Saturday, October 31, 2009
U.S. Stocks Drop as S&P 500 Ends Streak of Seven Monthly Gains
U.S. stocks tumbled, ending a seven- month streak of gains for the Standard & Poor’s 500 Index, as declines in consumer confidence and spending and the threat of a CIT Group Inc. bankruptcy raised concern over the durability of the economic recovery. The dollar and Treasuries gained, while commodities retreated.
CIT, the commercial lender, plunged 24 percent as investor Carl Icahn agreed to support its prepackaged bankruptcy plan. Citigroup Inc. tumbled 5.1 percent on a report that banking analyst Mike Mayo predicted a $10 billion writedown for this quarter. American Express Co. and Walt Disney Co. slid as Commerce Department data showed a drop in purchases and the Reuters/University of Michigan sentiment index weakened. MetLife Inc. lost 7.6 percent after a third straight quarterly loss. (more)
Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash
Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.”
“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up.”
U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19. (more)
Facing A Total Breakdown Of Financial Markets – Bob Chapman
The Wisconsin Department of Financial Institutions shut down the bank and turned it over to the Federal Deposit Insurance Corporation. The FDIC in turn sold it to an Oak Creek-based bank. The FDIC entered into an agreement with the Oak Creek-based Tri City National Bank to assume all of the Bank of Elmwood deposits and assets.
As of Sept. 30, 2009, Bank of Elmwood had total assets of $327.4 million and total deposits of approximately $273.2 million. (more)
Soros: Double-Dip Global Recession Possible
The global economic recovery is liable to run out of steam and the risk of a double-dip recession remains real, billionaire investor George Soros said on Friday, a day after the U.S. economy returned to growth.
The world financial system needs to be reinvented to prevent a repeat of the crisis, Soros told a lecture in Budapest, calling for a new Bretton Woods conference to revise the IMF's methods of operation and consider new rules to control capital movements.
"I regret to tell you that the recovery is liable to run out of steam and may even be followed by a 'double dip,' although I am not sure whether it will occur in 2010 or 2011," Soros said. (more)
Friday, October 30, 2009
Silver Unmasked
Most individuals have no clue about the dynamics of silver, thinking there is an infinite supply of it both above and below ground. But those savvy investors who incorporate commodity based stocks in their portfolios likely own the silver ETF (SLV) or silver miners with a high degree of leverage to the price of silver. The largest of this group include Silver Wheaton (SLW), Pan American Silver (PAAS), Coeur d'Alene Mines (CDE), Silver Standard Resources (SSRI), Hecla Mining (HL). There are also numerous junior and exploration companies that will provide extraordinary returns over the long term.
Silver is often thought to be a metal and little else. It is often assumed that silver is rather cheap due to the lack of scarcity. But both of these assumptions don't reflect the true underlying dynamics. (more)
Market Cheers Over Ugly GDP Report
Today the market is cheering over what is actually an ugly report.
A misguided Cash-for-Clunkers added a one-time contribution of 1.66 percentage points to GDP. Auto sales have since collapsed so all the program did is move some demand forward.
Government spending increased at 7.9 percent in the third quarter which is certainly nothing to cheer about.
Personal income decreased $15.5 billion (0.5 percent), while real disposable personal income decreased 3.4 percent, in contrast to an increase of 3.8 percent last quarter. Those are horrible numbers. (more)
A misguided Cash-for-Clunkers added a one-time contribution of 1.66 percentage points to GDP. Auto sales have since collapsed so all the program did is move some demand forward.
Government spending increased at 7.9 percent in the third quarter which is certainly nothing to cheer about.
Personal income decreased $15.5 billion (0.5 percent), while real disposable personal income decreased 3.4 percent, in contrast to an increase of 3.8 percent last quarter. Those are horrible numbers. (more)
Stock analysts issue 'Black Tuesday' warning Trends on anniversary of 1929 collapse indicate markets on verge of 'crash'
On this 80th anniversary of the "Black Tuesday" stock market collapse, some analysts are experiencing déjà vu, warning a major crash in the stock market is imminent. Graham Summers, senior market strategist at OmniSans Research, wrote in the firm's daily e-letter yesterday that the markets may finally be on the verge of the crash he has been predicting for more than two months.
"Well, judging from the market's action today, I believe we may be within 48 hours of getting the "Official Sell" signal I've been waiting for," he wrote in "Gain, Pains, and Capital." (more)
Gold to Rise to $2,000 Amid ‘Massive’ Inflation, Superfund Says
Gold may rise to a record $2,000 an ounce in the next three years as investors hedge against “massive” inflation sparked by governments printing money, according to Superfund Financial Singapore Pte’s Aaron Smith. “In the next few years, after the deflation cycle, we’ll see massive inflation,” Managing Director Smith, 30, said in an interview. “Soon, when you go to buy a cup of coffee, you’ll pay $20 or $30 because the dollar won’t be worth anything.”
The company’s Superfund Green Gold A Fund, which has more than doubled since its inception in 2005, has lost 15.6 percent this year because of higher volatility, said Smith, who joined in 2002. Gold rose to an all-time high this month as governments including the U.S. boosted debt to combat the global recession. (more)
How 56.5 Million Households Live
The recent American Consumer Survey had some thought provoking data regarding the typical American household. Wages over the past decade have been stagnant. At least that is what is propagated in the common datasets but in reality, not only has income not grown it has actually declined. The U.S. dollar during this time has been crushed as well. So incomes moving in a horizontal fashion may appear to be steady for Americans, but in reality the purchasing power has fallen due to inflation (not recently) and the declining dollar. Think of the rising cost of housing, healthcare, food, and automobiles. In the last decade, even after the housing bust, prices are still higher yet incomes still lag. (more)
Blow to Nymex as Saudis drop benchmark
Saudi Arabia yesterday decided to drop the West Texas Intermediate oil contract as the benchmark for pricing its oil, dealing a blow to the New York Mercantile Exchange. The decision by the biggest oil exporter could encourage other producers to abandon the benchmark and threatens the dominance of the most heavily traded oil futures contract.
The move reveals the growing discontent of Riyadh and its US refinery customers with WTI after the price of the benchmark became separated from the global oil market this year.
The surge in oil inventories in Cushing, Oklahoma, where WTI is delivered into America's pipeline system, depressed the value of the WTI contract against other benchmarks, throwing the oil market into disarray.
In January, WTI, which usually trades at a premium of $1-$2 (U.S.) a barrel to Brent, fell sharply, leaving it at a discount of almost $12 - a record gap. (more)
Thursday, October 29, 2009
Roubini: Global Markets Could Soon Crash
The global markets are at risk of crashing when the dollar rebounds, says economist Nouriel Roubini.
Roubini, a professor at NYU, is credited with long predicting the financial collapse of 2007 and 2008.
“In the short run what’s happening is there’s a wall of liquidity, not just in the U.S., but around the world, that is chasing assets,” he told CNBC.
“It’s equities, it’s commodities, it’s credit, it’s gold, it’s emerging market asset classes.” (more)
CNBC Viewership Plunges 50% In October
If anyone wants to know why CNBC anchors are so pale and nervous these days, look no further. As Comcast CEO Brian Roberts considers what to keep and what to, well, cut, post his digestion of NBC Universal (assuming deal rumors are true naturally) his eyes likely cast casual nervous glances at Nielsen reports of CNBC viewership. Yet his nervousness is quite minor compared to what actual employees must be feeling after Nielsen reported a 50% plunge in CNBC vierwership in October year over year. Specifically, CNBC has experienced a massive 52% decline in overall viewers during business day hours (5 am - 7 pm), and a not much better 49% drop in its demo (25-54) in the month of October as compared to last year. Specific shows that are likely to follow the fate of Dennis Kneale's recently cancelled 8pm gobbledygook are likely the Kudlow Report and Mad Money, which are down 59% and 56%, respectively. (more)
Study: Recession Makes Retiring at 65 Harder
Workers in more than half of U.S. households will likely be unable to retire at 65 at the same lifestyle they enjoy today, a new study says.
The Center for Retirement Research at Boston College says its latest analysis of household financial status shows 51 percent are at high risk of falling short of having enough money in retirement. That's up from 44 percent in 2007.
The center's National Retirement Risk Index was developed with funding from Nationwide Mutual Insurance Co. (more)
Fears of a New Chill in Home Sales
Even as new figures show house prices have risen for three consecutive months, concerns are growing that the real estate market will be severely tested this winter.
Artificially low interest rates and a government tax credit are luring buyers, but both those inducements are scheduled to end. Defaults and distress sales are rising in the middle and upper price ranges. And millions of people have lost so much equity that they are locked into their homes for years, a modern variation of the Victorian debtor’s prison that is freezing a large swath of the market.
“Plenty of pain yet to come,” said Joshua Shapiro, chief United States economist for MFR. He is forecasting an imminent resumption of price declines. (more)
Artificially low interest rates and a government tax credit are luring buyers, but both those inducements are scheduled to end. Defaults and distress sales are rising in the middle and upper price ranges. And millions of people have lost so much equity that they are locked into their homes for years, a modern variation of the Victorian debtor’s prison that is freezing a large swath of the market.
“Plenty of pain yet to come,” said Joshua Shapiro, chief United States economist for MFR. He is forecasting an imminent resumption of price declines. (more)
McAlvany Weekly Commentary, Oct 28, 2009
Where Keynes Went Wrong: An Interview with Hunter Lewis
October 28th, 2009
< href="http://www.mcalvany.com/podcast/#" onclick="javascript: podPressShowHidePlayer('1','http://www.mcalvany.com/podcast/wp-content/uploads/ica2009-1028.mp3',300,30,'true'); return false;">Hide Player | Play in Popup | Download Mp3Jim Rogers: Dollar Rally Ahead
Investment legend Jim Rogers says the dollar is due for a correction upward and commodities and stocks for a correction downward.
Those would be natural reactions after the extreme recent moves in those markets.
“The dollar is overdue for a rally. Everybody in the world is pessimistic on it, including me,” Rogers told Bloomberg.
“Whenever you have everybody on the same side of a boat, you know it’s time to move to the other side for a while. We may have a rally in the dollar, we may have a decline in perhaps some of the commodity prices or stock prices for a while. . . That’s what always happens.” (more)
Gold Declines and USD Rises, But Are These Moves Really Significant?
Precious metals moved lower this week, which was accompanied by a decline in the general stock market and a small rally in the USD Index. The situation in the main stock indices is still rather unclear, so this week I would like to point your attention to the U.S. Dollar as it provides clues invaluable to anyone involved in the precious metals sector. After all, there is a clearly visible negative correlation between USD Index and gold, silver and PM stocks. Let's begin with the chart (charts courtesy of http://stockcharts.com) featuring the USD Index in the medium term, and after that I will move to the short-term analysis. (more)
The coming public pension nightmare
With all the fiscal problems created by Barack Obama, the public pension crisis cannot be laid at his doorstep.
That's because public unions - police, firefighters, teachers, state and local workers, and transit employees - have been gouging cities and states for years, sweetening their pensions at taxpayer expense until a nightmare is now on the horizon; the inability of cities and states to pay for these diamond-studded pension plans.
And that will eventually mean a taxpayer bailout to end all taxpayer bailouts. (more)
That's because public unions - police, firefighters, teachers, state and local workers, and transit employees - have been gouging cities and states for years, sweetening their pensions at taxpayer expense until a nightmare is now on the horizon; the inability of cities and states to pay for these diamond-studded pension plans.
And that will eventually mean a taxpayer bailout to end all taxpayer bailouts. (more)
A Perfect Setup for a Stock Market Correction
Since there’s no holy grail to analyze financial markets, the best approach is an eclectic one. So I incorporate as many tools as possible in my analysis, including: Fundamental valuations, macroeconomic models, monetary and fiscal policies, interest rate developments, sentiment and momentum indicators, and chart analysis.
Major market turning points are usually characterized by many of these tools. That was clearly the case in 2007 when everything fell neatly into place to call the end of a bull market that had started in 2003. (more)
Wednesday, October 28, 2009
Waiting for the Next McMansion to Drop
Despite some tentative signs of recovery, the U.S. housing market remains vulnerable to further price drops—especially in areas where large numbers of mortgages are headed toward foreclosure over the next few years. The Wall Street Journal's quarterly survey of housing-market data in 28 major metro areas shows sharp drops in the number of homes listed for sale across the country. But the potential supply of homes is far larger because banks are likely to acquire significant numbers of foreclosed homes in some areas, notably Las Vegas, Atlanta, Detroit, Phoenix, Miami and other parts of Florida, and Sacramento, Calif., over the next few years.
Sales of those homes may depress prices further. By contrast, metro areas with relatively low foreclosure and mortgage-delinquency rates include Boston, Denver, Minneapolis, San Francisco, Seattle, Raleigh, N.C., and Portland, Ore., making them less vulnerable. (more)
Banks 'are a threat to economic recovery'
Britain's dysfunctional banking system could condemn the country to a stillborn economic recovery, a Bank of England expert warned last night. Adam Posen called on ministers to break up outsized banks and encourage healthy new entrants into the sector to secure a sustainable rebound.
He said the financial system was in the hands of a few big players, who deny businesses credit while engaging in unproductive speculation. (more)
Supply of Conventional Crude Oil is Very Close to It's Peak
After oscillating within a trading range for several weeks, the price of crude oil has recently broken out to a new recovery high. Now, you will recall that we have been firm believers of 'Peak Oil' since 2003 and we were expecting this bullish resolution. Look. Skeptics can say what they want; it does not change the fact that our world is struggling to maintain daily flow-rates. Whether you agree with us or not, the energy reality is that the supply of conventional crude oil is very close to its peak and no other fuel source can easily fill the supply gap.
Yes, various governments are now promoting alternative sources of energy and over the following years, we expect this drive to intensify. But those sources will provide too little, too late. So there remains, today, an unbelievable degree of denial when it comes to 'Peak Oil.' Most people simply dismiss it as a conspiracy. Others gleefully point to alternative sources of energy, whereas some believe that the vast improvements in oil drilling technology will save the day. Do not be seduced by these delusional hopes. (more)
Is It Really the End of the Dollar Carry Trade?
They don't ring a bell at the top, goes the old saying. But all we could hear last night was cow bell and more cow bell. Granted, it was part of the percussion section of a jazz/blues/funk band playing for the opening of a new art gallery on St. Kilda Road. But we're going to take the cow bell as a warning, and dedicate today's Daily Reckoning to it. But a warning about what? Sure, stocks, oil, and gold were all down yesterday and the U.S. dollar was up. But is it really the end of the dollar carry trade? And if it is, what happens next?
More cow bell!
We should back up a second. What is the dollar carry trade? It's the engine of bank profit growth this year. It's what's given the illusion that the financial system has recovered from its brush with death last year. (more)
Are You Middle Class? Maybe Not For Long
Many people write of the imminent destruction of the U.S. middle class (of which I consider myself a member) but few have explained specifically how this occurs. Understanding the mechanism seems important if I hope to avoid the fate of most of my peers.
An insight on this question came from an unexpected quarter.
A gentleman by the name of Fernando Aguirre, who posts on Internet forums and his blog as FerFAL, has written voluminously about his experiences as an Argentine citizen during and after the economic cataclysm that wracked his country in 2001. I first found a long forum post, and then a Google search of "FerFAL" revealed a larger web presence, including a recently published book (more)Fed Economist: "It Will Be Difficult for the Housing Market to Return to Normal"
The government, for all practical purposes, now controls the entire housing mortgage market.A senior economist at the San Francisco Federal Reserve Bank, John Krainer, said in a report that that government sponsored enterprise intermediation of mortgage lending will make it difficult for the housing market to "return to normal."
Krainer said that GSEs such as Fannie Mae, Freddie Mac and Ginnie Mae now guarantee over 80% of originations, while non-agency mortgage securitization and loans have pretty much dried up. (more)
U.S. bank chargeoff rate exceeds Depression: Moody's
The rate of loan charge-offs by major U.S. banks has exceeded those seen in the early years of the Great Depression as the credit crisis continues to take a toll, Moody's Investors Service said on Monday.
Bank charge-offs -- loans written off as uncollectable -- have reached $116 billion year to date, or 2.9 percent of outstanding loans on an annualized basis, Moody's said in a report. By comparison, bank charge-offs were about 2.25 percent in 1932, the third year of the Great Depression, Moody's said.
Charge-offs climbed to $45 billion in the third quarter from $40 billion in the second quarter and $31 billion in the first, Moody's said. (more)
The Super Rich are Laughing
The US has every characteristic of a failed state.
The US government's current operating budget is dependent on foreign financing and money creation.
Too politically weak to be able to advance its interests through diplomacy, the US relies on terrorism and military aggression.
Costs are out of control, and priorities are skewed in the interests of rich organized interest groups at the expense of the vast majority of citizens. For example, war at all cost, which enriches the armaments industry, the officer corps and the financial firms that handle the war's financing, takes precedence over the needs of American citizens. There is no money to provide the uninsured with health care, but Pentagon officials have told the Defense Appropriations Subcommittee in the House that every gallon of gasoline delivered to US troops in Afghanistan costs American taxpayers $400. (more)
Tuesday, October 27, 2009
When Will Inflation Really Hit Us?
Some interesting reading this weekend is this ‘take’ on inflation by Terry Coxon, Editor, The Casey Report Most of us are gathered at the station, watching for the Inflation Express to come rumbling in. But we’ve been waiting for a while now. Just when should we expect the big locomotive to arrive and start pushing the prices of most things uphill?
We’d all like to know the exact date, of course, but no one can know for sure. Not even a careful reading of the Mayan calendar will help. What we can do is estimate a time range for price inflation to show up, and that alone should have some important implications for investment decisions. (more)
Gold, Silver, Oil, Natural Gas ETF Trading
The past week in gold, silver, oil, natural gas and the broad market wasn’t anything to write home about. We are seeing controlled profit taking which is making the market choppy. Many traders are getting very bearish on the market which is a good thing in my opinion. According to my market internals, sentiment and volume analysis we should get a shake out (sharp dip) which would make traders exit their positions before the market continues higher. Some trader’s say we are in a bull market, others say we are in a major bear market. Either way the trend is up on the daily and weekly charts and companies are making money. Buying on over sold dips has been very profitable this year. Until I see things drastically change, this is my strategy for the broad market.
Lets take a look at the commodity sector. (more)
Insight: Is China due a reality check?
The United States had 1929, Japan 1989, and south-east Asia 1997. Will China face a similar moment of reckoning a few years from now?
The question is crucial, not just for those investing in Asia today, but for the wider global market. For as investors around the world reel from the recent financial crisis, many have clung to the idea of a Chinese boom, as the one bright spot of hope in an otherwise grim world. The trouble is that history suggests that much of this optimism may be misplaced.
Healthcare system wastes up to $800 billion a year
The U.S. healthcare system is just as wasteful as President Barack Obama says it is, and proposed reforms could be paid for by fixing some of the most obvious inefficiencies, preventing mistakes and fighting fraud, according to a Thomson Reuters report released on Monday. The U.S. healthcare system wastes between $505 billion and $850 billion every year, the report from Robert Kelley, vice president of healthcare analytics at Thomson Reuters, found.
"America's healthcare system is indeed hemorrhaging billions of dollars, and the opportunities to slow the fiscal bleeding are substantial," the report reads. (more)Morgan Stanley: This Rally Almost Over
According to Morgan Stanley euro analyst Teun Draaisma, we've got just a little bit more rally left, and then a long, low multi-year grind as moneys starts to get tight.
The tightening phase may start in the next quarter or two, Draaisma observes.
“We believe investors need increasingly to consider the implications of monetary and fiscal stimulus withdrawal,” he says.
“We expect the first Fed rate hike in mid-2010, but the tightening turning point could come sooner, for instance through higher oil.” (more)
Food will never be so cheap again
The world's grain stocks have dropped from four to 2.6 months cover since 2000, despite two bumper harvests in North America. China's inventories are at a 30-year low. Asian rice stocks are near danger level. Yet farm commodities have largely missed out on Bernanke's reflation rally in metals, oil, and everything else. Dylan Grice from Société Générale sees "bargain basement" prices.
Wheat has crashed 70pc from early 2008. Corn has halved. The "Ags" have mostly drifted sideways over the last six months. This divergence within the commodity family is untenable, given the bio-ethanol linkage to oil. (more)
After the Billionaires Plundered Alabama Town, Troops Were Called in ... Illegally
One of this year's more disturbing stories that were ignored was the illegal Army occupation of Samson, Alab., in March following a shooting spree that raged across two towns by a disgruntled worker, leaving 11 people dead.
As I wrote at the time, Michael McLendon, 27, went on a killing rampage following years of relentless corporate exploitation and harassment against him, his mother (whom he mercy-killed), and the entire rural Alabama region, which suffered like so many parts of rural America at the hands of billionaire goons like chicken oligarch Bo Pilgrim of Pilgrim's Pride notoriety.
One of the creepiest details to emerge in the shooting rampage were reports that troops from nearby Fort Rucker were brought into Samson and other surrounding areas to patrol the streets. This is a clear violation of the Posse Comitatus Act, every freedom-loving American's worst nightmare. (more)
Back-Door Taxes Hit U.S. With Financing in the Dark
Salvatore Calvanese, the treasurer of Springfield, Massachusetts, for four years, had a ready defense for why he risked $14 million of taxpayer money on collateralized-debt obligations laden with subprime mortgages in 2007.
He didn’t know what he was buying, he says, and trusted the financial professionals who sold them and told him they were safe.
“I thought they were money markets that were just paying more,” Calvanese said in an interview. “Nobody ever used the term ‘CDO,’ and I am not sure I would have known what that was anyway.” (more)
Rate Of Bank Charge Offs Surpasses That Set During Great Depression
Even as the cataclysmic events of last year fade into memory and most pundits are convinced that the government alone can push the country into prosperity, if it only wasn't for that pesky unemployment number that just refuses to cooperate, yet another comparison with the Great Depression emerges, one that shows that the current period is in fact even worse than what occurred in the years after 1930. Moody's has released an analysis which shows that the most recent rate of bank charge offs, which hit $45 billion in the past quarter, and have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 2.25% hit in 1932, before peaking at at 3.4% rate by 1934. (more)
S&P 500 Overvalued by 40%, Set to Fall, Smithers Says
The U.S. Standard & Poor’s 500 Index is about 40 percent overvalued and headed for a drop as central banks pull back on securities purchases that pushed up asset prices, according to economist Andrew Smithers.
Declines are likely because banks will need to sell more shares to raise capital, the economist and president of research firm Smithers & Co. said in an Oct. 23 interview at Bloomberg’s Tokyo office. The closing price on Oct. 23 of 1,079.6 was 40 percent above 771.14, a level last seen in March, according to data compiled by Bloomberg. (more)
The Mortgage Problem Is NOT Over
“This chart shows you it isn’t over yet,” Chris Mayer begins today. Chris, Dan Amoss and Addison Wiggin all made the trip to NYC last week to attend the annual Value Investing Congress. Here’s the bit that caught Chris’ attention, a redux of the famous Credit Suisse chart, courtesy of Whitney Tilson and Glenn Tongue of T2 Partners:“These helped frame where we are in the mortgage crisis,” adds Chris, “which has been the main shark in the water over the past couple of years. You should know where that shark is and whether or not it is hungry…
“Clearly, it is not yet safe to get back in the water: Years 2010 and 2011 face big resets in so-called Alt-A and Option ARM loans. What this means is more write-downs and more losses for banks and others who hold these mortgages.
“The bounce in home building stocks looks ridiculous in light of what they have to look forward to. The T2 duo actually recommended shorting the home building stocks through the iShares Dow Jones U.S. Home Construction ETF (ITB)… I like the idea of shorting homebuilders. At the very least, I wouldn’t buy one.”
Monday, October 26, 2009
Economic News This Week
The economic focus this week is on the preliminary third quarter GDP report.
September Durable Goods Orders to be released at 8:30 AM EDT on Tuesday are expected to improve to 0.7% versus -2.4% in August.
October Consumer Confidence to be released at 9:00 AM EDT on Tuesday is expected to improve to 54.0 from 53.1 in September.
September New Home Sales to be released at 10:00 AM EDT on Wednesday is expected to increase to 440,000 from 429,000 in August.
Preliminary third quarter GDP to be released at 8:30 AM EDT on Thursday is expected to increase to 3.0% from -0.7% in the second quarter.
September Personal Income to be released at 8:30 AM EDT on Friday is expected to be unchanged versus a gain of 0.2% in August.
September Personal Spending to be released at 8:30 AM EDT on Friday is expected to decline 0.4% versus a gain of 1.3% in August.
October Chicago PMI to be released at 9:45 AM EDT on Friday is expected to increase to 48.5 from 46.1 in September.
October Michigan Sentiment to be released at 9:55 on Friday is expected to increase to 70.0 from 69.4.
Earnings News
Canadian companies are prominent on the list of companies reporting third quarter earnings this week.
Monday sees reports from Avon, Corning, Electronic Arts and Verizon.
Tuesday sees reports from Apollo, Canadian Pacific, Massey Energy, Methanex, Norfolk Southern, Open Text, Rogers Communications, TransAlta, U.S. Steel and Visa.
Wednesday sees reports from Agnico Eagle, Conoco Phillips, General Dynamics, Goodyear, Exxon Mobil, Imperial Oil, Kellogg, Lundin Mining, Newmont and Procter & Gamble.
Thursday sees reports from Aetna, Apache, Barrick Gold, Canfor, Colgate, Exxon Mobil, Imperial Oil, Kellogg, Lundin Mining, Newmont and Procter & Gamble.
Friday sees reports from Chevron, Domtar, Eldorado Gold, Tim Horton and Weyerhaueser.
Louise Yamada Interview On Gold, Inflation, Deflation, Commodities And Fiat Currencies
Louise Yamada with an extensive and very interesting audio interview. A great opportunity to see the markets from a technical trader’s perspective. Louise Yamada shares her outlook on gold, the US Dollar and the sectors that are either in structural bear or bull markets.
To listen click here
Huge commercial real estate lender may file bankruptcy, heightens meltdown fears
Analysts have been warning for months that commercial real estate would be the next financial tsunami. Vacancy rates have hurt landlord receipts. Tenants are able to force lower rents in negotiations due to the rising vacancies. Some tenants are filing bankruptcy or walking away from leases completely.
Commercial real estate losses have already started to show up in the financial statements of the largest banks. Some of the 106 banks closed this year under the supervision of the FDIC had tremendous losses on their commercial real estate portfolios. (more)
Detroit house auction flops for urban wasteland
In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded. After five hours of calling out a drumbeat of "no bid" for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag.
"OK," he said. "We only have 300 more pages to go."
There was tired laughter from investors ready to roll the dice on a city that has become a symbol of the collapse of the U.S. auto industry, pressures on the industrial middle-class and intractable problems for the urban poor. (more)
Top 10 States make up 55 Percent of United States GDP. 6 of the top 10 States have Unemployment Rates over 10 Percent.
It should come as no surprise that the economic production of each state is not evenly divided. There are many variables including population, industrial base, and regional specialties. With this deep recession it is important to get an understanding of how things are divided in the United States. It is easy to get into the mode of thinking everything is evenly divided or the recession is being felt equally across state lines. It is not. Some states like California had historical housing bubbles that saw real estate prices in some areas triple in 10 years only to come crashing down. Other areas like Texas had minor real estate appreciation. In the United States 10 states make up 55 percent of all GDP. The U.S. in 2008 had a GDP of $14.16 trillion and these states produced $7.89 trillion of that amount. (more)
Experts see rebounding economy shedding jobs
Forget a jobless recovery. The economy may be entering a recovery with job losses.
Third-quarter estimates this week are expected to show that the economy grew for the first time since the quarter ending in June 2008. Despite the estimated 3 percent expansion and a stock market that has been on a tear since March, hundreds of thousands of people are still being laid off each month.
Eight million jobs have been lost nationwide since the recession began two years ago, and by some measures workers face the worst job market since the Depression. The average laid-off worker has been without a job for 61/2 months, a post-World War II record. Many of those workers will never recover financially. (more)
Percent of Permanent Job Losses at Highest in Over 30 Years
The Atlanta Fed’s macroblog has compiled a roundup of evidence showing that the economy is in a jobless recovery. It shows that jobs are scarce, that a higher than average number of jobs have been lost in small businesses (which is a bad sign), and that many workers have been forced into part time status.
However, the data point that really jumps out is this one — the dominant reason for unemployment in the current economy is permanent separation. Permanent separation is when a job is cut and it’s never coming back…versus temporary layoffs, quitting, and other types of job losses.
It’s a unique point because the percent of permanent job losses haven’t been this high in over 30 years, and as the article goes on to say, “Never, in the six recessions preceding the latest one, did permanent separations account for more than 45 percent of the unemployed. The current percentage stands at 56 percent as of September and appears to be still climbing.” (more)
Key China box index drops for first time since June
Alarm bells are ringing for liner firms as one of the most accurate gauges of the container index fell for the first time in more than four months Friday. The China Containerised Freight Index, operated by the Shanghai Shipping Index, dropped for the first time since early June today. Despite lines reporting increased volumes and some being successful with rate increases this news will be a hammer blow for the industry. The CCFI takes data from the leading 20 lines operating out of China. Its numbers have been consistently in line with the fortunes of the container sector over the years, especially since China accounts for one in two boxes moved. With container shipping often a precursor of the world economy, the drop in the CCFI has some analysts suggesting the global economy could be in for a nasty double dip recession.
Source: SeatradeAsia Online
Source: SeatradeAsia Online
Einhorn: Forget Inflation, Just Buy Gold
Gold prices have soared and some are buying on fears that inflation will weaken the dollar even further.
One hedge fund whiz kid, David Einhorn, says forget about whether the consumer price index rises or falls — just buy gold anyway.
Gold doesn't care about inflation, just if Washington is managing its economy well or not, says the president of Greenlight Capital.
“I have seen many people debate whether gold is a bet on inflation or deflation. As I see it, it is neither.
“Gold does well when monetary and fiscal policies are poor and does poorly when they appear sensible,” Einhorn told The Wall Street Journal. (more)
Fear Monday
- As we've been writing about for what? 6-9 months now? The linguistics turn that www.halfpasthuman.com has been tracking for October 25/26 is nearly in vie as processing continues.
- Just so you understand how this stuff works in a very general sense the October 'turn' was spotted in the last several data runs and may be as much as 85% economic in nature. But now that we're getting close, Cliff and Igor have been watching the data coming back from the forum scouring spiders which are sending in snips of interest to the servers, where in turn they are distilled and analyzed.
- So, the latest from Cliff is:
- "latest immediacy data shows it as occurring at 5:12 am 10-26-2009 (time zones are a bitch so let us just say east coast time) and will likely be wrong by about 6 hours as it may actually be 'effective' on the paris meridian (the old rose line). a small visibility spike occurs at 7:02 am on the 26th so damn early Monday morning...."
- I plan to get up a little earlier than usual Monday to see how it looks 'going by'. It's always of interest not only to watch something in the 'rickety time machine' pop into reality, but more interesting to is do some propagation mapping.
- What's that? Oh, you know: You can get a sense of who is playing 'follow the leader" and who the real leaders are when the Monday story hits (if/when it does at all - since we could be wrong).
- Seeing as it arises out of 'globalpop', I am not really expecting it to be a USA-centered event. Maybe something in Asia (huge mega quake or financial lockup - something like that - or heaven forbid Israel takes out the Bushir reactor complex.)
- Not only will Cliff & Igor get to see the change of language wash through the internet, but I will be able to see how the story pops and see how it goes from usually only one or two 'first hand' media to the rest of the MSM and then into the blogosphere. I figure if the timing's right, it ought to be on the tongues of about half the world's population by say Tuesday noon US time if we've got the timing clues right.
UrbanSurvival.com
Saturday, October 24, 2009
Markets, Money and Life With Grandich and George –
Good afternoon to you all and hope you’re preparing for a great weekend. Please find enclosed our next installment of Money, Markets and Life With Grandich and George . We covered some great topics in just 20 minutes including:
- China’s massive gold imports in 2008
- How Grandich reconciles higher US interest rates AND higher gold
- Answering a ton of questions posted by you earlier today on the blog, including but not limited to:
- Why didn’t Grandich double-dip by riding the “melt-up” and then ride it down
- Capital preservation strategies for retired investors
- Continental Minerals, Formation Capital and others
- Gold
- Copper
- How both New York football teams fared last week
- An apology to my dentist’s wife for having to wait for our show to be over before he’ll come to bed. Sorry Christine!!
Without further adieu, here is this week’s show.
For those of you whose Flash player isn’t up to snuff, here’s the MP3:
Schlaes: Early Retirees Killing Social Security
Columnist Amity Schlaes says that the U.S. is facing a Social Security crisis this fall as the number of early retirees is unexpectedly surging.
“In the 12 months ended Sept. 30, 21 percent more seniors opted to begin collecting their Social Security benefits than in the year-earlier period,” writes Schlaes on the Bloomberg wire.
“This was higher than the 15 percent increase actuaries forecast. Many signed up to collect cash at age 62, forgoing the significantly higher pension due to those who retire later in their sixties.”
The government may need to adjust the benefits to cope with this, but has not done so yet. (more)
The Economist (October 24th - October 30th 2009)
With a special report on China and AmericaFREE audio download click here
FREE PDF download click here
S&P 500 Retreat Signaled by ‘Bearish Wedge’: Technical Analysis
The Standard & Poor’s 500 Index may drop at least 7.5 percent based on a “bearish ascending wedge” pattern, according to Tom McNally, a money manager at Wilbanks, Smith & Thomas.
Drawing a so-called “bottom trend line” from the S&P 500’s 12-year low on March 9 and a “top trend line” from its close on May 8, at the time a four-month high, creates a nearly complete bearish ascending wedge, McNally said. The pattern usually signals stocks are about to retreat and hasn’t preceded a rally in at least five years, he said. (more)
Business Week (02/11/2009)
* APP$. The profitable new business ofsmartphone software is more than fun and games.
* China's economy behind all the hype.
FREE download click here
WHERE THE JOBS AREn't
Globalization is to save the world. Free Trade is supposed to benefit the western nations. This jurist sees the ebb and flow of economic demise as more of a factor of capital flight. The stock market crash of 1929 was supposed to be the harbinger of the great depression, but it was not. The depression happened some time later. Adding insult to injury was the capital flight. They didn't teach us that in school. The lion's share of Wall Street's investment dollars went to Germany and Hitler. For some strange reason they experienced an economic miracle. Anyway its perfectly clear where the jobs went. They're in the black. The suckers who let it happen are in the red.
When the money stopped flowing to Germany, we see a sharp spike in the manufacturing graph. Some people say you need a war to have prosperity. I say stop the capital flight. The decline is quite obvious post WWII with the Marshall Plan coming into effect.
George Freund
When the money stopped flowing to Germany, we see a sharp spike in the manufacturing graph. Some people say you need a war to have prosperity. I say stop the capital flight. The decline is quite obvious post WWII with the Marshall Plan coming into effect.
George Freund
Goldman should be allowed to fail
A decade ago, when Goldman Sachs was a private partnership, it had $6.5bn in equity and its 220 partners, most of whose money was tied up in the firm until they retired, took good care of their pot of gold.
The bank’s trading and principal investing division – the part that took the most risks with partners’ capital – was balanced with its fee-based investment banking and asset management divisions. Trading contributed about a third of its revenues in the two years leading up to its 1999 initial public offering.
After it sold shares in the IPO to outside investors – pension and mutual funds hold about 80 per cent of its equity – it steadily increased its appetite for risk. Its fixed income and currency division has become dominant, bringing in two-thirds of Goldman’s revenues in 2006 and 2007 (and 78 per cent in the first nine months of this year). (more)
Friday, October 23, 2009
Reducing deficit key to U.S. rating: Moody's
The United States, which posted a record deficit in the last fiscal year, may lose its Aaa-rating if it does not reduce the gap to manageable levels in the next 3-4 years, Moody's Investors Service said on Thursday.
The U.S. government posted a deficit of $1.417 trillion in the year ended September 30 as the deep recession and a series of bank rescues cut a gaping hole in its public finances. The White House has forecast deficits of more than $1 trillion through fiscal 2011.
"The Aaa rating of the U.S. is not guaranteed," said Steven Hess, Moody's lead analyst for the United States said in an interview with Reuters Television.
"So if they don't get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy." (more)
Watch What Institutional Investors are Doing
As an analytical firm, we pay for a lot of special data that the public can't get. Sometimes, the data is of major importance relative to what is going on in the stock market.
One such piece of data has to do with what Institutional Investors are doing. We all know that they are responsible for over 50% of any given day's volume ... which is why following this investment group is so important.
So today, let me share some of that data with you today. The data we will share is the daily "Institutional Selling Action". Every night, we take the data and feed it into a trending model chart that shows us the direction and trend of the Institutional Selling behavior. (more)
Are You Laughing or Crying About Markets?
Are You Laughing or Crying About Markets?
There's no question about it, the markets can be very difficult at times. On the other hand, you can laugh all the way to the bank if you approach the markets in a systematic way.
I was looking once again at the S&P 500 and many people have said the market has gone up, not on the fundamentals, but on the perception that things are going to be better. Perception is one of the most powerful elements of the market. I would say that perception trumps both the fundamental and technical.
So what's going to happen to the S&P 500? Is it going to continue going higher for the rest of the year, or are we close to a turning point?
http://broadcast.ino.com/education/sp5001019/
In my new short video, I outline several key areas that this market is fast approaching. These levels could be the Achilles heel for this market and potentially set the direction for the rest of the year.
There's no question about it, the markets can be very difficult at times. On the other hand, you can laugh all the way to the bank if you approach the markets in a systematic way.
I was looking once again at the S&P 500 and many people have said the market has gone up, not on the fundamentals, but on the perception that things are going to be better. Perception is one of the most powerful elements of the market. I would say that perception trumps both the fundamental and technical.
So what's going to happen to the S&P 500? Is it going to continue going higher for the rest of the year, or are we close to a turning point?
http://broadcast.ino.com/education/sp5001019/
In my new short video, I outline several key areas that this market is fast approaching. These levels could be the Achilles heel for this market and potentially set the direction for the rest of the year.
How a Crashing Currency Hides Actual Trends
Many Americans have a hard time wrapping their mind around a declining currency or the hidden tax that is inflation. The U.S. Treasury and Federal Reserve understands this and for decades has exploited this issue to slowly siphon off the buying power of the U.S. dollar. Openly they tell the public that they are for a strong dollar policy but every action they take is guided to slowly debasing the currency. Take for example the current stock market rally. The Dow Jones Industrial Average is up 56 percent from the March lows. A stunning rally only seen one other time in history and we would need to go back to the 1930s for that. Yet at the same time, we have seen a collapse in the U.S. dollar. That is why oil, even though demand is relatively the same, is now back near $80 a barrel. (more)
3 signs of the next real estate collapse
When the FDIC closed Chicago's Corus Bank last month, it may have signaled the beginning of the next shock to the banking system: commercial real estate defaults.
Corus, whose balance sheet was larded with bad construction loans, is just one of many banks that have a slew of this debt on their books. Refinancing the $2 trillion in commercial mortgages will be tough, as property values decline. And in this new age of cautious lending, few banks are willing to refinance loans.
"There is a lack of new debt," says Michael Haas, a real estate attorney at Jones Day. "There is a hesitancy to extend credit when there is a real possibility that the real estate may be worth less than it was a few years ago." (more)
World Government Lurches Forward, by Jason Hommel
People continually ask me about the plans for a North American Currency, or Amero. They ask, "Will the Amero devalue the dollar, will it be silver?" I've read the news on it for years, but nobody knows, it's only theoretical and in discussions at this point.
But I do have several solid and well founded opinions.
1. A North American Currency will NOT be planned to be gold or silver. Silver's price (and gold's) is way too low still.
2. A North American Currency will probably not be accompanied by a rapid or massive 50-75% devaluation of dollars. That's not how they introduced the Euro, it was smooth, well planned, and prices were quoted in both Euros and national currency for two years during the transition. (more)
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