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Monday, December 3, 2012 – Still in the Woods and Other Economic News

Still in the Woods and Other Economic News by Sinclair Noe DOW – 59 = 12,965SPX – 6 = 1409NAS – 8 = 300210 YR YLD + .02 = 1.63%OIL +.01 = 88.92GOLD + .80 = 1717.00SILV + .22 = 33.76 Let’s start with the economic news. Business among manufacturers contracted in November and fell to the lowest level in more than three years. The Institute for Supply Management’s index of purchasing managers dropped to 49.5% from 51.7% in October. Any reading below 50 indicates contraction in the manufacturing sector. The decline in the overall ISM index largely reflected a steep drop in new orders but companies remained active fulfilling prior orders. Only six of the 18 U.S. manufacturing industries surveyed by ISM said they expanded somewhat faster in November. Nearly twice as many said their industries contracted. In the euro zone, manufacturers contracted for the 16th straight month, according to Markit. China’s manufacturing sector expanded slightly. In a separate report, the Commerce Department said spending on construction projects advanced 1.4% in October to the highest level since September 2009. The big economic news will come on Friday with the monthly jobs report. The best guess is that the economy added about 75,000 jobs in November, but that is just a guess; Hurricane Sandy has distorted some of the economic numbers. The fourth quarter of 2012 has clearly gotten off to a slow start. Consumer spending, by far the biggest source of economic growth, fell in October for the first …

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Thursday, October 18, 2012 – The Only Day Like it Ever

The Only Day Like it Ever by Sinclair Noe DOW – 8 = 13,548 SPX – 3 = 1457NAS – 31 = 307210 YR YLD +.01 = 1.83%OIL un = 92.09GOLD – 8.30 = 1742.60SILV – .38 = 32.92PLAT – 19.00 = 1651.00 Do you remember where you were 25 years ago? It was a Sunday; 1987. The news of the day was that Nancy Reagan had been hospitalized with cancer; there was a threat of war with Iran and within 24 hours the US was shelling Iranian oil platforms; there were concerns about Germany’s currency; the United States, wanting to prop up the dollar and restrict inflation, tightened policy faster than the Europeans. US pressure on Germany to change its monetary policy was one of the factors that unnerved investors.The stock market had a wave of steady selling on Friday and the Dow dropped 108 points. Most people really weren’t aware; this was before we all had computers and smart phones and tablets. Maybe you read about the Friday sell-off in the Sunday newspaper. Maybe you thought about selling a little bit of your portfolio, but the truth is that it was already too late. Halfway around the world, the dollar-backed Hong Kong markets were chopped down 10%. And then the crash spread. European bond markets collapsed, which caused interest-sensitive savings and loans and money center banks to plunge. Monday morning, October 19, 1987 the crash washed across lower Manhattan. In a flash, the Dow crumbled and by the …

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Tuesday, September 11, 2012 – I Woke Up Early Today

I Woke Up Early Today – by Sinclair Noe DOW + 69 = 13,323SPX + 4 = 1433NAS +0.50 = 310410 YR YLD +.01 = 1.70%OIL – .37 = 96.80GOLD + 7.70 = 1733.50SILV + .14 = 33.58PLAT + 12.00 = 1610.00 Rating agency Moody’s says it likely would cut its “Aaa” rating on US government debt, probably by one notch, if negotiations on the federal budget fail. The lower rating by Moody’s would be the equivalent of the rating that Standard & Poor’s put on the US last year when it downgraded the rating following the debate over raising the debt ceiling. Moody’s says that if Congress and the White House don’t reach a budget deal, $1.2 trillion in spending cuts and tax increases will automatically kick in starting Jan. 2. House Speaker John Boehner says he’s not confident that Congress can reach a deal and avoid a downgrade. No serious negotiations are expected until after the November elections. The Federal Reserve’s FOMC policy making meeting commences on Thursday and the central bank is all but certain to extend its plan to keep interest rates low, moving the possible cutoff to 2015 from 2014. Also, it is widely expected the Fed will launch a bond-buying program targeting the mortgage market, QE3, or some new name to describe the same. The guidance on interest rates is supposed to encourage businesses and consumers to invest and spend, stimulating the economy, while the bond purchases are designed to further lower interest rates. …

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Monday, July 09, 2012 – Barclays Did Not Act Alone – Reaching Into the Upper Echelon

Barclays Did Not Act Alone – Reaching Into the Upper Echelon-by Sinclair NoeDOW – 36 = 12,736SPX – 2 = 1352NAS – 5 = 293110 YR YLD -.03 = 1.51OIL -.34 = 85.65GOLD + 4.90 = 1588.30SILV  + .24 = 27.44PLAT – 2.00 = 1449.00Alcoa kicked off the second quarter earnings reporting season. Alcoa has the ticker symbol AA and they are one of the 30 stocks in the Dow Industrials, so they start the earnings season based on alphabetical order and size and a little bit of tradition. Alcoa lost $2 million for the quarter. With an overhang of high inventories and a 20 percent drop in prices since March, many aluminum producers are losing money. Excluding items, also known as the cost of doing business, Alcoa earned $61 million from continuing operations, or 6 cents per share, which topped estimates of 5 cents per share. Later this week we’ll have earnings reports from some of the big banks, so it seems appropriate that Alcoa start earnings reporting season with some flashy accounting. Based upon this loss, they will probably get a tax refund. President Obama called on Congress to extend tax cuts for families earning less than $250,000 a year while allowing taxes to rise for households making more.Obama said: “Let’s not hold the vast majority of Americans and our economy hostage while we debate the merits of another tax cut for the wealthy.”Obama wants Congress to pass a one-year extension of the Bush-era tax cuts for households making …

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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 …

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February, Friday 17, 2012

DOW +46 = 12950SPX + 3 = 1361NAS – 8 = 295110 YR YLD +.02 = 2.01%OIL +1.75 = 104.06GOLD – 5.00 = 1724.80SILV -.24 = 33.38PLAT + 11.00 = 1638.00 The stock market is looking great. The S&P 500 hit a nine-month high. The Dow is back at levels from the beginning of 2008, (record high was 1517 for SPX) (14,198 for Dow). At least it’s looking decent. The market was cruising along with triple digit gains, but couldn’t hold into the close. Confidence is one thing, but going long heading into a holiday weekend.., well, let’s not get carried away. Optimism was high that there would be some sort of  deal worked out to rescue Greece by burying the country under unsustainable debt.  Euro-zone finance ministers will be meeting over the weekend to hammer out details. The big challenge is to cut Greece’s debt down to 120% over the next 8 years; to do this, the Greeks will have an orderly default of debt, paying off bonds at about 30 cents on the dollar for private sector investors and about a 50% haircut for the central bankers that hold Greek bonds. And nobody is quite sure if the private sector investors are going to accept the haircut. In return for the discounts, the Greeks would accept, maybe, harsh austerity measures that will contract the economy. And they keep saying they will have a deal, probably by Monday. And all I can think of is that Homer is now …

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