Uncategorized

Wednesday, July 4, 2012 – I Gotta Believe It’s Getting Better – Happy 4th

A couple of weeks back I foolishly said I thought things were getting better. Later that day, I was told I was wrong; things are not getting better.I think I can see the argument. It’s an old argument; It was the Best of Times, It was the worst of times. The economy is on the edge of collapse; the so-called fiscal cliff. Europe  is ready for collapse. Sure, there is plenty that is wrong. So, I tried to put together some sort of list of how things are better or worse. I’ve been saying that the economy is in a small “d” depression for the past 4 years. Unemployment is 8.2%, slightly less than the 8.5% rate of February 2009. The numbers are surely under-reported. This is the “new normal”. Drive through any town in America and you can see the businesses that have been shuttered, and the homes that have been foreclosed. We have a debt problem. Today, with a population of 305 million and debt of $16 trillion, it works out to about $52,000 per person… but that leaves out all the unfunded liabilities (which didn’t exist in years past) which add up to more than $75 trillion now, meaning a total debt and liabilities of $250,000 per person in the US.And personal privacy has been effectively shredded. No-knock warrant-less raids are the new norm; and the government is now using drones to spy on citizens; The United States has 5% of the world’s population and 25% of the world’s …

READ MORE →
Uncategorized

Tuesday, July 03, 2012 – Banksters Behaving Badly

Banksters Behaving Badly– by Sinclair NoeDOW + 72 = 12,943SPX + 8 = 1374NAS + 24 = 297610 YR YLD +.05 = 1.63%OIL +3.91 = 87.66GOLD + 19.80 = 1617.70SILV +.77 = 28.39PLAT + 34.00 = 1495.00Stocks extended a rally for a third day; two-and-a-half if you want to get technical. The markets were open for a half day today; closed tomorrow. On Friday, we’ll get the monthly jobs report. The best guess right now is that the economy added 90,000 jobs last month. Oil moved higher ahead of the holiday. Iran is again threatening to block a critical Persian Gulf shipping route in response to a European embargo of Iranian oil; the U.S. has sent military reinforcements into the Persian Gulf to deter the Iranian military from any possible attempt to block the vital waterway.Today, the Commerce Department said new orders for manufactured goods rose 0.7 percent during May. Economists had forecast orders rising 0.2 percent.The US recovery remains “tepid” and according to the IMF, is expected to grow only 2% this year. Meanwhile, the fiscal cliff looms in 2013, threatening to reduce the economy’s growth to only 1% next year. Meanwhile, the IMF predicts the job market will improve only at a snail’s pace. It expects the unemployment rate to average 8.2% this year and 7.9% in 2013.Amid that weakness and threats from slower growth abroad, the IMF recommended US policymakers spend more on infrastructure, worker training programs, extended unemployment benefits and fixes for the housing market. Boost the …

READ MORE →
Uncategorized

Monday, July 2, 2012 – Barclays Rate Rigging

Barclays Rate Riggingby Sinclair NoeDOW – 8 = 12,871SPX + 3 = 1365NAS + 16 = 295110 YR YLD -.08 = 1.58%OIL -.06 = 83.69GOLD – 2.20 = 1597.00SILV +.03 = 27.62PLAT + 7.00 = 1461.00The Institute for Supply Management’s index of national factory activity fell to 49.7 from 53.5 the month before. It was the first time since July 2009 that the index has fallen below the 50 mark that separates expansion from contraction. Manufacturing has been one of the drivers of the U.S. economic recovery, this is the biggest sign yet that the US is catching the slowdown that is well under way in Europe and China. So, with growth and inflation slowing  the ISM report increased the odds the Federal Reserve will step in with a third round of bond buying – known as quantitative easing, or QE3 – to prop up the economy. Oh yeah, unemployment is still high; that’s another good reason to have the central bank pass out free money. Of course, there is little to indicate QE3 will help the economy but it is a great justification. Banksters love free money. If the Fed won’t give it to them, they’ll create their own little scams – case in point:The Barclays rate rigging scandal is all the outrage in London. We’ve been a bit slow to ignite a spark of indignation on this side of the pond. Legislators in the UK are calling for the resignation of Bob Diamond, the CEO of Barclays. The …

READ MORE →
Uncategorized

Friday, June 29, 2012 – It’s Almost Like Free Money, Woohoo!

It’s Almost Like Free Money, Woohoo! – by Sinclair NoeDOW + 277 = 12,880SPX + 33 = 1362NAS + 85 = 293510 YR YLD + .08 = 1.66%OIL + 7.18 = 84.87GOLD + 47.10 = 1600.10SILV + 1.17 = 27.59PLAT + 58.00 = 1454.00All right gang – what do the markets love? Free money. When central banks give free money to the banks (and let’s be clear, they only give free money to banks not to regular people) the bank traders grab the loot and scamper off to the casino or to the trading desk (same difference), and it’s risk on.  Next thing you know the Dow is up 277. Woohoo, this economics stuff is easy. Sometimes, just the promise of free money is enough.The past couple of days the big wigs in Euro-land held an emergency summit in Brussels. This was their 20th emergency summit, so expectations were diminished. And just when it looked like an unproductive weekend full of waffles and chocolates; they announced a blockbuster deal (think John Carter, not Avatar). They have a plan for long term fiscal union, and a plan to save Spain and Italy from contagion. They’ll use the ESM, the European Slush Mechanism to directly inject capital straight into the banks, just like junkies on the mainline. And this bailout money would not be senior to existing debt. You may remember that caused  a problem for the Greek bailout, when the ECB forced Greek bondholders to take big haircuts but the ECB debt was not discounted at …

READ MORE →
Uncategorized

Thursday, June 28, 2012 – Adverse Selection, Asymmetric Information, Large Numbers, and Healthcare

Adverse Selection, Asymmetric Information, Large Numbers, and Healthcare – by Sinclair NoeDOW – 24 = 12,602SPX – 2 = 1329NAS – 25 = 284910 YR YLD – .04 = 1.58%OIL +.79 = 78.48GOLD – 22.20 = 1553.00SILV -.62 = 26.42PLAT – 19.00 = 1396.00If you had gone to Las Vegas and put down $5 dollars on Obamacare with John Roberts as the swing vote, your odds would have been about a million to one. According to Vegas bookmakers, nobody placed that bet; it was just too outrageous. This morning, a majority of the Supreme Court upheld the constitutionality of the Affordable Care Act, otherwise known as Obamacare. The big surprise, was the vote by the Chief Justice of the Court, John Roberts, to join with the Court’s four liberals.On the crucial issue in the case – whether the “individual mandate” requiring almost all Americans to purchase health insurance was a constitutionally-permissible extension of federal power under the Commerce Clause of the Constitution – Roberts agreed with his conservative brethren that it was not. If that was the end of the decision, it would have killed Obamacare, instead, it just tripped up the reporters at CNN and Fox who were so intent on trying to deliver “breaking news” that they forgot to read before speaking.  Roberts upheld the law because, he reasoned, the penalty to be collected by the government for non-compliance with the law is the equivalent of a tax – and the federal government has the power to tax. What’s …

READ MORE →
Uncategorized

Wednesday, June 27, 2012 – To Your Health; Spanish Junk; Barclays Bad; Falcone Flunks; Bhopal Veggie Garden; Goodnight Stockton

To Your Health; Spanish Junk; Barclays Bad; Falcone Flunks; Bhopal Veggie Garden; Goodnight Stockton – by Sinclair NoeDOW + 92 = 12,627SPX + 11 = 1331NAS + 21 = 287510 YR YLD -.01 = 1.62%OIL +.27 = 80.48GOLD + 1.60 = 1575.20SILV – .17 = 27.04PLAT – 18.00 = 1415.00According to the Centers for  Medicare and Medicaid Services, health spending accounts for about 18% of the GDP of the United States. So, tomorrow’s ruling by the Supreme Court on President Obama’s health care plan is pretty important, but so far the economists can’t seem to figure out the implications. This is not to say I have any advance info on the Supreme Court decision. They might say the Act is fine as it is, they might say they will eliminate the mandate but leave the rest unchanged, they might throw out the whole thing.  If they vote against Obamacare it will be seen as a highly partisan act. What better way to show the Court’s impartiality than to affirm the constitutionality of legislation that may be unpopular? That might be a stretch; I think I’ll stick with the idea that we’ll have to wait till tomorrow.The only safe bet is that there will be unintended consequences. For example, what if the Supremes strike down the mandate portion but leave the rest intact? The Obama administration put a mandate in the Affordable Care Act because the law requires insurers to charge the same premium regardless of health status. Without a mandate, it would …

READ MORE →
Uncategorized

Tuesday, June 26, 2012 – Grapes of Wrath

Grapes of Wrath by Sinclair NoeDOW + 32 = 12,534SPX + 6 = 1319NAS + 17 = 285410 YR YLD +.02 = 1.63%OIL +.23 = 79.59GOLD – 12.70 = 1573.60SILV – .43 = 27.21PLAT – 17.00 = 1433.00The S&P/Case-Shiller reports shows home prices rose 1.3% in April.  The Conference boards Consumer Confidence Index fell for a fourth straight month; the index hit 62 last month, which is still above average and better than last year at this time. We are not officially in the Dog Days of Summer; it just feels like it. The European Union has released a road map outlining the path to tighter fiscal integration. Nothing too flashy and it might take a year or more to implement. German Chancellor Angela Merkel  had played down large moves such as the issuance of common debt until euro-area countries agree to broad oversight of their budgets.  Egan Jones downgraded Germany from A+ to AA-. Today, Reuters reported Merkel told politicians in her ruling coalition that Europe would not have shared total debt liability “as long as I live.” So, that pretty much kills any idea of a euro-bond. Mario Monti, the technocratic non-elected Prime Minister of Italy now denies he said: “Eurobonds or I resign.” Meanwhile, Spanish and Italian bonds aren’t feeling healthy as yields rose again. Spain had to pay the highest yields since last November to sell 3.08 billion euros in short-term debt as demand from its ailing banks dwindled. Spain has officially requested a $125 billion dollar bank bailout. Details …

READ MORE →
Uncategorized

Monday, June 25, 2012 – Spain and Cyprus Fall – US Banks Insure Bets – Goldman Behaves Badly – Congressional Insider Trading – by Sinclair Noe

DOW – 138 = 12,502SPX – 21 = 1313NAS – 56 = 283610 YR YLD -.06 = 1.61%OIL -.06 = 79.15GOLD + 13.00 = 1585.30SILV +.64 = 27.64PLAT + 9.00 = 1450.00So, the good news is that the Dow only dropped 138.It could have been worse; or better, depending on your perspective. Back in April we advised heeding the old advice to sell in May and stay away. May was a horrible month. The first couple of weeks in June, we bounced back just a little, then we continue the declines.This Euro-problem just never dies. There will be another emergency two day Euro-summit starting Thursday.  This appears to be the one area of relentless growth in Europe – the emergency summit business. I’m guessing that the caterers and event planners in Brussels are posting nifty profits. Expectations are low after Germany resisted pressure for common euro zone bonds or a flexible use of Europe’s rescue funds at a meeting of the region’s four biggest economies last week. Austerity measures pushed forward by Germany have tested the patience of the Greeks. The Greek government had to begin a search for a new finance minister after the nominee for the post said he could not serve because of health reasons. The situation in Greece sometimes seems it is never-ending. Cyprus announced it was seeking a bailout for its banks and its budget. Cyprus joins Greece, Ireland, Portugal and Spain in seeking EU rescue funds, meaning more than a quarter of the 17 euro …

READ MORE →
Uncategorized

Friday, June 22, 2012 – Something About Mary – by Sinclair Noe

DOW + 67 = 12,640SPX + 9 = 1335NAS + 33 = 289210 YR YLD+.05 = 1.67%OIL + 13.92 = 92.12GOLD + 7.10 = 1573.30SILV +.02 = 27.00PLAT – 4.00 = 1441.00Over the past couple of weeks, we’ve paid attention to Jamie Dimon’s testimony on Capitol Hill. You might not have noticed the testimony of Mary Schapiro before the Senate before the Committee on Banking, Housing, and Urban Affairs. Schapiro is the Chairwoman of the SEC. Her testimony was a frank warning on the vulnerabilities of the money market fund system. You may remember that in September 2008, money market funds broke the buck; there was a run on funds held in money market accounts that was only staunched by a $3 trillion dollar guarantee from the Treasury and the Federal Reserve. Breaking the buck was a key part of the financial crisis. There were profound implications for a reputedly rock solid investment. The effects rippled throughout the economy as investors were shortchanged and sponsors were squeezed as they were forced to shore up valuations. Could we see another run on money market funds? We already have. It happened one year ago, a small scale run. And yes, it could happen again. And just because the run was stopped in 2008 and 2011, it is no guarantee another run could be contained in the future. There has basically been no reforms to prevent or control a future money market fund run. Here’s part of Schapiro’s testimony:“Given the role money market funds …

READ MORE →
Uncategorized

Thursday, June 21, 2012 – Like Crack for Bankers – by Sinclair Noe

DOW – 250 = 12,573SPX – 30 = 1325NAS – 71 = 285910 YR YLD – .02 = 1.62%OIL – 3.20 = 78.25GOLD – 41.60 = 1566.20SILV – 1.24 = 26.98PLAT – 19.00 = 1445.00Here is the bottom line on today’s declines; Wall Street has become addicted to free money from the Federal Reserve. Stimulus from the Fed is like crack for the Wall Street bankers. Yesterday, the Fed refused to pass out more free money. Today, Wall Street got a bad case of the shakes.One of the concerns when Bernanke and pals fail to act is that they can’t really think of anything they might do that would have any real effect, or maybe they’re satisfied with 2% inflation and 8.2% unemployment. So what if Bernanke doesn’t have any more ammo?Then we are left to the devices of fiscal policy, in other words; what can the politicians in Washington do to stimulate the economy? The most likely answer is that the politicians can drive the economy over a cliff. While that might seem cynical, it’s really just pragmatic. And then, of course there is the Lehman Brothers event with subtitles looming in Europe. If Europe collapses, the thinking is that Bernanke will find a few more bullets in the form of QE3, and he will once again toss money at the Wall Street bankers. The Wall Street crack whores will fire up their pipes and place “risk-on” trades with the certainty that the Fed will place a put against any …

READ MORE →