2

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