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October, Thursday 27, 2011

DOW + 339 = 12208SPX + 42 = 1284NAS + 87 = 273810 Yr. YLD +0.19 = 2.39%OIL – .21 = 93.75GOLD + 20.20 = 1746.70SILV + 1.72 = 35.19PLAT + 40.00 = 1643.00 Over the past few weeks I’ve been reading newsletters and blogs that seemed to have a recurring theme and similar screaming headlines: Euro collapse, Euro Crisis, Euro Armageddon, Global Meltdown. I didn’t read much saying the Euro leaders would play a game of extend and pretend and we’ll probably see an imperfect deal and there will probably be a rally on Wall Street, but that was my conclusion – that’s what I’ve been telling you – You’re welcome. The S&P 500 was up 3.4% sending its October gain to 14 percent, the biggest monthly gain since 1974, and erasing its 2011 loss. The 20 percent monthly advance for the Dow Jones Transportation Average, a proxy for the economy, is the biggest since 1939. Benchmark gauges in France, Italy and Germany rose more than 5 percent as German and emerging-market stocks extended gains from this year’s lows to more than 20 percent. The euro surged the most in more than a year and 10-year Treasury note yields rose 17 basis points to 2.38 percent. Maybe I’ve been too kind in calling it an imperfect deal; it is a lousy deal; it will result in more problems down the road. So the Euro leaders worked until the wee small hours of the night to hammer out a Grand …

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October, Wednesday 26, 2011

Euro Grand Plan and Catholics Occupying Wall Street DOW + 162 = 11869SPX + 12 = 1242NAS + 12 = 165010 YR YLD += 2.20% OIL +.75 = 90.95 GOLD + 20.90 = 1726.50SILV +.10 = 33.47PLAT + 29.00 = 1599.00 Today was the deadline – this was the day when the Europeans would announce the Grand Plan to solve the European Sovereign Debt Crisis. It was a day straight out of central casting. The Germans were stern and unyielding. The French were disdainful. The Greeks were tragic, and the Italians were confused and dramatic. Italian Prime Minister Silvio Berlusconi whipped up a last minute “letter of intent” promising to cut Italy’s huge public debt and promising to take action to boost growth in Italy and promising to balance the Italian budget by 2013 and promising to have all the details by November 15th. The German parliament voted to allow the EFSF, the rescue fund to leverage bailout funds. Chancellor Angela Merkel warned against complacency, saying: “No one should take for it for granted that there will be peace and affluence in Europe in the next half century. The world is watching Germany and Europe to see if we are ready and able to take responsibility. If the euro fails, Europe fails.” And so it appears the Eurozone will leverage its 440-euro bailout fund several times over, btu details are not expected until sometime in November. French President Sarkozy said he would speak with the Chinese about helping out with the …

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October, Tuesday 25, 2011

DOW – 207 = 11,706SPX – 25 = 1229NAS –61 = 263810 YR YLD – = 2.12%OIL – .55 = 92.62GOLD + 51.30 = 1705.60SILV + 1.53 = 33.37PLAT + 19.00 = 1573.00 Tomorrow is the big European summit to resolve the sovereign debt crisis. The idea is to present a plan to reduce Greece’s debt burden, pump money into the European banks to cover their bond losses, and pump money into the EFSF rescue fund to prevent market contagion. Global equity markets have been jumping and retreating based upon the rumor of the day coming out of Europe. Today, the rumor is that there are many details to be worked out. There is a self-imposed deadline of tomorrow to iron out the details. We might not get everything worked out in the next 24 hours. The sky is falling. My view is that the whole euro problem is getting a bit tiresome. The ECB and the Fed and the other central bankers will come up with some sort of a plan. The plan won’t really solve any problems. Right now, the real negotiation is to get the casino players to accept losses on bonds without triggering CDS defaults; in exchange, the plan will give away big gobs of FREE MONEY to the banks. Eventually, the cold, hard facts will hit – but I don’t think it will be tomorrow. For now the game plan is extend and pretend. The best bet right now is that the financial sector will …

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October, Monday 24, 2011

DOW + 104 = 11913SPX + 15 = 1254NAS + 61 = 269910 YR YLD +=2.23%OIL +.32 = 91.58GOLD + 11.30 = 1654.30SILV + .34 = 31.84PLAT + 34.00 = 1545.00 Five years ago, the real estate bubble started to leak. Three years ago, the global financial economy nearly collapsed. Today, we got a plan to save all the embattled, underwater homeowners of America. Hallelujah and pass the potato salad. Now you realize that 23% of all existing mortgages are underwater; plus banks are sitting on home equity loans and second mortgages at the original values, not market values. If you marked to market all the negative equity – then all of the big banks in America would be insolvent. The big banks are living on life support tossed their way by the government and the Federal Reserve; this is a situation that seems destined to result in another crisis. And so today, the Obama administration announced plans to help troubled homeowners. Actually, homeowners who benefit would just be coincidental – understand that this plan is really designed to help the banks. The Home Affordable Refinance Program, or HARP, was started in 2009. It lets homeowners refinance their mortgages at lower rates. But few people have signed up. Many “underwater” borrowers — those who owe more than their homes are worth — couldn’t qualify under the program. Roughly 22.5 percent of U.S. homeowners, about 11 million, are underwater, according to CoreLogic, a real estate data firm. As of Aug. 31, …

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October, Friday 21, 2011

DOW + 267=11808SPX + 22 = 1238NAS + 38 = 263710 YR YLD +=2.20%OIL +1.46 = 87.53GOLD +21.80 = 1643.00SILV +. 82 = 31.50PLAT +20.00 = 1516.00 Today we had two bits of news that bolster the stock market. First, the rumors that the Federal Reserve might, maybe, possibly consider Quantitative Easing Round 3 – in other words the Federal Reserve might throw FREE MONEY at the markets. The second bit to bolster the markets was a jolt of optimism that there is at least slightly improved visibility on the path to nearing a resolution of the European sovereign debt crisis and the troika would pass out FREE MONEY. Just in case you were wondering why Wall Street is hated – this is it. Wall Street should have been celebrating the fact that a coalition of allies managed to take out Kadaffi in Libya in a relatively short period of time and with zero loss of US soldiers lives AND President Obama announced this morning that the United States will withdraw nearly all troops from Iraq by the end of the year, effectively bringing the war in Iraq to an end. He said the last American troops will depart the country by January 1 “with their heads held high, proud of their success, and knowing that the American people stand united in our support for our troops.”  The truth is that Wall Street doesn’t give a tinker’s dam about supporting our troops; there is no recognition of the sacrifices made …

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October, Thursday 20, 2011

DOW + 37 = 11,541SPX +5= 1215NAS – 5 = 259810 YR YLD +=2.18%OIL – .66 = 85.45GOLD –22.50 = 1621.20SILV – .65 = 30.68PLAT –22.00 = 1501.00 The European leaders will be meeting tomorrow and through the weekend; they are expected to unveil their Grand Magical Stupendous Super Plan to solve all the problems by November 3. Don’t hold your breath. Sarkozy and Merkel promise a magic potion. They will probably deliver; the magic potion may be temporarily intoxicating, however I suspect it will prove to be little more than snake oil. France and Germany disagree over the best way to bolster the facility, with Paris fearing its triple-A credit rating could come under threat if the wrong method is chosen. Germany can’t leverage the 50% of the funds they have already committed to the EFSF – that would require a referendum to change their constitution – and that will never get passed. That’s why they’ve called on the IMF to backstop the increased leverage. However, so far the IMF and the US Treasury, the number one donor to the IMF says no, go back into negotiations. This is the sticking point – How to scale up the European Financial Stability Facility – the $600 billion dollar fund that has already been used to bailout Portugal and Ireland. Failure to agree on leveraging the EFSF will further damage confidence in the euro zone. In July, banks and insurers agreed to contribute 50 billion euros to reducing Greece’s debt via …

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October, Wednesday 19, 2011

DOW – 72 = 11,504SPX – 15 = 1,209NAS – 53 = 260410 YR YLD +=2.15%OIL – .07 = 86.04GOLD –12.40 = 1643.70SILV – .81 = 31.33PLAT – 17.00 = 1521.00 We have too much to cover today. We’ll deal with the craziness in the first half hour, then we’ll settle down in the second half hour and try to restore some financial balance, our guest is David Harris from Harris Investment Advisors, and we’ll be talking about some basic financial planning ideas and maybe how to deal with an uncertain world. Balance. Balance. Let’s get to work two main areas: Europe has gone crazy, and Bernanke is trying to move from crazy to nasty crazy. First is Euroland. Greece is on strike – the whole country is frozen by a general strike. Now, I have heard a whole lot of derisive comments about the Occupy Wall Street crowd; maybe they’re dupes fallen under the control of one ruling element or another; maybe they’re dolts for not understanding the issues to the satisfaction of one group or another. I went down to the Occupy Phoenix demonstration over the weekend; there were a few unique characters there – nothing wrong with unique characters – but there were a whole lot of people that could have been at the check out line of any grocery store. I talked with a few of the people and they seemed like they had a decent understanding of issues. The TV crews were filming the crowd …

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October, Tuesday 18, 2011

DOW + 180 = 11,577SPX + 24 = 1,225NAS + 42 = 265710 YR YLD – = 2.15%OIL +.39 = 86.77GOLD – 15.60 = 1656.10SILV +.24 = 32.14PLAT – 19.00 = 1535.00 Sometimes I wonder if I should even read the closing numbers – does it really matter that the Dow Industrials dropped a couple hundred points yesterday or that it bounced this morning? No; probably not. Maybe the daily scoreboard gives you some feel for the rhythm of the market, for the prevailing sentiment; then again, maybe not. Over the years, I’ve talked about trends in the market. One of my favorite phrases is that a trend in place is more likely to remain in place than it is to change – until it changes. Trends are not infinite. No pattern is perpetual. The greater the expectation, the more you should question the premise. And I’m reminded of the Mark Twain quote – History doesn’t repeat but it does rhyme. There’s a reason for this – it’s because we’re human and we have imperfect and selective memories. History rhymes because we put our unique human imprint on it, just enough to make minor alterations on the trajectory through time. You may remember a long ago wound, but a recent cut still stings and because it stings, it moves to the front of your thoughts and it colors your thinking; it might make you skittish; it might make you cautious; it might freeze you in your tracks; or maybe the …

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October, Monday 17, 2011

DOW –247= 11,397SPX –23= 1200NAS –52 = 261410 YR YLD – = 2.15%OIL – .11 = 86.27GOLD – 9.10 = 1671.70SILV – .36 = 31.90PLAT – 3.00 = 1559.00 Let’s start with a look at Wall Street. We start with a Merger Monday – normally a positive for Wall Street – today, not so much. Kinder Morgan agreed to acquire El Paso Pipeline Partners in a deal that valued the company for $20.7 billion and including debt at $37 billion. The deal is expected to close by the second quarter next year. The combined company is going to be one of the largest transporters of crude oil, natural gas and CO2. AmeriGas Partners agreed to acquire the propane operations of Energy Transfer Partners,for $2.9 billion. The transaction is expected to close in late 2011 or beginning of 2012. Brigham Exploration Company agreed to merger with Norway based Statoil ASA. Brigham will receive $4.4 billion in cashand the offer expected to commence by end of this month. With the purchase the company will extend its shale gas fields to Montana and North Dakota based fields and will deepen its involvement in unconventional oil exploration. Merger activity was not enough to lift Wall Street, in large part because we still have some problems in Europe. The G-20 was meeting in Germany over the weekend. They wrapped up their meeting saying they would likely adopt a five-point plan next weekend when they meet in Brussels. The plan would likely include recapitalizing banks and …

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October, Friday 07, 2011

DOW – 20 = 11,103SPX – 9 = 1,155NAS – 27 = 2,47910 YR YLD = 2.06%OIL – .84 = 81.75GOLD – 11.60 = 1639.70SILV -.66 = 31.37PLATINUM – 18.00 = 1502.00 The U-6 unemployment rate — including people who must settle for part-time jobs or have given up searching entirely — has SURGED to 16.5%, the worst this year! FORWARD LOOKING indicators of employment are deteriorating. Consumers just polled by the Conference Board said it was harder to find work now than at any point since 1983! And job placement firm Challenger, Gray & Christmas tracked more than 115-thousand corporate layoff announcements last month alone, the most since April of 2009. The headline unemployemnt rate held steady at 9.1%. The economy added 103,00 jobs last month. That is not enough jobs to lower the unemployment rate. The August number was revised from zero job gains to 57,000. In September, the private sector added 137,000 jobs — decent but nothing to write home about — while the government sector cut 34,000 jobs. Since January 2010, the private sector has added 2.556 million jobs while government has cut 503,000. In January 2010, 82.6 percent of payroll jobs were in the private sector; today, the total is 83.2 percent. Meanwhile, the Federal Reserve reported total borrowing dropped $9.5 billion in August. In July, borrowing increased $11.9 billion. The overall decline lowered total borrowing to a seasonally adjusted $2.44 trillion. Borrowing is just 2.1 percent higher than the recent low hit in September of …

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