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Tuesday, November 27, 2012 – Economic Data, Geithner’s Cliff, Greek Bailout, Warren’s Pitch, Blankfein’s Irony

Economic Data, Geithner’s Cliff, Greek Bailout, Warren’s Pitch, Blankfein’s Irony by Sinclair Noe DOW – 89 = 12,878SPX – 7 = 1398NAS – 8 = 296710 YR YLD -.02 = 1.65%OIL – .45 = 87.29GOLD – 7.60 = 1742.80SILV – – .13 = 34.15 Durable goods orders leveled off in October, mainly because of slack demand for automobiles and airplanes and a reversal in defense orders. Most other manufacturers saw an uptick in demand; so, conditions aren’t getting worse; they aren’t getting better either. Or at least that is how it looks at first blush. Overall orders for durable goods were virtually flat in October, but factoring out the volatile defense and transportation industries, so-called core capital orders jumped 1.7% last month to mark the strongest gain since May. Home prices rose in September for the sixth straight month. The S&P/Case-Shiller 20-city composite posted a non-seasonally adjusted 0.3% increase in September to reach the highest level in two years, following a 0.8% gain in August. Home prices were up 3% from September 2011 for the largest annual percentage growth since July 2010. In the latest Quarterly Report on Household Debt and Credit, the Federal Reserve Bank of New York reports that non-real estate debt jumped 2.3% to 2.7 trillion, with increases in student loans, auto loans, and credit card balances. Overall consumer debt shrank $74 billion to $11.3 trillion as mortgage debt decrease more than $120 billion. Nearly a quarter of a million people had a foreclosure tacked onto their …

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Monday, November 26, 2012 – Shopping, Cliffs, Greece, Two-Tiered Justice, Doha, Infrastructure

Shopping, Cliffs, Greece, Two-Tiered Justice, Doha, Infrastructureby Sinclair Noe DOW – 42 = 12,967SPX – 2 = 1406NAS + 9 = 297610 YR YLD -.03 = 1.66%OIL + 1.22 = 86.67GOLD – 2.50 = 1750.40SILV + .05 = 34.28 Well, I survived Black Friday, which actually creeped into Black Thursday; I made it through Shop Small Saturday, and I’ve arrived at Cyber Monday. Tomorrow will be Buyers’ Remorse Tuesday. Don’t forget Credit Card Shock January. I have not and will not go into debt for the holidays. Consumer debt is the worst. A rebound in housing and the job market, along with a drop in household debt, has led additional consumers to say they’ll buy more this holiday. A new survey from the Credit Union National Association and the Consumer Federation of America shows 12 percent said they would boost spending, the highest level since 15 percent in 2007, while 38 percent said they would spend less. According to the National Retail Federation, retail sales for the weekend are up about 13% from a year ago. Online shopping on Black Friday rose 26 percent to exceed $1 billion for the first time. Spending in stores and online rose to $59 billion in the four days starting Nov. 22. Customers spent $423 on average this weekend, up 6.3 percent from last year. The 13 percent jump in total spending suggests that some sales were pulled ahead from December and that retailers will have to keep up the promotions to avoid a …

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Wednesday, November 21, 2012 – Of Cliffs and Helicopters

Of Cliffs and Helicoptersby Sinclair Noe DOW + 48 = 12,836 SPX + 3 = 1391NAS + 9 = 292610 YR YLD +.03 = 1.69%OIL + .95 = 86.40GOLD + 1.10 = 1730.20SILV + .20 = 33.49 Israel and Hamas agreed to bring to an end more than a week of air strikes and missile attacks. A truce was declared; now we’ll see if it holds. The agreement aims to halt air strikes that have left more than 150 people dead in Gaza and rocket attacks that have killed five Israelis. Israel has hit more than 1,500 targets, and Palestinians launched more than 1,400 missiles. Secreatary of State Hillary Clinton said that she welcomed the accord and expressed hope it will “move us closer to a comprehensive peace.” “In the days ahead, the United States will work with partners across the region to consolidate this progress, improve conditions for the people of Gaza, and provide security for the people of Israel,” she said. The accord says that Israel shall stop all hostilities on the Gaza Strip, land, sea and air, including incursions and targeting of individuals. It also says that “all Palestinian factions shall stop all hostilities from the Gaza Strip against Israel, including rocket attacks and attacks along the border.” Israeli Prime Minister Netanyahu thanked President Obama and Egyptian President Mohamed Mursi for their work to end the violence. There was tremendous US pressure on the Egyptians, who in turn pressured Hamas to accept terms which are not set …

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Tuesday, November 20, 2012 – Extracting Meaning

Extracting Meaning by Sinclair Noe DOW – 7 = 12,788SPX +0.92 = 1387NAS + 0.61 = 291610 YR YLD + .04 = 1.66%OIL + 1.22 = 86.67 GOLD – 3.80 = 1729.10SILV + .08 = 33.29 There may be a ceasefire in the Middle East. An official for Hamas says a ceasefire deal has been reached. Officials for Israel and Egypt say not quite, some details are being worked out. Israel pressed on with its strikes in Gaza on the seventh day of its offensive and Palestinian rockets still flashed across the border. Secretary of State Clinton is in Israel to help broker a deal. A ceasefire may be announced within the hour, but that would just be a small step; actually enforcing the ceasefire would be more telling. Federal Reserve Chairman Bernanke delivered a speech today to the New York Economic Club. Bernanke said one reason the recovery has been so disappointing is that the financial crisis appears to have lowered, at least for a time, how fast the economy can grow over the long run. The crisis has reduced labor force participation and lowered productivity as businesses have trimmed investment. This suggests that the nation’s potential output has grown more slowly than expected in recent years. Potential output combines the economy’s long-run productivity rate and labor force growth. This means the economy has to grow faster than potential to bring down the unemployment rate. In some ways, this is Bernanke making the case against austerity and for stimulus. …

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Monday, November 19, 2012 – Debtmageddon: the Non-Problem Problem

Debtmageddon: the Non-Problem Problem by Sinclair Noe DOW + 207 = 12,795SPX + 27 = 1386NAS + 62 = 291610 YR YLD +.04 = 1.61%OIL + 1.22 = 86.67GOLD + 18.20 = 1732.90 SILV + .80 = 33.21 Pete Domenici and Alice Rivlin are co-chairs of the Bipartisan Policy Center for Debt Reduction Task Force, offering the following recommendations in an article in the New York Times over the weekend: Economic growth must precede full-scale debt restraint. Congress should take action now to pass legislation phasing in tax reform that yields new revenues and restructuring entitlements to curb the continued growth of federal spending, particularly for health care. We cannot resort to such ham-handed mechanisms as the approaching sequester cuts, large across-the-board tax increases and other elements of the “fiscal cliff.” In late 2010, the task force recommended a holiday from the full 12.4 percent Social Security payroll tax, not the partial 2 percent cut that Congress ultimately passed. The idea is that whether it comes in the form of a payroll tax holiday, an income tax rebate or another similar mechanism, the most pressing priority is to get the economy out of “stall speed.” The task force also suggested a possible “framework” for the lame-duck Congress to pass a modest down payment on deficit reduction in December, while pursuing a comprehensive agreement, a “grand bargain” of sorts, in 2013. If I may break it down in a nutshell; growth before austerity. Federal Reserve Board Chairman Ben Bernanke will travel …

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Friday, November 16, 2012 – Externality and Inequality

Externality and Inequality by Sinclair Noe DOW + 45 = 12,588SPX + 6 = 1359NAS + 16 = 285310 YR YLD -.02 = 1.57%OIL + 1.05 = 86.50GOLD – 2.40 = 1714.70SILV – .29 = 32.41 Top Congressional leaders met with President Obama today at the White House. Democrats said they recognized the need to curb spending. Republicans said they agreed to put revenue on the table. They sang a chorus of Kumbaya; they left the meeting and talked to the press. Mitch McConnell, John Boehner, Nancy Pelosi and Harry Reid all shared the microphone; both sides pledged cooperation; both sides agreed that driving over the fiscal cliff was a big bucket of crazy; no blood was shed today. Don’t hold your breath. Former Federal Reserve Chairman Alan “Bubbles” Greenspan says allowing taxes to rise would be a small price to pay to get lawmakers to accept spending cuts on entitlement programs, even if it leads to a moderate recession. So, what is on the negotiating table is starting to emerge, even though the goal posts are still moving targets. What is most interesting at this point is not the proposals that are on the table but the proposals that never make it to the table. How can we really have a debt to GDP ratio problem when we have a non-convertible fiat currency, a floating exchange rate and debts in currencies not our own? Yea, that isn’t going to be part of the discussion. And that brings us to …

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Thursday, November 15, 2012 – Pick One or Pick All Four

Pick One or Pick All Four by Sinclair Noe DOW – 28 = 12,542SPX – 2 = 1353NAS – 9 = 283610 YR YLD =1.59%OIL – 1.01 = 85.31GOLD – 11.50 = 1717.10SILV – .14 = 32.70 We had a few economic reports; they deserve mention; we also had a few flashpoints; we’ll get to those soon. Consumers paid somewhat higher prices for food, rent and housing in October, offsetting a decline in the price of gasoline at the pump. The consumer-price index edged up a seasonally adjusted 0.1% last month. Inflation-adjusted hourly wages, meanwhile, fell by 0.2% in October. Wages fell slightly, even as consumer prices rose, to account for the decline. Real wages have fallen 0.7% over the past 12 months, meaning consumers have less buying power compared with one year ago. Consumers got some relief in October, however, from the falling price of gasoline. The government’s price index of gas, which spiked 16.6% from July to September, tapered off 0.6% last month. The more important number to consumers — the actual cost of a gallon of gas — fell by almost 7% in October and retail prices continued to decline in the first two weeks of November. The average national cost is about $3.50 a gallon, down from nearly $4 a few months ago. Hurricane Sandy contributed to negative readings for both Philadelphia- and New York-area manufacturing gauges in November; not a surprise. First-time jobless claims soared by 78,000 to a seasonally adjusted 439,000 in the week …

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Wednesday, November 14, 2012 – How I Learned to Stop Worrying and Love the Bomb

How I Learned to Stop Worrying and Love the Bomb by Sinclair Noe DOW – 185 = 12,570SPX – 19 = 1355NAS – 37 = 284610 YR YLD un = 1.59%OIL + 1.10 = 86.48GOLD + 2.70 = 1728.60SILV + .24 = 32.84 President Obama held his first post-election news conference today. I was a little surprised when he announced the presidential pardon for Big Bird. Then he moved on to the more serious issues, like the sex life of generals. In addition to addressing the Petraeus scandal, Mr. Obama used the opportunity to broach a far more expected crisis; the looming “fiscal cliff.” He stressed that unless Congress acts to avert the “fiscal cliff” all Americans could see their taxes could go up and the economy could fall back into a recession, and he insisted that the top 2% of income earners see a tax increase. So, that’s where it stands. Both sides digging in their heels. Everyone is afraid of falling off the fiscal cliff, but there’s another dangerous countdown clock about hit to zero and no one is talking about it, even though it will spell even more financial problems for us all. At midnight on December 31, 2012, we’ll get tagged; the Transaction Account Guarantee (TAG) program will expire. The TAG program was initiated at the height of the crisis when depositors were fleeing banks for fear they would go under. So, the FDIC upped regular deposit insurance from $100,000 to $250,000 and under the TAG …

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Tuesday, November 13, 2012 – Roll With It

Roll With It by Sinclair Noe DOW – 58 = 12,756SPX – 5 = 1374NAS – 20 = 288310 YR YLD -.02 = 1.59%OIL -.20 = 85.37GOLD – 3.90 = 1725.90SILV +.08 = 32.60 Both sides in the “fiscal cliff” debate stood their ground today as they gathered in Washington for the first time since the elections. It’s a high stakes game of chicken. The White House made clear it was ready to negotiate with Republicans on taxes and spending, but a spokesman for President Obama said he will not budge on insisting that the wealthy’s tax rates must rise in 2013. The president wants to extend low individual income tax rates beyond year’s end for 98 percent of Americans. On the Senate floor, Republican Leader Mitch McConnell said his party was open to discussing new government revenues, but not raising tax rates. Groups concerned with protecting entitlements such as Social Security and Medicare are finding themselves at odds over whether an overarching fiscal deal during Congress’s end-of-year session would help or hurt their cause. A “grand bargain” to prevent the year-end onset of tax hikes and spending cuts “could cut Social Security, Medicare and Medicaid benefits, all to give tax cuts to the wealthiest Americans.” I seriously doubt Republicans have the clout, following the elections, to make a full-on attack against the entitlement programs. In fact, it seems the only one who could attack the social safety net programs is President Obama. He may have been convinced by Wall …

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Monday, November 12, 2012 – Render Unto Caesar, and Don’t Forget Interest

Render Unto Caesar, and Don’t Forget InterestBy Sinclair Noe DOW – 0.31 = 12,815SPX + 0.18 = 1380NAS -0.62 = 290410 YR YLD = 1.60%OIL – .50 = 85.57GLD – 2.00 = 1729.80SLV – .21 = 32.52 British lawmakers have criticized executives of Starbucks, Google and Amazon on Monday for not paying more tax in Britain and Amazon said it had received a $252 million demand for back taxes from France. Britain and Germany last week announced plans to push the Group of 20 economic powers to make multinational companies pay their “fair share” of taxes following reports of large firms exploiting loopholes to avoid taxes. One of the members of Parliament explained the problem: “You’re either running the business badly, or there’s some fiddle going on.” Starbucks seems to be selling a lot of coffee in the UK; over the past 3 years they’ve sold more than 3 billion pounds (weight) of coffee but they haven’t paid any tax. (fiddle) Amazon just refuses to answer questions by the British tax authorities.(fiddle) And Google has apparently been playing the game. Google’s filings show it had $4 billion of sales in the UK last year, but despite having a group-wide profit margin of 33 percent, its main UK unit reported a loss in 2011 and 2010. It had a tax charge of just 3.4 million pounds in 2011. (fiddle) The search engine provider books European sales via an Irish unit, an arrangement that allowed it to pay taxes at a rate of …

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