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Wednesday, January 16, 2013 – Fuzzy Justice

Fuzzy Justice by Sinclair Noe DOW – 23 = 13,511SPX +0.29 = 1472NAS + 6 = 311710 YR YLD – .01 = 1.82%OIL + .88 = 94.16GOLD + .10 = 1681.00SILV + .12 = 31.59 The National Association of Home Builders/Wells Fargo housing market index was flat at a seasonally adjusted level of 47 in January. This is a gauge of homebuilders’ confidence. Conditions in the housing market look much better now than at the beginning of 2012 and an increasing number of housing markets are showing signs of recovery, which should bode well for future home sales later this year. The builder-confidence gauge is up 88% from the same period in the prior year, even though the number was essentially flat for the January reading. Industrial production increased 0.3% in December and now stands at the highest level since the summer of 2008. Production is up for 2 months, indicating a recovery from Hurricane Sandy. The House of Representatives finally passed a $51 billion aid package to provide emergency relief for Hurricane Sandy. It was a partisan vote, but 49 Republicans voted for the aid package, mainly representatives from the affected areas. The Consumer Price index was flat in December. The core rate of inflation, excluding food and energy, rose 0.1%. Gasoline prices dropped last month. For all of 2012 consumer prices climbed 1.7%, the third lowest rate in the past 10 years. That’s also down from a 3% increase in the prior year. Core CPI was up 1.9% …

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Tuesday, January 15, 2013 – It’s Better Than Nothing

It’s Better Than Nothing by Sinclair Noe DOW + 27 = 13,534SPX + 1 = 1472NAS – 6 = 3110 10 YR YLD – .03 = 1.83%OIL – .71 = 93.43GOLD + 12.10 = 1680.90SILV + .29 = 31.47 Let’s start with some economic reports. Consumer spending rose 0.5% in December and sales for October and November were revised slightly higher. It was a pretty good holiday shopping season, but the pace of spending in 2012 failed to equal the gain in the previous year. Retail spending rose an unadjusted 5.2%, down from 7.9% in 2011. And the pace of spending might slow as workers adjust to lower take-home pay as a result of a 2% hike in the payroll tax. We already know that the expiration of the payroll tax cuts was an especially damaging outcome of the fiscal cliff negotiations. It will total approximately $125bn less in wage-earners’ pockets, and is showing up immediately in reduced paychecks. Average weekly earnings of all employees on private nonfarm payrolls: $818.69 in December. The 2% payroll tax increase clips $16.37 a week from take-home pay. And if weekly earnings held steady in January, at the December level, workers would feel like they earned $802.32 instead. That’s the equivalent of losing all the 2012 gain in weekly earnings in one month.” As a percentage of income it hits the middle class hardest because it applies only to the first roughly $113,000 in wages, effectively a regressive measure that takes money from the …

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Subsidizing Bad Behavior by Sinclair Noe DOW + 18 = 13,507SPX – 1 = 1470NAS – 8 = 311710 YR YLD – .02 =1.86%OIL + .64 = 94.20GOLD + 5.10 = 1668.80SILV + .64 = 31.18 This morning, President Obama held the final news conference of his first term. The debt ceiling was a major topic. The President demanded lawmakers raise the nation’s $16.4 trillion federal debt limit quickly, warning that, “Social Security benefits and veterans’ checks will be delayed” if they don’t and cautioning Republicans not to insist on cuts to government spending in exchange. Republican congressional leaders repeated their demand that increases in borrowing authority must be accompanied by spending cuts. Obama, flat out rejected that, saying: “They will not collect a ransom in exchange for not crashing the economy. The full faith and credit of the United States of America is not a bargaining chip. And they better decide quickly because time is running short.” The president opened his news conference with a statement by saying that a vote to increase the debt limit “does not authorize more spending. It simply allows the country to pay for spending that Congress has already agreed to. These are bills we’ve already racked up and we need to pay them.” Obama said he was willing to consider future deficit cuts, but only if they are done independently from a vote to raise the $16.4 trillion debt limit. The debt limit must be raised to prevent a default, a series of …

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Friday, January 11, 2013 – Meet the New Boss

Meet the New Boss by Sinclair Noe DOW + 17 = 13,488SPX -.07 = 1472NAS + 3 = 312510 YR YLD – .02 = 1.88%OIL -.06 = 93.76GOLD – 12.10 = 1663.70SILV – .42 = 30.54 Within a few days, Tim Geithner will be gone from the Treasury. Geithner was at the center of the financial crisis, first in his role as President of the Federal Reserve Bank of New York and in 2009 as Treasury Secretary. In a recent exit interview he said: “It was a very bad crisis. No playbook. No road map. No clear precedent. If we had a different set of constraints, particularly in fiscal policy, then I think that the economic outcome could have been modestly better.” To be fair, Geithner was handed a mess, and to his credit he did not turn it into a catastrophe, and there were constraints. Still, Geithner’s tenure at Treasury has been a little less than satisfying. The Too Big to Fail banks are bigger than ever; they operate with an explicit public guarantee, and despite Geithner’s dissatisfaction with constraints placed on him, he did little to challenge the banksters. Geithner quashed proposals to seize bonuses, impose new taxes or otherwise punish bankers. He claimed that it would have destabilized the banks; instead he created a moral hazard and a two-tiered system of justice; Too Big to Fail became Too Big to Jail and the result is the banksters now operate with impunity. At the same time Geithner was …

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Thursday, January 10, 2013 – California As A Role Model

California As A Role Model by Sinclair Noe DOW + 80 = 13,471SPX + 11 = 1472NAS + 15 = 312110 YR YLD + .04 = 1.89% OIL + .77 = 93.87GOLD + 16.80 = 1675.80SILV + .50 = 30.96 So, those are the closing numbers. At least, we think those are the closing numbers; give or take; kinda, sorta. It could be off a bit. The stock exchanges have a bit of a problem with something called the consolidated tape, which provides trade data. Seems it went out for about an hour at the New York Stock Exchange Tuesday, making it tough to see in anyone had traded in 165 securities. And the NYSE’s screw up follows a similar snafu last week at the Nasdaq. The consolidated tape at Nasdaq went totally blank last week. The consolidated tape is the record of securities transactions across all US exchanges. If you’re keeping track, the exchanges have recently had to admit they can’t always run IPO’s competently, there are some problems with faulty data and trade data. So, that’s the closing numbers, more or less. The World Economic Forum is underway in Davos, Switzerland. The annual gathering of the wealthy and influential includes the publication of a survey which outlines the concerns of about 1,000 experts. This year’s report seemed to focus on the interplay between the environment and the economy, saying: “A sudden and massive collapse on one front is certain to doom the other’s chance of developing an effective, …

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Wednesday, January 09, 2013 – Miscellaneous Financial News

Miscellaneous Financial Newsby Sinclair Noe DOW + 61 = 13,390SPX + 3 = 1461NAS + 61 = 13,39010 YR YLD -.02 = 1.85%OIL +.01 = 93.16GOLD – 2.80 = 1659.00SILV – .05 = 30.46 AIG, the insurance company won’t join ex-CEO Maurice “Hank” Greenberg’s lawsuit against the US government over the insurance giant’s financial crisis bailout. Greenberg has filed a $25 billion lawsuit accusing the government of violating shareholders’ rights by bailing out AIG, because the terms of the bailout weren’t as cushy as Greenberg wanted. Thank you, AIG. Earlier this week I told you about an $8.5 billion settlement announced between the Federal Reserve and the Office of the Comptroller of the Currency with 10 big mortgage services, including Citigroup, JPMorgan and Wells Fargo over botched foreclosure claims. Now, Goldman Sachs and Morgan Stanley and other banks are expected to agree to a $1.5 billion settlement with the regulators sometime this week. The other banks haven’t been officially identified but best guess is that the group includes HSBC, Ally, EverBank, and OneWest Bank. Goldman got into the mortgage servicing business by purchased Litton Loan Servicing and Morgan Stanley bought Saxon Capital. The Fed has ordered both firms to conduct case by case reviews of foreclosures after widespread mistakes were discovered in how the firms processed home seizures. Meanwhile, Morgan Stanley plans to cut about 1,600 jobs, nearly 3 percent of its workforce. The cuts will focus on senior ranks at the bank. About half of the cuts will be …

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Tuesday, January 08, 2013 – Thank You, America

Thank You, America DOW – 55 = 13,328SPX – 4 = 1457NAS – 7 = 309110 YR YLD -.03 = 1.87%OIL +.06 = 93.25GOLD + 13.20 = 1661.10SILV + .24 = 30.50 Some people have debated what we should do if the banks get into trouble again; should they be bailed out? The Too Big to Fail Banks of 2008 are even bigger today, and if one collapses, then there would likely be a cascading effect through the global financial system. So, if a big financial institution gets into trouble, should there be a bailout, or do we just say “tough luck”? You probably have an opinion, and reasonable people can debate the issue, or at least there could be room for reasonable debate, until now. As of today, there is no more debate. If you go to Webster’s Dictionary and look up the word “ingrate”, you will find a picture of Maurice “Hank” Greenberg; the guy who founded American International Group, AIG, the huge insurance company that in 2008 accepted a $182 billion dollar bailout from the Treasury. Hank Greenberg, the former CEO of AIG is contending in a lawsuit that the government treated the company’s shareholders too harshly when carrying out its 2008 rescue of the insurance giant. AIG is weighing whether to join the lawsuit, filed by Mr. Greenberg’s investment firm, Starr International Company, which owns about 12% of AIG. In addition to founding AIG, Greenberg gained notoriety for a high profile fraud case in 2005 that …

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Monday, January 7, 2013 – I Went on Vacation and Not Much Changed

I Went on Vacation and Not Much Changed by Sinclair Noe DOW – 50 = 13,384SPX – 4 = 1461NAS – 2 = 309810 YR YLD -.01 = 1.90%OIL + .21 = 93.30GOLD – 9.90 = 1647.90SILV – .02 = 30.26 Forty years ago, Yale Hirsch at the Stock Traders Almanac, created the January Barometer. The idea was simple: as the S&P 500 goes in January, so goes the year. This market prediction tool has been correct 89% of the time since 1950, suffering only seven major setbacks. Since 1950, stocks have finished lower for the year only three times after posting gains in January. When the Dow is positive in January, then the rest of the year is positive 83% of the time, averaging additional gains of 9.59%. Compare that to the Dow’s performance when January is negative. In those years, the February-December returns are positive just half of the time, with an average gain of 2.04%. As with the full-year results, a positive January typically leads to a positive February. When the Dow closes higher in January, February goes on to average a return of 0.57%, and is positive 63% of the time. When January is negative, February is negative more than half the time, and averages a loss of more than 1%. However, an outsized return in January has not necessarily translated into a bigger return for February. If January is up more than 3.5%, the average February gain is not as big as if January is …

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Friday, December 21, 2012 – If You Are Not a Member of an Organized Political Party, You Just Might Be a Republican

If You Are Not a Member of an Organized Political Party, You Just Might Be a Republican by Sinclair Noe DOW – 120 = 13,190SPX – 13 = 1430 NAS – 29 = 302110 YR YLD – .05 = 1.75%OIL – 1.24 = 88.89GOLD + 9.80 = 1658.00SILV + .04 = 30.06 The world as we know it did not end today. This means that I have a lot of Christmas shopping to complete in a very short period of time. Last minute might working for shopping but it’s no way to run a country. Let’s take a look at Plan B, excuse me, I think we’ve now moved on to Plan C. Will Rogers once said: “I’m not a member of any organized political party, I’m a Democrat.” Well, times change and now the unorganized party is the GOP. Consider: last week, Mitch McConnell tried to filibuster his own bill; this week John Boehner couldn’t line up enough votes for a vote on Plan B, let alone Plan A. Plan B was really a brilliant piece of legislation; it was sold as a tax cut for everybody with incomes under $1 million, except it actually raised taxes on everybody except the income earners between $200,000 and $1 million; everybody else would have been staring down a tax increase; low income earners and high income earners alike. There were some other little dirty secrets in Plan B. House Republicans want to cut wasteful spending, so Plan B offered to eliminate …

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Thursday, December 20, 2012 – Plan B, Plan S

Plan B, Plan S by Sinclair Noe DOW + 59 = 13,311SPX + 7 = 1443NAS + 6 = 305010 YR YLD un = 1.80%OIL -.03 = 89.95GOLD – 18.70 = 1648.20SILV – 1.06 = 30.02 I’m thinking we just go over the cliff. Why not? It looks more and more that they aren’t going to get anything done. They say they are close, they say it is possible, but really, I don’t have confidence. President Obama held a press conference. And he said he had gone at least halfway in meeting some of the Republican concerns. At least halfway? So he’s admitted that he’s already met them in the middle, and likely gone past the middle into Republican territory. And we’re still two weeks out from the fiscal cliff deadline, with Republicans sitting around waiting for the inevitable further concessions Obama will make. Why didn’t Obama say something like, “I made a more than fair deal. The GOP rejected it. So now I’m pulling the offer off the table and waiting to see what the GOP has to offer. Clock’s ticking!” Instead, the GOP will bank the concessions he’s already made, then demand more. Rinse. Lather. Repeat. Meanwhile, Speaker John Boehner is just playing with himself. He’s offered up a Plan B for a vote in the House. One of the touted benefits of “Plan B” is that it only raises taxes for those making $1 million or more. Eric Cantorsaid this morning, the plan would raise revenue “without …

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