McAlvany Weekly Commentary

Five Keys to Restoring America’s Prosperity: An Interview With John Taylor

Posted on 16 May 2012.

A Look At This Week’s Show:
-Predictable policy is a must
-We must move from discretionary policies to the rule of law
-It’s time to clearly limit the role of government

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John Williams: The Real Unemployment Rate: 22% – Not 8.1%

Jim welcomes back John Williams from Shadow Government Statistics. John believes the real unemployment rate is 22%, not 8.1%, which is why it still feels like a recession. He also calculates the CPI at 6%, not 2.8%, and explains how the government manipulates the rate of inflation. Lastly, John believes the US is still on track for hyperinflation in 2014 as we near the coming fiscal cliff. Listen to the interview.

John received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. Formally known as Walter J. Williams, his friends call him John. For nearly 30 years, John has been a private consulting economist and, out of necessity, had to become a specialist in government economic reporting.

JIM: Joining me on the program today is John Williams of Shadow Government Statistics.

And John, before we get into a real big issue that’s going to hit the economy January 2013, I want to talk about the front page of your website. And you have two graphs that are available publicly and one is the unemployment rate where you have U3, U6 and then SGS, which is your own. Let’s talk about those numbers, what they mean for our listeners and the differences between them. [1:11] (more)

Chart of the Day - Colgate-Palmolive (CL)

The "Chart of the Day" is Colgate-Palmolive (CL), which showed up on Tuesday's Barchart "All Time High" and "Gap Up" lists. Colgate-Palmolive on Tuesday posted a new all-time high of $101.82 and closed up 2.05%. TrendSpotter has been long since April 16 at $97.67. Colgate-Palmolive was last featured on "Chart of the Day' as of the close on August 29, 2011 when the stock was at $89.77. In recent news on the stock, Argus on May 15 upgraded Colgate-Palmolive to Buy from Hold with a price target of $118 based on emerging market opportunities, improving free cash flow, and expectations for continued stock repurchases and dividend increases. Colgate-Palmolive, with a market cap of $47 billion, is a leading global consumer products company, focused on Oral Care, Personal Care, Household Surface Care, Fabric Care and Pet Nutrition.

Global Systemic Risk Soars To 5 Month Highs

from Zerohedge:

Only two weeks ago, we noted that the 30 most systemically important financial institutions in the world were seeing risk surging to 3-month highs. Today has seen that eclipsed dramatically as the credit risk of these entities soars to the year’s worst levels jumping 22% in the last two weeks alone. At 264bps, we are now close to the 3/9/09 peak crisis levels (of 274bps) and pushing up to the Q4 2011 peaks over 300bps as every region is deteriorating systemically – with the US and Europe worst (US below previous peak levels but Europe at record wides), Asia accelerating wider, and even the Aussie banks now losing it. While markets are staging a mini-recovery this morning, financials are not really participating as this index of global systemic risk has now retraced all of the LTRO benefits.

Read More @ zerohedge.com

Gold miners will need prices at $3,000 in 5 years - WGC

Sharp increases in mining costs mean gold will need to reach $3,000 an ounce in five years for the industry to stay profitable, World Gold Council chief executive Aram Shishmanian said on Monday.

Miners currently needed a gold price of $1,300 to survive, Shishmanian said, but faced steep rises in mining costs, along with the cost of dividends and host nation taxes.

"If this continues for the next five years the gold price needs to be at least $3,000 just to stay in the business," he said. However, he was optimistic sustained demand would drive prices higher over the long term.

Spot gold fell to a four-and-a-half month low of $1,556.5 an ounce on Monday on concerns over the European debt crisis. Normally a refuge for investors in times of economic turmoil, gold has recently traded in line with risk assets like base metals and stocks. (more)

Last Month a Disaster for Commodities

I went to cir­cle back today to look at what has been among the weak­est areas of the mar­ket, and chart after chart came up in the com­mod­ity space. Here is a chart of the per­for­mance of the futures in var­i­ous mar­kets (mostly com­modi­ties) over the past month (via Fin­viz) and it's a mess. Iron­i­cally, nat­ural gas – the most hated com­mod­ity of most of the first quar­ter, was the stand­out. Rever­sion to mean trade. Coal is not listed, but that group looks as bad as solar stocks… ironic since the lat­ter was sup­posed to sup­plant the for­mer at some point.

There is an in depth story on the sec­tor in the WSJ today as well.

• Com­modi­ties fell to nearly two-year lows last week, mea­sured by a widely used bench­mark, prompt­ing investors to pon­der whether the mas­sive rally that began in 1999 may be faltering.
• China is cool­ing down at the same time the U.S. is strug­gling to heat up, cloud­ing the out­look for the world's two biggest con­sumers. And pro­duc­ers of some raw mate­ri­als have ramped up sup­plies enough to cre­ate at least tem­po­rary gluts, par­tic­u­larly if appetites falter.
• For more than a decade, invest­ing in com­modi­ties was prac­ti­cally a sure thing. Prices rose in nine of the 12 years start­ing in 1999. Even down years had expla­na­tions, such as the Sept. 11 attacks in 2001 and the global finan­cial cri­sis in 2008.
• On Fri­day, the Dow Jones–UBS Com­mod­ity Index, which tracks futures con­tracts for 20 basic goods, fell 1% to the low­est level since Sep­tem­ber 2010. U.S. crude oil, gold and cotton—all com­po­nents of the index—helped lead the way down, as each hit fresh lows for 2012. The index is down 4% this year after a 13% drop last year, putting it on track for the first con­sec­u­tive declines since 1997 and 1998.

Embry – This is One of the Greatest Statements of All-Time

from KingWorldNews:

With global stock markets tumbling, along with gold and silver, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management. Embry discussed gold and other major markets, but first, here is what Embry had to say regarding recent derivatives turmoil: “This makes me very uncomfortable because I’ve always been very wary of the whole derivative situation. I believe the notional value of the outstanding derivatives is comfortably north of one quadrillion dollars. The Bank of International Settlements changed the definition, so they said there is only $700 trillion worth of them, rather than one quadrillion.”

John Embry continues @ KingWorldNews.com