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Thursday, October 11, 2012 – The Bigger Debate

by Sinclair Noe DOW – 18 = 13,326SPX +0.28 = 1432NAS – 2 = 304910 YR YLD – .02 = 1.67% OIL + 1.22 = 92.47GOLD + 4.60 = 1768.00SILV +.06 = 34.10PLAT + 4.00 = 1682.00 Archived audio at http://www.moneyradio.com/Audio-Archive A fairly remarkable thing happened today. I doubt you’ll hear much of it on the nightly news because after all, there is a big debate this evening, but the news out of Tokyo this morning centered around and even bigger debate. The International Monetary Fund and the World Bank are holding their annual meeting in Japan and the Managing Director of the IMF, Christine Lagarde announced that the harsh austerity measures that European monetary officials have been pushing could produce the opposite effect on struggling nations like Greece and Spain and Portugal and Ireland. In other words, austerity has not worked and it probably isn’t the solution to Europe’s problems after all. For those of you that have been alert and attentive, you know that Euro-crisis has served as the testing ground for major economic theory. The IMF announcement today marks a dramatic turning point moving forward, or at least it marks a dramatic sounding announcement and a surprising admission of policy failure. Still to be determined is how the Euro-crisis plays out from here. Large parts of the Euro-zone are now in economic depression that threaten not just the weak nations but even the strongest. We are familiar with the situation in Greece; unemployment is running at 25%; the …

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Wednesday, October 10, 2012 – Great Fun and Very Entertaining

Great Fun and Very Entertaining -by Sinclair Noe DOW – 128 = 13,344SPX – 8 = 1432NAS – 13 = 305110 YR YLD – .03 = 1.69% OIL – 1.04 = 91.35 GOLD – 1.30 = 1763.60SILV +.08 = 34.08 PLAT – 13.00 = 1678.00(to listen to audio visit Financial Review at MoneyRadio.com) It’s earnings season. Chevron took a hit after announcing third quarter earnings would be substantially lower. Alcoa took a hit because law suits and remediation costs are part of their business model and not one time exclusions. FedEx announced it will fire workers and park planes to cut $1.7 in expenses. S&P cut Spain’s sovereign credit rating to BBB-minus, just a notch above junk status. Less than 4 weeks to the election. Tomorrow we can watch the vice-presidential debate. It’s all great fun and very entertaining. Last week, the first presidential debate produced a bump in the polls for Romney. The latestPew Research Center poll shows Mitt Romney ahead of President Barack Obama among likely voters, 49% to 45%. But the latest Gallup poll shows President Obama leading Romney among likely voters, 50% to 45%. If you’re wondering about the discrepancy, the reason is simple. The Pew poll covered the days immediately following last Wednesday’s presidential debate, but it didn’t include last weekend. The Gallup poll, included the weekend and that means it also included Friday’s September’s jobs report which showed unemployment down to 7.8 percent for the first time in more than three years.Romney got a bump …

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Diminished Expectations by Sinclair Noe (to listen to Financial Review audio visit MoneyRadio.com) DOW – 110 = 13,473SPX – 14 = 1441NAS – 47 = 306510 YR YLD – .03 = 1.72%OIL – .23 = 92.16GOLD – 11.60 = 1764.90SILV – .08 = 34.00PLAT – 8.00 = 1692.00 On this day five years ago, the Dow and S&P 500 hit record highs; the Dow closed at 14,164 and the S&P 500 closed at 1,545. The Dow is currently 4 percent below that peak, the S&P is 7 percent below its record. So, will the current cyclical bull market end tomorrow? It’s not a crazy question; it happened on this date 5 years ago. It looked a little like it today. It’s earnings reporting season. Back in July, analysts said they expected Alcoa to report earnings of 12 cents per share, then expectations were lowered and now the hope was for break even. Alcoa reported a net loss of $143 million, or 13 cents per share, compared with a profit of $172 million, or 15 cents per share, in the same quarter last year. Revenue decreased 9 percent to $5.83 billion from $6.42 billion a year ago. The first report I read on Alcoa earnings after the close said, Alcoa reported quarterly earnings and revenue that topped analysts’ expectations. Excluding charges from the settlement of a civil lawsuit and environmental remediation of a New York state river, earnings were 3 cents per share. Here’s the thing; lawsuits and environmental remediation are …

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Monday, October 8, 2012 – The 11th Anniversary

The 11thAnniversary by Sinclair Noe DOW – 26 = 13,583SPX – 5 = 1455NAS – 23 = 3112 10 YR YLD OIL+.30 = 89.63GOLD – 5.80 = 1776.50SILV – .53 = 34.08PLAT -12.00 = 1699.00 Due to the Columbus Day holiday, US bond markets were closed and there was no interesting data to speak of. Trading volume was on the lighter side. After equity futures opened the day 5 points lower in the S&P 500, stocks drifted slightly higher on the day. This was also an important anniversary; yesterday actually. When the Taliban refused to give up the al-Qaida leaders who orchestrated 9/11, the US invaded Afghanistan on Oct. 7, 2001. With any luck our troops will be out of there by the end of 2014. When the Soviets withdrew from Afghanistan in the 1990s, the country fell apart and eventually fell under the control of the Taliban. In time we’ll learn how the country will manage after the US leaves. The Afghan people already view their government as weak and corrupt and those doubtful of a peaceful future say that if the upcoming presidential election is rigged and yields an illegitimate leader, civil war could erupt between ethnic groups backed by neighboring countries trying to influence Afghanistan’s future. We don’t speak much about war. We have had very little public discourse on the longest war in US history. War, for some, is a business. And across this country we have a strong infrastructure of military industries that produce instruments …

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Friday, October, 5, 2012 – Slow, Steady, Weak, Uncooked Growth in Jobs Report

Slow, Steady, Weak, Uncooked Growth in Jobs Report by Sinclair Noe DOW + 34 = 13,610SPX -0.47 = 1460NAS – 13 = 3136 10 YR YLD +.07 = 1.73%OIL – 1.79 = 89.92GOLD – 9.00 = 1782.30 SILV – .46 = 34.61PLAT – 13.00 = 1710.00 The first Friday of each month brings the jobs report and it is always important economic data. This is the first Friday in October, in an election year; so, it is really big news. We’ve discussed at great length that the jobs report is imperfect; even after revisions, the report is imperfect. Still, the report provides a manner of comparison, and it is the best we have. It provides an apples to apples comparison. The economy added 114,000 jobs in September. The unemployment rate fell to 7.8% from 8.1% The unemployment rate is the lowest since 2009, and the first time the rate has dropped under 8% during the Obama administration. The private sector has now added jobs for 31 consecutive months. Still, 114,000 new jobs would have to be considered weak growth. The best guesses are that the economy would have to generate at least 250,000 jobs each month for several years to reduce unemployment to around 6%. So, the first question is why did the unemployment rate drop when the number of new jobs was only showing weak growth? The Labor Department revised employment figures for August and July to show somewhat faster job growth in late summer, mostly because of government …

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Thursday, October 4, 2012 – If I Didn’t Hear It, Did It Happen?

If I Didn’t Hear It, Did It Happen? By Sinclair Noe DOW + 80 = 13,573SPX + 10 = 1461NAS + 14 = 314910 YR YLD +.04 = 1.66%OIL + 3.47 = 91.61GOLD + 11.30 = 1791.30SILV + .33 = 35.07PLAT + 31.00 = 1725.00 Initial claims for state unemployment benefits climbed 4,000 last week to a seasonally adjusted 367,000, the Labor Department. But that followed a drop of 22,000 and a four-week average, which offers a view of trends, held steady at 375,000. The monthly jobs report is tomorrow morning. Today, the Federal Reserve released the minutes of the FOMC’s September 13meeting. Of course, we know the Fed launched QE to Infinity and Beyond, or at least $40 billion dollars a month in mortgage-backed securities, until such time as we see maximum employment or until inflation becomes a problem. From the meeting minutes we learn that there might be limits on QE. The report says: “Most participants agreed that the use of numerical thresholds could be useful in providing more clarity about the conditionality of the forward guidance but thought that further work would be needed to address the related communications challenges.” In other words, there might be limits to acceptable unemployment. Maybe 7%, maybe 5%? We don’t know. And there might be limits to acceptable inflation. Maybe 2%, maybe 3%? We don’t know. We would like to know. If we knew, we could bet on the numbers. Unemployment at 8.2% and inflation at 1.5% equals risk on. Unemployment …

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Wednesday, October 3, 2012 – Happy Anniversary

Happy Anniversary by Sinclair Noe DOW + 12 = 13,494SPX + 5 = 1450NAS + 15 = 313510 YR YLD +.01 = 1.62%OIL – 3.86 = 88.03GOLD + 4.60 = 1780.00SILV +.02 = 34.74PLAT + 10.00 = 1692.00 So, how are we doing? Well, we’re seeing some stronger employment figures, a surge in refinancing applications, and expansion in the services sector. The Institute for Supply Management’s service sector index rose to 55.1 from 53.7 last month – well ahead of expectations for a small decline. The Mortgage Bankers Association’s latest weekly survey showed mortgage applications jumped 20 per cent over the previous seven days to the highest level since April 2009. The average interest rate on a 30-year fixed-rate mortgage fell to 3.53 per cent from 3.63 per cent last week, a new historic low. The increase in mortgage applications comes on top of already strong refinancing activity. We’ve seen 10 months of improving existing home sales and prices. The Federal Reserve stepped in with QE to Infinity and Beyond; maybe the Fed is leading this parade; maybe the Fed just jumped on the bandwagon; we’ll see in a couple of months. The big monthly jobs report is Friday. Economists are expecting an increase in payrolls in the neighborhood of 115,000 to 130,000 but also a rise in the overall unemployment rate to 8.2 per cent. Today, the payroll processing company ADP reported private companies added 162,000 jobs in September. That sounds good but the ADP numbers are not a …

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Tuesday, October 2, 2012 – The Church of England and the Case Against Usury

The Church of England and the Case Against Usury – by Sinclair Noe DOW – 32 = 13,482SPX + 1 = 1445NAS + 6 = 312010 YR YLD – .01 = 1.62%OIL – 22 = 91.67GOLD – .80 = 1775.40SILV – .03 = 34.72 Late yesterday I noticed a report citing the Church of England taking on British Banks. I’d like to thank an astute and alert listener for another version of the story to my attention. As many of you know, I wrote a book about the bankers’ role in the financial crisis, and I paid particular attention to the role of usury. The book is “Eat the Bankers: The Case Against Usury, the Root Cause of the Economic Crisis and the Fix”. (Click here for more info on the book.) There is a direct relationship between usury and the current economic problems. The rise in usury led directly to predatory loans, foreclosures, personal and business bankruptcy, debts that spiral out of control and never seem to get paid despite good intentions. Many families have suffered quietly, blaming themselves for what was happening. Bankers have no moral compass. They reject compassion and try to shift culpability. Usury traps the most desperate; it is a form of regressive taxation that chops away at the middle class and working poor. Usury enslaves the borrower and oppresses the poor. Usury wasted a great economy by shifting investment capital away from productive purposes. Usury stunts economic development and perpetuates poverty. Usury was condemned …

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Monday, October 1, 2012 – Ghosts in the Machine

Ghosts in the Machine by Sinclair Noe DOW + 77 = 13,515SPX + 3 = 1444NAS – 2 = 311310 YR YLD – .01 = 1.62%OIL – .02 = 92.46GOLD + 4.10 = 1776.20SILV +.16 = 34.75PLAT + 16.00 = 1685.00 You can watch the Presidential Debate this Wednesday but if you’re looking for clues about who will live at 1600 Pennsylvania Avenue over the next four years, the thing to watch is the Non-Farm Payroll Report from the Bureau of Labor Statistics on Friday morning. It’s all about jobs. In August, the report show the economy added 96,000 jobs. The September report needs to show that the economy added even more; it needs to show we’re moving in the right direction, not slipping back. The unemployment rate is currently at 8.1%. That’s a lousy number but at least it has been heading in the right direction. Of course, a major reason the unemployment rate has been falling is because people have dropped out of the workforce; they are no longer actively looking for a job and so they no longer get counted; that’s been the methodology for quite some time now; these are people who are not working but they aren’t considered unemployed. They have become ghosts in the machine. Now, there is a big difference between the 800,000 jobs lost in the last month of the Bush administration and the 96,000 jobs gained last month under the Obama administration, but the reality is that 96k jobs is just …

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Friday, September 28, 2012 – Eat Cake

Eat Cake by Sinclair Noe DOW – 48 = 13,437SPX – 6 = 1440NAS – 20 = 311610 YR YLD un = 1.64%OIL + .25 = 92.10GOLD – 6.50 = 1772.10SILV – .17 = 34.59PLAT + 13.00 = 1669.00 There are bad things and they are bad. There are good things and they are good, even though the bad things are bad. Let me give you an example; You probably know I’m not a fan of the Federal Reserve. I believe there are better ways to conduct monetary policy. This does not mean the Fed’s monetary policy doesn’t work. You’ve heard the old adage, “don’t fight the Fed”. In case you haven’t noticed, the stock market has doubled in the past 3 1/2 years. That’s good, even though the bad things about the Fed remain bad. And the stock market has been performing much better than seems possible. As the third quarter comes to an end you might think about the problems in Europe and the slowdown in China; you might think about the slowdown in the US with the economy growing at an anemic 1.3% pace, the seemingly never ending housing recovery, the interminably high unemployment; and you might think of the looming fiscal cliff and the dysfunctional political bickering as corrosive elements sucking the life blood out of the economy; and you might think the best investment opportunities are in freeze dried foods and concrete bunkers – but no. The stock market has been sweet. The S&P 500 …

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