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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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March, Tuesday 20, 2012

DOW – 68 = 13170SPX – 4 = 1405NAS – 4 = 307410 YR YLD -.01 = 2.37%OIL – 2.41 = 105.68GOLD – 12.70 = 1651.80SILV – .76 = 32.26PLAT  – 28.00 = 1659.00 Yesterday the S&P 500 moved above the 1400 level, and we mentioned how it was the highest level since May 2008, and it was 10% below the record high of October 2007. It’s also worth noting that the first time we hit 1400 was July 1999. We could call it a “Lost Decade” but we’re heading for 13 years. Fed Chairman Ben Bernanke delivered the first of four lectures today at George Washington University.Bernanke used  ‘It’s a Wonderful Life’ as template to explain what a central bank can do. Not many of the students have seen it. Bernanke says the Fed is a lender of last resort to banks, and without a central bank, depositors couldn’t get cash from a troubled bank. And financial panics led Congress to consider establishing a central bank. It sounds like Professor Bernanke was smoking something before delivering his lecture. A gold standard is a “partial alternative” to a central bank, Bernanke says. But they are far from perfect. He says, there is an awful waste of resources mining gold and bringing it to the basement of the New York Fed. Under a gold standard, a central bank has no flexibility to lower rates in recession and raise them during periods of inflation. Apparently none of the students were willing to …

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March, Monday 19, 2012

DOW + 6 = 13,239SPX + 5 = 1409NAS + 23 = 307810 YR YLD +.08  = 2.38% OIL  – .31 = 107.78GOLD + 3.40 = 1664.50SILV + .36 = 33.02PLAT + 10.00 = 1685.00 The S&P 500 Index is now at its highest level since May 2008 and 10 percent below the record close of 1,565.15 set in October 2007. Apple rose 15.53 to $601.10 per share, pushing the market cap to $560 billion. It is the first time Apple has closed above $600. The market capitalization makes Apple the most valuable publicly traded company in the world. This is a parabolic rise; Apple is up almost 50% for the quarter. Today’s move followed an announcement they would pay a dividend of $2.65 per quarter starting in July, and also a $10 billion stock buyback program, and also that sales of the iPad 3 topped 3 million over the weekend.  It all sounds a little frothy. I mean, what are they going to do next Monday? Treasuries continued to drop. Thirty-year-bond yield added 7 basis points to 3.48%, a level it hasn’t close above since September. Yields on 10-year notes rose for a fifth day, by 8 basis points to 2.38%, from as low as 2.26% touched during European trading hours. Yields haven’t closed above that level since Oct. 27. Yield moves inversely to prices. In a speech, William Dudley, president of the New York Federal Reserve Bank said “the economy still faces significant headwinds” and inflation is expected …

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March, Friday 16, 2012

DOW – 20 = 13,232SPX + 1 = 1404NAS – 1 = 305510 YR YLD +.02 = 2.30%OIL + 2.04 = 107.15GOLD + 2.80 = 1661.10SILV + .02 = 32.66PLAT – 13.00 = 1675.00 You look at the markets and you’re confused. I know. The markets can be confusing. We heard that the Federal Reserve FOMC was feeling sanguine; the economic outlook was copacetic. And in the pretzel twist that passes for logic, that meant the Fed was not going to approve a new round of Quantitative Easing; the Fed would not shovel free money from a helicopter to rain down on Wall Street. Certainly, the markets would convulse and complain, they would twitch like a junkie past due for a fix. So far, no problem. Pretty much every asset class has been moving higher. Go figure. It’s pretty simple. The Fed will continue to provide free money to their Wall Street banking buddies; that’s what the Fed does. There is no exit strategy from QE. In fact, not easing would be the equivalent to tightening. Really, it’s just a matter of timing and deciding on a good name. It might not be called QE3; it might be called Operation Twist Some More, Maybe they’ll call it the Sterilized Accommodation, or maybe just the New QE. Make no mistake, the Fed will have a purchase program that involves purchases of mortgage backed securities and Treasuries. The Fed’s balance sheet will expand. There are several reasons to expect more free money …

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