Monday, July 5, 2010

S&P500 Necklines 10 Year Chart

The U.S. Economy is Falling. Towards another Credit Collapse? by Bob Chapman

The Fed says US unemployment is likely to stay high for a long time, and that justifies zero interest rates indefinitely.

The June Chicago Purchasing Managers Index was 59.1 vs. 59.7 in May. The employment component rose to 54.2 from 49.2 in May. New orders fell to 59.1 from 62.7.

Homebuilder Lennar is cutting new home prices 15% as new orders fell 10%. KB Builders said new orders fell 23%, as new home sales fell 32%.

The MBA Purchasing Applications Index fell another 3.8% week-on-week and was 36% lower year-on-year.

The housing market is in serious freefall with builders scheduled to increase units by 535,000 this year. As sales fall so will big bank balance sheets. That means we are facing another credit collapse.

The US stock market seems to have a case on indigestion. The Dow continues to struggle just above 10,000 and is getting ready for another test of recent lows, which we believe could very well be broken. Markets worldwide share the downward pressure. We predicted a lower Chinese market in September and it has since fallen 23%, as China prepares for the bursting of their recent real estate bubble caused by the injection of $1.8 trillion into the economy. It could be that debt restructuring could be needed by the five PIIGS of the euro zone. The elitists are talking in terms of five years when that problem may have to be faced over the next six months to a year. There is the call for great fiscal centralization and the final death of sovereignty. Europe did not do well for ten years; they just hid their problems, much as other nations have. The euro has proven to be another unnatural creation engineered to bring about a world currency. (more)

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How to Play “The Land of Rising Stocks”

The Wall Street Journal reported last week that, for the first time in three years, foreign investors are increasing their holdings in the Japanese stock market.

Data released by the Tokyo Stock Exchange shows that foreign ownership of Japanese shares rose to 26% for the year that ended in March, up from 23.5% a year earlier.

The Journal suggests that a recovery in Japanese corporate earnings is tempting foreign investors back to the country’s equity markets.

But I think there’s more going on here. Perhaps hedge fund managers and other savvy global investors have paged back through their old, dog-eared copies of Dr. Jeremy Siegel’s Stocks for the Long Run.

If so, they may have recognized something significant… (more)

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California budget nightmare – in 1970 California took in 28 percent of state revenues from personal income taxes. Today, the state pulls in 52 percent

The problems for the California state budget are deep and significant and will provide fodder for another politically charged year. California faces a $19 billion budget deficit brought on by falling fund revenues and expenses that still reflect a time of better days. The Governor last week announced that 200,000 state employees would see their wages cut to the minimum of $7.25 (that is, for the exception of practically every group with special benefits so the number dwindles to a handful). The act in itself is merely a political move since pay will be retroactive once a budget is enacted. Yet this is how the gimmicks are played in California. There was also a recent focus on state benefit debit cards being used at strip clubs and casinos although this only reflected a tiny fraction, less than 1 percent of 1 percent of 1 percent this is how the state handles priorities and sensationalizes pennies to ignore the dollars. (more)

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Johann Hari: How Goldman gambled on starvation

By now, you probably think your opinion of Goldman Sachs and its swarm of Wall Street allies has rock-bottomed at raw loathing. You're wrong. There's more. It turns out that the most destructive of all their recent acts has barely been discussed at all. Here's the rest. This is the story of how some of the richest people in the world – Goldman, Deutsche Bank, the traders at Merrill Lynch, and more – have caused the starvation of some of the poorest people in the world.

It starts with an apparent mystery. At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people – mostly children – couldn't afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it "a silent mass murder", entirely due to "man-made actions." (more)

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BNN: Don Vialoux, research analyst, JOV Investment Management, shares his top picks.

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50 Random Facts That Make You Wonder What In The World Has Happened To America

Our world is changing at a pace that is so staggering these days that it can be really hard to fully grasp the significance of what we are witnessing. Hopefully the collection of random facts below will help you to "connect the dots" just a little bit. On one level, the facts below may not seem related. However, what they all do have in common is that they show just how much the United States has fundamentally changed. Do you ever just sit back and wonder what in the world has happened to America? The truth is that the America that so many of us once loved so much has been shattered into a thousand pieces. The "land of the free and the home of the brave" has been transformed into a socialized Big Brother nanny state that is oozing with corruption and has accumulated the biggest mountain of debt in the history of the world. The greatest economic machine that the world has ever seen is falling apart before our very eyes, and even when our politicians actually try to do something right (which is quite rare) the end result is still a bunch of garbage. For those who still love this land (and there are a lot of us) it is heartbreaking to watch America slowly die. (more)

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Technically Precious with Merv, July 2, 2010

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Analyst: Obama has U.S. economy in 'death spiral'

A new analysis of the U.S. economy shows that since 2007, the private sector has lost 10.5 million jobs while the public sector has added 720,000 jobs, creating a "death spiral" for the nation's economy.

The study comes from The Free Enterprise Nation, a nonpartisan national membership/advocacy organization for individuals and businesses that make up the private sector.

The analysis was done using statistics about employment data from the U.S. Bureau of Labor Statistics.

The recession of the last two years exacerbated the larger problem that already was in place, it revealed. (more)

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Goldman Sachs warns on global economic slowdown

As Britain enters a self-imposed period of austerity to deal with an historically large budget deficit, Jim O'Neill, one of the world's foremost economists, said that events beyond our shores could pose more of a problem than any domestic economic problems.

Writing in The Sunday Telegraph, Mr O'Neill, head of global economic research at Goldman, said: "What is clear is that a persistently struggling US, in addition to a major disappointment in China, would not be good news for the rest of us."

Mr O'Neill, the man who first identified the BRIC economies of Brazil, Russia, India and China as the future for global economic growth and who has previously been bullish on the recovery, goes on to pinpoint growth in China as the main concern for the global economy.

He does say, though, that the present slowdown in China is to be welcomed as long as it is controlled.

"If we are wrong (about estimates for growth in China) especially significantly, then the world will be a very challenged place, particularly for those living on self-imposed domestic austerity," he said. (more)