- dollar will recover somewhat;
- bonds will rally;
- industrial commodities will be under pressure;
- gold will trade sideways to moderately down;
Tuesday, June 30, 2009
Marc Faber On Bloomberg- Short term Predictions June 2009
Marc Faber appeared on Bloomberg giving his short term outlook which contradict his long term outlook. His short term outlook is as follows..
Buy Financial Stocks as Rally Persists, UBS Says
une 30 (Bloomberg) -- Financial stocks are poised to keep rising worldwide after posting this quarter’s best performance, according to Jeffrey Palma, a global strategist at UBS AG. The industry stands to benefit from “a much improved backdrop,” Palma wrote yesterday in a report. He recommended that investors increase their percentage of assets in financials to a “modest overweight” relative to benchmark indexes. They had been “neutral.”
As the CHART OF THE DAY shows, financials are headed for the second quarter’s biggest gain among the 10 main industry groups in the MSCI World Index. They last set the pace in the second quarter of 2003, according to data compiled by Bloomberg. The chart has the MSCI World Financials Index’s quarterly rankings and percentage moves during the past six years, including this quarter’s gain through yesterday. (more)
Corn, Soybeans, Wheat Plummet as U.S. Farmers Boost Acreage
June 30 (Bloomberg) -- Corn plunged by the Chicago Board of Trade’s limit after a government report showed U.S. farmers planted more acreage with the grain than estimated in March. Wheat and soybeans also tumbled on signs of increasing supplies.
About 87.035 million acres were planted with corn, the U.S. Department of Agriculture said today in a report following a survey of farmers. That was up 2.4 percent from the March forecast on growers’ intentions and 1.2 percent higher than 85.982 million last year. The average estimate of 24 analysts in a Bloomberg News survey was for 85.16 million acres. (more)
The U.S. housing market has finally stopped accelerating into the abyss?
Both home price indexes delivered an annual return of negative 18% in April, S&P and Case-Shiller report today. While that’s still a lousy number, it marks the third month in a row of flat-to-rising annual rates of return… neither the 10- or 20-city index has set an yearly record decline since January. We hasten to note that home prices are still falling -- S&P/Case-Shiller say home prices are down roughly 33% from their 2006 peak. But at least “the pace of decline has moderated,” as S&P likes to say.
“Every metro area, except for Charlotte, recorded an improvement in monthly returns over March,” adds David Blitzer of S&P. “While one month’s data cannot determine if a turnaround has begun, it seems that some stabilization may be appearing in some of the regions. We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here.
“The stock market bottomed in March and measures of consumer confidence have turned upward. This report shows that these better spirits are also appearing in the housing market.”
Funny Mr. Blitzer should mention consumer sentiment. The Conference Board’s measure of consumer confidence unexpectedly fell in June, the group reports today. Their index of consumer vibes slipped to 49.3, from a downwardly revised 54.8 in May… the Street was expecting a slight increase to 55. That’s the first fall in consumer confidence since April.
Monday, June 29, 2009
U.S. Stocks Rise, S&P 500 Extends Best Quarterly Gain Since ‘98
June 29 (Bloomberg) -- U.S. stocks rose, extending the best quarterly rally for the Standard & Poor’s 500 Index since 1998, as higher oil prices lifted energy shares and speculation grew that the recession is easing. Exxon Mobil Corp. gained 2.2 percent as crude climbed above $71 a barrel. Microsoft Corp. added 2.2 percent after Deutsche Bank AG raised its price estimate for the world’s biggest software company. Ford Motor Co. rallied 3 percent after predicting the slowest slide in sales among major automakers. Treasuries advanced for a third day, sending 10-year yields to the lowest level in a month. (more)
VIX Drops to Lowest Level Since Lehman’s Collapse as Fear Ebbs
June 29 (Bloomberg) -- The benchmark index for U.S. stock options returned to its level before the September collapse of Lehman Brothers Holdings Inc., as an almost four-month rally in equities and signs the economy is improving helped calm concern spurred by the worst recession in 51 years. The VIX, as the Chicago Board Options Exchange Volatility Index is known, lost 2.2 percent to 25.35 at 4:14 p.m. New York time, putting it below the Sept. 12 close of 25.66. It measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index, which added 0.9 percent. (more)
Pickens: Oil Could Go to $300 a Barrel
Legendary oil man T. Boone Pickens says that if the U.S. doesn’t take major steps to curb its reliance on foreign oil, the consequences will be drastic.
“Let’s say in 10 years, you do nothing,” Pickens tells Fortune.
“You will be importing 75 percent of your oil (up from 68 percent now), and you’ll be paying $300 a barrel.” (more and watch the video)
“Let’s say in 10 years, you do nothing,” Pickens tells Fortune.
“You will be importing 75 percent of your oil (up from 68 percent now), and you’ll be paying $300 a barrel.” (more and watch the video)
Bond Dealers Say Worst Over as Demand Soars at Sales
June 29 (Bloomberg) -- Wall Street’s largest bond-trading firms say the worst may be over for investors in Treasuries after government securities posted their biggest first-half losses in at least three decades.
The 16 primary dealers, which trade directly with the Federal Reserve and are obligated to bid at Treasury auctions, forecast the benchmark 10-year note yield will finish the year little changed at 3.58 percent, after rising from 2.21 percent at the end of 2008, according to a survey by Bloomberg News.
The dealers, which include JPMorgan Chase & Co. and Goldman Sachs Group Inc., say the sell-off will slow after signs emerged this month that foreign buyers are scooping up record amounts of debt being sold by the Obama administration. Plus, yields at the highest since November are luring investors speculating that the economy’s recovery may be slow. (more)
Dollar to Rise Most Since 1981, Best Predictor Says
June 29 (Bloomberg) -- Strategists who came closest to predicting the dollar’s value against the euro so far this year see it strengthening as much as 17 percent in the second half as the U.S. recovers from the recession faster than Europe.
CIBC World Markets Plc, Deutsche Bank AG, Bank of America Corp. and Wells Fargo & Co. estimate the U.S. currency will rise more than 4 percent by Dec. 31 after May ended with its sharpest three-month fall since 2002. At the start of the year, all had second-quarter forecasts within a penny or two of the $1.4056- per-euro close on June 26, Bloomberg’s currency survey shows. (more)
Saturday, June 27, 2009
California, Vegas Home Prices Drop on Foreclosures
June 25 (Bloomberg) -- Home prices throughout California and in the Las Vegas area fell from a year earlier in May as a glut of foreclosed property pushed down the value of single- family houses and condominiums.
The median price for an existing, single-family detached house in California declined 30 percent to $267,570, the California Association of Realtors said today in a statement. In the Las Vegas area, the median price for houses and condominiums fell 44 percent to $135,000, San Diego-based MDA DataQuick said in a separate statement today.
About 73 percent of all existing houses and condos sold in the Las Vegas-Paradise area were foreclosures last month, up from 56 percent a year earlier, and such sales accounted for 51 percent all existing-home transactions in California, MDA DataQuick said. Foreclosure sales represented 40 percent of California resales a year ago, the research company said. (more)
Marc Faber: More Doom Than Boom
Dr. Marc Faber, the Thailand-based editor and publisher of The Gloom Boom & Doom Report, favors stocks only as the least of all evils.
Q: How high can the market go before, if I read your work correctly, America falls apart and takes everything down with it?
A: I'm not sure that the risk/reward now is particularly favorable. The inflationary school of thought says the Federal Reserve has no other option but to print money, and that will lift asset prices. The Standard & Poor’s 500 could get to 1,000 or 1,100 or depending on how much money they print, possibly even higher than that.
Between March and today, the S&P is up 40%, and in an environment of zero interest rates, that's a huge gain. Many of the resource stocks we were recommending in November and December have tripled. So, maybe we have for two or three months now a reversal in expectations, where people suddenly realize that maybe the economy doesn't recover a lot and that deflationary pressures are still there. But if the S&P was to come down to 800 or 750, the Fed would probably increase its money printing activity. So, I kind of doubt that we'll see new lows. (more)
Trading Commodities the Easy Way
In the past commodity trading was only available to trader with large accounts, high risk tolerance and a good understanding of how the futures market works. During the past 7 years with commodities making incredible moves and gaining attention from the media, several exchange traded funds (ETF's) have been created allowing everyone to take advantage of the commodity market. Gold was the first commodity back in 2002 which really made traders and investors want into the commodity market. Silver was followed shortly after in popularity, then crude oil and natural gas. While most commodities were on fire these are the ones that the media took a hold of and make them well known to everyone as prices soared month after month. (more)
Where's The Gold?
The Comex is the name for the largest gold futures market in the world, traditionally centered in New York City. Although the market recently became part of the Chicago Mercantile Exchange, it has retained its old nickname. Also, the depositories which hold the actual bars of gold used to settle the futures contracts remain in New York City. A gold depository must be the most boring business on earth. They charge a small monthly fee to store 100oz. standardized bars of gold in an insured vault. It is an industrial-sized version of a safe deposit box. (more)
Friday, June 26, 2009
US Savings Rate Hits 15 Year High
June 26 (Bloomberg) -- Saks Fifth Avenue is cutting orders 20 percent after posting losses in the last four quarters. Kia Harris says some customers at the Washington shoe store where she works are buying one pair rather than three.
In the recession following a borrowing binge that sent consumer debt to the highest level ever, Americans are shutting their wallets and building their nest eggs at the fastest pace in 14 years. (more)
Pre-opening Comments for Friday June 26th
U.S. equity index futures are slower this morning. S&P 500 futures lost 4 point. Traders are concerned about the “cap and trade” bill that could reach the House of Representatives today. The bill includes significant taxes on corporations that have carbon dioxide emissions. Higher corporate expenses related to higher corporate taxes will be passed to consumers.
Economic news released at 8:30 AM EDT was mildly encouraging. Consensus for May Personal Income was a gain of 0.3% versus 0.5% in April. Actual was a gain of 1.4%. Consensus for May Personal spending was a gain of 0.4% versus a decline of 0.1% in April. Consensus was a gain of 0.3%. (more)
Economic news released at 8:30 AM EDT was mildly encouraging. Consensus for May Personal Income was a gain of 0.3% versus 0.5% in April. Actual was a gain of 1.4%. Consensus for May Personal spending was a gain of 0.4% versus a decline of 0.1% in April. Consensus was a gain of 0.3%. (more)
Have Uranium Stocks Found A Bottom?
We had a reasonable upside day but in the end nothing has yet significantly changed from the short or intermediate term. One indicator to watch is the daily volume action. For an up day the volume was pathetic and not encouraging at all. Of course it just might be speculators taking time off with the various holidays that are on-going at the present. I guess we’ll just have to watch and wait and see how things develop.The Merv’s Daily Uranium Index closed higher by 5.81 points or 3.45%. There were 30 winners, 12 losers and 8 going nowhere. The largest stocks were somewhat mixed. Cameco gained 5.1%, First Uranium lost 0.2%, Paladin gained 4.4%, Uranium One was confused and went nowhere and USEC gained 8.0%. The best winner of the day was Strateco with a gain of 13.9% while the loser of the day was Crosshair Exploration with a loss of 7.0%. (more)
Housing Headache
06/25/09 Baltimore, Maryland The U.S. housing market is back to underperforming expectations. We saw the latest existing home sales and new home sales numbers this week — both failed to meet the Street’s forecast.
The National Association of Realtors reported 2.4% growth in existing home sales Tuesday, to an annual rate of 4.7 million. The stock market — no longer satisfied with meager housing growth — wanted a rate of 4.9 million and suffered a small sell-off.
Even though sales managed to increase in back-to-back months for the first time since 2005, existing home prices are still plummeting, distressed sales are still booming and the market is still saturated with a 9.6-month supply of homes… a positive sign that the free market still works, but hardly reason to call a bottom. (more)
Marc Faber Predicts Inflation, Social Unrest, War
Gloom Doom and Boom editor Dr. Marc Faber joins Alex Jones on June 23, 2009. Dr. Faber discusses the reasons for our current crisis, problems with the so-called solutions the government and FED has come up with, hyperinflation, future trends and his forecast in the near- and long-term. (more)
Thursday, June 25, 2009
David Morgan: We Could See Silver Outperform Gold 2:1
The Gold Report: Last month saw the biggest single gain in silver since the 1980s. Why did this happen when it did? And what should we expect in the months to come?
David Morgan: I don't know if anyone can really answer why it happened in May. This sounds trite, but it's true: Any market, commodity or stock, is based on buying or selling pressure. A lot of buying pressure in silver from all angles—the exchange traded funds, the mining equities, and the physical market itself—combined to really push the market higher.
Normally you see good seasonality in precious metals, with peaks sometime in the first quarter every year. We've seen the May peak a couple of times before, the big peak in 2008 also came in May. Here we are again actually in early June and we're still near a peak. I do believe, unfortunately, that we will see the top of this on an intermediate-term basis. (more)
Long Term Buy And Hold Is Still Bad Advice
In spite of what you hear from main stream media and self-serving advice from Wall Street, an investment philosophy of long term buy and hold is not what it's cracked up to be.
Unfortunately, many boomers headed into retirement are finding that out now, at the worst possible time. Moreover, looking ahead, I doubt the next decade is not going to be much better than the last.
Please consider the following analysis from my friend "TC" (more)
Defusing the Dollar Bomb
Already lost is the fact that by the time Obama took office in early 2009, the Fed had already fired every monetary bullet fighting the early stages of the FIRE economy depression. Only fiscal stimulus remained to pull the nation out of a spin dive. But can we afford it?
Buried far deeper in the bottomless abyss of America’s forgotten past are the darkest days of the Carter administration when US deficits spiraled out of control. Gold prices doubled and doubled again as one hundred articles pronounced the dollar doomed. (more)
Wednesday, June 24, 2009
Transfer of Wealth
Hong Kong, China After decades of excess credit and over-consumption, the developed world is finally being forced to deal with private-sector deleveraging. However, the governments seem to have other plans and they’ve decided to fight these deflationary forces tooth and nail. Their solution – even more credit and consumption!
Rather than accept a painful adjustment period, policymakers are desperately trying to revive the party. And in the process, they are making the situation much worse. All over the world, governments are spending trillions of dollars in order to clean up the mess. Unfortunately, the stark reality is that these governments have no money. So, in most instances, these glorious state-sponsored spending programs are being financed by borrowing and money printing. (more)
Buffett Says U.S. May Need a Second Stimulus Package
June 24 (Bloomberg) -- Billionaire investor Warren Buffett said the U.S. may need a second economic stimulus package as unemployment is poised to continue rising.
“It looks like we’re going to need more medicine, not less,” Buffett said today in a Bloomberg Television interview. “We’re going to have more unemployment. The recovery really hasn’t got going.” Buffett is chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc. (more)
FOMC - For Immediate Release
Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. (more)
Right Time For Gold Stocks
Conditions have improved for gold equities, and economic policy decisions being made in Washington could further increase the investment appeal of these mining stocks.
The charts below clearly illustrate the relationship between gold-
mining stocks and the federal budget.
The top chart below compares the total-return performance of the S&P 500 (blue line) with that of the Toronto Gold & Precious Minerals Index* (gold line) going back to 1971, when President Nixon ended dollar convertibility into gold and deregulated the price of gold. (more)
New home sales fall 0.6% to 342,000 yearly rate
WASHINGTON (MarketWatch) -- Sales of new homes in the United States were essentially unchanged near record-low levels in May as home builders continued to slash their inventories of unsold homes, the Commerce Department estimated Wednesday.
Sales dropped 0.6% to a seasonally adjusted annual rate of 342,000 in May from a downwardly revised 344,000 in April. Seasonally adjusted sales have been essentially flat since January, when they dropped to a postwar record low of 329,000. (more)
Banking Holiday Coming?
NEW YORK (MarketWatch) -- The top-performing letter that predicted the Crash of 2008 now predicts a confiscatory Franklin D. Roosevelt-style "bank holiday." But it's surprisingly sanguine about stocks -- in the (very) short term.
The Harry Schultz Letter (HSL) was my pick for Letter of the Year in 2008 because it really did predict what it rightly called a coming "financial tsunami." But its performance in 2008 was still terrible, albeit arguably for technical reasons. ( See Dec. 28, 2008, column.)
Now HSL has bounced back big-time. ( See April 13 column.) Over the year to date through May, it's up a remarkable 81.7% by Hulbert Financial Digest count, compared to 4.1% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. (more)
Tuesday, June 23, 2009
US Wealth May Take 15 Years to Rebound
June 22 (Bloomberg) -- U.S. households may take as long as 15 years to rebuild wealth lost in the recession, said Columbia University professor Edmund Phelps, winner of the Nobel Prize in economics in 2006.
“The only way we’re going to get a healthy, full recovery is over a long period of time, involving households rebuilding their balance sheets and companies in trouble rebalancing their balance sheets,” Phelps said in an interview today with Bloomberg Television. “There’s no silver bullet that’s going to get us into good shape quickly.” (more)
Dow Industrials, Transports, S&P Close Below Key Moving Averages
Last week, we mentioned that technical indicators began to turn negative. Technical damage continued today as the Dow Jones Industrial Average, Dow Jones Transportation Average, and S&P 500 closed below their pivotal 50 and 200 day moving averages (first time since March), with all 3 averages registering an RSI sell signal. NASDAQ bucks the trend and remains above both critical levels. (more)
California Collapsing
Washington and Wall Street seem to be treating California as if it were a sideshow in the financial circus of these turbulent times.
It’s not.
California is home to the largest manufacturing belt in the United States and to Silicon Valley, the nation’s largest high-tech center.
California is America’s most populous state with 38 million people. Its GDP of $1.8 trillion is the largest in the U.S. Its economy is bigger than those of Russia, Brazil, Canada, or India. (more)
The U.S. and the U.K. Will Both Default on Their Debt by the End of Summer
As anticipated by LEAP/E2020 as early as October 2008, on the eve of summer 2009, the question of the US and UK capacity to finance their unbridled public deficits has become the central question of international debates, thus paving the way for these two countries to default on their debt by the end of this summer.
(1) At this stage of the global systemic crisis' process of development, contrary to the dominant political and media stance today, the LEAP/E2020 team does not foresee any economic upsurge after summer 2009 (nor in the following 12 months) (more)
Monday, June 22, 2009
Nightmarish Financial Numbers By The Mogambo Guru
06/22/09 Tampa Bay, Florida Minyanville.com had the headline, “Velocity of Money Comes to a Standstill.” The report starts off with the news that “Current consumption, which at $8.2 trillion is around 70% of GDP, has fallen $150 billion from last year,” and that investment, which represents things like building factories, is $1.3 trillion or 11% of GDP, and down 23.3% from last year.”
This is certainly bad news, although I am always leery of the concept of velocity, as it is just the plug number that makes Fisher’s famous equation (MV = PQ) work out, namely that the Money supply times the turnover of the money (Velocity) equals the Quantity of things sold times the Price of those things that were sold. Simple. (more)
Insiders Exit Shares at the Fastest Pace in Two Years
June 22 (Bloomberg) -- Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.
Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years. (more)
Russia Stocks Fall 20% in World’s First Bear Market Since March
June 22 (Bloomberg) -- Russia’s Micex Index tumbled more than 20 percent from its 2009 peak, becoming the world’s first benchmark equity index to enter a bear market since global stocks began rallying in March.
The index of ruble-denominated shares slid 5.9 percent to 957.56 as of 5:58 p.m. in Moscow, bringing its decline since June 1 to 20.6 percent, according to data from the Micex exchange’s Web site and Bloomberg. The 30-company gauge led a worldwide retreat in stocks this month on concern the global recession will persist for longer than investors anticipated. The MSCI All-Country World Index slid 5.6 percent from its 2009 high, paring its gain from a six-year low on March 9 to 39 percent. (more)
U.S., Europe Stocks Fall, Commodities Drop on Recession Concern
June 22 (Bloomberg) -- U.S. and European stocks tumbled, extending losses from the first weekly decline for global equities in more than a month, as the World Bank said the recession will be deeper than previously forecast. Treasuries rose, while oil fell below $67 a barrel and metals slumped.
Freeport-McMoRan Copper & Gold Inc., Alcoa Inc. and BP Plc lost more than 3.7 percent amid a 2 percent retreat in the Reuters/Jefferies CRB Index of 19 raw materials. Bank of America Corp., the biggest U.S. bank by assets, dropped 3.4 percent as two board members resigned. Walgreen Co., the second-largest U.S. drugstore chain, declined 3.8 percent after reporting earnings that trailed analysts’ estimates. (more)
Freeport-McMoRan Copper & Gold Inc., Alcoa Inc. and BP Plc lost more than 3.7 percent amid a 2 percent retreat in the Reuters/Jefferies CRB Index of 19 raw materials. Bank of America Corp., the biggest U.S. bank by assets, dropped 3.4 percent as two board members resigned. Walgreen Co., the second-largest U.S. drugstore chain, declined 3.8 percent after reporting earnings that trailed analysts’ estimates. (more)
The Truth About Unemployment Numbers
Nowadays, it is often wise to step away from business news sources, and look at original data sources, in order to learn the truth.
If we look carefully at the original information published by the U.S. Department of Labor, we see some surprises. The news stories which have run in CNBC, Marketwatch and Bloomberg, hailing "good unemployment numbers" were not conveying accurate information. Here is the real truth (more)
How The Gold Bull Market Ended (in 1980)
TUESDAY, 22nd JANUARY was a day like any other, only more so, as 1980 got under way.
"Car production fall forecast," said a headline in the Financial Times. "Bleak future for North," said another. "Economic policy deepens pessimism over future," added a third.
It wasn't all doom and gloom in the pink pages. "Lazy millionaire will back energetic individual," said one classified advert; "Property investment opportunity, 18% by 1982," another promised. But the casual investor reading the broadsheet at breakfast, or the professional trader struggling to flick open his FT on the Tube, would be forgiven for feeling as bleak as the weather. (more)
TRANSFER OF WEALTH
There can be no doubt that the global economy is undergoing a massive transformation and we have now entered an era of 'Big Government'.
After decades of excess credit and over-consumption, the developed world is finally being forced to deal with private-sector deleveraging. However, the governments seem to have other plans and they've decided to fight these deflationary forces tooth and nail. Their solution - even more credit and even more consumption! (more)
Sunday, June 21, 2009
Saturday, June 20, 2009
Friday, June 19, 2009
Coming Market Crash: Time To Review
Yesterday this analyst had the bizarre experience of watching two consecutive and conflicting items on the evening Television news:
- A well respected economic forecasting organization is expecting Australian domestic real estate prices to rise by around 19% over the coming three years.
- Over one million homeowners in Australia have fallen behind in their mortgage payments in an environment where one of the country's largest banks has just moved to raise its mortgage interest rates.
Question: If 2 above is a fact, then how can 1 above be possible? (more)
Net Federal Gov't Savings
The U.S. government announced yesterday it will auction a record $104 billion in debt next week. Despite obvious warning signs that the world has had its fill of American paper, the Treasury will forge ahead: $40 billion in 2-years Tuesday, $37 billion in 5-year notes Wednesday and $27 billion in 7-year garbage on Thursday.
They must “get it.” Last week’s sharp rise in 10-year yields was as sure a sign as any that investors everywhere are getting cold feet. A prudent government would take a break… let things cool off. But there’s no rest for Uncle Sam, or his Treasury. They’ve got the mother of all Ponzi schemes to run:
The government chalked up a $189 billion budget deficit last month alone, another record and the eight-straight monthly deficit. We suspect they’d love to take a break from force-feeding the market notes and bonds, but they can’t… the Treasury will have to auction $2 trillion in debt this year just to keep the lights on.
(An interesting aside… funny how government savings started circling the bowl at the precise moment the gold standard was abandoned.)
Who Is Really Behind the GM Bankruptcy?
The bankruptcy of General Motors (GM) is very similar to the collapse of the twin towers of the World Trade Center on 9-11. Both catastrophic events are described in the controlled media as having occurred due to natural forces, while actually they are both the results of sabotage carried out by insiders. In both cases, the people who brought down the operation were Trojan Horses, people who had bought their way into positions of control in order to destroy them. The people behind the destruction of GM and the WTC are corporate raiders of the worst kind. (more)
S&P 500 Long, Medium, and Short Term
Starting out from the long term and working our way to the short term, below is a technical analysis of the S&P 500 index. The rally that began in 2003 produced a bull market (defined a series of higher highs and higher lows), that lasted until October of 2008 and resulted in a gain of almost 100% when measured from its low, at about 800, to its high at about 1550. The market went from a bull to a bear market after October 2008, making a trend of lower lows and lower highs. In the summer of 2008, the market crashed into the fall of 2008, followed by a sharp rally, and then another crash that took the index into a low at 666 in early March of 2009. The subsequent rally from early March in the context of the long term looks more like a reaction than a trend. I say that because of the sharpness, almost “panic” buy nature of the rally. It resembles the “panic” sell that preceded it. Of course, this rally can be the beginning of a new bull market. Or it could be a reaction in a longer term bear market. (more)
Thursday, June 18, 2009
Financial Sector: On the Mend or in the Mire?
06/18/09 Laguna Beach, California Today we examine a couple of recent stories from Fantasyland - otherwise known as Wall Street. Seven of America’s largest banks repaid their TARP borrowings to the US Treasury yesterday, in the process providing one more occasion for hopeful investors to proclaim the end of the credit crisis. The details of the repayments were as follows: (more)
Gasoline, Oil Strategies
Crude Oil
Given slack demand tied to the global recession, some have questioned whether recent gains in crude oil are indeed justified. I am one of the biggest commodity bulls out there (I had been recommending buying oil in January and February), but I do think crude oil is a bit toppy, and the charts are showing a potentially bearish crossover right now that could be indicating a near-term correction.
NYMEX July crude oil futures have been struggling to move above $70 a barrel, and I think a correction could take the market down to $65, the 200-day moving average, or lower, to the 50-day moving average at $61. I see that as a good value area to buy in line with a resumption of another leg up in July and August. (more)
Wednesday, June 17, 2009
CPI Drops 1.3% in Past Year, Biggest Drop in 59 Years
U.S. consumer prices increased a seasonally adjusted 0.1% in May as falling food prices largely offset higher gasoline prices, the Labor Department reported Wednesday.
It was the first increase in three months in the consumer price index, which tracks inflation at the retail level. The CPI has fallen 1.3% in the past year, the sharpest decline in prices since April 1950.
The Federal Reserve has warned that deflation remains a major risk, with the global recession putting downward pressure on prices. Slack in the nation's economy -- a high unemployment rate and many idle factories and stores -- should keep inflation in check for the next year or two, Fed officials say. (more)
It was the first increase in three months in the consumer price index, which tracks inflation at the retail level. The CPI has fallen 1.3% in the past year, the sharpest decline in prices since April 1950.
The Federal Reserve has warned that deflation remains a major risk, with the global recession putting downward pressure on prices. Slack in the nation's economy -- a high unemployment rate and many idle factories and stores -- should keep inflation in check for the next year or two, Fed officials say. (more)
Capacity Utilization
It’s a simple concept that’s hard to track. Capacity utilization measures what percent businesses are using existing capabilities. 100% marks an economy “firing on all cylinders,” as the corporate catchphrase goes. When consumer demand drops, so too does capacity utilization… and since 1970, it hasn’t picked up until the worst is over.
Yesterday, capacity utilization in the U.S. found a record low of 68.3%. The Federal Reserve said utilization fell another 0.7 percentage points from April to May, to the lowest score since at least 1967, when they started keeping track. Factory output is down 13.4% over the last year, the biggest drop since 1946.
Tuesday, June 16, 2009
U.S. Home Prices to Fall 14% More
June 16 (Bloomberg) -- U.S. home prices may fall another 14 percent, led by the New York and Orange County, California, metropolitan areas, before reaching a bottom as an increase in unemployment offsets lower prices, Deutsche Bank AG said.
“Affordability is no longer the driving issue in the housing market, and we believe prices still have a ways to fall in many areas before home prices reach their trough,” Deutsche Bank analysts led by Karen Weaver, wrote in a report yesterday. “The bottom is getting closer, but we are not there yet.”
Home prices are forecast to fall 41.7 percent from their peak, Weaver said. That’s higher than a forecast she released in March and reflects “the actual declines to date and the expected future impact on home prices from rising foreclosure inventory and unemployment.” (more)
“Affordability is no longer the driving issue in the housing market, and we believe prices still have a ways to fall in many areas before home prices reach their trough,” Deutsche Bank analysts led by Karen Weaver, wrote in a report yesterday. “The bottom is getting closer, but we are not there yet.”
Home prices are forecast to fall 41.7 percent from their peak, Weaver said. That’s higher than a forecast she released in March and reflects “the actual declines to date and the expected future impact on home prices from rising foreclosure inventory and unemployment.” (more)
U.S. likely to lose AAA rating: Prechter
NEW YORK (Reuters) - Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.
Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy. (more)
Monday, June 15, 2009
Is Bottom In Gold & Silver Near?
In my previous essay I wrote the following:
(...) once you consider details, the outlook becomes rather bearish in the short term. The point here is that volume has been declining while gold has been rising and it rose along with declining gold price. Volume usually confirms the direction in which the market is headed, and this time it points to lower prices in coming days. Naturally, a day or two of pause are possible (and also quite likely), as gold is currently just at its support level, but still - it is likely that gold will move lower in the short term.
This is exactly what took place during the rest of the week - we had slightly higher prices of gold, silver and mining stocks in the middle of the week, but they closed lower on Friday. Of course the key question here are: "Is the bottom already in?" and "Is it safe to get back on the long side of the market?" In short, it seems that we are going a little lower before we will reach a local bottom. (more)
Act II of the Food Crisis?
06/15/09 Gaithersburg, Maryland Inflation – rising prices, or a drop in the purchasing power of the dollar – will soon rise to the very top of economic concerns. I can’t understand why there are pundits who insist we can’t have inflation while the economy is weak. There are plenty of examples of weak economies with high inflation. After all, I don’t think they are hitting on all cylinders in Zimbabwe, where inflation is thousands of percent. (more)
Peak Soil Investment: This Quiet Land Grab is Just Beginning
According to the Economist, Saudi Arabia, Kuwait, and China have been “quietly” buying up more than $20 billion of this asset.
It’s not oil or natural gas assets though. And it’s not the molybdenum they need to build thousands of miles of new pipelines. They’re buying up one of my favorite long-term investments, farmland.
The way things are shaping up, investors who follow their lead now will do exceptionally well in the short-term and long-term. Let me explain. (more)
It’s not oil or natural gas assets though. And it’s not the molybdenum they need to build thousands of miles of new pipelines. They’re buying up one of my favorite long-term investments, farmland.
The way things are shaping up, investors who follow their lead now will do exceptionally well in the short-term and long-term. Let me explain. (more)
Sunday, June 14, 2009
3 Currency ETFs for a Falling Dollar
To every action there is an equal and opposite reaction. Newton's third law of motion has proven itself once again as the U.S. dollar, and related ETFs, is negatively affected by robust government spending policies.
The U.S. dollar has depreciated against each of the 16 most-active currencies since March 5 as investors worried over the nation’s ability to fund the budget deficit, reports Candice Zachariahs for Bloomberg. Investors are turning to cyclical currencies with strong balance sheets, such as the Norwegian Krone and Canadian dollar.
Treasury yields in between the 2- and 10-year notes increased to a record 2.793%, reflecting investors’ demand for higher premiums on longer government loans and the possibility of inflation eating away returns. (more)
The U.S. dollar has depreciated against each of the 16 most-active currencies since March 5 as investors worried over the nation’s ability to fund the budget deficit, reports Candice Zachariahs for Bloomberg. Investors are turning to cyclical currencies with strong balance sheets, such as the Norwegian Krone and Canadian dollar.
Treasury yields in between the 2- and 10-year notes increased to a record 2.793%, reflecting investors’ demand for higher premiums on longer government loans and the possibility of inflation eating away returns. (more)
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