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Friday, June 21, 2013 – Summertime

Summertime by Sinclair Noe DOW + 41 = 14,799SPX + 4 = 1592NAS – 7 = 335710 YR YLD + .09 = 2.51%OIL – 1.39 = 92.92GOLD + 20.80 = 1299.60SILV + .52 = 20.22 There are certain phrases that seem to paint a picture. Today stocks ended slightly higher after two days of sharp declines. The phrase that comes to mind is “dead cat bounce”. Stocks, and pretty much everything, slumped since Wednesday when Federal Reserve Chairman Ben Bernanke laid out the Fed’s plans to scale back on its $85 billion in monthly asset purchases. The S&P broke under its 50-day moving average, contributing to 4.6 percent pullback from its all-time closing high reached on May 21. This retreat represents the largest since an 8.9 percent decline between September and November. For the week, the Dow fell 1.8 percent, the S&P was down percent 2.1 percent, and the Nasdaq lost 1.9 percent. It was the biggest weekly decline for all three since April and also the fourth week of losses out of the past five. In the four weeks since Ben Bernanke first mentioned that the Federal Reserve Board might start to taper its program of quantitative easing (QE) later this year, more than $2 trillion was wiped off the value of global stock markets — and probably far more from the value of global bonds. On Wednesday, Bernanke held a press conference where he repeatedly said the Fed would not exiting its bond buying program until the economy …

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Thursday, June 20, 2013 – Fed Fallout

Fed Fallout by Sinclair Noe DOW – 353 = 14,758SPX – 40 = 1588.19NAS – 78 = 336410 YR YLD + .11 = 2.42%OIL – 3.61 = 94.70GOLD – 73.50 = 1278.80SILV – 1.75 = 19.70 Yesterday the Federal Reserve FOMC issued a formal statement that they were holding steady with their zero interest rate policy and their Quantitative Easing policy which involves buying up $85 billion a month in Treasuries and mortgage backed securities. Then, Chairman Bernanke held a press conference and said the Fed might scale back purchases if the economic data gets better. And while Bernanke was trying to make a very nuanced forecast with no specific call for action, what the market players heard was a threat the Fed would slash the flow of free money; the plug was being pulled on the money printing press. Faced with the economic crisis of 2008, the Fed started creating money at a prodigious pace and giving it to the banks. Catastrophe was averted. The money flowed into the markets and financial asset prices jumped. The US equity markets have been on a 4 year bull run; housing prices have bounced back, at least a partial bounce. The money did not flow into the broader economy. Cheap money and credit, instead, lead to malinvestment. The result is that while some financial asset prices have jumped dramatically, the rest of the economy has stagnated or atrophied. The idea is that the economy did not go through its normal cycle of …

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Thursday, June 06, 2013 – The World is Changing

The World is Changing by Sinclair Noe DOW + 80 = 15,040SPX + 13 = 1622NAS + 22 = 342410 YR YLD – .03 = 2.07OIL + .91 = 94.41GOLD + 11.00 = 1414.70SILV + .04 = 22.69 Today is June 6; on this date 69 years ago, nearly 200,000 Allied troops invaded the Normandy coast. Today is and will always be D-Day. The world is changing. For the first time in modern times, the emerging markets now account for more than half of global GDP. And they are continuing to grow; the majority of global growth the rest of this decade will happen in the developing world. India and China alone will make up almost half of it. The growth in emerging markets is partly a matter of playing catch up. Emerging markets have more room to grow; developed markets have already experienced the growth. The center of world economics is shifting, and it is shifting to the east. The International Labor Organization released its annual “World of Work” (PDF)report today. The employment rate won’t return to pre-crisis levels in emerging markets until 2015, while advanced economies will have to wait until 2017 for their work woes to end. But even then, the number of unemployed people is still set to grow 4% to 208 million in 2015. How can the employment rate and unemployment levels rise simultaneously? Because the unemployed are dropping out of the work force: In more than half of the countries surveyed, labor force participation …

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