Tuesday, May 18, 2010

Market Cap as a % of GDP

IMF warns rich nations to cut debt

Advanced economies face a herculean task to restore public debt to pre-crisis levels, and failure to do so will drive up borrowing costs and curb economic growth, the IMF warned on Friday.

If government debt is not reduced, potential growth in rich countries could decline by more than 0.5% annually, the International Monetary Fund said in its "Fiscal Monitor" report, which it launched last year.

In order to accomplish that, advanced economies will need to reverse deficits, which now average 4.9% of GDP, into an average surplus of 3.8% by 2020. (more)

None Yet, But Here Are Some Early Technical Clues of a Market Top in Gold

Comex nearby gold futures late last week pushed to a new all-time record high of $1,249.70 an ounce. The fact gold futures prices have pushed to a new all-time high suggests much bigger upside targets in the coming weeks and months.
There are not yet any early near-term technical clues to suggest a market top is close at hand in the gold market. The path of least resistance for gold will remains sideways to higher until some technical warning flags are raised.

Here are some early near-term technical warning signals that, if they occur, should put the gold market bulls on high alert that at least a near-term market top is in place in the precious yellow metal:

-- the near-term price uptrend on the daily bar chart being negated. If gold prices drop significantly below the last "reaction low" on the daily bar chart, that would negate the near-term price uptrend in gold. At present, the last reaction low on the daily bar chart in June gold futures is the May low of $1,156.20. A reaction low is a downside price correction that occurs in an uptrending market. Uptrend lines on the bar charts are drawn from the reaction lows. (more)

Debtors with Highest Probability of Default

Financial Fraud. How It Works. The Truth behind the Madoff Investment Scandal

The mass media is not telling the entire truth about the Bernie Madoff scandal and that is contributing to the suffering of the victims of the largest investment scandal in history. Massachusetts School of Law Dean Lawrence Velvel ought to know; he’s one of them.

“Let me tell you the things you don’t know,” said Velvel, who has written extensively on the complex subject in books and blogs and hosted several television programs dealing with the Madoff affair. “The media isn’t telling the whole story because they generally focus only on the very wealthy people who were taken in. But the vast majority of the victims are ordinary people, like you and me, and they are the ones who are now left twisting in the wind. It looks to us like the wealthy are being helped now while the average bloke who put in $500,000 or $750,000 and who needed to use the income in order to live is being hurt.”

Velvel is actively involved in the appeal of a recent federal decision that denied recoveries to thousands of small investors. (more)

Why Gold And The Dollar Are BOTH Rising

An unusual dynamic has taken shape over the last few months – Both the US Dollar and Gold have been rising together. Normally, such a movement would seem counter intuitive as Gold is a commodity and commodities tend to move in the opposite direction of the US dollar. There is a slight caveat, however, to the Dollar-Commodity relationship which exists during extremely rare occasions and that is gold (along with silver) doesn’t always function as a commodity. There are times when it behaves more like a currency. This is one of those times. (more)

Stocks, Euro Plunge on Concern Austerity Plans to Curb Recovery

Asian stocks fell the most in almost six months, led by the Shanghai Composite Index’s 5 percent plunge, the euro dropped to its lowest against the dollar since 2006 and the cost of insuring bonds from default jumped on concern European austerity measures will derail the recovery.

The MSCI Asia Pacific Index tumbled 2.8 percent to 116.65 at 4:12 p.m. in Tokyo. The Stoxx Europe 600 decreased 0.6 percent to 246.87. Standard & Poor’s 500 Index futures declined 0.7 percent. The euro fell as much as 0.7 percent against the dollar to as low as $1.2235. The British pound lost 0.8 percent versus the U.S. currency. The Markit iTraxx Asia index of credit-default swaps climbed 11 basis points to 131 basis points and oil lost 2 percent. (more)

Chart of the Day