March, Thursday 15, 2012

DOW + 58 = 13252SPX + 8 = 1402NAS  + 15 = 305610 YR YLD + .01 = 2.28%OIL +.35 = 105.46GOLD + 13.50 = 1658.30 SILV + >39 = 32.64PLAT + 11.00 = 1688.00           Yesterday we talked about the op-ed article in the New York Times written by Greg Smith, an executive from Goldman Sachs who was quitting the firm. He blasted Goldman in the article, saying the firm had changed, and not for the better. Smith chided his employer of nearly 12 years for its “toxic” environment and practice of “ripping clients off” while calling them “muppets.”           One of the stupidest responses came from the editorial board at bloomberg.com. No specific names here, just the “editorial board”.  They replied with an article titled: “Yes, Mr. Smith, Goldman Sachs is all about Making Money”. They say: “If you want to dedicate your life to serving humanity, do not go to work for Goldman Sachs. That’s not its function, and it never will be. Go to work for Goldman Sachs if you wish to work hard and get paid more than you deserve even so.”           And here I thought Goldman Sachs was doing God’s work. That’s what Lloyd Blankfein said; I guess  he was lying? Yep. The Bloomberg editorial board just described a mercenary’s job description. Nobody seriously expects Goldman investment bankers to serve humanity, but it doesn’t mean they should work to destroy it. Bloomberg and Goldman both work in the financial industry. In fact, Goldman …

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March, Wednesday 14, 2012

DOW +16 = 13,194SPX – 1 = 1394NAS +0.85 = 304010 YR YLD +.17 = 2.27%OIL +.27 = 105.70GOLD -31.30 = 1644.80SILV – 1.26 = 32.25 PLAT – 15.00 = 1679.00 There was a pretty remarkable story in the New York Times today. A guy by the name of Greg Smith is quitting his job at Goldman Sachs as an executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa, and he wrote an article explaining why he was leaving and what he believes is wrong with Goldman.  It’s not a revelation about Goldman, the only thing that’s unique about it is that a Goldman drone actually broke away and admitted publicly that Goldman is bad. Let me share a few salient points from the article. If you want to read the whole thing it is entitled: Why I am Leaving Goldman Sachs by Greg Smith TODAY is my last day at Goldman Sachs. After almost 12 years at the firm —  I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it. To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. The firm has veered so far from the place I joined …

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March, Tuesday 13, 2012

DOW + 217 = 13,177SPX + 24 = 1395NAS + 56 = 303910 YR YLD + .08 = 2.11%OIL +.04 = 106.75GOLD – 25.70 = 1676.10 SILV – .20 = 33.51PLAT – 7.00 = 1692.00 It’s a crazy world. Stocks posted their best day of the year. Go figure. The big boost seems to be JPMorgan announcing a dividend, while at the same time 3 banks failed the Fed’s Stress Test. Wait a minute, you’re asking yourself, “Self, am I going crazy or was the Fed supposed to release the results of the Stress Test on Thursday?” And of course, the answer is yes. The Fed, in releasing its annual stress test results, said 15 of the 19 largest banks would have satisfactory capital buffers, even after considering banks’ proposed dividend increases or share buybacks. The regulator said Citigroup, Ally Financial, SunTrust, and MetLife fared worst under the supervisory stress ratios, with Tier 1 common capital ratios of 4.9 percent, 2.5 percent, 4.8%, and 5.1 percent, respectively. The bank holding companies that came out top were Bank of New York Mellon with a Tier 1 common capital ratio of 13.1 percent under the hypothetical financial shock, State Street Corp with 12.5 percent and American Express with 10.8 percent. Bank of America came in with 6.2 percent, and JPMorgan’s result was 5.4 percent. So, only 4 out of 19 enormous financial institutions failed the stress test, meaning that just over one-quarter of the biggest banks in the country could implode at …

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March, Monday 12, 2012

DOW + 37 = 12,959SPX + 0.22 = 1371NAS – 4 = 298310 YR YLD -.01 = 2.03%OIL +.28= 106.62GOLD – 12.70 = 1701.80SILV – .71 = 33.71 PLAT + 11.00 = 1699.00 For the NYSE, relative to the previous 30 session average, volume was -17.48% below the average. For the SPX, the day’s volume was 76.2% of the average daily volume for the last year. Volume was 85.5% of the last 10 day average and 87.6% of the previous day’s volume. Today marked the lowest trading volume of the year. Last week you will remember there were solar flares. There was some speculation the solar storms might cause damage to the electric grid, possibly damaging electronic gadgets, possibly interfering with radio signals. Turns out it is far, far worse than imagine. The reality is that the earth has been knocked from its orbit around the sun; we are now hurtling through the cosmos with no set path. You want proof? O.K., Louis Freeh is the former FBI Director and current trustee for the MF Global bankruptcy case. Freeh has announced plans to pay $1 million in bonuses to Bradley Abelow, MF’s chief operating officer, Laurie Ferber, the general counsel and Henri Steenkamp, chief financial officer; they could make more if salaries and other incentives are approved. You may recall that MF Global lost more than $1.6 billion in customer funds that were supposed to be segregated, and completely safe. Nobody has been able to find the money. The last …

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March, Friday 09, 2012

DOW + 14 = 12,922SPX + 4 = 1370NAS + 17 = 298810 YR YLD +.02 = 2.04%OIL + .84 = 107.42GOLD + 14.00 = 1714.50SILV +.44 = 34.42PLAT + 22.00 = 1688.00 The S&P 500 managed to post a gain of 0.1% for the week; so, even with the big drop on Tuesday, the S&P notched its 4th consecutive weekly gain. This morning we got the monthly jobs report; the headline number showed the economy created a net 227,000 jobs in February. It is generally estimated that we need a job creation rate of 150,000 per month just to keep up with population growth, just to tread water. Now we’re finally getting that growth. February marked the third straight month in which payroll jobs rose by more than 200,000. Gains could be seen in a range of industries: professional and business services, manufacturing, and health care. The construction and retail trade sectors shed positions. Every month, when the Bureau of Labor Statistics reports the jobs figures, it revises the previous two months’ reports. Looking back, BLS has determined that more jobs were created in December 2011 and January 2012 than originally thought. The December jobs gain, originally reported as a 200,000 gain in January, was revised to 223,000. January’s job total, originally reported as a gain of 243,000, was revised upwards to 284,000. In other words, BLS discovered an extra 61,000 jobs. Compared with February 2011, 2.021 million more Americans have payroll jobs. In the past two years, the …

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March, Thursday 08, 2012

DOW + 70 = 12907SPX + 13 = 1365NAS + 34 = 297010 YR YLD +.04 = 2.01%OIL + .69 = 106.85GOLD + 15.20 = 1699.50SILV +.45 = 33.98PLAT  + 32.00 = 1665.00 A couple of months ago we were talking about the situation in Greece; this has turned into the never-ending-story. I told you that the smart boys and girls at the Federal Reserve and the various central banks around the world believed that they learned a lesson in 2008, and they were determined not to let Greece become the subtitled sequel to the Lehman Brothers Debacle. And so today was the deadline for the private sector investors to approve the deal for a 75% haircut on Greek bond holdings and avert a meltdown. And the deal was done. The assorted Central Bankers have primed pump; they have rolled out tow tranches of the Long Term Refinance Operation in Europe, dumping more than a trillion dollars worth of easy cash on the Euro-banks. If you want to cram down a few billion dollars worth of lousy Greek bonds, it turns out that a trillion dollars or so of free money is very persuasive. Greek government officials said  that more than 75 percent of eligible bonds have been committed. Greece will swap their old bonds for new bonds, wiping out 105 billion-euro in debt in the swap. The deal will not solve Greece’s deep-seated problems and at best it may buy time for a country facing its biggest economic crisis …

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March, Wednesday 07, 2012

DOW + 78 = 12,837SPX + 9 = 1352NAS + 25 = 293510 YR YLD +.03 = 1.97%OIL + 1.46 = 106.16GOLD + 9.70 = 1685.30SILV +.48 = 33.53PLAT + 18.00 = 1633.00 Yesterday the Dow Industrials dropped a couple of hundred points. That was all it took; now the talk is about more free money from the Fed. The Murdoch Street Journal is reporting the Fed is considering a new type of bond-buying program. The Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates. I’m sure we’ll hear more details in the days and weeks ahead, but this goes in line with the idea that the Fed will try to juice the housing market in an election year. The initial guess is that this move might lower long term rates and mortgage rates. This quantitative easing, the article calls it “sterilized” quantitative easing, would use reverse-repurchase agreements to keep the money from flowing to bank reserves, the thinking there is that it would not be a big boost of inflation. The Fed has an existing program in place to lower long-term interest rates. Since September, the Fed has been replacing short-term securities on its balance sheet with longer-term securities, a program known as Operation Twist. This $400 billion program ends in mid-June. So, this is no surprise. We’ve been telling you the Fed would have some form of QE3 and …

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March, Tuesday 06, 2012

DOW – 203 = 12759SPX – 20 = 1343NAS – 40 = 291010YR YLD -.06 = 1.94%OIL – 1.72 = 105.00GOLD -31.80 = 1675.60SILV – 1.05 = 33.05PLAT – 50.00 = 1621.00 A less than Super Tuesday in most markets. Today was the biggest drop for stocks in about 3 months. The CBOE Volatility Index, the VIX, jumped up about 18 percent. Complacency was fun while it lasted. Despite the decline, the S&P 500 is still up almost 7 percent for the year. If fourth-quarter gains are included, the index is still up almost 20 percent since September 30. A pull back was not unexpected, it was really just a matter of when it might hit. This is just a one day decline, and most likely not the pullback, more like a shot across the bow, to say the pullback is coming. Throughout the world, the pullback is just getting started. China is slowing down;even Brazil isn’t running as fast. Brazil reports 2011 GDP grew at a 2.7% pace – not exactly terrible but hardly thrilling. And in Europe, the recession has barely begun. They still can settle the problem in Greece and it is getting a bit scary. The problem is that the Greek government wants to default on its bonds but the European Central Bank doesn’t want to call it a default because that would trigger payouts on Credit Default Swaps. In order for it to not be considered a default, 75% of private sector investors in Greek …

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March, Monday 05, 2012

DOW – 14 = 12,962SPX – 5 = 1364NAS -25 = 295010 YR YLD +.02 = 2.00%OIL +.42 = 107.12GOLD – 4.60 = 1707.40SILV -.73 = 34.10PLAT – 34.00 = 1671.00 Resource Consultants 800-494-4149 Last week, Federal Reserve Chairman Ben Bernanke went to Capitol Hill and mumbled a little and the general consensus was that the Fed would not be throwing money out of a helicopter any time soon, and the markets dipped and gold dumped. Today, Federal Reserve bank of Dallas president , Richard Fisher gave a speech in Dallas, and he was a bit more plainspoken about the economy and QE3. He said, “I would suggest to you that, if the data continue to improve, however gradually, the markets should begin preparing themselves for the good Dr. Fed to wean them from their dependency rather than administer further dosage.” Fisher said financial markets “have become hooked on the monetary morphine we provided” after the 2008 financial crisis. He added, “I am personally perplexed by the continued preoccupation, bordering upon fetish, that Wall Street exhibits regarding the potential for further monetary accommodation — the so-called QE3, or third round of quantitative easing.” Allow me to explain. The economic news is looking better lately. But after previous false starts — remember “green shoots”? — it would be foolish to assume that all is well. And in any case, it’s still a very slow economic recovery by historical standards. And the problems with bad debt and derivatives haven’t really changed, and …

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March, Friday 02, 2012

DOW – 2 = 12,977SPX – 4 = 1369NAS – 12 = 297610 YR YLD -.05 = 1.99%OIL – 2.34 = 106.50GOLD – 6.70 = 1712.00SILV -.78 = 34.83PLAT – 2.00 = 1703.00 Ben Bernanke has wrapped up his semiannual testimony on Capitol Hill. There was a total of 83 questions asked by the 61 members of the House Financial Services Committee, only seven questions were about Bernanke’s actual job: monetary policy. Many, if not most, members used their 5 minutes for statements rather than questions. It’s an election year. So, we can pretty much break down all the worthwhile comments from Bernanke in four categories, and cover it all in a couple of minutes: Bernanke on QE “If you look back at Quantitative Easing 2, so called, in November 2010, concerns at the time were that it would be a high inflationary environment, it would hurt the dollar, it would not have much effect on growth, etcetera. “But since November 2010, we have had since then the QE2 and the so-called Operation Twist, we have had about 2-1/2 million jobs created, we have seen big gains in stock prices, we have seen big improvements in credit markets, the dollar is about flat, commodity prices excluding oil are not much changed, inflation is doing well in the sense that we are looking for about a 2 percent inflation rate this year. “And one other point, in November 2010, we had some concerns about deflation, and I think we have sort …

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