The World Financial report, July 30 2010

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BNN : Commodities Overview

Oil continues to fall for a fourth consecutive week. BNN gets an overview of commodities from Andre Julian, CFO and senior market strategist at OpVest Wealth Management.

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Weekly Commitment Of Traders Summary: July 30

Commitment of Traders Report

Three Reasons Silver Is Likely to Shine

Kevin Grewal,

Although gold continues to grab most of the attention in the precious metal world, its less glamorous sister, silver, may be more appealing, and for good reason.

First off, silver has many more uses than gold. It's used for numerous industrial purposes and nearly 55% of total silver fabrication is used for industrial purposes. Silver is commonly used in the electronics space and can be found in plasma display panels and printed circuit boards, as well as in the lining of refrigerators, for food storage containers, and for water purification. Additionally, the metal can be used as an antimicrobial to fight bacteria and as an antiseptic to treat fungal infections. Silver's industrial uses even span to the solar energy industry. As economies around the world continue to expand, the industrial demand for silver will likely follow. See also, "The Misleading Nature of Beating Estimates in the Mining Sector."

Another force that's likely to support silver is that valuations appear to be strong. In a nutshell, silver is cheap and depressed on a historical basis, when compared to its sister metal, gold. Gold is trading much higher than its long-term ratio of 16 times the price of silver, indicating that there's plenty of room for silver prices to run. Additionally, silver is nearly 70% below its all-time high witnessed in 1980 and well below its near-term high of $21 per ounce seen in 2008. (more)

Bloomberg Businessweek - August, 02 2010

* The new abnormal american consumers
are cutting back. Except when they're not.

* Real Estate. A fixer-upper with seating for 80,000.

* Energy. BP's next move: more deepwater drilling.

* Finance. The sultan of credit default swaps.

(read more here)

Can Anyone Stop the Fed?

By Charlie Gasparino,| FOXBusiness

Congressional Republicans are now ramping up their criticism of the secrecy surrounding another government agency, the Federal Reserve, which under the new financial regulatory overhaul gains vast new powers to regulate Wall Street firms and banks, yet receives minimal oversight, FOX Business Network has learned.

The new initiative, spearheaded by Congressman Spencer Bachus, a ranking member of the House Banking Committee, comes after a FOX Business report detailed how the Securities and Exchange Commission, which polices the securities markets for wrongdoing, can now withhold more information from the public through new exemptions to the federal Freedom of Information Act created during the financial reform legislation that was recently signed into law by President Obama.

The SEC says it still must comply with most aspects of the FOIA. (more)

Marc Faber Questions if Dow Could Hit 1,000

By: Patrick Allen
CNBC Senior News Editor

In the August edition of the ‘The Gloom, Boom & Doom Report’ Marc Faber questions whether the Dow could hit 1,000 as predicted by Robert Prechter, based on his interpretation of Elliot Waves, Fibonacci numbers and socioeconomic trends.

Prechter, who has written 13 books on finance, believes that the stock market is historically overvalued in terms of dividends and earnings, because of a "great rise in positive social mood."

But the mood changed in 2000 and the "trend toward negative social mood will lead to an economic contraction," according to Prechter.

"Small bear markets lead to recessions, big bear markets lead to depressions. The current bear market will be the biggest in nearly 300 years, so the depression will be correspondingly deep," Prechter said. (more)

States go deeper into debt and you're on the hook

(CNNMoney.com) -- The states are broke, and like many consumers, they're borrowing big time to get out of their fiscal binds.

The amount of debt that states are carrying spiked 10.3% last year to $460 billion, according to Moody's Investors Service. The debt is paid for through taxes and fees, making residents ultimately responsible.

The median personal share of this burden jumped to $936, from $865 in 2008. (To see how much the tab is in your state, click here.)

And it's likely that states will turn to the bond markets even more this year as federal stimulus money dwindles, experts said. After all, officials face an additional $12 billion shortfall for the current fiscal year and a $72 billion gap for fiscal 2012, which starts next July 1. (more)

The Economist - July 31st-August 6th 2010

The Economist is a global weekly magazine written for those who share an uncommon interest in being well and broadly informed. Each issue explores the close links between domestic and international issues, business, politics, finance, current affairs, science, technology and the arts.
In addition to regular weekly content, Special Reports are published approximately 20 times a year, spotlighting a specific country, industry, or hot-button topic. The Technology Quarterly, published 4 times a year, highlights and analyzes new technologies that will change the world we live in.
(read more here)

Stocks: Best monthly gain in a year

(CNNMoney.com) -- Despite a mixed performance on Friday, stocks booked the best monthly gain in a year, with the Dow Jones industrial average and S&P 500 both rising nearly 7% in July.

Stocks were supported this month by strong quarterly financial results from major U.S. companies. About 75% of the roughly 300 companies in the S&P 500 that have reported earnings so far have beat analysts' estimates.

But the earnings optimism has been tempered by ongoing concerns about the economy, particularly worries that tepid job growth will eventually undermine corporate profits.

"Even though earnings and guidance have been better than expected, there's still skepticism in the market because jobs have been missing in action," said Alec Young, an equity strategist at Standard & Poor's. (more)

Sprott's John Embry "Gold Is On The Cusp Of A Parabolic Move Up"

Today, the FT provided some additional information on the BIS' "goldgate" as relates to its 346 tonnes of gold disclosed as swapped recently by the ubercentral bank. As the FT says, "Investors have bought physical gold in record amounts during the past two years and deposited it in commercial banks. European financial institutions are awash with bullion and some are trying to pledge gold as a guarantee." There was nothing necessarily new in the article, and as expected the swap was merely put in place to collateralize a dollar funding crunch ahead of the European insolvency, allegedly resolved by the guaranteeing of $1 trillion in the world biggest bail out fund by the IMF and the ECB. Nonetheless, at least now we can end speculating as to who benefited: it was not entire countries that had pledged their gold reserves to the ECB (contrary to the rumor that Portugal had given Bernanke a lien on its gold), but merely ten banks, of which HSBC, Société Générale and BNP Paribas were the biggest. While HSBC's presence is somewhat surprising, the latter two banks having found themselves in a massive currency crunch makes sense: as Zero Hedge had previously noted, this is confirmation that it was precisely the French banks that had found themselves on the wrong side of some major euro trades (one need only to recall BNP's call for subparity in the EURUSD from a month ago). Yet what is without doubt is that physical gold will play an increasingly prominent role as a hard collateral asset. In light of this, we present to you the thoughts of Sprott's John Embry on the precious metal, titled "Gold's on the cusp of parabolic move up" whose conclusion fits with the implications of the BIS action: "Central banks can no longer supply the amount needed to balance supply and demand while mine production continues to stagnate at best. It is imperative that investors ignore the volatility created by the anti-gold cartel and use every opportunity that is created by them to purchase more physical gold." Yes John is conflicted, and yes, he has said comparable things in the past... maybe, as more and more piece of the puzzle come into place, this time he will finally be right? (read the Investors Digest article)

Totalinvestor Special Situation: UNX a Ten+ Bagger?

Byron King of Agora Financial thinks he may have found a tiny Canadian penny stock that could result in a 3577% gain.

In the following video "you will hear about the "Oil Kitchen," a potential 2.3 billion barrel discovery off Africa's West coast. Time magazine calls this part of Africa "an oil and gas bonanza just waiting to be tapped.""

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click here for info on Universal Power

This is NOT a recommendation or advice.

Foreclosures up in 75 percent of top U.S. metro areas

(Reuters) - Foreclosures rose in 3 of every four large U.S. metro areas in this year's first half, likely ruling out sustained home price gains until 2013, real estate data company RealtyTrac said on Thursday.

Unemployment was the main culprit driving foreclosure actions on more than 1.6 million properties, the company said.

"We're not going to see meaningful, sustainable home price appreciation while we're seeing 75 percent of the markets have increases in foreclosures," RealtyTrac senior vice president Rick Sharga said in an interview.

Foreclosure actions -- which include notice of default, scheduled auction and repossession -- in the first half rose in 154 of the 206 metro areas with populations 200,000 or more.

"We're not going to see real price appreciation probably until 2013," said Sharga. "We don't see a double dip in housing but we think it's going to be a long painful recovery for the next three years." (more)

Zilch for You Know Who Trillions for Wall Street

By MIKE WHITNEY

On Tuesday, the 30-year fixed rate for mortgages plunged to an all-time low of 4.56 per cent. Rates are falling because investors are still moving into risk-free liquid assets, like Treasuries. It's a sign of panic and the Fed's lame policy response has done nothing to sooth the public's fears. The flight-to-safety continues a full two years after Lehman Bros blew up.

Housing demand has fallen off a cliff in spite of the historic low rates. Purchases of new and existing homes are roughly 25 per cent of what they were at peak in 2006. Case/Schiller reported on Monday that June new homes sales were the "worst on record", but the media twisted the story to create the impression that sales were actually improving! Here are a few of Monday's misleading headlines: "New Home Sales Bounce Back in June"--Los Angeles Times. "Builders Lifted by June New-home Sales", Marketwatch. "New Home Sales Rebound 24 per cent", CNN. "June Sales of New Homes Climb more than Forecast", Bloomberg. (more)

Investing in the world's best balance sheets

FORTUNE -- At the G20 summit in Toronto last month, the leaders of world's largest economies embraced a brave new theme: Halting the alarming, potentially ruinous growth in already mountainous sovereign debt.

Now that the spotlight is shifting to the dangers of big deficits and excessive leverage, many politicians, pundits, and even investors, are mostly ignoring the most remarkable feature of the global debt picture. It's almost exclusively the developed countries that are guilty of excessive borrowing.

Amazingly, the emerging nations, from China to Russia to Brazil to Indonesia, are either virtually debt-free or boast far healthier balance sheets than their giant trading partners. These countries stand as the new models of fiscal prudence. (more)

Why The Fed Will Not Raise Interest Rates

Are Risky Assets Back in Vogue?

Barrons,
In the manic world of Wall Street, the tide can roll in and roll back out with blazing speed. Just two weeks ago, the talk was centered on deflation as yields in the Treasury market plummeted and stocks threatened a major technical breakdown.

This week, with stocks freshened by one of the stronger months we've seen recently and with many commodities on the move higher, the outlook seems to have changed. Have investors changed their minds and are now willing to take on more risk?

I don't think so. The stock market's recent recovery is fueled more by investors grasping for hope of anything positive rather than an underlying change in the structure of the markets.

Stocks were extended to the downside, and Treasuries were extended to the upside as fears ran high. Gold, one safe haven in times of duress, was tired. So was the Japanese yen—the safe haven in the currency world—especially versus the euro. (more)

Rosenberg on the cause of the next secular uptrend in inflation or hyperinflationary shock

David Rosenberg is bullish on bonds. And the reasoning for his bullishness has a lot to do with the deleveraging and excess capacity which the bursting of the credit bubble has brought into view. In this sense, his views on inflation are actually rather similar to modern monetary theory advocates.

In his daily letter to investors yesterday, Rosenberg asks "So what will be the cause of the next secular uptrend in inflation or hyperinflationary shock?" In response, he writes:

If the 55 year-old Boomer resolves to work longer and harder, cut the budget to save more and liquidate debt, can we really expect the politics to maintain the status quo? This type of behavior from the developed world will exert enormous deflationary pressure. In addition, the huge amount of debt and entitlement expansion that has occurred at the government level, particularly in response to the financial crisis, will be an enormous drain on economic growth as taxes are raised to service the debt and budgets are dramatically cut. (more)

Foreclosures In California Killing MiddleClass Dreams

Nassim Taleb: "The Government Debt Is Becoming A Pure Ponzi Scheme"

In an interview conducted with Business Week, Nassim Taleb discusses his view of the biggest black swan in the market currently, and isn't shy to call government debt a "Pure Ponzi scheme." - When asked where he the biggest potential source of systemic fragility is, he responds: "The massive one is government deficits. As an analogy: You often have planes landing two hours late. In some cases, when you have volcanos, you can land two or three weeks late. How often have you landed two hours early? Never. It's the same with deficits. The errors tend to go one way rather than the other. When I wrote The Black Swan, I realized there was a huge bias in the way people estimate deficits and make forecasts. Typically things costs more, which is chronic. Governments that try to shoot for a surplus hardly ever reach it. The problem is getting runaway. It's becoming a pure Ponzi scheme. It's very nonlinear: You need more and more debt just to stay where you are. And what broke Madoff is going to break governments. They need to find new suckers all the time. And unfortunately the world has run out of suckers." Alas, Taleb is wrong: Ponzi or not, today's UST auction will likely once again come at a multi year high Bid To Cover as the suckers (especially those who recycle Fed discount window money) just refuse to go away. (more)

Stocks fall amid uncertainty over the economy

CNBC,
Stocks ended an erratic day with a modest loss Thursday as investors tried to reconcile another batch of conflicting economic signals.

The Dow Jones industrial average closed down 30 points after falling as much as 110 and rising 87 during the course of the day. The other big market indexes also closed slightly lower.

Thursday's trading fit with the market's months-long pattern. Investors are torn between upbeat earnings news from companies and reports that point to an uncertain recovery. That indecision was clear as stocks rose on strong earnings at Southwest Airlines Co., ExxonMobil Corp. and other companies, then fell on disappointment over a slight drop in first-time claims for unemployment benefits.

Traders were also uneasy ahead of the first reading on U.S. gross domestic product for the April-June quarter, to be released Friday.

"This is a market that is trying to ascertain how deep the downturn is going to be and it is a market that's future-looking," said Quincy Krosby, a market strategist with Prudential Financial. (more)

Gerald Celente on Tony Cruise WHAS

Chart of the Day

McAlvany Weekly Commentary, July 28,2010

End of the Party: An Interview with Don McAlvany

Posted on 28 July 2010.

Don McAlvany is Chairman of McAlvany Wealth Management and also founder of International Collectors Associates (ICA), a precious metals brokerage and consultation firm serving clients in over 20 countries since 1972. He has been a featured speaker at political, monetary, and investment conferences in Western Europe, Africa, Australia, the Middle East, Hong Kong, and Singapore, as well as all over the North American continent and Latin America. Don is also the founder and President for the Asian Pacific Children’s Fund (APCF). APCF is a non-profit organization that’s mission is to find well-run, largely unknown Asian children’s homes – homes that are on no one’s radar screen – and to help them to raise funding and bring in resources which they need to survive and prosper. www.mcalvany.com

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Jim Rogers: Another Recession to Hit by 2012

By: Frank McGuire

Jim Rogers, chairman of Rogers Holdings, thinks another recession will hit around 2012 but central banks will not be able to throw cash at it anymore.

"We do have inflation in the world … most central banks should resign," Rogers told CNBC.

There has always been a recession every four to six years in the United States "since the beginning of time," and that would mean another one is due around 2012, according to Rogers, a hedge fund pioneer who started the Quantum Fund with George Soros in 1970.

"When the next one comes the world is going to be in worse shape because the world has shot all its bullets," he said.

"Is Mr. (Federal Reserve Chairman Ben) Bernanke going to print more money than he already has? No, the world would run out of trees," Rogers added. (more)

Evolving Global Financial Crisis: The Dollar Should Head Down Again

by Bob Chapman

As we long ago predicted, 2005 was the beginning of the collapse of the housing bubble. The result was financial chaos and a credit crisis that enveloped the US, Europe and eventually the world. Some would like us to believe that materialism and selfishness were the reasons for bubbles, but the causes go far deeper than that. US, UK and European central banks, due to their greed for power, and a desire for world government, allowed debt to get totally out of control.

America’s monetary problems began on August 15, 1971, when the country left the gold standard, although GATT, which became WTO in 1986, began the cycle of destruction in the early 1960s. The presidency of Ronald Reagan opened and initiated the floodgates of debt after cutting taxes far too much and then destroying upper income taxpayers with the 1986 Tax Reform Act, which thrust 8 million millionaires into bankruptcy. Reagan’s failure to cut spending set a precedent, which lives with us to this day. During his time in office debt doubled. The result was the economy came unglued in 1989 and didn’t recover until the beginning of 1994. His successors had the opportunity to purge the system of debt and malinvestment, but they and the Fed passed up that opportunity to again cover up the mess they created. A boom in the stock market followed in the late 1990s and economic failure by 2007. (more)

More than 40M gallons of oil MIA

By Rick Jervis, USA TODAY

NEW ORLEANS — For more than three months, Gulf Coast residents and federal officials have asked where the oil spill was headed and how much damage it would deliver.

Now, a new, equally baffling question looms: Where has the oil gone?

The amount of surface oil that has bubbled up from the leaking well at the site of the Deepwater Horizon rig sinking has rapidly shrunk in size since the well was capped 11 days ago, according to the Coast Guard.

Recent flyovers of the spill area spotted only one sizeable oil deposit in the region, down considerably from the large pools of thick, reddish oil that washed into Louisiana's coastal marshes and beaches along the Gulf of Mexico.

"What we're trying to figure out is: Where is all the oil at?" said retired Coast Guard admiral Thad Allen, the oil response's federal overseer. "There's still a lot of oil that's unaccounted for." (more)

BNN: Top Picks

Michael Sprung, president, Sprung & Company Investment Counsel, shares his top picks.

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Dry Bulkers Pull Back As BDI Extends Rally

Indie Research,

Dry bulk shipping stocks took a breather on Wednesday, but there was no slowing the Baltic Dry Index. The sector's pricing benchmark pushed higher for its ninth straight session after plummeting from late-May through mid-July. At the end of that run, Deutsche Bank analyst Justin Yagerman called a bottom for dry bulk shares after the BDI's first session in positive territory following those more than 30 trading days in the red. Earlier this week Bloomberg suggested that the shipping sector is bottoming as Chinese steel prices signal iron ore demand.

As a whole, the Dry Bulk Shipping Stocks Index is off by -1% on the day as the S&P 500 widens its monthly lead on the sector. OceanFreight (NASDAQ: OCNF - News), DryShips (NASDAQ: DRYS - News), and Diana Shipping (NYSE: DSX - News) are all among top performers for the period, gaining more than 8%.

DryShips will report its second-quarter results after the bell today, and Diana is reporting next Thursday. The stocks were both among Pro-favorites in the dry bulk sector at the end of the first quarter, with four 13F-filing asset managers counting shares among their top-15 U.S.-listed equity holdings respectively. (more)

Buy, Sell, or Hold Research In Motion?

Eric Jhonsa, Motley Fool

Right now, you can't go through a list of news articles for Research In Motion (Nasdaq: RIMM - News) without seeing gloomy headlines such as "Why RIM is a Risky Investment" (TheStreet.com) and "BlackBerry's Era May Be Ending" (The New York Times). Fears of market share declines because of Apple's (Nasdaq: AAPL - News) iPhone and Google's (Nasdaq: GOOG - News) Android platform clearly have investors on edge -- and an underwhelming earnings report last quarter didn't do much to calm their nerves.

But the tech sector's history features many companies that thrived long after predictions were made of their imminent doom. Is RIM one of those names, or are Apple and Google on the verge of deep-sixing the Canadian giant? Here's a list of reasons to either buy, sell, or hold onto RIM's shares: (more)

Unemployment rises in 75 pct of metro areas

(AP) -- The unemployment rate in about three-quarters of the nation's largest metro areas rose last month as nearly one million teenagers entered the work force looking for summer jobs.

The Labor Department said Wednesday that the unemployment rate rose in 291 of 374 areas in June from May. It fell in 55 areas and was flat in 28. That reverses the trend of the previous three months, when joblessness fell in most metro areas.

But the report does not adjust the figures to take into account seasonal trends, such as high school or college students looking for work during the summer. As a result the figures tend to be volatile from month to month.

The economic recovery has spurred some hiring, with private employers adding an average of 100,000 jobs each month this year. But the pace of hiring slowed in May and June and isn't nearly fast enough to bring down the unemployment rate. (more)

Mining for Mergers: Which Gold Miners Might be Acquired?

Joung Park,

As gold prices have scaled new heights in recent years, acquisition activity has begun to heat up in the gold mining space. In this article, we will conduct a case study of recent major transactions in the gold mining space to identify characteristics of attractive takeover candidates. We will then apply these lessons to spot likely takeover targets within our coverage universe.

Profile of the Perfect Target
The primary reason a gold miner would acquire one of its peers is to expand its reserve base. As a gold miner depletes its existing reserves by extracting its below-ground ore, the firm must replenish those reserves to ensure continued production. This need is particularly acute for large majors, who typically deplete reserves at prodigious rates. While miners can expand their reserves by using either their shovels or their checkbooks, many prefer to purchase reserves on the market given the significant capital and time requirements, as well as the highly uncertain prospects surrounding exploration.

One of the largest deals in the gold mining space in recent years was initiated by Australian major Newcrest Mining (Other OTC:NCMGY.PK - News), which extended a takeover bid for Lihir Gold (NasdaqGS:LIHR - News) in May 2010, valued at $8.8 billion at the time of the offer. We believe the deal will almost certainly close this fall. There are several reasons why Lihir represented such an attractive takeover target for Newcrest. The firm controls the world-class Lihir Island mine, which houses 31 million ounces of gold reserves. Lihir is also a low-cost producer, ensuring that the combined Newcrest-Lihir entity will remain in the bottom quartile of the industry cost curve. More specifically for Newcrest, most of Lihir's reserves are situated in Papua New Guinea, a country where Newcrest also enjoys a significant mining presence. This close geographic proximity of Lihir's assets undoubtedly increased its appeal to Newcrest, as the firm can leverage its existing infrastructure and experience working in Papua New Guinea to better service the acquired assets. (more)

U.S. households only have a median of $2,000 saved in retirement accounts. The median net worth for those 25 to 34 is $3,700

I recently had a conversation with a retired neighbor, a former Navy vet who worked most of his life at a local grocery store. I wouldn’t call him wealthy but he has his financial house in order; he paid off his home in the early 1990s, has no other debts, and lives well below his means. His big source of income comes from Social Security. We talked about the current economy and the strain we are facing. It was a good conversation and ultimately the mathematical problems we are facing for the working and middle class become extremely obvious when confronted face to face. We both conceded that government retirement programs will have problems in one or two decades (doesn’t help many who are still working). The economic issues faced between the generations will cause many hard decisions down the road.

First, we should examine income levels in the U.S.: (more)

Marc Faber: Relax, This Will Hurt A Lot

Tyler Durden, Zerohedge.com

Marc Faber closed out this week's Agora Financial Symposium with a speech that pretty much recapitulated the view that the end of the world is if not nigh, then surely tremendous dislocations to the existing socio-political and economic landscape are about to take place (with some very dire consequences for the US). His conclusive remarks pretty much summarize his sentiment best: "We've had a trend for most of the past 200 years: GDP of countries like China and India went down while the West surged. That's now changed. Emerging economies will go up, and your children in the West will have a lower standard of living than you did. Absolutely. We won't sink to the bottom of the sea. But other countries will grow much faster than us. The world is very competitive, and the odds are stacked against us. Americans, with their inborn arrogance, will not let it go that easily, so there will be lots of tension going forward." While long-time fans of Faber will not be surprised by the gloom and doom (not much boom) here, anyone else who still holds a glimmer of hope that at the end of the day the CNBC spin may be right, is advised to steer clear of Faber's most recent thoughts. (more)

Chart of the Day

Denison Mines

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Jay Taylor: Turning Hard Times Into Good Times

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Charting The -1.000 Correlation Between Stock Prices And Volume

Zerohedge.com,
In our day and age, when implied correlation is approaching 1 with each passing day, and when nuanced relationships are ignored, as every correlation somehow immediately becomes causation only to be invalidated, chewed out and left for dead, there is one certain and virtually guaranteed statistical relationship left, that not only persists day after day but has now become its own self-fulfilling prophecy. We speak of course of the (inverse) correlation between stock prices and volume: i.e., "volume up, stocks down; volume down, stocks up." Rinse, repeat, over and over and over. Rarely has this correlation been as pronounced (although we have been discussing it for well over a year) as over the past 12 weeks. Behold.
What this means is that any distributions only occur to the downside, and that the second retail gets suckered into stocks once again, for whatever reason, the selling pressure will again materialize as the algo decides to take advantage of the "sidelined" money and be a better seller into every bid.

Four Shocking Bombshells Bernanke Did NOT Tell Congress About Last Week

In his testimony before Congress last week, Ben Bernanke lifted the Fed's skirt and gave us a glimpse of the disasters now sweeping through the U.S. economy.

But there are four bombshells he did NOT talk about:

FIRST and foremost, what's CAUSING the economy to sink? The stock market has not yet crashed. Interest rates have not yet surged. Gasoline prices have not skyrocketed. There has been no recent debt collapse, market shock, or terrorist attack.

So what is the invisible force that's suddenly gutting the housing market, driving consumer confidence into a sinkhole, and killing the recovery that Washington was so avidly touting just a few months ago?

Bernanke won't say. But the answer is clear: The recovery had very little substance to begin with. Rather, it was, in essence, a mirage — a dead cat bounce bought and paid for by Washington's massive bailouts, stimulus programs, and money printing.

Put another way, the recession never really ended. Yes, we saw some growth in GDP. And yes, thanks to that growth, some companies are still reporting better earnings — the news that spurred a rally in the stock market last week. But at the core of the economy, the fires that started the recession are still burning intensely. (more)

Shiller: I Actually Expect a Double-Dip Recession in US

Newsmax.com
The state of the U.S. economy is worrisome and there is a high possibility of a double-dip recession, one of the property market's most well-known economists said Tuesday.

Robert Shiller, professor of economics at Yale University and co-developer of Standard and Poor's S&P/Case-Shiller home price indexes, told Reuters Insider he does not know where home prices may be headed, but believes the economy may be on a precarious path.

"For me a double-dip is another recession before we've healed from this recession ... The probability of that kind of double-dip is more than 50 percent," Shiller said. "I actually expect it."

Shiller said he is unclear where home prices are headed. (more)

Oil falls toward $77 on double-dip recession fear

(Reuters) - Oil prices fell by 1.9 percent on Tuesday after data showed U.S. consumer confidence plunged to its lowest level in five months, prompting investors to sell off riskier assets including oil and equities.

The confidence index fell in July to the lowest level since February on worries about a stagnant job market in the world's top economy.

The data stoked fears that a U.S. economic recovery was stalling, and prompted U.S. benchmark oil prices to back down sharply from a new 11-week high of $79.69 a barrel earlier Tuesday. Crude settled down $1.48 a barrel to $77.50.

U.S. stocks fell, giving up earlier gains, and the U.S. dollar firmed against a basket of foreign currencies, an indication investors were piling into safe havens, such as Treasury bonds. (more)

U.S. markets show signs of a significant shift

(MarketWatch) - With this week's upturn, the U.S. markets are showing signs of life.

Most notably, each major U.S benchmark has closed above its 200-day moving average, raising the flag to a potentially significant trend shift, as detailed below.

more charts here

Confidence falls even as corporate profits rise

NEW YORK — The disconnect between Wall Street and Main Street is growing.

Americans' confidence in the economy faded further in July, according to a monthly survey released Tuesday, amid job worries and skimpy wage growth. That's at odds with Wall Street's recent rally fueled by upbeat earnings reports from big businesses such as chemical maker DuPont Co. and equipment maker Caterpillar Inc. That's because the pumped-up profits are being fueled by cost cuts like layoffs and overseas sales. In fact, big companies have shown few signs they're ready to hire.

The Consumer Confidence Index came in at 50.4 in July, a steeper-than-expected decline from the revised 54.3 in June, according to a survey the Conference Board. The decline follows last month's decline of nearly 10 points, from 62.7 in May, and is the lowest point since February. It takes a reading of 90 to indicate a healthy economy — a level not seen since the recession began in December 2007.

"Consumers have a much different view of the economy than the stock market does, and their views matter more to the economy," said Mark Vitner, an economist at Wells Fargo. The index "tells me the economy is heading for slower growth in the second half. We have low expectations for back-to-school." (more)

Jim Rogers on CNBC 7/27/10 : Looking at European Earnings

Home Vacancies Rise as U.S. Ownership Falls to Lowest in Decade

About 18.9 million homes in the U.S. stood empty during the second quarter as surging foreclosures helped push ownership to the lowest level in a decade.

The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.6 million in the year-earlier quarter, the U.S. Census Bureau said in a report today. The ownership rate, meaning households that own their own residence, was 66.9 percent, the lowest since 1999.

Lenders are accelerating foreclosures as borrowers fall behind in mortgage payments after the worst housing crash since the Great Depression. A record 269,962 U.S. homes were seized in the second quarter, according to RealtyTrac Inc. Foreclosures probably will top 1 million this year, the Irvine, California- based data company said in a July 15 report. (more)

Stock Advisor Buy List: Ford

At Motley Fool Stock Advisor, we're about finding stocks with huge long-term upside. Our research efforts double-down on a company's growth potential, competitive advantages, and management quality. It's a strategy that's led to an average return of 60% for our stocks and 14% annualized returns since 2002 versus 1% for the S&P 500.

Let's see why Ford (NYSE: F) currently makes our buy list.

Growth potential
The recent history of the U.S. auto industry probably has you convinced of three things:

1. U.S. automakers are hopelessly uncompetitive.
2. They can't make quality cars.
3. Anyone who invests in them, especially after the recent bankruptcies of General Motors and Chrysler, needs to get their own engine checked.

But we think Ford, the only one of Detroit's Big Three not to go bankrupt, could have investors driving away with profits for years to come. (more)

How to save $1 million by 65

(Money Magazine) -- Question: I'm 28 and would like to have $1 million by the time I retire at 65. What are some of the investing options I should consider? --Joshua Sin, Fresno, Calif.

Answer: I'm all for savvy investing, and I'll get to what I think you should do on that front in a minute. But let's not forget that when it comes to building wealth, investing alone won't do it.

You also need to save.

I don't care how brilliant an investor you are. If you're not putting away a decent amount of money on a regular basis throughout your career, your chances of accumulating a million bucks are lower than LeBron's chances of getting elected mayor of Cleveland.

To understand what I'm talking about, let's look at a few numbers. (more)

Is China Entering “Buy” Territory?

ZeroHedge.com,

Jim Trippon, of the China Stock Digest, says that investors better start scaling into China now, or risk missing the biggest economic opportunity of our lifetime. Quality growth stocks can be bought for price earnings multiples under 11, and often for 4-5 times, compared to an average 13 multiple for the S&P 500. You are already investing indirectly in the Middle Kingdom whether you realize it or not. Just take a stroll through Wal-Mart (WMT).

Jim has been publishing his widely followed China Stock Digest for six years, running a full time group of analysts out of offices in Shanghai, Hong Kong, and Houston. Financial markets in China are still primitive, with no options or futures, short selling, international accounts, arbitrage, spotty disclosure, and tough currency restrictions. Individuals account for up to 70% of turnover, compared to only 10%-20% in the US, which can lead to higher highs and lower lows in share prices. (more)

Goldman reveals where bailout cash went

Goldman Sachs sent $4.3 billion in federal tax money to 32 entities, including many overseas banks, hedge funds and pensions, according to information made public Friday night.

Goldman Sachs disclosed the list of companies to the Senate Finance Committee after a threat of subpoena from Sen. Chuck Grassley, R-Ia.

Asked the significance of the list, Grassley said, "I hope it's as simple as taxpayers deserve to know what happened to their money." (more)

The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it

From The Business Insider

Editor's note: Michael Snyder is editor of theeconomiccollapseblog.com

The 22 statistics detailed here prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

So why are we witnessing such fundamental changes? Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough. (more)

The Death of Paper Money

Ebay is offering a well-thumbed volume of "Dying of Money: Lessons of the Great German and American Inflations" at a starting bid of $699 (shipping free.. thanks a lot).

The crucial passage comes in Chapter 17 entitled "Velocity". Each big inflation -- whether the early 1920s in Germany, or the Korean and Vietnam wars in the US -- starts with a passive expansion of the quantity money. This sits inert for a surprisingly long time. Asset prices may go up, but latent price inflation is disguised. The effect is much like lighter fuel on a camp fire before the match is struck. (more)

Ten Stock-Market Myths That Just Won't Die

Wall Street Journal,

The Dow Jones Industrial Average last week ended up pretty much where it had been a little more than a week earlier. A rousing 200-point rally on Wednesday mostly made up for the distressing 200-point selloff of the previous Friday.

The Dow plummeted nearly 800 points a few weeks ago -- and then just as dramatically rocketed back up again. The widely watched market indicator is down 7% from where it stood in April and up 59% from where it was at its 2009 nadir.

These kinds of stomach-churning swings are testing investors' nerves once again. You may already feel shattered from the events of 2008-2009. Since the Greek debt crisis in the spring, turmoil has been back in the markets.

At times like this, your broker or financial adviser may offer words of wisdom or advice. There are standard calming phrases you will hear over and over again. But how true are they? Here are 10 that need extra scrutiny. (more)

Recent Rally Could Usher in More Swings

Smart Money,
A vote of confidence in Europe and strong earnings at home have given the markets a little lift, but how soon the recovery gets back on track remains a matter of debate.

Stocks finished last week on a high note, as the results of stress tests for major European banks came in generally positive, and sparked a Friday rally. The S&P 500 rose 38 points, or 3.5%, for the week and the Dow Jones Industrial Average climbed 327, or 3.2%, to 10425.

The threat of a worsening European downturn has weighed on stocks since the Greek debt crisis came to light at the end of the year, and anticipation over the test results remained high until word came that 84 of 91 European banks examined had passed tests about how they would fare if the economy got worse.

"Optimism abounds over the European bank stress tests," Gluskin Sheff chief economist David Rosenberg wrote Friday. Still, he added that "earlier concerns of a European economic meltdown have yet to occur," a statement that left open the possibility for more trouble. (more)

When Will the U.S. Go the Way of Rome?

By Bill Frezza

When do you suppose the citizens of imperial Rome first realized that their way of life had tipped into inexorable decline?

A few foresaw the impact of Caesar's usurpation of the rule of law, marking his ascension as the beginning of the end. Many more sounded the alarm when Rome's fiscal balance spiraled out of control, debts multiplying faster than the ability to extract taxes from a dwindling base of productive citizens. The plebeian masses, accustomed to bread and circuses, were probably oblivious until Rome was finally sacked. Everything was fine yesterday, how did these barbarians arrive at our gates?

A strange sign of the times has begun traversing America's rural byways. The sole purpose of this giant machine is to grind up paved roads leaving behind a trail of chopped asphalt and gravel. Strapped county administrators are throwing in the towel, unable to maintain their road systems absent the flow of largess cut off from near bankrupt state and federal agencies. Instead of reducing their carbon footprint by driving ecologically friendly electric cars these people will soon be riding horses. The Sierra Club must be thrilled. (more)

Latest Bout Of Stock Schizophrenia Strikes As 10 Year Drops Back Below 3%

ZeroHedge.com

Nothing much to be said here. Stocks are broken for yet another day, as correlation 101 fails as expected due to the most recent attempt to ramp stocks regardless of anything and everything. Oh, guess where volume is... Laughable. At this point nobody, absolutely nobody in stock land dares to take on the Fed, even as the bond vigilantes rumble in their sleep.

Americans Have A Serious Household Net Worth Problem

The state of U.S. household net worth is dismal, as this chart (via The Big Picture) shows, with the country falling back to levels last seen in the late 1980s and early 1990s.

This collapse happened once prior, after the deflation of the dot com bubble. But now, as a result of the housing bubble collapsing, household net worth has fallen even lower.

The rebound after the dot com collapse was dramatic. The rise from 2009 lows has been less pronounced, with it clearly slowing in 2010.

We are only back to levels first reached in the early 1990s. (more)

Home Builder Stocks and New Home Sales

In a note to investors today, a well-regarded strategist on the equity sales desk at a major sell side firm put up the following two Bloomberg charts next to each other.

The two charts reflect different time frames but are from related data sets. The first chart is a long-time series dating from 1963, the seasonally-adjusted annualize rate of new home sales. You can see home sales falling off a cliff into this past recession.

The second chart is a three-day chart of the ITB, the iShares home construction ETF which consists mostly of home builder shares. The home builders are crushing today as new home sales in June came in up over 23% month-over-month. Of course, May was a record low, the slowest ever in 46 years of data. (more)

Roubini : Euro Stress Tests not stressful enough

"The assumptions made about economic growth, about sovereign risk were not realistic enough in my view especially on sovereign risk" said. Nouriel Roubini,most of the sovereign risk was held in maturity books and the tests did not allow for a default Roubini explains and there is a question on how you measure also things that have not been market down like toxic assets ...the strength of the Euro is more likely the weakness of the dollar , until a month ago the dollar looked like less ugly than the Euro due to the problems in the Eurozone stress test sovereign default risk risk of a double dip risk of the break-up of the monetary union , last month the month the numbers have come out worse for the United States in terms of macroeconomic data ....

Chart of the Day

Chart of the Day

The World Financial Report, July 23, 2010

click here for audio

BNN: Dr. Marc Faber

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Options Play: Crude Could Be Ready To Pop

OPTIONS PLAY: Crude Could Be Ready To Pop

Crude Oil Could Be Poised To Hit A New High For The Year, But The Market Must Get Through The $80/Barrell Area First.

MY ANALYSIS

Fundamentally, I look for NYMEX CRUDE FUTURES to rally above $80/Barrell and make new yearly highs for 3 basic reasons:

1. Hurricane Season

2. European Banks Passing Stress Test

3. Improved Equity Prices

Technically, I see NYMEX CRUDE FUTURES as being in a short-term trend higher as indicated to me by the market holding above the 9 period moving average. (more)

Gross: Look For Five Percent Stock Returns

By: Julie Crawshaw

PIMCO co-CEO Bill Gross says we're having "a mini-replay of 2008" in which return of money, not return on money, is becoming the dominant theme.

“Instead of 10 percent returns for stocks, look for five or so,” Gross told CNN Money. “And instead of the past 20 years' returns on bonds, which are actually better than stocks — close to double digits — it's 4 percent going forward.”

That's what the “new normal” is, Gross says, “based upon the primary assumptions of a deleveraging of the private sector and the public sector being limited in what it can spend.”

Gross says that the slight advantage stocks offer “barely” justifies their risk.

As to whether inflation or deflation is the most likely scenario, Gross sees four possible scenarios. “Scenario A is that the global economy rebounds back to past levels of high growth. B is just a decent rebound. C is that new normal — half-sized growth. And D is deflation, debt, destruction,” he observes. (more)

Why the U.S. Need Not Fear a Sovereign Debt Crisis: Unlike Greece, It Is Actually Sovereign

Ellen Brown, Huffington Post

Last week, a Chinese rating agency downgraded U.S. debt from triple A and number one globally, to "double A with a negative outlook" and only 13th worldwide. The downgrade renewed fears that the sovereign debt crisis that began in Greece will soon reach America. That is the concern, but the U.S. is distinguished from Greece in that its debt is denominated in its own currency, over which it has sovereign control. The government can simply print the money it needs or borrow from a central bank that prints it. We should not let deficit hawks and short sellers dissuade the government from pursuing that obvious expedient.

We did not hear much about "sovereign debt" until early this year when Greece hit the skids. Investment adviser Martin Weiss wrote in a February 24 newsletter: (more)

Chavez threatens to cut off oil to US

AP

President Hugo Chavez has threatened to halt oil sales to the United States if Venezuela is attacked by its US-allied neighbour Colombia.

Chavez said during a speech to thousands of supporters that if there were an "armed aggression against Venezuela" from Colombia backed by the US, "we would suspend shipments of oil".

Chavez said "we wouldn't send one more drop" of oil to the United States, which is the top buyer of oil from the South American country. (more)

Is Oil Spill Cover for Massive Foreclosure?

by Jack Ragnarok

See the Gulf of Mexico oil spill not as an engineered environmental disaster but rather a savvy political move that diverts attention from foreclosure action by foreign financiers.

The lands have been offered by successive elected governments as collateral for the enormous cumulative debt of today. The Federal Reserve has issued unlimited debt instruments as fiat and electronic currency to government only through consent of its foreign owners. Ten foreign financial institutions are the corporate owners of the world's biggest alchemy machine, the Federal Reserve system.

Government is an agent of Plutocracy to transfer wealth from serfs to aristocrats. And the military serves to protect the economic interests of Plutocracy. Until recently the US has been Plutocracy's chief global policeman to enforce foreclosure and inflict punishments. Busily policing and bullying other nations, US citizens have yet to understand the time has come to foreclose upon the lands of the New World of Amaracu (America).. (more)

White House predicts record $1.47 trillion deficit this year, 9 percent unemployment next year Read more at the Washington Examiner

By: ANDREW TAYLOR
Associated Press

WASHINGTON — New estimates from the White House on Friday predict the budget deficit will reach a record $1.47 trillion this year. The government is borrowing 41 cents of every dollar it spends.

That's actually a little better than the administration predicted in February.

The new estimates paint a grim unemployment picture as the economy experiences a relatively jobless recovery. The unemployment rate, presently averaging 9.5 percent, would average 9 percent next year under the new estimates.

The Office of Management and Budget report has ominous news for President Barack Obama should he seek re-election in 2012 — a still-high unemployment rate of 8.1 percent. That would be well above normal, which is closer to a rate of 5.5 percent to 6 percent. Private economists don't think the unemployment rate will drop to those levels until well into this decade. (more)