Friday, July 12, 2013

Dow 16,000 Anyone?

It may be time soon to ring the bell for Dow 16,000 — there are reasons to believe the June stock slump is over and a new leg up is under way, according to MSN Money.

The June stock washout looks done, and fresh economic data gives reason for optimism, MSN Money noted.

To begin with, last week's jobs report was stronger than expected, with more than 200,000 positions added even as hourly earnings rose 2 percent. Researchers at Capital Economics "are wondering is this has become a 'job-full' recovery in a reversal of the fast-growth/slow-jobs 'jobless' recovery we've gotten used to," MSN Money reported.

Labor's share of business income has fallen in recent years, while corporate profits hit record highs, but that trend should ease now with good economic benefits in the wings. (more)

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Advance Declines Break Out to New Highs

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From Merrill Lynch’s technical team:
The Most Active A-D line breaks to new highs
The Most Active Advance-Decline (A-D) line is a market breadth indicator of the daily top 15 most active stocks by share volume in the US. These stocks are generally more liquid with larger market caps where the trading is dominated by institutional investors. The Most Active A-D line has moved to new highs, which is bullish for the US equity market. This is similar to the breakout for the Most Active A-D line in late April (Chart Talk, 30 April 2013) and confirms the strength in the stocks only A-D lines (Chart Talk, 10 July 2013).
In addition, unlike the S&P 500, the Most Active A-D line did not break the uptrend line from last November. Strong market breadth supports the case for a continued US equity market rally. See Market Analysis Comment, 09 July 2013 and Chart Talk, 10 July 2013 for more details and key technical levels for the S&P 500.
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Fed is Very Concerned About Rise in Rates / By Martin Armstrong / July 11, 2013
Interest Rates are not actually within the scope of the Fed’s power. It can create a base rate, but everything from there is indirect. That is why the Fed bought in 30 year bonds. It was hoping to create a shortage of long-term to reduce mortgage rates and encourage capital to buy mortgages. Everything they do is trying to INDIRECTLY manipulate the markets because they have NO POWER to actually dictate to the markets.
The Emperor is bare ass NAKED! He never had any clothes!
This is a CONFIDENCE game. The Fed has been going around to the major banks warning them that their models will fail and need to be re-calibrated. The Fed realizes it has painted itself into a corner and cannot move. So the comments are trying to confuse the markets and hopefully prevent the bonds from collapsing. This is what has been going on. The Fed is telling the banks there will be NO FLIGHT TO QUALITY.
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Oil Myths and Why WTI is a Short

The Cushing Myth
“Going along with ‘drill, drill, drill’ is now ‘ship, ship, ship,’ ” said John Kilduff, energy analyst with Again Capital.” The bottleneck has been addressed in Cushing [Okla]. We’re seeing those inventories plunge. We’re seeing it from all the rail movement. It’s having an impact, as are the pipeline reversals.”
That is the rhetoric and here are the facts from the latest EIA report: Last year Cushing had 46.8 million barrels in storage and today Cushing has 47 Million barrels in storage. Thank goodness for all the rail and pipeline movements of the last year. I guess “plunging inventories” justifies the recent narrowing of the WTI-Brent spread from a year ago.

Funny Business Going on with Inventories
There was a 20 million withdrawal from inventories the last two weeks for the first time in 30 years. What are the odds that this is wholesalers stocking up for the rest of the summer? Expect a substantial build next week in inventories as Saudi Arabia`s upcoming increased export shipments finally hit the market, many wholesalers summer needs have been met, and product inventories are higher than this time last year.

2% GDP Economy
But the one thing that is apparent is that consumer demand for products didn`t all the sudden spike by a factor of 10 over the last two weeks. Furthermore, Oil inventories still stand at 374 million barrels compared to starting 2013 with 361 million in storage. This is after an unprecedented and highly unusual withdrawal occurrence that doesn`t fit with the 2% GDP growth environment that necessitates the Fed having to stimulate the economy with $85 Billion of monetary stimulus each month, and a total unemployment rate well above the 10% level.  (more)

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Mortgage rates rise to the highest level in nearly 2 years

The 30-year mortgage rate rose to its highest level in nearly two years this week, according to mortgage financing company Freddie Mac.

After a slight pause, Freddie Mac said rates climbed 0.22 percentage point to 4.51% for a 30-year, fixed-rate loan. The rate is the highest it has been since the week of July 28, 2011.

The rate for a 15-year mortgage hit 3.53%, up 0.14 percentage point.

Analysts blamed a 0.53 percentage point spike two weeks ago on the actions of the Federal Reserve

Rates began to run up following hints by chairman Ben Bernanke that the Fed would soon start tapering off on its purchases of up to $85 billion a month in bonds and mortgage-backed securities, a program designed to keep borrowing costs low.  (more)
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Now’s the Time to Buy Chesapeake Energy (NYSE: CHK)

Chesapeake Energy (NYSE: CHK), our long-term pick in the natural gas sector, continues to make significant progress in its quest to stabilize its once debt-bloated balance sheet.

The company, which became infamous for making all the wrong moves, is finally taking steps to raise cash and secure its future growth potential.

To be sure, it may be selling the right assets at the wrong time, as Chesapeake has little choice if it wants to avoid a credit downgrade.

Fortunately, it has the assets to sell and, afterwards, will still be left with some of the most valuable land in the United States when it comes to energy resources.  (more)

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We Are In The Early Stages Of A Massive Short Squeeze In Gold

from King World News
Today one of the most respected institutional minds in the entire financial world told King World News that we are in the early stages of what will be a massive short squeeze in the gold market. John Hathaway, of Tocqueville Asset Management L.P., is one of the great original thinkers in the business, and his fund was awarded a coveted 5-star rating. Below is what Hathaway had to say about the developing massive short squeeze in gold.
Hathaway: “I think the story of the day is the disconnect between physical gold and paper. I just saw a note this morning about the most current drop in COMEX warehouse inventories. Brinks also reported this week that their inventories were down 55%….
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