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Thursday, May 3, 2012 – Jobs More or Less, Europe More or Less, HSBC Mess

DOW – 16 = 13, 206SPX – 10 = 1391NAS – 35 = 302410 YR YLD unchanged = 1.92%OIL +.09 = 102.63GOLD – 17.90 = 1636.80SILV – .58 = 30.17PLAT – 28.00 = 1540.00 Tomorrow the government releases the employment report for April. Economists predict the U.S. gained 160k to 175k jobs last month, up from a disappointing 120,000 in March. The preliminary increase in March was the lowest in five months and fell well short of the 246,000 average from December to February. We’ve seen several reports on jobs that might give a hint on tomorrow’s report: The four-week average of initial jobless claims was 383,500.Jobless claims declined by 27,000 to a seasonally adjusted 365,000 in the week ended April 28. The Labor Department said continuing claims decreased by 53,000 to a seasonally adjusted 3.28 million in the week ended April 21. Continuing claims reflect people already receiving benefits. ADP’s report on private-sector payrolls slowed to 119,000 from 201,000 in March. The employment component of the Institute for Supply Management’s manufacturing report rose to 57.3% from 56.1%, on a scale where readings over 50% indicate expansion. The employment component of the Institute for Supply Management’s services report slowed to 54.2% from 56.7%, on a scale where readings over 50% indicate expansion. Planned layoff announcements rose 7% to 40,559, according to Challenger, Gray & Christmas. What does it mean? It means wait until tomorrow’s report and we’ll find out. This is not the kind of report that you bet on. …

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Wednesday, May 02, 2012 – Jobs Report, Euro Elections, California Budget, and Watching Paint Dry

DOW – 10 = 13,268SPX – 3 = 1402 NAS + 9 = 305910 YR YLD -.03 = 1.92OIL +.14 = 105.36GOLD – 8.50 = 1654.70SILV – .32 = 30.75PLAT – 9.00 = 1569.00 This is shaping up to be a wild weekend. Friday we get the jobs report. Then, in Europe there will be elections in France and Greece. On a personal note, I’m going to paint the patio on my house, so I’ll be watching paint dry, just to counterbalance the rest of the world. The monthly jobs report, already the most highly anticipated data of the month, will be getting a little extra attention this Friday after a disappointing report on GDP late last week. A bad jobs report and a weak GDP report might be enough to trigger another round of Quantitative Easing from the Federal Reserve. The economy is adding and will continue to add jobs; that is not in question. It is the rate of job growth. Expectations are that there were about 160k to 175k new jobs created in April, up from 120,000 in March, and an unemployment rate that remains steady at 8.2%. The lowball guesses are for only about 125k jobs. With the addition of 120,000 jobs, March marked the 15th straight month of jobs growth, but it broke a three-month streak in which the economy had added more than 200,000 jobs. Now we are only a couple days away from finding out whether March’s report was a fluke or the …

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Tuesday, May 01, 2012 – The Return of Occupy Wall Street

DOW + 65 = 13, 279 SPX + 7 = 1405NAS + 4 = 305010 YR YLD +.04 = 1.96%OIL – .15 = 106.01GOLD – 2.10 = 1663.20SILV -.04 = 31.07PLAT + 3.00 = 1577.00 The Dow Industrials hit the highest point since December 2007. Later this week we’ll have reports on retail sales and the big monthly jobs report on Friday. Today, the ISM reported their manufacturing index rose to 54.8% last month from 53.4% in March. The results were much better than anticipated. We may have hit a top in the stock market: Former Federal Reserve Chairman Alan Greenspan said U.S. stocks offer good value and are likely to rise as corporate earnings increase over time. “Stocks are very cheap,” Greenspan said today at the Bloomberg Washington Summit hosted by Bloomberg Link, citing “a very low price-earnings ratio. There is no place for earnings to grow except into stock prices,” I mean, when Greenspan speaks it must be a contrary indicator. Today is the one year anniversary of the killing of Osama bin Laden. President Obama is in Afghanistan, and he’ll deliver a speech a little later. Today is also May Day. Occupy Wall Street is back; trying to resurrect the movement with May Day marches, which gained momentum through the day. Protesters marched on banks, chanted anti-corporate slogans, and clashed with police in an opening day of sorts for the movement’s summer revival. In New York, hundreds of protesters gathered in Union Square. A crowd surged out …

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Monday, April 30, 2012 – The Euro is Actually Kind of Important – Corporate Campaign Bribery – OWS Comes out of Hibernation

DOW – 14 = 13,213SPX – 5 = 1397NAS – 22 = 304610 YR YLD – .02 = 1.91%OIL -.07 = 104.80GOLD + 1.50 = 1665.30SILV – .26 = 31.11PLAT – 4.00 = 1574.00 A sharp drop in an index of Midwestern manufacturing and a slowdown in U.S. consumer spending last month added to worries that the U.S. economy is slowing down. Weaker earnings reports from health insurer Humana and the owner of the New York Stock Exchange, NYSE Euronext. The losses were broad. Nine of the ten industry groups in the S&P 500 fell, led by materials. Only telecoms rose. The Spanish government said that country’s economy shrank 0.3 percent in the first three months of the year, the second straight quarter of contraction. Spain is the fourth-largest economy among the 17 countries that use the euro. The worry is that Europe’s bailout funds won’t be big enough to rescue Spain if it needs help. Ratings agency Standard & Poor’s downgraded Spain’s government debt to just three notches above junk Friday. Earlier today, S&P lowered its rating for 11 Spanish banks, which are loaded with bad debt from a collapsed housing market. The good news is the euro hasn’t collapse, at least not yet. Somehow, the countries of the European Union continue to overcome their varied self-interest and they seem to do just enough to avoid catastrophe, at least for now. One reason the Euro still exists is because it is more than a monetary union, it is also …

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Friday, April 27, 2012 – Falling Down: US GDP, Spain, & Romania

DOW + 23 = 13,228SPX + 3 = 1403NAS + 18 = 306910 Yr yld -.03 = 1.93%OIL +.26 = 104.81GOLD  + 5.70 = 1663.80SILV + .18 = 31.37PLAT + 4.00 = 1579.00 This week was the best week in about one month for the major stock averages. Amazon climbed 15.7 percent to $226.85 and contributed half of Nasdaq’s gain for the day. The S&P retail index rose 3.5 percent and hit an all-time high. Shares of Expedia, the Web-based travel provider, surged 23.5 percent to close at $40.31, after hitting a new high at $43 on record volume. Growth in S&P 500 earnings rose to 7.2 percent this week from 3.2 percent at the start of the month. About 73 percent of the companies that have reported so far have beaten expectations. Earlier this week, a blowout quarter from Apple Inc gave the Nasdaq its best day of the year .  The S&P 500 is up 11.6 percent for the year.  Pay no attention to the Commerce Department report behind the curtain of the Wall Street indices.  The report says the U.S. economy expanded at a 2.2 percent annual rate in the first quarter, far below expectations for growth of 2.5 percent. Growth of 2.2% is mediocre, but it’s worse than that once you peel away a few layers — about a fourth of the growth in gross domestic product was accounted for by a buildup in inventories, and half of it came from the building and selling of motor vehicles. …

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Thursday, April 26, 2012 -Home Sales Up, Expectations Up; Beard on Beard Violence; Spain Sinks; Draghi’s Pretzel Logic; Big Banks Payday Tactics

DOW + 113 = 13,204SPX + 9 = 1399NAS + 20 = 305010 YR YLD -.02 = 1.96%OIL – .50 = 104.05GOLD + 12.80 = 1658.10SILV + .38 = 31.19PLAT + 16.00 = 1574.00 The number of people seeking U.S. unemployment benefits last week was 388,000; basically unchanged from a week earlier. The National Association of Realtors’ pending-home-sales index rose 4.1% to 101.4 in March. March pending home sales were up 12.8% from year-ago levels. A sale is listed as pending when the contract has been signed but the transaction has not closed. Sales of existing homes during the first quarter were the strongest in five years, and the NAR said the pending home sales data suggests the second quarter will be equally good. Pending sales are now at a 23 month high. We told you there would be a push to stimulate the economy by way of the housing market. It probably started with Operation Twist, and the Fed buying mortgage backed securities, and then continued with the push for HARP 2.0. We had a plethora of earnings reports today. Pulte Homes posted a smaller than expected loss. Citrix Software posted a better than expected profit. Amazon.com reported better than expected earnings even though profit dropped 35% from a year earlier. Of the 51% of the S&P 500 companies that have reported first-quarter results so far, 72.4% have reported earnings above expectations, 11.8% reported earnings in line with expectations and 15.7% reported earnings below estimates. It’s all about expectations. …

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Wednesday, April 25, 2012 – Bernanke Approximately Right, UK Approximately Wrong, Students Approximately Taxed

DOW + 89 = 13,090 SPX + 18 = 1390NAS + 68 = 302910 YR YLD +.02 = 1.98%OIL -.11 = 104.01GOLD + 2.80 = 1645.30SILV – .12 = 30.81PLAT + 8.00 = 1559.00 If you own shares in Apple, congratulations. It gained nearly $50 to finish at $610, up nearly 9%. If you don’t own Apple, don’t worry about it, don’t chase it. Realize that a big chunk of the move today for the broader market, was really just Apple, but it was a good day, with gainers outpacing losers by 3 to 1. The Federal Reserve wrapped up their FOMC meeting and announced no changes. Wow, what a surprise. The Fed didn’t raise rates – they can’t. They didn’t lower rates – they can’t. They didn’t announce QE3, but they didn’t take it off the table. Bernanke told reporters at a press conference, “We see monetary policy as being approximately in the right place at this point.” He said, “Our intention is to maintain highly accommodative stance of policy for the foreseeable future.” Kind of like QE in Perpetuity. Bernanke stressed that the Fed could purchase more assets if it looked like the economy needed help, but he said some ways to boost the economy, like tolerating higher inflation, would be “reckless.” At the same time, he said it was too early to raise rates, “I think it’s a little premature to declare victory. I think that keeping interest rates low is still appropriate for our economy.” The …

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Wednesday, April 25, 2012 – Bernanke Approximately Right, UK Approximately Wrong, Students Approximately Taxed

DOW + 89 = 13,090 SPX + 18 = 1390NAS + 68 = 302910 YR YLD +.02 = 1.98%OIL -.11 = 104.01GOLD + 2.80 = 1645.30SILV – .12 = 30.81PLAT + 8.00 = 1559.00 If you own shares in Apple, congratulations. It gained nearly $50 to finish at $610, up nearly 9%. If you don’t own Apple, don’t worry about it, don’t chase it. Realize that a big chunk of the move today for the broader market, was really just Apple, but it was a good day, with gainers outpacing losers by 3 to 1. The Federal Reserve wrapped up their FOMC meeting and announced no changes. Wow, what a surprise. The Fed didn’t raise rates – they can’t. They didn’t lower rates – they can’t. They didn’t announce QE3, but they didn’t take it off the table. Bernanke told reporters at a press conference, “We see monetary policy as being approximately in the right place at this point.” He said, “Our intention is to maintain highly accommodative stance of policy for the foreseeable future.” Kind of like QE in Perpetuity. Bernanke stressed that the Fed could purchase more assets if it looked like the economy needed help, but he said some ways to boost the economy, like tolerating higher inflation, would be “reckless.” At the same time, he said it was too early to raise rates, “I think it’s a little premature to declare victory. I think that keeping interest rates low is still appropriate for our economy.” The …

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Tuesday, April 24, 2012 – As the Euro Turns, Counting Protesters at Shareholder Meetings

DOW + 74 = 13,001 SPX + 5 = 1371NAS – 8 = 296110 YR YLD +.03 = 1.96%OIL +.20 = 103.75GOLD + 3.20 = 1642.50SILV -.03 = 30.93PLAT – 14.00 = 1550.00 Yesterday’s edition of “As the Euro Turns” included the collapse of the government in the Netherlands when it could not agree with a key allied party on budget cuts to bring the deficit below the EU-mandated 3 percent. In France, Socialist Francois Hollande led the first round of presidential elections; he has vowed to renegotiate a European treaty tightening rules on debt. All that was absorbed today. After all, the Dutch still have a Triple-A credit rating; they will probably pay their bonds. It does appear, at least for today, that the Euro has turned; as if a sudden transformation has swept the continent. Austerity is dead. Keynes has been resurrected and placed on a pedestal in Brussels, right next to a chocolate covered waffle. There was a mass awakening that countries cannot cut their way to prosperity. Angela Merkel is fighting back against the austerity backlash; she argues the “credibility” of the Eurozone is at risk without more austerity and continuing cutbacks. But austerity isn’t working and its hard to maintain credibility in the face of failed policy. Here is the problem: If a government (say Greece) has a massive deficit and now they are trying to balance their budget, the government will be making the situation worse by imposing cuts, both because government expenditure is …

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Monday, April 23, 2012 European Debate Austerity v. Growth, Walmart in Mexico, Apple in Seattle

DOW – 102 = 12,927SPX – 11 = 1366NAS – 30 = 297010 YR YLD – .04 = 1.93%OIL +.03 = 103.14GOLD – 4.10 = 1639.30SILV – .84 = 30.86PLAT – 22.00 = 1565.00 There is some uncertainty in Europe. Sarkozy is losing the election in France; the Dutch government has collapsed, and the debt continues to mount and the austerity plans aren’t working and the natives are getting restless. In France, Sarkozy came in second behind Francois Hollande, the Socialist candidate and a harsh critic of the spending cuts prescribed as a way to end the region’s debt crisis. This was the first round of voting and there will be a runoff election on May 6th. Hollande won 28.6 percent to Sarkozy’s 27.1 percent; Hollande has the momentum. Voter frustration with the status quo and with the E.U. fed a rise of support for extremes at both ends of the political scale, making potential kingmakers out of 11 million voters who supported candidates of the far right and left. Sarkozy and Germany’s Chancellor Angela Merkel have been the main architects of Europe’s efforts to avoid a collapse of the region’s shared currency. If Sarkozy loses, it means Merkel might not last. If both Sarkozy and Merkel lose power, we’ve got a whole new situation. Figures reported by the European Union’s statistics office confirmed the effects of budget-cutting programs on countries that use the euro currency. Even with widespread spending cuts, overall debt rose to 87.2 percent, the highest level since …

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