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Thursday, May 02, 2013 – Dying to Work for Slave Wages

Dying to Work for Slave Wages by Sinclair Noe DOW + 130 = 14,831SPX + 14 = 1597NAS + 41 = 334010 YR YLD – .01 = 1.63OIL + 3.04 = 94.07GOLD + 9.30 = 1468.40SILV + .18 = 23.93 Yesterday the Federal Reserve left interest rates unchanged and announced they would continue buying $85 billion a month in Treasury bonds and mortgage backed securities; they might increase or reduce the purchases depending; they blamed politicians for fiscal policy, or lack thereof. Today, the European Central Bank cut interest rates for the first time in 10 months, promising to provide as much liquidity as eurozone banks need well into next year and to help smaller companies get access to credit. The ECB lowered its main interest rate by a quarter percentage point to a record low 0.50 percent in response to a drop in eurozone inflation to an annualized 1.2%, well below its target level, and rising unemployment. ECB President Mario Draghi said the central banks was “ready to act if needed’, should more be required to boost the eurozone’s economic health. Sounds good; doesn’t mean much. The late moves by the ECB probably won’t do much to lift the economic health. The best analogy I heard today was that the ECB action is like opening the windows in a convertible when the top is already down. In recent months there have been growing calls for European countries to move away from austerity measures. Both French President Francois Hollande and newly-elected Italian Prime Minister Enrico Letta …

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Thursday, May 02, 2013 – Dying to Work for Slave Wages

Dying to Work for Slave Wages by Sinclair Noe DOW + 130 = 14,831SPX + 14 = 1597NAS + 41 = 334010 YR YLD – .01 = 1.63OIL + 3.04 = 94.07GOLD + 9.30 = 1468.40SILV + .18 = 23.93 Yesterday the Federal Reserve left interest rates unchanged and announced they would continue buying $85 billion a month in Treasury bonds and mortgage backed securities; they might increase or reduce the purchases depending; they blamed politicians for fiscal policy, or lack thereof. Today, the European Central Bank cut interest rates for the first time in 10 months, promising to provide as much liquidity as eurozone banks need well into next year and to help smaller companies get access to credit. The ECB lowered its main interest rate by a quarter percentage point to a record low 0.50 percent in response to a drop in eurozone inflation to an annualized 1.2%, well below its target level, and rising unemployment. ECB President Mario Draghi said the central banks was “ready to act if needed’, should more be required to boost the eurozone’s economic health. Sounds good; doesn’t mean much. The late moves by the ECB probably won’t do much to lift the economic health. The best analogy I heard today was that the ECB action is like opening the windows in a convertible when the top is already down. In recent months there have been growing calls for European countries to move away from austerity measures. Both French President Francois Hollande and newly-elected Italian Prime Minister Enrico Letta …

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Wednesday, May o1, 2013 – May Day

May Day by Sinclair Noe DOW – 138 = 14,700SPX – 14 = 1582NAS – 29 = 329910 YR YLD – .04 = 1.64%OIL – 2.54 = 90.92GOLD – 19.10 = 1459.10SILV – .70 = 23.75 It’s May Day. Maybe you all gathered round the May pole with colorful ribbons. Or maybe you commemorate the workers’ protests of 1886. Or maybe you think it’s all just a communist plot and you won’t celebrate May Day at all, you will take the advice of President Eisenhower and observe Law Day. Actually, the history of May Day is kind of interesting. It started with pagan celebrations dealing with Spring and fertility. May 1, 1886, protests erupted all across the United States, with some 340,000 workers taking part, demanding an 8-hour workday. An estimated 190,000 went out on strike. In Chicago, a center of the eight-hour day agitation, some 80,000 workers walked off the job, with most of them joining a vast parade through the city streets. Chicago police launched an assault on union members by gunning down locked-out workers at the nearby McCormick Harvester Plant. When an explosion of unknown origins went off at a subsequent protest rally at the Haymarket, a large open square in the city, police also opened fire on that worker gathering, killing some and wounding hundreds of others in what became known as the Haymarket Massacre. Radical labor agitators were arrested and blamed for the bloodshed, although most of them were not present at the rally. Four …

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Tuesday, April 30, 2013 – Relax, 20 Years Pass in the Click of a Mouse

Relax, 20 Years Pass in the Click of a Mouse by Sinclair Noe DOW + 21 = 14,839SPX + 3 = 1597NAS + 21 = 332810 YR YLD + .01 = 1.67%OIL – 1.46 = 93.04GOLD + .70 = 1478.20SILV – .24 = 24.45 The Dow Industrial Average did not hit a record high close. The old record close is 14,865. The S&P 500 did hit a new record high close. What next? Sell. Tomorrow is May 1st. Sell. Sell everything, or at least all stocks. We’ve been over this before. The theory is “Sell in May and Stay Away”. This is the best six months, worst six months theory of investing. It basically says you sell stocks in May and you buy back in November. The six months from May to November are bad; the six months from November through April are good. This works on broader stock averages and it can also apply to individual stocks, but the results on individual stocks are not as predictable. So if you have a S&P 500 Index Fund, or a Dow Industrials ETF, or something like that, sell. The S&P 500’s gains between November – April have trounced May – October returns for more than 60 years. Annualized gains from November – April have averaged 13.8%, while May – October gains have averaged only 1.4%. Numerous academic studies of the market going back many decades have confirmed that even though there is not a correction every year, an investor who simply …

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Monday, April 29, 2013 – A Busy Week Heading in the Same Direction

A Busy Week Heading in the Same Direction by Sinclair Noe DOW + 106 = 14,818SPX + 11 = 1593NAS + 27 = 330710 YR YLD + .01 = 1.67%OIL + .58 = 93.58GOLD + 13.60 = 1477.50SILV + .55 = 24.69  The S&P 500 index ended at an all-time high. We have a celebration when the Dow Industrial Average closes at an all time high; no party for the S&P 500. I wish I could give you a valid reason for this but it defies logic. There is no law that says you can’t enjoy milk and cookies anyway. This week offers a packed economic calendar,with ISM manufacturing data Wednesday, and PMI manufacturing reports for the euro zone and China on Thursday. The week ends with Friday’s U.S. employment report, expected to show 150,000 new nonfarm payrolls in April; and the backdrop to all the information is last Friday’s initial report on first quarter GDP, which came in at 2.5%, short of the consensus forecast of 3%.  Also, we’ll compare and contrast this week’s news with last week’s reports out of Europe showing economic weakness in Germany as well really bad weakness in the peripheral countires where unemployment is rising from one awful record to another. In Spain, for example, the rate increased to 27.2%, with an even more stunning 57.2% rate among the young. In Greece, the unemployment rate tops 27% and the government is cutting thousands more jobs to qualify for more ECB bailout money. The European …

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Friday, April 26, 2013 – The Fix is In

The Fix is In by Sinclair Noe DOW + 11= 14,712SPX – 2 = 1582NAS – 10 = 327910 YR YLD – .05 = 1.66%OIL – .86 = 92.78GOLD – 5.30 = 1463.90SILV – .36 = 24.14 The initial guesstimate of first quarter gross domestic product shows the economy growing at a 2.5% pace. Consumer spending increased by 3.2%, the strongest increase in consumer spending in 2 years. Defense spending fell at an annual rate of 11.5 percent in the first quarter, on the heels of a 22.1 percent decline in the last three months of 2012. This is the initial report on GDP and it is subject to revisions. The initial fourth quarter GDP number came in at a negative 0.1% and was revised up to 0.4%; the first quarter estimate of 2.5% is well below expectations, and it certainly isn’t showing enough strength to indicate a solid recovery. Personal disposable income, today’s report shows, actually fell by $140 billion in total from the fourth quarter. Reversion of the payroll tax to its normal rates at the beginning of 2013 will continue to drag on the disposable income of middle-class consumers throughout the year. Business investment in productive equipment and IT — a driver of productivity, innovation, and employment — slowed markedly to 3% growth in the first quarter, relative to nearly 12% in the prior quarter. Residential investment maintained strong growth, however, expanding 13% as housing markets in many areas of the country seem to be turning up. …

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Thursday, April 25, 2013 – Austerians v. Keynesians

Austerians v. Keynesians by Sinclair Noe DOW + 24 = 14,700SPX + 6 = 1585NAS + 20 = 328910 YR YLD + .01 = 1.71%OIL + 1.79 = 93.22GOLD + 36.70 = 1469.20SILV + 1.24 = 24.50 Five years ago the banking system nearly imploded and almost resulted in a meltdown of the global financial system. Three years ago Congress passed the Dodd-Frank financial reforms, aimed at correcting some of the problems of 2008. Dodd-Frank may have included some good ideas, but you had to wade through 2,000 pages to find anything worthwhile. Much of the legislation has still not been implemented, and on the issue of averting another banking system implosion, it really didn’t do much; it basically called on regulators to do a better job of catching problems and nipping them in the bud. We all know that’s not going to happen. And so, the biggest banks have been getting bigger than before the financial crisis and it’s widely believed that if a big bank were to fail, they would be bailed out.., again. The government considers these banks to be Systemically Important Financial Institutions, which means they are Too Big to Fail. That implied backing has given firms a green light to engage in risky activities that pose a threat to the financial system. Yesterday, Senators David Vitter and Sherrod Brown introduced legislation that aims to end the implicit guarantee of a government bailout. Brown and Vitter are calling for big banks with more than $500 billion in …

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Wednesday, April 24, 2013 – God Bless the Child

God Bless the Child by Sinclair Noe DOW – 43 – 14,676SPX +.01 = 1578NAS +0.32 = 326910 YR YLD un = 1.70%OIL + 2.43 = 91.61GOLD + 17.90 = 1432.50SILV + .22 = 23.26 Them that’s got shall get; them that’s not shall lose; so the Bible said, and it still is news. The Pew Research Center has analyzed the most recent date from the Census Bureau, and it turns out the rich got richer and the poor got poorer. During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%. From the end of the recession in 2009 through 2011 (the last year for which Census Bureau wealth data are available), the 8 million households in the US with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $0.6 trillion. Because of these differences, wealth inequality increased during the first two years of the recovery. The upper 7% of households saw their aggregate share of the nation’s overall household wealth pie rise to 63% in 2011, up from 56% in 2009. On an individual household basis, the mean wealth of households in this more affluent group was almost …

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Tuesday, April 23, 2913 – A Tweet Day

A Tweet Day by Sinclair Noe DOW + 152 = 14719SPX + 16 = 1578NAS + 35 = 326910 YR YLD un 1.70%OIL + .38 = 89.57GOLD – 12.70 = 1414.60SILV – .47 = 23.04 Some days you hear a bit of news and it’s bad, really bad. And then some days, hackers hack into the Associated Press Twitter account and tweet that there are bombs at the White House, and the stock market goes into a freefall, and it’s bad, but not really bad. Yes, a false tweet sent stocks plummeting. The 143-point fall in the Dow industrial average came after hackers sent a message from the Twitter feed of the Associated Press saying the White House had been hit by two explosions and that Barack Obama was injured. The fake tweet, which was immediately corrected by Associated Press employees, caused a sensation on Twitter and in the stock market. White House officials were unimpressed. An AP reporter apologized for the Twitter hacking at the start of the daily White House press briefing, saying the tweet had been deleted as soon as it was discovered. A stoney-faced Jay Carney, Obama’s personal spokesman, thanked the reporter but did not look amused. “The president is fine. I was just with him,” added Carney. The market recovered within a few minutes of the misunderstanding, but the incident raised many questions. We still have a problem with high frequency trading algorithms that scan the news and trade quickly, causing flash crashes. And then …

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Monday, April 22, 2013 – Airplanes, Austerity, and Flying Bulls

Airplanes, Austerity, and Flying Bulls by Sinclair Noe DOW + 19 = 14,567SPX + 7= 1562NAS + 27 = 3233 10 YR YLD – .01 = 1.70%OIL + .80 = 88.81GOLD + 19.80 = 1427.30SILV + .12 = 23.51 It’s Monday but it’s a better Monday than last Monday. No bombings to report today, at least not in our country. Over the weekend, the cover story on Barron’s magazine featured a cartoon drawing of a bull on a pogo stick, leaping through the air. You may recall that 6 months ago, Barron’s poll of big money, institutional investors were bearish on the market; that was about 1,000 points ago. Now they’re bullish. This would be a contrary indicator. But not today. Today, the bulls were buying the dips. The market started negative but finished positive. It’s all about momentum. Many fundamentally-oriented investors have been licking their wounds. And the nature of momentum-driven investing is that it can work longer than more sober-minded souls would think possible. An open question is the odd continued rise of stock prices even as corporate earnings weaken. Why are investors paying more for companies whose earnings are declining in aggregate? In normal bull markets, you see a new leadership group emerge, and late in cycle, investors increasingly favor conservative stocks. This time the leaders are defensive plays, high quality companies that pay healthy dividends. While bulls say that this is predictable given ZIPR, we’ve had ZIPR for years now.When this disconnect ends is anyone’s guess. But markets like this …

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