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Tuesday, March 05, 2013 – Milk and Cookies

Milk and Cookies by Sinclair Noe DOW + 125 = 14,253.77SPX + 14 = 1539NAS + 42 = 3224 10 YR YLD + .02 = 1.89%OIL + . 50 = 90.62GOLD + .80 = 1576.40SILV + .16 = 28.80 The Dow has recovered all of its losses from the financial crisis and the small”d”depression, gaining 119 percent from its low in March 2009, making this the third-strongest bull market for the Dow since World War II. Though the Dow has erased its memories of the crisis, many households aren’t so lucky: Neither jobs nor wages have regained their pre-crisis highs. Home prices are still nearly 26 percent below their level when the Dow last peaked, and about 14 million homeowners are still underwater on their mortgages. The job market has recovered only 5.5 million of the 8.7 million jobs lost during the downturn. With the job market weak, worker wages have stagnated. Inflation-adjusted average income is 8 percent lower than in 2007, when the Dow was at its previous high. A chart of the stock market points to the upper right hand corner, while a chart of hourly earnings is just a flat line. Higher stock prices do tend to benefit the more affluent. This might eventually provide a lift for the broader economy, or it might just be enough to sucker Mom and Pop investors into the market again; you remember those folks who were clobbered, twice in the past 13 years; those folks who were steamrolled by the …

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Friday, February 22, 2013 – Taxes, Sequester, Inequality, Name That Stadium

Note: I will be speaking at the 2013 Wealth Protection Conference on April 5th and 6th. For information, click here Taxes, Sequester, Inequality, Name That Stadium by Sinclair Noe DOW + 119 = 14,000SPX + 13 = 1515NAS + 30 = 316110 YR YLD – .01 = 1.97%OIL + .52 = 93.36GOLD + 4.50 = 1582.50SILV + .08 = 28.86 The European Commission has released its forecast for this year for Euro-zone economic growth, or lack thereof. The economy is expected to shrink in back to back year for the first time, driving unemployment higher, and spending will likely be lower for governments, consumers, and companies. Gross domestic product in the 17-nation region will fall 0.3% this year, compared with a November prediction of 0.1% growth. Unemployment will climb to 12.2%, up from the previous estimate of 11.8%.  The commission’s weak outlook reflects government austerity measures and efforts by companies and consumers to reduce debt. Seven Euro-zone economies are expected to contract in 2013, including: Italy, Spain, Portugal, Greece, Cyprus, Slovenia, and the Netherlands. Germany is expected to show modest growth of 0.5%, revised down from earlier estimates. One of the things the Europeans are considering is a tax on financial trading; it will likely go into effect as soon as next year. The traders claim a tax would hurt economic growth and raise the cost of capital for companies, and they claim it would drive trading to other countries, leaving the country that adopted it with less revenue and …

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Wednesday, February 13, 2013 – Everything You Need to Know – Fast and Furious Edition

Everything You Need to Know – Fast and Furious Edition by Sinclair Noe DOW – 35 = 13,982SPX + 0.90 = 1520NAS + 10 = 319610 YR YLD +.04 = 2.02%OIL – .37 = 97.14GOLD – 8.70 = 1643.60SILV – .34 = 30.88 I realize that you are a very important person; your time is valuable; time is money. I could spend hours bloviating on the minutiae of the State of the Union Address. Instead, I respect your busy schedule by condensing the one hour Address down to less than 3 minutes. Seriously, you take out the applause and the pomp and circumstance and a few adjectives, and the hour long speech fits neatly in just under 3 minutes. Here you go: I know you also like lists, so here’s the top ten policy area’s covered in the speech: #10 – an emotional appeal to vote on gun control, #9 – raise the minimum wage to $9 an hour, #8 – on the energy front, tap the oil and gas royalties for revenue to find alternatives to oil, #7 – the president pledged action on climate change and if Congress won’t do it he would use executive authority, #6 – Education starting with universal pre-school for 4-year olds, #5 – let people vote, (turns out this is controversial. Who knew?) #4 – immigration reform, #3 – on foreign policy, cut the forces in Afghanistan by half, #2 – beef up American manufacturing (starting with a visit today to a Canadian …

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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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Tuesday, September 25, 2012 – Fed Good at Growing Inequality

Fed Good at Growing Inequality by Sinclair Noe DOW – 101 = 13,457SPX – 15 = 1441NAS – 43 = 311710 YR YLD -.04 = 1.68%OIL – .51 = 90.86GOLD – 3.90 = 1761.60SILV – .23 = 33.84PLAT + 8.00 = 1634.00 Let’s start with a few economic reports. Case Shiller’s Index of existing home sales posted a 1.6% increase in July; all 20 cities in the index saw housing prices rise; it’s the fourth month of price increases, and the past 12 months are now showing increases. This is very positive news for housing. Pricesin Phoenix gained 2.2% to take the year-on-year increase to 16.6%, by far the strongest advance of any major metropolitan area. Los Angeles saw a 1.3% gain, and the year-over-year comparison has now turned positive by 0.4%. The consumer-confidence index increased to 70.3 in September, the highest level since February. Generally when the economy is growing at a good clip, confidence readings reach at least 90. September expectations increased for employment and business conditions, while consumers’ views on the present situation also rose. One of the big factors affecting the optimistic outlook is the turn in the housing market.  In August, the dividend-reinvested S&P 500 was up some 18% year-on-year. The combination of positive returns on stocks and real estate hasn’t been this good since 2006. Any economic gains are still fragile but you take whatever positives you can find. Both consumer-confidence measures, the one conducted by the University of Michigan and the one done …

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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, 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 …

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Wednesday, April 11, 2012

DOW + 89 = 12,805SPX + 10 = 1368NAS + 25 = 301610 YR YLD +.04 = 2.03%OIL – .13 = 102.57GOLD – .90 = 1660.70SILV -.23 = 31.71PLAT – 14.00 = 1591.00 What changed between yesterday and today? What pushed the markets higher today? What pushed the markets lower yesterday? I hope I’m smart enough to not fall into that trap. The markets fluctuate. They don’t go straight down and they don’t go straight up. At the start of the month, I said you might want to think about taking profits off the table; I still think that’s wise, but I’m not saying the market will crash; I don’t think the sky is falling, at least not today. There are twelve different regional banks in the Federal Reserve; each month the task of writing about the economy falls to a different bank; the results are published in a book format with a beige cover, hence the name “Beige Book”. It’s a misnomer. Some months the book should be called “the lime green electrifying economic report” and other months it might be called the “Kind’a Blue Forecast”. This month, the report was prepared by the Cleveland Fed and the “Beige Book” title fits. The Federal Reserve says the economy continued to grow at a “modest to moderate pace” over the last month. Manufacturers and retailers expressed some concern about rising oil prices, but the unusually warm weather helped retail sales. The report showed an economy chugging if not roaring along: …

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