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Monday, August 27, 2012 – Still Waiting on the Fed

Still Waiting on the FedSinclair Noe DOW – 33 = 13,124SPX – 0.69 = 1410NAS + 3 = 307310 YR YLD -.03 = 1.65%OIL +.25 = 95.72GOLD – 7.10 = 1664.60SILV – .10 = 30.82PLAT – 6.00 = 1549.00 The Greek economy shrank 6.2% in the last quarter. The European Monetary Union is insisting on even more austerity in return for emergency funding. They’re trying to see if they can contract the economy right into oblivion. And that’s the good news; the bad news is that 20% of Greek bank loans are now non-performing.  The non-performing loans in Greece are bound to get worse, as the government does not have enough cash to return VAT tax refunds to small businesses which depend on such rebates for survival.  So, it is highly likely that the non-performing assets in Greek banks will rise as small businesses fail. And in Spain, 9.5% of bank loans are non-performing, a record high and cause for a little concern. Italy’s fiscal deficit is swelling. Germany is still the strongest Euro-country and they will probably see economic contraction in the next quarter. The UK might be as bad as any of them, with the exception of Greece.  In China, the housing bubble is deflating.  Prices are falling rapidly.  Lack of new construction has had a worldwide impact on the prices of raw materials.  The slowdown in demand and the decline in raw material prices has significant negative implications for the commodity producing countries like Australia and Canada. …

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Friday, August 24, 2012 – Say It Ain’t So

Say It Ain’t So-by Sinclair Noe DOW + 100 = 13,157SPX + 9 = 1411NAS + 16 = 306910 YR YLD +.01 = 1.68%OIL – .44 = 97.47GOLD – .40 = 1671.70SILV +.24 = 30.92PLAT + 7.00 = 1554.00 Say it ain’t so Lance. The unbeatable Lance Armstrong; the guy who did so much with the yellow bracelets; he finally admitted he is a cheat. He used performance enhancing drugs. He doped. “Enough is enough,” that was Armstrong’s statement. I couldn’t agree more. And yet, even with this I have to take exception. You see, Armstrong didn’t admit guilt. He didn’t come clean. Armstrong will not contest the charges of doping against him. Weary from years of denial, legal battles, skirmishes with former-team mates and anti-doping chiefs, it is a fight Armstrong says he no longer has the stomach for: “Today I will turn the page,” Armstrong said. “I will no longer address this issue regardless of the circumstances.” He didn’t go through a discovery process that would have brought out all the sordid details and entered them into evidence. No, that might have allowed his corporate sponsors to claw back all those endorsement fees. So, Armstrong and his attorneys just say that’s it, enough is enough. This is what corporations do when they want to limit liability; make no mistake, Armstrong is a corporation.  Pay the fine, but do not admit guilt, give up the Tour de France championship but keep the money. The workers were already taking down …

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Thursday, August 23, 2012 – No QE? Step Away From the Crack Pipe

No QE? Step Away From the Crack Pipe-by Sinclair Noe DOW – 115 = 13,057SPX – 11 = 1402NAS – 20 = 3053 10 YR YLD -.05 = 1.67%OIL – 1.05 = 97.69GOLD + 17.00 = 1672.10SILV + .75 = 30.68PLAT + 6.00 = 1548.00 The Federal Reserve FOMC minutes were released yesterday and the interpretation called for monetary accommodation sooner rather than later; so we’ll see QE3 August 31 at Jackson Hole on September 13 at the next FOMC meeting. They might not call it QE3, they might do some variation on the theme but the promise was that there will be big time accommodation unless the economy shows a strong and sustainable improvement. And if the Fed fails to deliver on QE3, you can expect a severely negative response from Wall Street; expect a move that would make today’s 115 point drop look small; the economy would tank and the Fed would be forced to step in with QE3, only in crisis mode.  So, this morning on CNBC, James Bullard, president of the Fed’s St. Louis bank, said the minutes from the July 31-Aug. 1 meeting were “stale” because the economy had picked up since then. If it becomes “a bit stronger,” he said, the Fed will hold off. And then he went back to smoking  his crack pipe.  What do the economic reports suggest? The HSBC Flash China manufacturing purchasing managers index, a preliminary reading that provides an early peek at data for August,  fell this month to …

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Wednesday, August 22, 2012 – QE Soon, Inequality Grows

QE Soon, Inequality Grows– by Sinclair Noe DOW – 30 = 13,172SPX + 0.32 = 1413NAS + 6 = 307310 YR YLD -.09 = 1.72%OIL – .28 = 96.40GOLD + 15.50 = 1655.10SILV + .50 = 29.93PLAT + 26.00 = 1541.00 The Federal Reserve released minutes of their most recent Federal Open Market Committee meeting. Here’s the money quote from the FOMC minutes: “Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.” In other words, a majority of the FOMC members think it is time for QE3, unless we see an economic miracle, say hallelujah! So, when will they make an announcement? Well, there is a symposium in Jackson Hole, Wyoming on August 31. There is another FOMC meeting September 12 and 13. The language in today’s minutes is not a guarantee of QE3, but if they do not make an announcement of QE3, then the lack of action will be interpreted as highly political and obstructionist. They have now obligated themselves to some sort of accommodation; it might not be called QE3, but a rose by any other name… The economy is ready for help; GDP is growing at less than 2%; inflation is running less than 2%; unemployment is lingering at 8.3%; Europe could implode and hurt the US economy. So, what will happen when the Fed provides additional monetary accommodation? Kansas City Federal Reserve President Esther …

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Tuesday, August 21, 2012 – A Crash? Your Guess is as Good as the Economists, Maybe Better

A Crash? Your Guess is as Good as the Economists, Maybe Better -by Sinclair Noe DOW – 68 = 13,203SPX – 4 = 1413NAS – 8 = 306710 YR YLD -.01 = 1.80%OIL -.30 = 98.16GOLD + 17.40 = 1639.60SILV + .52 = 29.43PLAT + 25.00 = 1516.00 Normally, these are the slow,  sultry, dog days of summer; that’s what we’ve seen lately. Volume has been so light that you wondered if everyone had gone to sleep. And then this morning, people started trading, or maybe the computers started trading. Who can say which? Volume jumped to the highest in 3 weeks and prices flopped.  David Kostin, Goldman Sachs chief US equity strategist, has sent a note to clients advising them to get out of stocks; Kostin is forecasting a 12 percent drop ahead, down to about 1250, believing that Congress will fail to address the fiscal cliff before the election, and maybe even before the end of the year. Kostin says: “Political realities and last year’s precedent suggest the potential that Congress fails to reach agreement in addressing the fiscal cliff is greater than what most investors seem to believe based on our client conversations.” According to Goldman Sachs economists, the worst case scenario this year is that a lame duck Congress does absolutely nothing after the election – not even kick the can down the road by voting in a short extension of the tax breaks and spending plans. Under that scenario, 2013 GDP would actually contract. Now normally …

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Monday, August 20, 2012 – Diminished Expectations

Diminished Expectations-by Sinclair Noe DOW – 3 = 13,271SPX -0.03 = 1418NAS -0.38 = 307610 YR YLD un = 1.81%OIL – .05 = 97.70GOLD + 5.40 = 1622.20SILV +.72 = 28.91PLAT + 12.00 = 1496.00 Apple already boasts the largest market value of any public company. Today it became the most highly valued public company ever. With an increase in its share price, Apple broke the record for the biggest market capitalization, $616.34 billion, set by Microsoft on Dec. 27, 1999. Of course, shortly thereafter, Y2K hit and destroyed modern civilization as we know it; or maybe it was because Apple invented the iPod and the iPhone and the iPad, and Microsoft gave us Zune. Who knows?  Apple’s stock closed at $665.15, giving it a market value of $623.52 billion. Microsoft’s 1999 market value is still far higher than Apple’s when adjusted for inflation. The Microsoft of late 1999 would be worth $850 billion in today’s dollars. To beat Microsoft’s inflation-adjusted market value, Apple needs to close at $910. The Microsoft of August 2012 is worth $257 billion. I’m not sure what it says about our economy, that Apple is the most valuable company ever, but I suspect it is problematic.  ECB President Mario Draghi is scheduled to speak at this year’s Jackson Hole symposium. A fellow named Ben Bernanke is already scheduled to speak at the symposium, and so there has been a little speculation that there might be some coordinated action that will be announced. I’m not sure …

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Friday, August 17, 2012 – We All Want Justice but You’ve Got to Have Money to Buy It

We All Want Justice but You’ve Got to Have Money to Buy It-by Sinclair Noe  DOW + 25 = 13,275SPX + 2 = 1418NAS + 14 = 307610 YR YLD -.02 = 1.82%OIL + .61 = 96.21GOLD + 1.10 = 1616.80SILV – .13 = 28.19 PLAT + 34.00 = 1479.00 We had a bunch of economic reports this week. Here’s a quick review:The Consumer Price Index, or CPI, measures inflation at the retail level; in July the overall consumer prices were unchanged, while the core gauge rose 0.2%. The CPI rose 1.4% over the year through July, the smallest 12-month change since late 2010.  The Producer Price Index, or PPI, measures inflation at the wholesale level; it rose 0.3% in July. Higher  food prices were only slightly offset by lower energy prices. In the 12 months ending in July, producer prices rose 0.5%, the smallest gain since October 2009.  However, food prices jumped, with corn prices leading the way, up 34.5% for the month. That will filter through the economy. Energy prices were down in July, but they’ve been moving higher. Inflation is not a problem right now, but wait.  Initial filings for unemployment benefits climb by 2,000 to 366,000 in the latest week, but the four-week moving average dropped to its lowest level since March. While the July unemployment figure rose a tenth of a point from June to 8.3 percent, the government says 44 states saw their jobless rates increase. Nevada has the highest unemployment rate at 12%. California …

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Thursday, August 16, 2012 – The Solar Power Update

The Solar Power Update– by Sinclair Noe DOW + 85 = 13,250SPX + 9 = 1415NAS + 31 = 306210 YR YLD +.03 = 1.84OIL +.92 = 95.25GOLD + 11.60 = 1615.70SILV +.39 = 28.32PLAT + 42.00 = 1445.00 Last Sunday morning a caller to the radio show asked about solar projects in the desert. Let me tell you a little of what I’ve found out. Solar power in California has been growing rapidly, because of a Renewable Portfolio Standard which requires that 20% of California’s electricity come from renewable resources by 2010, and 33% by 2020. Much of this is expected to come from solar power. At the end of 2010, California had 1,386 MW of solar and 3,177 MW of wind farms. According to a recent report by the California Public Utilities Commission, California failed to meet the 20% renewables by 2010 target. Pacific Gas & Electric and Southern California Edison were the closest to meeting the goal. PG&E generated 17.7% of the electricity it sold in 2010 from renewable sources while SCE was the closest to hitting the goal by producing 19.4% of its electricity from renewable sources in 2010. San Diego Gas & Electric, on the other hand, generated only 11.9% of its electricity from renewable sources in 2010 The California Solar Initiative is a 2006 initiative to install 3,000 MW of additional solar power by 2016. Included in it is the million solar roof initiative. In 2011, this goal was expanded to 12,000 MW by …

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Wednesday, August 15, 2012 – I’ve Never Been to Spain and I’ve Never Seen a Flash Flamenco

I’ve Never Been to Spain and I’ve Never Seen a Flash Flamenco– by Sinclair Noe DOW – 7 = 13,164SPX  + 1 = 1405NAS + 13 = 303010 YR YLD +.08 = 1.80%OIL -.07 = 94.26GOLD + 4.10 = 1604.10SILV un = 27.93PLAT un = 1400.00 JPMorgan Chase, Barclays, UBS,  Deutsche Bank, Royal Bank of Scotland, HSBC Holdings, and Lloyd’s are the seven banks subpoenaed in the past week in New York and Connecticut’s investigation into alleged manipulation of Libor. Citigroup and UBS received subpoenas earlier this year as part of the investigation. New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen are jointly investigating alleged manipulation of the London interbank offered rate, or Libor.  Meanwhile, HSBC has handed over details of current and former employees to the US authorities as part of a tax probe that almost sank rival bank UBS in 2009. As a result, the bank may be sued by the former employees claiming banks infringed the criminal code and Swiss privacy laws. HSBC claims it has avoided breaching strict Swiss banking secrecy laws by redacting from the documents any information that could lead to the identification of clients. Yesterday, I told you that Standard Chartered had reached a settlement with New York State regulators. There will be no criminal prosecutions as a result of the settlement, mainly because the New York state regulator doesn’t have prosecutorial powers. You may also recall that when this story broke last week, one of the first things …

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Tuesday, August 14, 2012 – Go Figure

Go Figure– by Sinclair Noe DOW + 2 = 13,172SPX – 0.18 = 1403NAS – 5 = 301610 YR YLD +.07 = 1.73%OIL +.60 = 95.30GOLD – 10.90 = 1600.00SILV un = 27.93PLAT + 12.00 = 1403.00 I have always been fascinated with Pi; not the apple or blueberry pie (although that’s good), rather Pi, the ratio of a circle’s circumference to its diameter. Pi is considered a transcendental number; you can’t square the circle. It is an irrational number which cannot be expressed as a ratio of two integers. The number is 3.141, but that’s just the beginning. It is a number that cannot be fully expressed. People have tried. Mathematicians have used computers to extend the decimal out to 10 trillion digits, and then they give up; the decimal representation never ends and it never repeats; the number appears random but there has never been proof of the randomness. As best we know, Pi is infinite, and yet the definition of Pi relates to the circle, which is a closed loop. There are links to Pi in music and in the pyramids and in scripture and most likely in all sorts of things we haven’t yet begun to understand. Go figure. The US Census Bureau population clock hit 314,159,265; which is 100 million times Pi. Beyond the obvious conclusion that there are more births than deaths, I don’t know what it means. Maybe the world is more inscrutable; maybe it has always been so.  The next time you’re …

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