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04032012 Script DOW – 64 = 13,199SPX – 5 = 1413NAS – 6 = 311310 YR YLD +.09 = 2.28%OIL +.07 = 104.08GOLD – 31.20 = 1646.80SILV -.31 = 32.78PLAT – 10.00 = 1647.00 Stocks slumped, bond yields rose, the dollar strengthened, and Wall Street traders experienced DT shakes as they read the Federal Reserve’s March FOMC meeting minutes. There was no direct mention of QE3, the Fed’s big money giveaway to the big banks. And so, the traders started twitching and squirming. Where would they get their next fix of free money? Market expectations for more Fed easing—both quantitative easing or an extension of its ‘operation twist’—have seesawed back and forth in the past several weeks. In the beginning of March, markets factored out quantitative easing based on comments from Fed Chairman Ben Bernanke that it might not be needed and that the economy was showing improvement. At the time, yields rose and stocks also held gains. But some weaker economic reports and new comments from Bernanke last week, defending the Fed’s easing stance, while not new, helped renew expectations for more easing. The minutes of the March 13 FOMC meeting show the voting members talking about more stimulus if the economy deteriorates. It also showed that the recent economic data did not materially change the forecast for 2013, or 2014. They also repeated past concerns about housing and unemployment, as well as discussed recent improvements in employment. Bernanke last week said the improvement in employment may be the …

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April, Monday 2, 2012

DOW + 52 = 13,264 SPX + 10 = 1419NAS +28 = 311910 YR YLD -.02 = 2.19%OIL – .40 = 104.83GOLD + 8.30 = 1678.00SILV +.71 = 33.09PLAT + 12.00 = 1657.00 The calm before the storm. Maybe I should say storms. This Friday we’ll look at the monthly jobs report for March. The nonfarm payroll is one of the bigger economic reports each month and frequently moves markets. The report this Friday will be strange. I guarantee. This Friday marks the somewhat unusual occurrence of a payrolls report being released on a holiday (Good Friday) that will keep stock markets shut. On Friday, stock futures will be trading for at least 45 minutes after the release, and government bonds will trade until noon. All Canadian and most European markets will be shut. It is widely expected the economy added 200,000 jobs in March; down from an average of 245,000 for the three prior months. The unemployment rate will probably stay at 8.3%. The addition of 200,000 jobs is not enough to lift the economy; it is just treading water, at best. So, the economy is looking pretty good, not great but good. A warm winter may have exaggerated first quarter growth. Consumer confidence is up but spending is outpacing wage gains. It makes for a pretty straightforward scenario for growth. The consumer can rely on high debt and/or growing asset prices to fuel their consumption but if debt gets too high and/or asset prices slip, then the consumer …

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March, Friday 30, 2012

DOW + 66 = 13,212 SPX + 5 = 1408NAS – 3 = 309110 YR YLD +.06 = 2.22%OIL +.15 = 102.93GOLD + 7.30 = 1669.70SILV +.02 = 32.38PLAT + 11.00 = 1645.00 The S&P 500 gained 11.6 percent in the first quarter, its best start of the year since 1998 and the best overall quarter since the third quarter of 2009. The Nasdaq Composite gained 18.7%. The Dow Industrial average gained nearly 1,000 points, up 8.1% – the best first quarter point gain for the Dow – ever. Apple’s share price increased 48%. Bank of America’s share price increased 70%, if you had the stomach for it. Elsewhere Germany’s Dax gained 17%; the Nikkei was up more than 19%; crude oil futures were up 4.2% and gold gained 6.7%. Pretty good, really. If there’s no real bad news and the Fed is pushing money into the economy, markets tend to go higher. For now, the economic news is pretty good. Consumer sentiment rebounded to its highest level in more than a year in March as optimism about jobs and income overcame higher prices at the gasoline pump. Meanwhile, personal spending jumped 0.8% in February as personal income edged up 0.2%; that might qualify as semi-good economic news. An increase in spending, 4 times greater than income growth, doesn’t pencil out on an individual level but it is a positive for the broader economy, consumer spending accounts for about 70% of economic activity; higher spending tends to result in more …

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March, Thursday 29, 2012

DOW + 19 = 13,145 SPX – 2 = 1403NAS – 9 = 309510 YR YLD -.04 = 2.16% OIL +.52 =103.30GOLD – .70 = 1662.40SILV + .22 = 32.36PLAT – 11.00 = 1631.00 Let’s talk about your retirement. The numbers that are selected with the highest frequency are: 48, 36, 53, 12, 27, 31, 51, and 52 – that’s for the first selection on the MegaMillions lottery ticket. The most common numbers for the Mega ball are 36, 9,7, 35, and 2. You’re scrambling for a pencil. You can always wait about an hour and we’ll post the audio archives of today’s show at MoneyRadio.com. Of course, even if you pick those numbers, your probability of winning the lottery are beyond astronomical, and the crazy part is that for many people, even with the ridiculous odds, this is their best chance at retirement, or getting out of debt. The estimate is that the jackpot for tomorrow’s drawing is up to about $550 million, so it’s interesting, it’s fun to fantasize. There is some entertainment value. I’m just suggesting that it might be a good idea to have a Plan B. You know, personal discipline, a savings plan, an investment plan, solid information – it’s not that difficult, just keep it tuned to MoneyRadio. It’s not as fast as the lottery, but the odds are much better. While winning the lottery would be sweet, there are some people who seem to have won the legal lottery. They collected get out …

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March, Wednesday 28, 2012

DOW – 71 = 13,126SPX – 6 = 1405NAS – 15 = 310410 YR YLD + .01 = 2.20% OIL +.13 = 105.54GOLD – 18.50 = 1663.10SILV – .55 = 32.14PLAT – 16.00 = 1640.00 Oil prices fell. The United States, France and Britain are in talks about possibly releasing strategic petroleum reserves. The problem is not a lack of supply. Not now anyway. Maybe tomorrow, maybe next week, maybe this summer; not today. The economy faces multiple risks: the Greeks might vote the technocrats out of office and tell the ECB to go to hell; Spain might default next and it would require a firewall that is bigger than the mother of all firewalls to avoid a cascading default; the Euro-banks hold twice as much toxic waste as their American counterparts, and their American counterparts still have extremely significant exposure to the Euro-trash; Japan’s debt to GDP makes the southern European countries look fiscally conservative – oh yeah the country is radioactive; China might slow down and the slowdown might be worse than expected. And then there are a few problems here in the US: unemployment at 8.3% (or is that inflation?), unemployment around 18% if you count all the invisible people that nobody wants to count, and the banks are still behaving badly and with impunity. I get the feeling that something is going to break. I don’t know what, but something is just going to stop working. Maybe it will be a breakdown in the electric grid, …

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March, Tuesday 27, 2012

DOW – 43 = 13, 197 SPX – 3 = 1412NAS – 2 = 312010 YR YLD -.06 = 2.19%OIL – .52 = 106.81GOLD – 9.30 = 1681.60SILV -.25 = 32.69 PLAT + 6.00 = 1656.00 A flat trading day on Wall Street; weakness in financials compared to a little strength in tech; the weakness carried the day. The Standard & Poor’s/Case-Shiller index of 20 American cities fell 0.8% from December to January and 3.8% from January 2011. Sixteen cities tracked by the index posted declines. Eight cities saw average home prices hit new lows. Home values fell for the fifth-straight month and prices dropped to their lowest levels since 2003. In January, Washington, Miami and Phoenix were the only metro areas that posted monthly gains. Robert Shiller, a professor of economics at Yale University and co-creator of the Standard & Poor’s/Case-Shiller Index, says the market has “a chance” of rebounding even though the downward momentum in the real estate market has accelerated in the past five years. Shiller says the problems facing mortgage giants Fannie Mae and Freddie Mac must be resolved before housing can bottom. There is speculation that Fannie and Freddie could sell bundles of foreclosed homes to hedge funds; both Fannie and Freddie are reportedly leaning toward principal mortgage write-downs and loan forgiveness, but don’t hold your breath on that. Of course you don’t make your home buying decisions based on national averages. All real estate is local. There have been several calls of a housing …

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March, Monday 26, 2012

DOW + 160 = 13,241SPX + 19 = 1416NAS + 54 = 312210 YR YLD +.01 = 2.24% OIL + .08 = 107.11GOLD + 27.10 = 1690.90SILV +.60 = 32.94PLAT + 1.36 = 22.00 Last week was the worst week of 2012 for the S&P 500. No big collapse last week, just a down week. The S&P 500 is still up 25% since the end of September. We have a nice bull market, likely a cyclical bull underway, and with good reason. We’ve seen some improvement in the economy; the unemployment rate has been moving lower; economic activity has picked up in the manufacturing and services sectors; central banks have been shoveling money out of helicopters from Athens to Rome to New York. C’est si bon! Let the good times roll. Of course, you probably remember the almost total collapse and meltdown of the global financial system a few years back and you might be wondering what was done to correct the malinvestment; and the answer is nothing. Everything is still as screwed up as ever; nothing was fixed. And then you remember that even though we have this nice cyclical bull market, we are still in a secular bear, at least for now; and that means the recovery is perilous at best. Fed chairman Ben Bernanke gave a speech today and he basically said we’re not out of the woods just yet. Bernanke said he’s encouraged by the unemployment rate’s decline to 8.3 percent, continued accommodative monetary policy will …

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March, Friday 23, 2012

DOW + 34 = 13,080SPX + 4 = 1397 NAS + 4 = 3067 10 YR YLD -.04 = 2.24% OIL + 1.40 = 106.75 GOLD + 17.90 = 1663.80 SILV +.65 = 32.34PLAT + 4.00 = 1630.00 Bloomberg News is reporting that Jon Corzine, the former CEO of MF Global gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s accounts with JPMorgan Chase in London. Back in December, Corzine testified that he never intended to misuse customer funds, he didn’t know where the money went, and (quote) “I did not instruct anyone to lend customer funds to anyone.”  Now, investigators have an email from the firm’s treasurer, three days before the company collapsed, and it says the transfer of funds was “Per JC’s direct instructions.” Somebody is going to have to re-hypothecate their testimony. Federal Reserve Chairman Ben Bernanke says the economy is operating below its level prior to the financial crisis. Bernanke said: “Consumer spending is not recovered, it’s still quite weak relative to where it was before the crisis. In terms of debt and consumption and so on we’re still way low relative to the patterns before.” I think what Bernanke is saying is: go shopping; go into debt if you don’t have money but just buy something. The US changed in the early 1980s from a model where rising worker wages were seen as the driver to growth and hence a focus of policy, …

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March, Thursday 22, 2012

DOW – 78 = 13,046SPX – 10 = 1392NAS – 12 = 306310 YR YLD -.02 = 2.28%OIL +.16 = 105.51GOLD – 5.20 = 1645.90SILV -.58 = 31.69PLAT – 17.00 = 1624.00 Do you remember hearing that there will be no more bailouts? Well, it’s not just a lone voice. The Dallas Federal Reserve has just issued its annual report and the title is “Choosing the Road to Prosperity. Why We must End Too Big to Fail – Now”. Ending bailouts is not a new idea, but we’ve never really heard it from one of the branches of the Fed. The letter also voices strong opposition to Dodd-Frank, but not for the reasons you might think; rather, that Dodd-Frank doesn’t go far enough. Dallas Fed President Richard Fisher, generally known as one of the most hawkish and conservative Fed Presidents wrote the letter; I’ll share some of the highlights: Letter from thePresidentIf you are running one of the “too-big- to-fail” (TBTF) banks—alternatively known as “systemically important financial institutions,”—I doubt you are going to like what you read in this annual report. Memory fades with the passage of time. Yet it is important to recall that it was in recognition of the precarious position in which the TBTF banks and SIFIs placed our economy in 2008 that the U.S. Congress passed into law the Dodd–Frank Wall Street Reform and Consumer Protection Act. While the act established a number of new macroprudential features to help promote financial stability, its overarching purpose, as …

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March, Wednesday 21, 2012

DOW – 45 = 13,124SPX – 2 = 1402NAS + 1 = 307510 YR YLD -.08 = 2.29%OIL -.36 = 106.91GOLD -.70 = 1651.10SILV +.01 = 32.27PLAT – 16.00 = 1646.00 Federal Reserve Chairman Ben Bernanke  testified on Europe to the House Committee on Government Oversight and Reform. In his prepared remarks, Bernanke said: “Financial strains in Europe have also shown through to our financial markets. During times when financial conditions in Europe were at their most turbulent, investors around the world retreated from riskier assets. In the United States, these pullbacks decreased stock prices increased the costs of issuing corporate debt, and reduced consumer and business confidence. In addition, U.S. financial institutions that were thought to have substantial exposures to Europe saw their stock prices fall and their credit spreads widen.” “The difficulties in the euro area have affected the U.S. economy,” Bernanke said. “The European Union accounts for roughly one-fifth of U.S. exports of goods and services. Not surprisingly, U.S. exports to Europe over the past two years have underperformed our exports to the rest of the world. In addition, weaker demand from Europe has slowed growth in other economies, which has also lowered foreign demand for our products.” Bernanke said: “U.S. financial firms and money market funds have had time to adjust their exposures and hedge their risks to some degree as the European situation has evolved, but the risks of contagion remain a concern for both these institutions and their supervisors and regulators.” In particular, Bernanke …

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