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January, Tuesday 17, 2012

DOW + 60 = 12,482SPX + 4 = 1293NAS +17 = 272810YR YLD un=1.85%OIL + 2.30 = 101.00GOLD + 8.80 = 1652.60SILV + .09 = 30.06PLAT + 26.00 = 1527.00 On Friday, after the close of business in the stock market, S&P downgraded 9 European countries. Spain and Italy were both taken down 2 notches, leaving Italy with a BBB+ rating and Spain with an A.  But the headline damage was done to France, whose triple-A rating got downgraded to AA+. France had been rated AAA for 36 years.  The French bid adieu to their triple-A status…said they didn’t care about it, expected it, and didn’t need it anyway. But it was a blow. France, with Germany, was one of the strong, big economies at the center of Europe. It was one of the economies the others were depending on to bail them out. Over the weekend, The Wall Street Journal warned that markets needed to “brace for European fallout,” this morning.  And then to put an exclamation point on the matter, this morning Standard & Poor’s downgraded the creditworthiness of the eurozone’s rescue fund, putting the fund’s ability to raise cheap bailout money at risk. The EFSF, the European Fubar Slush Fund was cut by one notch to AA+. Quite the Tempest in Europe: “Some kinds of baseness Are nobly undergone, and most poor matters Point to rich ends.” Spain had a Treasury bill auction today and it went quite well. They sold twice the amount targeted and yields fell, …

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January, Friday 13, 2012

DOW – 48 = 12422SPX – 6 = 1289NAS – 14 = 271010 YR YLD -.08 = 1.85%OIL -.35 = 98.75GOLD – 8.90 = 1640.70SILV – .48 = 29.87PLAT – 7.00 = 1497.00 For all our triskaidekaphobic friends, Friday the 13th actually has a mild upward bias in stock market history. It’s up 55% to 60% of the time. That said, we were down today, and there was a massacre, of sorts, after the close of trade. We start with some shocking news – this is utterly remarkable – Standard & Poor’s has cut France’s credit rating by one notch to AA, down one notch from AAA. Shocking. And expected for about a month now.  More shocking news – S&P cut Italy’s credit rating to BBB+. The cut their ratings on 24 Italian banks and affirmed their ratings on 19 banks.  Now, here’s the fun part. S&P has to provide 24-hour notice to the countries if they are going to change their ratings.  S&P had Italy as A1 on negative watch, and just cut them to BBB+. Earlier today, Italy held a bond auction. Italy sold bonds while in possession of information that they were going to be downgraded. Are those bond sales valid? They sold $ 6 billion–dollars worth of bonds without disclosing insider information of an impending downgrade that would certainly be harmful to the value of the bonds. It doesn’t get more insider than that. But wait – there’s more! Then they cut Russia to BBB. Austria …

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January, Thursday 12, 2012

DOW + 21 = 12471SPX + 3 = 1295NAS + 13 = 272410 YR YLD +.03 = 1.93%OIL –1.65 = 99.22GOLD + 5.60 = 1649.60SILV + .28 = 30.35PLAT + 2.00 = 1504.00 In 2011, the market value of U.S. stocks went nowhere from the first trading day, January 3, to the last trading day, December 30. And I mean absolutely nowhere. The S&P 500 started the year at 1,257.64 and ended the year at 1,257.60. While the market value of the S&P 500 was going absolutely nowhere, its valuation was plummeting. S&P 500 trailing 12-month earnings (through September 30, 2010) started last year at $79 a share and ended the year at $94.64 per share. That means earnings grew at nearly 20%, but prices went nowhere. In fact, prices have gone nowhere for the past 12 years. That’s not exactly true – we are pretty much where we were 12 years ago, but prices moved quite a bit in between. We get into overbought and oversold positions. The question is: where can we find opportunity? Standard & Poor’s classifies every individual stock into one of ten primary sectors. They then publish specific indexes for each sector (as well as dozens of sub-sectors within the ten primaries). The worst performing S&P sectors for 2011 Financials (-18.4%), Materials (–11.6%), and Industrials (-2.19%). The top performers included Utilities, consumer staples, and health care. Only 3 of the ten sectors were down but the S&P 500 is capitalization weighted; that means each stock …

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January, Wednesday 11, 2012

DOW –13 = 12449SPX +0.4 = 1292NAS + 8 = 271010 YR YLD -.07 = 1.90OIL -.51 = 101.73GOLD +10.80 = 1644.00SILV + .03 = 30.07PLAT + 30.00 = 1500.00 Fitch Ratings Agency reminds us all that Europe isn’t in good shape. Fitch says the ECB should take a more active role in buying Eurozone debt to avert a cataclysmic collapse. Fitch said they’re not really predicting a collapse of the Euro; just that it is a concern. Meanwhile, Fitch downgraded Hungary to junk status. The euro hit a 16 month low of $1.27. Germany reported its economy shrank in the fourth quarter. European regulators will recommend blocking the deal that would have seen Germany’s largest stock exchange buy the New York Stock Exchange. France says they have not been informed of an imminent decision to cut the country’s credit rating.  In Italy, the banks stopped lending and organized crime has stepped in to fill the void for short-term lending, meaning the Mafia has become the number one bank in Italy.  And the rest of the Eurozone seems determined to grind Greece into the ground. Grecian formula austerity has seen unemployment jump from 13% to 19%. Rates of homelessness, suicide, crime, and HIV have skyrocketed; and public hospitals are facing severe shortages – they’ve run out of bandages and similar necessities. And Germany’s Angela Merkel and the IMF’s Christine LaGrande warn that Greece won’t get any more bailout money if they don’t pull themselves up by the bootstraps. So, it’s …

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January, Tuesday 10, 2012

DOW + 69 = 12,462SPX + 11 = 1292NAS +25 = 270210 YR YLD +.01 = 1.97%OIL +.84 = 102.15GOLD +21.20 = 1633.20SILV +.89 = 30.04PLAT + 39.00 = 1467.00  The S&P 500 Index moved back to its highest level since July. There was positive reaction to earnings. Alcoa kicked off the earnings reporting season by announcing they lost $193 million dollars in the fourth quarter. Go figure. Is the economy facing inflation or deflation? The answer is – yes. Two Federal Reserve officials laid out contrasting views of Fed attempts to bolster the economy, with one seeing a need for more asset purchases and another warning that current accommodation risks provoking instability. Federal Reserve Bank of San Francisco President John Williams sees a “strong” case for new purchases of mortgage bonds given his expectation that inflation will fall below 1.5 percent this year. His counterpart in Kansas City, Esther George, said officials must weigh whether their current policy is increasing the odds of renewed financial turmoil. In his speech, Williams credited the Fed’s emergency lending to financial institutions with keeping the U.S. economy from falling into an abyss in 2008 and 2009. He said it’s “vital” for policy makers to support an economy that’s hobbled by high unemployment, anemic spending and a weak housing market. Williams thinks the Fed should provide more stimulus for the economy. George, in her speech said “the economy is going through a deleveraging process and that takes time. Efforts to speed up that process run …

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January, Monday 09, 2012

DOW +32 = 12.392SPX + 2 = 1280NAS + 2 = 267610 YR YLD un = 1.96%OIL -.25 = 101.31GOLD – 5.60 = 1612.00SILV +.30 = 29.15PLAT +20.00 = 1433.00 Remember the Eurozone crisis? Maybe you haven’t heard much in the past couple of weeks, what with the holidays and everything. Well, it’s still a problem; they didn’t fix anything. The Greek government is still trying to agree a bond-swap deal with banks that is crucial to a new 130 billion euro bailout package from European partners and the International Monetary Fund (IMF). Without that package, Athens faces the threat of a debt default in March. Banks and investment funds are being asked to accept 50 percent losses on their Greek bonds to help pay for the bailout have dragged on for weeks. German Chancellor Angela merkel said today that Greece must restructure its debt. Merkel said: “From our point of view, the second Greek aid package including this restructuring must be in place quickly. Otherwise it won’t be possible to pay out the next tranche for Greece.” Greece is entering its fifth straight year of contraction, with no hope of paying down its massive debt. There is a chance there won’t be a deal. Greece might default. Both France and Greece are scheduled to hold elections in a few months and that could complicate decision-making at the national level and make it tougher to finalize agreements sealed at an EU summit last month. Greece has been operating under a technocratic …

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Financial Review

Financial Review for Tuesday, January 07, 2012

DOW + 33 = 12, 878SPX + 2 = 1347NAS + 2 = 290410 YR YLD +.06 = 1.96%OIL + 1.74 = 98.65GOLD + 25.00 = 1744.90SILV +.47 = 34.15 PLAT + 36.00 = 1647.00 I talked with a friend this weekend about the unbelievably better than expected jobs report on Friday. My friend was a bit surprised that I viewed the report favorably. I tried to explain that the report was deeply flawed, seriously imperfect, and likely not accurate, however it is probably still the best report to track the jobs picture, even with strange seasonal adjustments. The debate continued that the jobs report was certainly nothing more than a big BLS snow job, and if I bothered to look at the tax rolls, I would see that tax revenue declined while jobs were supposedly increasing. Of course, that’s what happens when you cut the payroll tax rates. Then I heard the argument that if we really counted the way we used to count in 1994 the unemployment rate would be 22.5%, and I was politely told about shadowstats. Well, I’ve met John Williams and I’ve cited John Williams, and if we compare today’s  unemployment rate to 1993, then he has a good point, but if we compare the unemployment rate from a year ago or 3 years ago then the jobs picture is improving; apples to apples and oranges to oranges. Then my friend asked if the economy was recovering. I think we’re still in a small “d” …

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January, Friday 06, 2012

DOW –55 = 12359SPX –3 = 1277NAS  +4 = 267410 YR YLD -.03 = 1.96OIL +.12 = 101.93GOLD – 4.80 = 1617.60SILV-.62 = 28.85PLAT –9.00 = 1407.00 OK, I know the Bureau of Labor Statistics manipulates numbers; I know it looks like the overall labor force is shrinking, and this is the reason the headline unemployment rate dropped in today’s report; I know that if you don’t miscount, the number would really be 11.4% and not 8.5%; and I don’t believe people just drop out of the labor force; and I know there was a freakish gain in new jobs for messengers and couriers and I can’t explain that; and I know the U6 measure of underemployed and marginally employed puts the rate at 15.2%; and I know the non-manipulated number is really closer to 22.4% un-under-marginally-unemployed. Still, today’s monthly jobs report looked pretty good. The economy added 200,000 jobs in December. The headline unemployment rate dropped to 8.5% from an upwardly revised 8.7% in November. Unemployment has fallen fourth straight months. Over the past six months, the U.S. has added an average of 142,000 jobs, the most job growth in more than six years. Virtually every major industry added jobs and only the government sector cut employment. The private sector added 212,000 jobs in December, offset by a 12,000 drop in government employment, primarily state and local government jobs. we’ve now added 3.2 million new private sector jobs over the last 22 months — nearly 2 million jobs last …

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January, Thursday 05, 2012

DOW – 2 = 12,415SPX +3 = 1281NAS +21 = 266910 YR YLD -.01 = 1.99%OIL +.03 = 103.25GOLD +8.90 = 1622.40SILV + .21 = 29.47PLAT – 5.00 = 1421.00 Today we are proud to present Evan Greenberg’s Top 10 for 2012. 10. USHS – U.S. Home Systems =$7.24 9. TGE – TGC Industries =7.16 8. DLA – Delta Apparel = 19.25 7. PESI – Perma-Fix Solutions = 1.56 6. ANIK – Anika Therapeutics = 9.60 5. FRD – Friedman Industries = 11.29 4. CECE – CECO Environmental = 5.67 3. CVU – CPI Aerostructures = 13.03 2. ACET – Aceto Corp = 6.83 1.HURC – Hurco Companies = 21.58 The top 10 List is presented in no particular order. It is small & micro cap stocks only. I’ve given today’s price. We will come back at the end of 2012 and see how we did; no trading during the year to try to manipulate the results. Over the years, the TOP Ten List has proven to be incredibly profitable. You’re welcome. To contact Evan send email to: Egreenberg@legendcap.com Data continued to point to a stronger U.S. economy. More than twice the expected number of private sector jobs were added in December while initial jobless claims dropped 15,000 in the latest week. In addition, the pace of U.S. services growth quickened more than expected in December. Bank stocks were moving generally higher today. This was not based upon great fundamental news, even though the spin-meisters tried to paint that rosy …

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January, Wednesday 04, 2012

DOW +21 = 12418SPX +0.24 = 1277NAS –0.36 = 264810 YR YLD +.04 = 2.00%OIL +.29 = 103.25GOLD +8.90 = 1613.50SILV -.55 = 29.26PLAT –12.00 = 1427.00 Bill Gross manages PIMCO’s $244 billion Total Return Fund, the largest bond fund in the world. Every so often, Gross posts an investment letter on his website. His most recent letter is entitled “Welcome to 2012”. In the letter, Gross said “paranormal” was a more fitting description for the current economic environment than the phrase “New Normal,” coined several years ago by his chief co-investment officer Mohamed El-Erian to describe a world of low-growth and high unemployment. This year, Gross argues that process will get messier. “We are left with zero-bound yields and creditors that trust no one and very few countries. The financial markets are slowly imploding – delevering – because there’s too much paper and too little trust,” he said. Those factors may lead financial markets to experience “the fat-left-tailed possibility of unforeseen – delevering – or the fat-right-tailed possibility of central bank inflationary expansion.” So, this goes right in line with what I’ve been talking about for quite some time. The situation in Europe, the ongoing situation in the USSA all points to de-levering and the response to de-levering by the central bankers – especially the Federal Reserve – is to pump free money into the markets. That’s really about all they can figure out to do, because they don’t know what else to do. They need the economy to …

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