Monday, July 12, 2010

This Week: Now Come Earnings

NEW YORK (TheStreet) -- Earnings reports from blue-chip companies in the coming week will provide investors with the first real indication of how the European debt crisis and continued economic stress have affected Corporate America's bottom line.

Stocks lost a good deal of value over the second quarter, but the start of July has indicated a sharp about-face in sentiment. The Dow Jones Industrial Average rallied more than 400 points this week alone. The question is whether the bulls will be disappointed next week, further the rally or sell the good news. With recent volatility -- at times inexplicable -- it's been hard to predict.

"An important thing to take away from this is that we have to get used to continued volatility," said Curvin Miller, a vice president at Russell & Co. a wealth-management firm for seniors in Fairborn, Ohio. "It's not going anywhere; it's here to stay." (more)

Here's Why This Summer Rally May Be One To Ride

Last week I noted that the market was again short-term oversold and due for another rally attempt. But I said, “I’m not ready to turn bullish yet. Let’s see the second quarter earnings reports due out next week and how the market reacts to them.”

I noted that the January – February market correction began when December quarter earnings were released, even though those earnings were impressive, and the more serious April-July correction began precisely when March quarter earnings were released, even though they were also better than forecasts.

However, early this week I did recommend that subscribers at least take profits on our downside positions. Although I am still intermediate-term bearish on the market, not expecting the low for this second year of the Four-Year Presidential Cycle until October or November, this short-term rally might have longer legs than the last three oversold rally attempts that have taken place since the market topped out in April. (more)

Commodities Week: Oil and Copper Rise, Natural Gas Falls, Gold Unchanged

Crude oil rose 4% this past week, as the commodity took its cues from rebounding equity markets. A fairly uneventful economic calendar allowed for a bit of optimism, with some traders speculating that any potential economic slowdown had already been priced in. Peak-to-trough, the S&P 500 fell nearly 17%, while oil fell 26.3% using the May 20th low and 18.4% using the more recent low put in this Tuesday.
Another disappointing ISM figure, this time measuring the service sector, was released on Tuesday. The Index fell from 55.4 to 53.8 in June, which was below the 55 analyst consensus. Though oil and equities attempted to rally in spite of the poor reading, they gave up much of their gains by the end of the session. Indeed, oil settled slightly to the downside. Not to be discouraged, bargain hunters reentered the markets on Wednesday, with a lack of news enabling them to carry markets higher uninterrupted. The positive momentum carried into Thursday’s session, aided by a drop in initial U.S. jobless claims which fell to 454,000 from 475,000 in the prior week. (more)

Preventing Your Government From Stealing Your Gold

With the U.S. government having already stolen the gold of its own citizens once, a question which I have often been asked by American readers is “do I think the U.S. government will steal [their] gold again?” My reply has always been that in the absence of a gold standard there is no motive for simply confiscating all gold again.

With U.S. debts and liabilities exceeding $100 trillion, while all the gold inside the U.S. is worth considerably less than $100 billion (at current values) even a quadrupling of the gold price from today's price would still make it totally inconsequential in restoring solvency to the U.S. government. If the government were to stoop to directly (and openly) stealing from its citizens, it would be much more likely to pillage their bank deposits, which are more than ten times as large as their gold holdings.

However, there is a further point which I should have made which relates to this issue. Specifically, even without formally “confiscating” our gold, all of our governments have already created a vehicle to steal a portion of our gold: our taxation systems. The pretext our governments use/will use to steal our gold (and silver) via taxation is “capital gains”. This is such a perversion of the concept of a “capital gain” that such tax treatment for gold and silver is simply evil. (more)

Technically Precious with Merv, July 9, 2010

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Gold keeps rising as panicky investors look for security

Goldfinger, the villain of the eponymous James Bond film, hatched a plot to increase the value of his bullion by detonating a nuclear device inside Fort Knox, making America's gold supply radioactive for 60 years. No less exciting, though rather more unsettling, is the real-life drama taking place on the world's financial markets, where investors have piled into gold on fears that capitalism is about to crumble.

As a result, the gold price has soared to record levels, rising 9% this year to reach a peak of $1,264.90 (£834.44) an ounce, with influential names in the world of finance predicting it could top $2,000. Among them is Jim Rogers, the investment guru who called the start of the commodities rally in 1999.

Having narrowly averted a financial Armageddon in 2008, investors are worried the authorities have transferred western indebtedness from banks and consumers to national governments. (more)

Argentina's economic Collapse "Memoirs of the Looting" (Memoria del Saqueo)

Documentary on the events that led to the economic collapse of Argentina in 2001 which wiped out the middle class and raised the level of poverty to 57.5%. Central to the collapse was the implementation of neo-liberal policies which enabled the swindle of billions of dollars by foreign banks and corporations. Many of Argentina's assets and resources were shamefully plundered. Its financial system was even used for money laundering by Citibank, Credit Suisse, and JP Morgan. The net result was massive wealth transfers and the impoverishment of society which culminated in many deaths due to oppression and malnutrition.

watch the full film click here

The Financial Con Of The Decade Explained So Simply Even A Congressman Will Get It

Submitted by Tyler Durden

Sometimes, when chasing the bouncing ball of fraud and corruption on a daily basis, it is easy to lose sight of the forest for the millions of trees (all of which have a 150% LTV fourth-lien on them, underwritten by Goldman Sachs, which is short the shrubbery tranche). Luckily, Charles Hugh Smith, of has taken the time to put it all into such simple and compelling terms, even corrupt North Carolina congressmen will not have the chance to plead stupidity after reading this.

Of course, to those familiar with the work of Austrian economists, none of this will come as a surprise.

1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans. (more)

Seriously Underpriced Silver

At breakfast I told the kids that I was instituting some new austerity measures around here, and they became so insistent that I heard all about how this was going to “ruin” them and their stupid social lives that I did not have to tell them that I was going to use the money to buy silver, which would have sent them ballistic.

The impetus for my New Mogambo Crusade (NMC) to acquire more silver came as a result of reading in Ed Steer’s Gold & Silver Daily where he noticed in the Comptroller of the Currency’s “Q1/2010 Report on Bank Trading and Derivatives Activities” that “the bottom-line numbers show that two US banks… JPMorgan and HSBC, USA hold between 97% and 99% of all the gold and silver derivatives held by all US banks.” Yow!

This is a result of naked short selling. Normally, to short something, you would have to borrow it from somebody, and then sell that. Now, to short gold or silver is as simple as getting somebody to pay money for a piece of paper that says it represents gold or silver. Easy! There is nothing behind it! (more)

George Ure: Tick...tick...tick - Israeli Mistake, Confusion, and a chart

After speaking with George Ure about the current events as of today, and having run into a wall of confusion, and misunderstanding between us over certain forecasts and the language and the tension values, i thought it wise to post this small article and a chart in aid of the confusion, either to increase, or decrease.

The issue is the July 11th break into 18 and a half hours of release language. George, and apparently others, are under the impression that some big 'thing' would happen on that date. This may well be the case, however, note that the release language (all the downward slanting lines in the charts below) continues all summer as punctuations to building tension. So the pattern from July 11th through to November 8th is one of building tension and then release of tension, almost on a daily basis. Note that this is the USUAL state of our charts for the planet. What is unusual is that we have been in a very long period of building tension for these past few months. What is also unusual is the 'tipping point' that is forecast to occur over 4 days in November from the 8th through the 11th inclusive. Then what is even more unusual is that the release language continues unabated, without deviation for over 2 months, from November 11th through to January 23rd. Please note some slight distortion in the charting software related to fonts alters the dates placement visually. The above dates are from the raw data, not from charting. (more)

Debt commission leaders paint gloomy picture

BOSTON (AP) -- The heads of President Barack Obama's national debt commission painted a gloomy picture Sunday as the United States struggles to get its spending under control.

Republican Alan Simpson and Democrat Erskine Bowles told a meeting of the National Governors Association that everything needs to be considered -- including curtailing popular tax breaks, such as the home mortgage deduction, and instituting a financial trigger mechanism for gaining Medicare coverage.

The nation's total federal debt next year is expected to exceed $14 trillion -- about $47,000 for every U.S. resident.

"This debt is like a cancer," Bowles said in a sober presentation nonetheless lightened by humorous asides between him and Simpson. "It is truly going to destroy the country from within."

Simpson said the entirety of the nation's current discretionary spending is consumed by the Medicare, Medicaid and Social Security programs. (more)