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October, Wednesday 05, 2011

DOW + 131 = 10,939SPX + 20 = 1,144NAS + 55 = 2,46010 YR YLD = 1.90%OIL + .08 = 79.76DEC GOLD + 4.50 = 1646.10DEC SILVER + .17 = 30.52 Economic news: The September ISM Non-manufacturing index was at 53.0%, down from 53.3% in August. The employment index decreased in September to 48.7%, down from 51.6% in August. Note: Above 50 indicates expansion, below 50 contraction.  ADP reports private sector employment gained more than expected rising 91,000 in September. Economists had expected a gain of 75,000. Meanwhile, Challenger, Gray & Christmas says the number of planned layoffs at U.S. firms in September jumped to 115,730 last month, the highest in more than two years. The figure was more than double August’s total of 51,114. The reports come ahead of Friday’s monthly jobs report. The report might show a slight improvement as Verizon workers returned to their jobs, but otherwise, there is a strong chance the report will continue to disappoint. Let’s look at today’s banking news:  Three law firms are seeking participants in a class action law suit seeking damages from 13 lenders for alleged fraud against borrowers seeking Veterans Administration (VA) home loans.  The suit charges that the lenders charged fees for their loans which were unallowable under VA mortgage rules, an action that technically, according to the suit, invalidated the VA guarantee. The premise for the suit rests on a VA rule that certain fees typical to a real estate transaction i.e. attorneys’ fees or settlement closing fees are not allowed in closing a …

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October, Tuesday 04, 2011

DOW + 153 = 10,808SPX + 24 = 1,123NAS + 68 = 240410 YR YLD = 1.78%OIL + 2.47 = 78.14Dec Gold + 11.70 = 1627.70 Dec Silver + .27 = 30.11 You’ve probably heard that old rhyme – “Sell in May and go away”. The thinking is that May through October represents the six worst months in the market. If you took $10,000 and invested in stocks 60 years ago and you just invested from November to April, your investment would have grown to $527,288. If you invested from May through October, you would have lost $474. So, today’s lesson is “do not invest when stocks go down, but its okay to invest when stocks go up. Wow. This investing stuff is easy. The S&P 500 hit a high of 1370 on April 29, today it closed at 1096 – marking a 20% decline; the technical definition of a bear market. The explanation offered daily is the European situation is what’s taking a toll on Wall Street. David Goldman, the former head of credit research at Bank of America says the situation in Greece is hopeless, but not serious; yea, that’s a good line. Ha ha. He contends this is not a rerun of the Lehman Brothers collapse in 2008. Nobody knew then what lurked on the balance sheets of major banks in terms of mortgage derivatives, least of all their chief executives, who were particularly clueless. Really? I remember when Dick Fuld , the former CEO of Lehman …

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October, Monday 03, 2011

DOW – 258 = 10,655SPX – 32 = 1,099NAS – 79 = 233510 YR YLD = 1.78%OIL – 1.09 = 76.52DEC GOLD + 7.70 = 1665.40DEC SILVER + .71 = 30.83 Stocks closed at the lowest levels in a year. Let’s start with some economic news here in the USA.  A report from the Institute for Supply Management showed stronger growth in. The index went from 50.6 in August to 51.6 points in September, showing expansion — a reading over 50 — for the 26th consecutive month; so a half year of expansion in manufacturing. But the index was still lower than a year ago and new orders contracted slightly, hinting at continued troubles ahead. Construction spending increased 1.4 percent in August, driven largely by gains in the public sector – mainly state and local government building projects. General Motors, Ford and Chrysler reported increases in sales of new vehicles last month, one of few areas of sharp growth in the domestic economy.GM – .45 = 19.73F – .30 = 9.37 Airlines were clobbered today. Some airline analysts came out with a fairly obvious observation; if the economy slows, then we might see a cutback in flying and the airlines might struggle. AMR, the parent for American dropped -.98 = 1.98; losing about one-third of its value today and looking like a candidate for bankruptcy.  UAL Continental – 2.27 = 17.11; US Airways – .87 = 4.63 (almost a 16% drop). So the economic news was decent, certainly not terrible, yet the …

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September, Friday 30, 2011

DOW – 240 = 10,913SPX – 28 = 1,131NAS – 65 = 2,41510 YR YLD = 1.92% OIL – 3.39 = 78.75DEC GOLD + 5.00 = 1622.30DEC SILVER – .43 = 30.08 The third quarter is history, ugly history. Let’s go to the Score Board: The MSCI All Country World Index is down 17% for the quarter. Stoxx Europe 600 down 17% for the quarter. The German, French and Spanish market indexes also recorded their biggest quarterly losses in nine years. The Dow Jones Industrial Average lost 12% for the quarter, the biggest percentage decline since the first quarter of 2009. The S&P 500 Index is down 14% for the quarter, and the month of September saw a 6% drop. The Nasdaq Composite lost 13% for the quarter. Some of the top performing sectors over the past 3 months include U.S. Pharmaceuticals – (This just makes too much sense; how many people have reached for the Zantax or Prilosec in the past 3 months? Wouldn’t you love to have the Pepto-Bismol franchise in lower Manhattan? ) New Zealand gained. Other sectors that posted positive results: Global healthcare, consumer staples, the Developed European countries (a little surprising maybe), Switzerland (although the past month has been down), Germany, Indonesia, Biotechnology, and US Consumer discretionary. Losing sectors included Peru, also global timber, clean energy, US broker dealers, North American Technology & Multimedia, Silver, China Small Cap and Israeli Small Cap. The S&P GSCI, the Commodities Index dropped 11% in the third quarter, and …

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September, Thursday 29, 2011

DOW + 143 = 11,153SPX + 9 = 1,160NAS – 10 = 2,48010 YR YLD 1.95%OIL +.84 = 82.98DEC GOLD – .80 = 1,617.30DEC SILVER + .38 = 30.52 Once again, Wall Street started the day with optimism and enthusiasm; the Dow Industrials jumped up about 260 points. Then the index slipped into negative territory. Then rallied into the close. The German parliament approved a revamped euro bailout fund. Under the plan, the EFSF will be enlarged to €440bn. The actual price tag will be much higher. It will also be given the ability to give “precautionary loans” to struggling European countries, buy EU government debt, and provide funding to shore up the capital reserves of European banks – you know the same banks that were 100% capitalized last week. Seven more euro countries still need to vote on the bailout, and the voting won’t finish until the end of October. For things to improve, a whole host of things need to go right but even a single mis-step could worsen the crisis even more.  A new Bloomberg survey shows 93% of investors think Greece will eventually default. It is widely accepted that the EFSF will be inadequate and will require radical enhancement virtually as soon as it’s approved. Last weekend US treasury secretary Tim Geithner was demanding a huge increase in the EFSF’s €440bn firepower. So, very soon, we’ll start to  hear about expanding the guarantees or insurance the EFSF will offer for creditor countries and even talking about …

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September, Wednesday 28, 2011

DOW – 179 = 11,010SPX – 24 = 1,151NAS – 55 = 2,49110 YR YLD = 2.00%OIL – .96 = 80.25DEC GOLD – 34.40 = 1618.10DEC SILVER – 1.40 = 30.13 The stock market started in positive territory and then slipped. Why did the equity markets move lower? Blame Greece, blame sunspots, blame the invisible hand, blame a lack of confidence, blame crisis fatigue, blame the sloth-like Eurozone response, or create your own diversions. The mess in Europe saw money moving toward the safe haven of the dollar, which in turn pushed US equities lower – that might be considered a logical and even normal response. Euroland is throwing ideas on the wall and trying to see what sticks. The solution du jour involves taxing financial trades; just a little, tiny percentage of every stock and bond bought or sold. Europeans estimate the tax could suck in about $75 billion a year. For the tax to work, it would have to be a global tax. If it were not global then traders would just move to a market that doesn’t have the tax. Now that the idea is being floated, the next question is who gets the money generated from such a tax? Raise your hand,… and get in line. The Financial Times reports the European Central Bank is preparing to rapidly recapitalize European banks. This might sound reassuring except for the fact that last week we were told the big euro banks were fully capitalized; no problems; no worries, …

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September, Tuesday 27, 2011

DOW +146 = 11,190SPX + 12 = 1,175NAS + 30 = 2,54610 YR YLD = 2.01% OIL – .97 = 83.48DEC GOLD + 57.70 = 1,652.50DEC SILVER + 1.56 = 31.53 Go figure. I read an article from Mark  Hulbert on Market Watch. He basically says it doesn’t make sense that the markets go up or down 300 points any given day  because of what is happening in Greece. Last week, the Dow lost 738 points and all publicly traded stocks in the US lost about $865 Billion in market capitalization. Since the stock market high this past spring, US stocks have lost approximately $2.5 trillion in market cap, and the prime suspect is concern over Europe’s debt situation. He says Greece’s sovereign debt totals a mere $393 billion, and even if you add in Portugal and Spain, the total sovereign debt is only about $1.25 trillion. He goes on to ask: “Why, then do so many investment commentators persist in telling the story that Europe’s debt situation is to blame?” Hulbert is very clever to offer no explanation for what is happening in the stock market. Maybe there is no explanation. Maybe stocks go up and down in a totally random fashion; maybe there is an invisible hand. Maybe there are forces at work that I’m too dense to recognize. Mindful of the irrefutable evidence that I am a simpleton, I will attempt to explain the relevance of Greece on the Global Markets. Debt, including the sovereign debt of …

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September, Monday 26, 2011

DOW + 272 = 11,043SPX + 26 = 1,162NAS + 33 = 2,51610YR YLD = 1.90%OIL + 1.14 = 81.38DEC GOLD – 45.00 = 1594.80DEC SILVER – 1.25 = 29.97 The 30-year U.S. Treasury bond briefly lost more than 2 points in price to yield 2.99 percent. The benchmark 10-year U.S. Treasury note was down 21/32 in price to yield 1.90 percent. The euro dropped against the dollar and yen. Oil rose, just when I started dreaming it might drop below $3 dollars a gallon at the pump. Gold futures fell, on course for their largest monthly slide in three years as investors scrambled for cash. In late trading, December gold has move back up to 1625 an ounce. European leaders have not been able to agree on the next steps they will take to deal with Europe’s debt problems. Over the weekend they talked and pledged to take bolder steps but there was no agreement on what those bolder steps should be. The immediate issue is whether Greece will default or if it will be bailed out; and if it is bailed out, who pays. Greece needs the next $11 billion dollars in bailouts within the next week or there will be a default. Greece must meet certain requirements for the bailout. Auditors will determine if the Greeks meet those requirements. The auditors have left the country and nobody knows when they will return. Germany is scheduled to vote on Thursday to decide if they will authorize the next …

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September, Thursday 22, 2011

DOW – 391 = 10,733SPX – 37 = 1,129NAS –82 = 245510YR YLD 1.71%OIL – 5.39 = 80.53GOLD – 64.90 = 1733.80SILVER -.54 = 36.03 In August, the S&P 500 dropped down to 1,101, the Dow Industrials dropped to 10,604. Today the Dow went to a low of 10,597 and found support. The S&P made it down to 1,114 and found support. The European markets set the tone for Wall Street this morning. We saw a gap down at the open. A reminder that a day like today can lead some traders to act or rather react; and the last thing you want to do is chase a gap down. If you want to short these markets, fine, but you really want to short before a gap down, not after a gap down. You do not want to sell into fear – just the opposite; you want to sell into greed. Quite simply, yesterday we got the FOMC announcement discussing “significant downside risks” accompanied by Operation Twist. The results kicked the legs out from under the remaining bulls on Wall Street and confirmed a chart pattern that has been setting up for the past month and a half, a bearish flag pattern – Well this looks like the breakdown of that congested flag pattern. And just in case you needed further confirmation of a bearish move – there was extremely heavy volume today Meanwhile, the results were bullish for bonds and the 20-Yr jumped 2.50% to challenge its multi-year highs …

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September, Tuesday 20, 2011

The Corporate Bank Run Has Started: Siemens Pulls €500 Million From A French Bank, Redeposits Direct With ECB http://www.zerohedge.com/news/shocker-siemens-pulls-%E2%82%AC500-million-french-bank-redeposits-direct-ecb Greece Nears the Precipice, Raising Fear http://www.nytimes.com/2011/09/20/business/global/as-greece-struggles-the-world-imagines-a-default.html?_r=1&partner=rss&emc=rss Turnaround Tuesday – Greece is Fixed (again)http://www.zerohedge.com/contributed/turnaround-tuesday-greece-fixed-again Stocks Shrug Off Italian Downgrade http://www.nytimes.com/2011/09/21/business/daily-stock-market-activity.html?ref=business Bill Clinton’s Advice to President Obama on Jobs: Start With Clean Energy http://finance.yahoo.com/blogs/daily-ticker/bill-clinton-advice-president-obama-jobs-start-clean-142127429.html;_ylt=AkKxIsraPGO2y2pwscOqBUi7YWsA;_ylu=X3oDMTE1YzduN2FkBHBvcwMzBHNlYwN0b3BTdG9yaWVzBHNsawNiaWxsY2xpbnRvbnM-?sec=topStories&pos=main&asset=&ccode= Fed begins policy meeting, tiptoes toward easing http://www.reuters.com/article/2011/09/20/us-usa-fed-idUSTRE78J3HB20110920 Global energy use to jump 53% http://money.cnn.com/2011/09/19/markets/global_energy_use/ Guest Post: Will Tokyo Be Evacuated Due to Fukushima Radiation? http://www.nakedcapitalism.com/2011/09/guest-post-will-tokyo-be-evacuated-due-to-fukushima-radiation.html DOW + 7 = 11,408SPX – 2 = 1,202NAS – 22 = 2,59010 YR YLD = 1.94%OIL + 1.05 = 86.75GOLD + 26.60 = 1,801.50 Stocks were in positive territory for most of the day and then prices faded into the close. Once again, the story is Greece. A teleconference between Greek officials and international lenders, may have spurred sellers late in the day. After the teleconference, the European Commission said debt inspectors would continue to review Greece’s progress on its budget goals early next week. So, there will be no resolution to Greece’s debt crisis for at least the next few days. When debt grows to certain levels, then default is almost inevitable. The only question is whether the default is quick and painful or slow an painful. And who feels the pain. Greece is working frantically in concert with other European nations to avoid default, by embracing further austerity measures it has promised in return for more European bailout money to help pay its debts; but Greece keeps inching closer …

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