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Friday, July 27, 2012 – Wall Street Finds Pleasure in GDP Pain

Wall Street Finds Pleasure in GDP Pain-by Sinclair NoeDOW + 187 = 13,075SPX + 25 = 1385NAS + 64 = 295810 YR YLD +.13 = 1.56%OIL + .91 = 91.98GOLD + 7.50 = 1624.60SILV +.25 = 27.89PLAT + 6.00 = 1417.00All right class; Pop Quiz. Question: What does Wall Street love? Answer: Free money. I know, it’s the same pop quiz as yesterday. That was then and this is now. Yesterday, the free money was coming from the ECB, as Mario Draghi promised to do whatever it takes to save the euro. Today came news that was so bad that it should push Federal Reserve Chairman Ben Bernanke out of denial and into action. Economic growth was so stagnant that Bernanke will be forced to pass out free money to his bankster buddies; it’s not the solution but it is what Bernanke knows how to do. The nation’s gross domestic product, the broadest measure of the economy, grew at just 1.5% in the second quarter; that compares to GDP growth of 2% in the first quarter and 4.1% growth in the fourth quarter of 2011. Consumers cut back, local governments cut spending, factories received fewer orders and exports declined because of the global slowdown and a stronger dollar. Spending on durable goods, including things like cars and home appliances, fell 1.% in the second quarter. Cuts in government spending, especially at the local level, also held back growth. State and local spending fell 2.1% during the quarter while federal spending declined 0.4%. …

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Thursday, April 26, 2012 – Everybody Loves Free Money

Everybody Loves Free Money– by Sinclair NoeDOW +211 = 12,887SPX + 22 = 1360NAS + 39 = 289310 YR YLD +.02 = 1.43%OIL +.02 = 89.41GOLD + 11.30 = 1617.10SILV + .20 = 27.64PLAT + 5.00 = 1411.00Pop Quiz: What do Wall Street bankers love? Free money. They swoon at the prospect of  money being redistributed from taxpayers to bankers. You might say they are socialists, in this regard; if redistribution of wealth is your definition of socialism. This morning European Central Bank President Mario Draghi declared “the ECB is ready to do whatever it takes to preserve the euro…and believe me, it will be enough.”We don’t know the details. Draghi wasn’t actually handing out euros to the bankers, but the idea is that there will be a European version of Quantitative Easing, possibly a direct bond purchase program.The euro rallied against the dollar. European stock exchanges jumped. Commodity prices jumped. The Yield on Spanish and Italian bonds dropped. Yields on German and US bonds rose as prices dropped. And US stocks moved higher. The ECB announcement was a put, a floor under the markets. For bankers and traders, the announcement flicked the switch to “risk on”, because even if they lose money, the ECB will just print more. Draghi opening the door to a Bernanke-style monetary policy in Europe is a big deal — at least for the financial markets. This sort of stimulative policy does a poor job of circulating money through the broader economy. Still, the market was …

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Wednesday, July 25, 2012 –

Sandy Weill, Glass-Steagall, and Banksters on the Wrong Side of History-by Sinclair NoeDOW + 58 = 12,676SPX -0.42 = 1337NAS – 8 = 285410 YR YLD unch = 1.41OIL +.61 = 90.67GOLD + 23.70 = 1605.80SILV +.38 = 27.44PLAT + 15.00 = 1406.00One story today. In 1993 Sandy Weill acquired Shearson Lehman; in quick order he also bought up Travelers Corp and Aetna Life and Casualty and then Salomon Brothers. He began calling the conglomerate, Travelers Group. In April 1998, Travelers Group announced an agreement to undertake the $76 billion merger between Travelers and Citicorp. The new company, called Citigroup, combined a commercial bank holding company with an insurance company and investment banking; it was a big one stop shop that included Citibank, Travelers, Smith Barney, Primerica, Citifinancial, Shearson, Aetna, and Salomon. At the time, it was the largest merger in history and created a financial behemoth with operations in 100 countries. It was also illegal based upon the Glass-Steagall Act of 1933.Let’s go back in time to explain Glass-Steagall. At the height of the Great Depression the Congress conducted hearings which showed that the presumed leaders of American enterprise, the bankers and brokers, were guilty of disreputable and dishonest dealings and gross misuses of the public’s trust, literally buying control of politicians. The hearings started in 1932 and they uncovered plenty of abuses. JP Morgan maintained a “preferred list” of clients that would get special deals, huge discounts on stock purchases that could then be flipped for a quick …

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Tuesday, July 24, 2012 – The Dog Days of Summer

The Dog Days of Summer– by Sinclair NoeDOW – 104 = 12,617SPX – 12 = 1338NAS – 27 = 286210 YR YLD -.03 = 1.40%OIL +.58 = 90.29GOLD + 4.40 = 1582.10SILV – .10 = 27.06PLAT – 13.00 = 1391.00These are the Dog Days of Summer; those lazy, languid, sultry days where not much happens; theoretically.The economy could use another boost, and it won’t come from fiscal policy. Can the Federal Reserve provide it? Chairman Ben Bernanke keeps insisting that the central bank is not out of ammunition, and in a literal sense he is right. After all, the Fed has not yet exhausted its bag of tricks. It is still twisting the yield curve.  Maybe Bernanke has a few tools he hasn’t pulled out yet. For example, some sort of “funding for lending” plan that favors banks that are actively making loans; lowering the rate the central bank pays financial institutions for parking their reserves at the Fed, currently at 0.25 percent.Or, the Fed can purchase more assets; they are clearly still considering a third bout of quantitative easing, or QE3, and recent weakness in the economy could prompt policymakers to launch such a program as early as September. The problem is that the economy is building up resistance to monetary stimulus that only stimulates the banks and the stimulus never works its way to Main Street. Another alternative is the possibility of cutting the rate of interest on excess bank reserves (IOER), now at a quarter percentage point, all …

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Monday, July 23, 2012 – There Are Problems With Spain And Greece And Germany

There Are Problems With Spain And Greece And Germany – by Sinclair NoeDOW – 101 = 12,721SPX – 12 = 1350NAS – 35 = 2890 10 YR YLD – .02 = 1.44%OIL + .10 = 89.81GOLD – 7.30 = 1577.70SILV -.27 = 27.16PLAT – 17.00 = 1404.00There are problems with Spain. We’ve been talking about the problems for quite some time; they had a housing crash; a whole bunch of real estate is underwater; the banks were clobbered; the unemployment rate jumped up to more than 25%, which is in line with unemployment during the Great Depression. The IBEX 35, the Spanish equivalent of the Dow Industrials finished the day down 1.1% after trading as low as -5.8%, and the FTSE MIB (Italian index) was down 2.76% on the day. Spain announced that it is banning all short selling for the next three months. Italy announced it would ban short selling for banks and insurers.  The move echoes decisions in August last year by the two nations plus France and Belgium after European banks hit their lowest levels since the credit crisis of 2008 and 2009. The ban worked, sort of; the IBEX rose 6% last year during the ban, and the financial stocks that were covered under last year’s ban they gained 10%. Most bank stocks extended their decline once the bans were lifted. Last time around it didn’t really have any lasting impact. They artificially propped up prices but they didn’t correct the underlying problems. This is trying to avert hedge …

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Friday, July 20, 2012 – Why Hasn’t Anything Been Fixed on Wall Street?

Why Hasn’t Anything Been Fixed on Wall Street?  -Sinclair NoeDOW – 120 = 12,822SPX – 13 = 1362NAS – 40 = 292510 YR YLD -.05 = 1.46%OIL – 1.14 = 91.83GOLD + 2.30 = 1585.00SILV +.05 = 27.43PLAT – 3.00= 1421.00For quite some time it has been accepted that Greece was toast; the Greeks would be forced to swallow the bitter pill of austerity; somehow the Euro-union would survive. And the EU seemed to be dealing with the meltdown of Ireland and Portugal as well; they just forced them to pay for their own bailouts; that plan isn’t working out so well with Spain. The Kingdom of Spain was supposed to be the firewall where the breakdown of the Euro-union stopped; that plan isn’t working our so well. The problem today is Valencia, a region of Spain, not the orange; they are asking for a $22 billion dollar bailout; apparently in addition to the $123 billion dollar assistance package that is going to bailout Spanish banks and backed by the Spanish citizens, at least theoretically. May be good for the banks but the Spanish economy is still in a downturn and the government says it will step up austerity measures.Spain’s IBEX stock index fell 5.8 percent, its biggest one-day drop in two years, and the risk premium on government debt hit a euro-era high as its borrowing costs rose to 7.32 percent. That yield is above the 7 percent threshold considered unsustainable, with little relief in sight. And that is …

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Thursday, July 19, 2012 – CPFB is Alive, Banksters will Eat the Bankers, and the Big Drought

CPFB is Alive, Banksters will Eat the Bankers, and the Big Drought-by Sinclair NoeDOW + 34 = 12,943SPX + 3 = 1376NAS + 23 = 296510 YR YLD +.04 = 1.51%OIL – .46 = 92.20GOLD + 8.20 = 1582.70SILV + .10 = 27.38PLAT + 12.00 = 1424.00I was so busy following Fed Chairman Bernanke’s Humphrey Hawkins testimony yesterday that I forgot to mention the Big Bankster Failure of the Day: Capital One was sanctioned by the OCC, and its net penalty is $210 million in fines; $140 million to 2 million customers pressured, mislead or otherwise hoodwinked into buying payment protection and credit monitoring when they activated their credit cards. What makes this interesting is that this is the first enforcement meted out by the CFPB, the Consumer Financial Protection Bureau. The CFPB imposed the fine without a judge or jury or trial. If it sounds heavy handed, consider Capital One has a pattern of bad behavior; fined by the British government 5 years ago for pretty much the same activities; sued by Minnesota for false, deceptive and misleading practices. As is typical for this kind of settlement, the people responsible were not named. You’ve heard of victim-less crimes. We know have perpetrator-less crimes. A crime happened but nobody did it.The CFPB was signed into law two years ago, the anniversary is Saturday. This was the first enforcement by the CFPB. It is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is still incomplete and largely …

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Wednesday, July 18, 2012 – A Primer on Money

A Primer on Money– by Sinclair NoeDOW + 103 = 12,908SPX + 9 = 1372NAS + 32 = 294210 YR YLD -.02 = 1.48%OIL +.72 = 90.26GOLD – 8.90- = 1574.50SILV -.13 = 27.28PLAT – 12.00 = 1412.00It’s earnings reporting season: Ebay profit more than doubles. IBM profit was up and they raised their outlook. American Express profit came in flat. I don’t think earnings have as much impact as they once did. Treasury Secretary Tim Geithner was speaking at a conference in New York. Geithner says the economy is definitely slower than we’d all like it to be. He cited 3 reasons: “It’s slower mostly because of the trauma from Europe, the after effects of the rise in oil prices earlier this year, and because government spending is actually falling now quite significantly. Those three things are a pretty significant drag on a recovery.”Geithner also defended his response, or lack thereof, to the Libor rate rigging scandal: “We acted very early in response to the concerns that the processes to set this rate were impaired and flawed, and vulnerable to misrepresentation,” he said. “The U.S., to its credit, set in motion at that stage a very, very powerful enforcement response, the first results of which we have now seen,” and “There is more to come,” he added, but provided no details. Four years after the fact, Barclays is fined; finally an investigation starts; maybe something will happen, wow, that was soooo powerful. Apparently Geithner never heard the phrase, justice delayed is …

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Thursday, July 17, 2012 – Accepting Unacceptable Manipulation or Dude, What Happened To My Pension

Accepting Unacceptable Manipulation or Dude, What Happened To My Pension?-by Sinclair NoeDOW + 78 = 12,805SPX +10 = 1363NAS + 13 = 291010 YR YLD +.04 = 1.50%OIL – .21 = 89.01GOLD – 6.20 = 1583.40SILV unchanged = 27.41PLAT + 1.00 = 1424.00Federal Reserve Chairman Ben Bernanke went to Capitol Hill today. He made some remarks; he took some questions; he did not surprise.  Bernanke said in his testimony:”Reflecting its concerns about the slow pace of progress in reducing unemployment and the downside risks to economic growth, the committee made clear at its June meeting that it is prepared to take further action.” Prepared to act but not acting right this moment. Nothing new. If you were looking for a signal, you didn’t really get it.Bernanke said the risks of a surge in inflation were low and that there was a modest risk of a broad-based decline in prices.Bernanke said  the Fed could also use communications tools, such as extending its pledge to hold rates exceptionally low. He cited the possibility of additional bond buying — whether Treasury debt or mortgage-backed securities — lending through the Fed’s emergency loan window, and lowering the rate the Fed pays banks on reserves held at the central bank. Which is almost a new idea. Holdings of cash and other liquid assets at US industrial corporations rose to $1.7 trillion in March 2012; that’s cash held in short-term and low-risk instruments, which is what the Fed has been selling to buy longer-term as part of …

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Monday, July 16, 2012 – Strong Demand for Negative Interest

Strong Demand for Negative Interest-by Sinclair NoeDOW – 49 = 12,727SPX – 3 = 1353NAS – 11 = 289610 YR YLD -.03 = 1.46%OIL -.32 = 88.11GOLD – .80 = 1589.60SILV – .03 = 27.41PLAT – 15.00 = 1423.00The International Monetary Fund cut its forecast for global economic growth and warned that the outlook could get worse if policymakers in Europe do not act with enough force and speed to control the financial crisis. The IMF said emerging market nations, long a global bright spot, were now being dragged down by Europe. It said a drop in exports in these countries would combine with earlier policies meant to prevent overheating and slow growth more sharply than hoped. The IMF cut its 2013 forecast for global growth to 3.9 percent from the 4.1 percent it projected in April, trimming projections for most advanced and emerging economies. It left its 2012 forecast unchanged at 3.5 percent. The IMF said advanced economies would only grow 1.4 percent this year and 1.9 percent in 2013.It also trimmed its forecast for emerging economies, projecting they will expand 5.9 percent in 2013 and 5.6 percent in 2012. Both figures are 0.1 of a percentage point lower than in April. The IMF cut its 2013 growth forecast for the crisis-hit euro zone to 0.7 percent, while maintaining its projection of a 0.3 percent contraction this year.The IMF cut its US forecasts slightly, largely based on concerns over a political battle brewing in Washington over how to avoid painful …

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