Americans Repaying Debt Most Since ‘52 Spurs Savings

For the first time since Harry S. Truman was in the White House, Americans are paying back their debts, a phenomenon that just might help keep interest rates low as the Treasury sells a record $2 trillion of bonds and rising unemployment increases U.S. savings.

While the proportion of consumers without jobs rose to 9.5 percent last month, household borrowing fell to 128 percent of the average family’s after-tax income in the first quarter from a record 133 percent a year earlier, according to data compiled by Bloomberg. The total debt of individuals, nonfinancial companies and federal, state and local governments grew at a 4.3 percent pace at the start of the year, down from a peak of 9.9 percent in the fourth quarter of 2005, Goldman Sachs Group Inc. estimated. (more)

Oil's year-to-date rally defies declining demand

Declining demand in the U.S., the world's biggest oil consumer, has pushed up total inventories of crude oil, gasoline, and other petroleum products to the highest level in 19 years, an analysis of energy data showed. U.S. demand in the first half of 2009 was the weakest in a decade, while global consumption fell in the second quarter to the lowest level in four years.

The increasingly bearish fundamentals are raising concerns over the rally in oil prices. While some analysts say oil's gain was helped by hopes for an economic recovery, others believe it's speculation that has pushed oil higher, and a major correction could pull prices back to around $50 a barrel.(more)

The friendly trend Commentary: The 50-day moving average is well above the 200-day

And it sure became friendly earlier this month, following a correction that had many analysts wondering if the rally that began last March was over for good.
But on July 2, overlooked by us mere mortals but to great fanfare among trend followers, the Dow's 50-day moving average rose above its 200-day moving average. And, sure enough, within a couple of trading days the market dutifully reversed course. And it is now at a new rally high -- rising another 104 points on Monday alone. (more)

Treasury Trend Bearish Despite Bernanke Bounce

Treasury prices have seen some rallies in June and July and are up in the wake of Federal Reserve Chairman Ben Bernanke's July 21 testimony to Congress, but overall, I see the longer-term trend as bearish. Look to sell Treasury bond futures as investors gain confidence in riskier assets.

Stocks and commodities have been on the rise this year, and it seems clear investors and traders have recently been seeking out riskier assets as confidence in the economy’s prospects improves. Treasury bonds, which investors turn to as a safe haven during uncertain times, are being put on the backburner. Given the magnitude of government spending, people are also getting worried about the prospect of inflation, which is bearish for Treasury bonds. Treasury prices trade inversely to their yield. If inflation is rising, your real returns (reflected in your bond’s coupon payment) will decline. (more)

Peter Grandich Update

The U.S. stock market is getting to a point where some bearish call spreads may be in order. My thinking is to use major indexes like the DJIA, S & P 500 and the like. I’m currently looking for the right option vehicles and of course the entry point so stay tuned.

I mentioned in my weekend update that I thought this time around gold could get above $940 and stay there. We got the first part right. A very good Comex floor source of mine says that for the first time in quite awhile, the locals think the shorts could see this market get away from them. They feel this can occur if we can close above $950 or so at weeks-end. I concur so stay tuned. If only that commodity newsletter guy with the awful gold record didn’t go long. Hey, even a blind squirrel can find a nut now and then. (more)

Ted Butler on market manipulation, where the economy is headed and why silver is a screaming buy

Daily Bell: Thanks for sitting down with us. You are truly a legend in the field of silver and silver investing.

Butler: Those are some very kind words, so thank you. I just hope I can live up to them in this interview.

Daily Bell: The economic crisis is grave and getting graver. Give us a high-altitude overview of how the current economic situation affects silver - and how silver as a money metal might benefit in terms of price and popularity.

Butler: You are correct, these are certainly the most severe economic conditions I have ever witnessed. But whether we sink or swim economically, silver looks positioned to prevail better than any other asset I can think of. That's because of its dual-role, as a vital industrial material and as a primary investment asset. (more)

Marc Faber On CNBC

Marc Faber appeared on CNBC on July 16,2009. Marc Faber is expecting an “ultimate crisis” that will “clean the system.

“If you pump money into the system and you create large fiscal deficits, you create volatility,” Faber said.

“We’ve seen an intermediate low in March, we’ll rally for a year or so or maybe 18 months… the ultimate crisis will happen much later, and the ultimate crisis would clean the system,” (more)