Monday, October 25, 2010
While taking nothing away from this amazing bullish move in Gold during the past decade, we have been expressing concerns about a possible bubble and listed a number of caveats about loading up on Gold indiscriminately. Most notably, the concerns are two-fold: a) Gold is not a traditional investment in that it provides no inherent yield or return other than price appreciation and b) Gold is a commodity nonetheless and as such exposed to significant volatility. You can review some of our previous comments on Gold at FXIS/Gold. With regard to external and fundamental factors causing concerns, John Authors of the Financial Times expresses these concerns much more elegantly than I can. Please consider: Remember 1980: all that glisters is not gold. (more)
CFTC Weekly Options Update: Total Treasury Spec Longs Surge By 40% To 2010 Record, Dollar Inflection Point Reached?
Commitment of Traders Report Traditional Commodities
Commitment of Traders Financials
California Is Broke – 19 Reasons Why It May Be Time For Everyone To Leave The State Of California For Good
For many Californians today, there are very few reasons to stay in the state but a whole lot of reasons to leave: falling housing prices, rising crime, budget cuts, rampant illegal immigration, horrific traffic, some of the most brutal tax rates in the nation, increasing gang violence and the ever present threat of wildfires, mudslides and natural disasters. The truth is that it is easy to understand why there are now more Americans moving out of California each year than there are Americans moving into the state. California has become a complete and total disaster zone in more ways than one, and an increasing number of Californians are deciding that enough is enough and they are getting out for good.
Sadly, the state of California is facing such a wide array of social, economic, and political problems that it is hard to even document them all. It is really one huge gigantic mess at this point. (more)
The government has just pulled a Madoff. They have admitted that they don't have the money to pay everyone out they have promised to pay out via Social Security. Specifically, those under 30 are going to get really screwed.
Business Insider's Bruce Kasting explains how bad the situation is, but keep in mind that this is based on CBO projections, and there is no chance the CBO has run the truly negative scenarios, where the government can't pay its Treasury debt--which is mostly what the Social Security Trust fund holds. Factor that in and the odds drop for everyone that they are going to get paid in full : (more)
Top Ten countries External % GDP to debt ratio. Same list has names of countries with blood in the streets. Who's next?
Great Britain UK 426.65 %
Portugal 256.67 %
France 197.04 %
Greece 182.67 %
Spain 165.51 %
Germany 146.88 %
Australia 114.50 %
Italy 107.59 %
USA 94.96 %
And with farmers seeing fatter profits from their crops, many are taking the money and putting it into new farm equipment.
According to the Association of Equipment Manufacturers, September sales of row-crop tractors increased by +46.9% from August, while four-wheel drive tractor sales rose +20.5%.
Because of this, shares of Deere (NYSE: DE) -- the world's largest manufacturer of lawn and farm equipment -- are surging. (more)
As we write, the US dollar is in the process of trying to find at least a temporary bottom at 76.50 and to launch a countertrend rally. We would think a rally back to 80 is achievable, but we do not believe it’s sustainable - only some stabilization through the election. Japan drew a line in the sand at 82 and finished last Friday trading at 81.37. That does not smack of success, but we see improvement over the next two weeks.
One thing the weaker dollar has done is make exports cheaper for transnational conglomerates and that has helped the market along with these companies repurchasing their stock in the market. In spite of these subsidies the market went nowhere last week. That was probably because of the off again, on again, of quantitative easing 2. Half of the Fed members say lets do it and the other half says do not. In the middle of this verbal conflict is the ever-placid Ben Bernanke, who is answering the call of Wall Street by expanding aggregates via the repo market, which he has been doing since early June. At this point we can assume that the wise guys, who really make the decisions and just happen to own the Fed, have discounted an injection of $500 billion. In addition, they know long-term interest rates are headed lower, although a reduction in the ten year T-note of ½% to 1% is not going to change things much. It will only provide a comfort zone and make big corporations more profits. We do not believe it will have a big influence on home buying with the mortgage scandal in process, which could drag on for years. It will be interesting to see if any bankers are charged criminally. In all probability none will, they just pay fines, or their corporations do, which is all the government is interested in. (more)
With foreclosed properties accounting for a large portion of housing sales, and investors accounting for a large portion of buyers — particularly in some key markets with very high foreclosure rates — the implications for the broader economy could be serious.
Investors who would buy, rehabilitate and then sell or rent foreclosures were playing a "huge role," in helping to clear the market, said housing economist Tom Lawler.
But many of those investors are now staying on the sidelines.
"We're like a plane flying around in a holding pattern, waiting to land," said Tony Alvarez, an investor in southern California who is currently renting out 40 former foreclosed homes. "Nothing is going on, and why? Fear has taken hold in the marketplace." (more)
|Date||Time (ET)||Statistic||For||Actual||Briefing Forecast||Market Expects||Prior||Revised From|
|Oct 25||10:00 AM||Existing Home Sales||Sep||-||4.20M||4.25M||4.13M||-|
|Oct 26||9:00 AM||Case-Shiller 20-city Index||Aug||-||2.0%||2.0%||3.18%||-|
|Oct 26||10:00 AM||Consumer Confidence||Oct||-||48.0||49.0||48.5||-|
|Oct 26||10:00 AM||FHFA Home Price Index||Aug||-||NA||NA||-0.5%||-|
|Oct 27||7:00 AM||MBA Mortgage Applications||10/22||-||NA||NA||-10.5%||-|
|Oct 27||8:30 AM||Durable Orders||Sep||-||1.0%||1.7%||-1.3%||-|
|Oct 27||8:30 AM||Durable Orders - ex transporation||Aug||-||0.5%||0.1%||2.0%||-|
|Oct 27||10:00 AM||New Home Sales||Sep||-||270K||295K||288K||-|
|Oct 27||10:30 AM||Crude Inventories||10/23||-||NA||NA||0.667M||-|
|Oct 28||8:30 AM||Initial Claims||10/23||-||450K||455K||452K||-|
|Oct 28||8:30 AM||Continuing Claims||10/16||-||4450K||4418K||4441K||-|
|Oct 29||8:30 AM||GDP-Adv.||Q3||-||1.3%||2.0%||1.7%||-|
|Oct 29||8:30 AM||Chain Deflator-Adv.||Q3||-||1.9%||2.0%||1.9%||-|
|Oct 29||8:30 AM||Employment Cost Index||Q3||-||0.5%||0.5%||0.5%||-|
|Oct 29||9:45 AM||Chicago PMI||Oct||-||58.0||57.5||60.40||-|
|Oct 29||9:55 AM||Michigan Sentiment - Final||Oct||-||67.0||68.0||67.9||-|