Uncategorized

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 …

READ MORE →
Uncategorized

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 …

READ MORE →
Uncategorized

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 …

READ MORE →
Uncategorized

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 …

READ MORE →

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 …

READ MORE →

March, Thursday 01, 2012

DOW +28 = 12,980SPX + 8 = 1374NAS + 22 = 298810 YR YLD +.06 = 2.04 OIL + 1.53 = 108.60GOLD + 21.00 = 1718.70SILV + .87 = 35.61PLAT + 22.00 = 1705.00 So, a big question lingering from yesterday was, what happened to gold? And there probably isn’t a good answer. The first temptation is to blame Fed Chairman Bernanke, but if you own gold, really, we should all be thanking Bernanke; no one has done more for the price of gold than Helicopter Ben. Here’s the thinking. Quantitative Easing, or QE and the sequel, QE2, and the next sequel, Operation Twist, swapping short-term bonds for long-term bonds; these are all just different names for printing money out of thin air, and that is generally bullish for gold prices. Yesterday, Bernanke is talking to Congress and he acts like there isn’t a QE3, even though we know the Fed is buying mortgage backed securities, even though the ECB is throwing currency out of helicopters over in Europe. Remember, yesterday the ECB handed out 530-billion-euro in the Long Term Refinance Operation. So even though it isn’t officially QE3, there is still $700 billion dollars worth of money injected into the global financial system, and this isn’t enough to satisfy the wags, and they go running for the exits, and that triggers sell orders, and the next thing you know, gold is down 4%; which in the grand scheme of things, 4% is not much. Stay calm. Pay attention but …

READ MORE →

February, Wednesday 29, 2012

DOW – 53 = 12,952 SPX – 6 = 1365NAS – 19 = 296610 YR YLD +.05 = 1.98%OIL +.32 = 106.87GOLD -87.20 = 1697.00SILV – 2.29 = 34.74PLAT – 40.00 = 1685.00 I really don’t know much. I’m not Nostradamus. I can’t see into the future. I do not operate a shadow CIA. I just read a lot and try to make sense of what I read, and that is sometimes a fool’s errand, and when all else leaves me awash in chaos I just follow the trend. The trend is your friend. And a trend in place is more likely to continue than it is to reverse, until it reverses. Right now, the trend says the US economy is improving. The US economy grew 3% in the fourth quarter, so says the Commerce Department; that is up from an earlier estimate of 2.8%. There was an increase in commercial construction, higher consumer spending and lower imports, and a large buildup in business inventories. It doesn’t sound sustainable but the trend is up. The Federal Reserve published its Beige Book, in which they proclaimed the  economy continues to expand at a modest pace, and consumer spending is generally positive, and manufacturing is expanding at a steady pace nationwide. And then, Federal Reserve Chairman Bernanke went to Capitol Hill to ask lawmakers to dust off the old relic known as fiscal policy, and take it for a spin. Also, as part of Bernanke’s semiannual testimony he said, “The recovery of …

READ MORE →

FEBRUARY, TUESDAY 28, 2012

DOW + 23 = 13,005SPX + 4 = 1372NAS + 20 = 298610 YR YLD +.01 = 1.93%OIL – 1.96 = 106.60GOLD + 15.80 = 1784.90SILV +1.47 = 37.03PLAT + 11.00 = 1723.00 Dow at 13,000 for the first time since May of 2008. I never really liked the Conference Board’s Consumer Confidence Index. First, it reduces people to the role of consumers. I consume, but I do much more. I don’t consider myself a consumer, at least not first  and foremost. Second, it isn’t really trying to measure our confidence, it is trying to determine if we will loosen our steadfast grip on the purse-strings, and if we will buy something. Apparently we will. The Consumer Confidence Index jumped to 70.8 from 61.5 in January. A nationwide average of $3.78 a gallon was trumped by a stronger jobs market and a mild winter that left many people with more work and lower heating bills. Consumer confidence resulted in a 3% increase in chain store sales for the week. Meanwhile, the durable goods orders dropped 4.5% in January. Part of the drop may be the expiration of a tax break which pushed demand forward into December. The Case-Shiller report on sales of homes in 20 major metropolitan areas across the country shows that house prices continued to drop in December, down 1.1%, for the 4th quarter, prices dropped 3.8%, and for the year, prices dropped 4%. For the Phoenix market, prices have been going up the past couple of months. …

READ MORE →
Uncategorized

February, Monday 27, 2012

DOW – 1 = 12,981SPX + 1 = 1367NAS + 2 = 296610 YR YLD -.06 = 1.92%OIL – 1.07 = 108.70GOLD – 5.50 = 1769.10SILV +.05 = 35.56PLAT – 3.00 = 1711.00 Let’s look at the price of a gallon of gas and the factors that have been pushing prices higher. You may recall that last May, oil prices moved up to $114 per barrel. So one of the first considerations is that this is a seasonal move. You will also recall that last spring, the oil production in Libya was disrupted. After a while, Khadafi was deposed and by last October, prices had dropped to $75 a barrel. Now the concern is Iran, and any disruption in Iranian oil supply would be considerably larger than Libya, and might lead to even more widespread disruption of oil transportation through the Strait of Hormuz. Iran produces about 4.3 million barrels per day. So, now we are looking at the imposition of sanctions on Iran. What are the implications? The most likely result of sanctions is that the countries participating in the sanctions would have to cut back demand and find new sources, and the countries not participating could buy the oil from Iran. China and India would buy more oil from Iran, while Europe would buy more oil from Saudi Arabia. There would still be the same amount of oil in the global market, just have to buy it from different sources. Maybe sanctions could alter global production, or maybe …

READ MORE →
Uncategorized

February, Friday 24, 2012

DOW  – 1 = 12,982SPX + 2 = 1365 NAS + 6 = 296310 YR YLD – .01 = 1.98% OIL +1.86 = 109.69 GOLD – 6.50 = 1774.60 SILV +.04 = 35.51PLAT – 13.00 = 1717.00 We’ve almost made it through the first two months of the year and if you haven’t noticed, things are getting better. This is not to say that everything is good or even great, just that things are getting better. And of course, there is the caveat that things might get worse and that could happen fast and it could be severe, but for this specific moment in time, things are getting better. Some people would like to deny this; they claim this getting better notion is a false meme; we’re being manipulated into believing that things are getting better when they are not. Despite the presence of bright sunlight, we know that the darkness of night is right around the corner; and even cold, hard numbers are unconvincing. Let’s look at the numbers: the S&P 500 has doubled in less than 3 years, and it’s up more than 8% year to date; just this week home sales showed strength and inventories dropped, the unemployment rate has been steadily dropping and the initial claims for jobless benefits fell to the lowest level since March, 2008; and consumer confidence in January moved to its best level in a year. Maybe these numbers don’t apply to you personally; fair enough. And it’s easy to claim the …

READ MORE →