Financial Review

Notice to Readers 05-16-2014

We will be undergoing some site renovations in the next few days (weeks); trying to build a better site. Hopefully it won’t be an inconvenience. Thank you for your patience. Sinclair

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Financial Review

January, Tuesday 03, 2012

DOW + 201 = 12418 SPX + 21 = 1278 NAS +44 = 2649 10 YR YLD +.09 = 1.96% OIL +4.22 = 103.05 GOLD +37.20 = 1604.60 SILV +1.85 = 29.81 (biggest % gain in 3 years) PLAT + 32.00 = 1435.00 Here is the basic question for investing in 2012: will we see a turnaround? Will we see economic growth or is the economy so inherently damaged that you should fear it and possibly short it? The Federal Reserve has been driving the bus, so let’s start there. The Fed has been active in Quantitative Easing. This means the Fed has been adding tremendous amounts of money into the financial system by selling treasuries directly from the government to the big banks at auction.  The Fed then purchases the treasuries from the big banks, also known as primary institutions, and pays the banks by crediting their accounts. The big banks get paid for holding the treasuries in reserve. And the big banks now have new “cash” for their banking activities. You have to think the Fed intervention had something to do with treasury bonds posting one of their biggest annual gains last year. Further, the Fed has a ZIRP Policy, or Zero Interest Rate Policy. The Fed has held interest rates to the big banks at near zero for the past 3 years, and they announced today they will communicate any intention to change the ZIRP – there will be no surprise interest rate hikes, but eventually there …

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Financial Review

February 14, 2012

DOW + 4 = 12,878 SPX – 1 = 1350 NAS +0.44 = 2931 10 YR YLD -.07 = 1.92% OIL +.29 = 101.20 GOLD – .80 = 1722.10 SILV – .14 = 33.68 PLAT – 26.00 = 1635.00 Over the weekend, the unelected technocrat Greek Prime Minister warned that if the terms of the second Greek bailout were not approved, there would be a “disorderly bankruptcy that would create conditions of economic chaos and social explosion. The savings of the citizens would be at risk. The state would be unable to pay salaries, pensions, and cover basic functions, such as hospitals and schools, and … the country – public and private sector alike – would lose all access to borrowing and liquidity would shrink. The living standards of Greeks would collapse. The country would drift into a long spiral of recession, instability, unemployment and prolonged misery. These developments would lead, sooner or later, to exit from the euro.” And so the Greek parliament voted to accept a plan to impose austerity on the already austere Greek economy in exchange for a 130-billion euro bailout needed to pay 14-billion in bonds that are set to be redeemed in March.  If there is a default on the bonds, it would likely start a process of national bankruptcy which in the first order would mean state pensions, wages, contracts and medical bills not being paid. From there, the insolvency would multiply outwards into the already deeply impaired private sector, where many businesses …

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Tuesday, March 11, 2014 – The Next Wave

The Next Wave by Sinclair Noe DOW – 67 = 16,351 SPX – 9 = 1867NAS– 27 = 430710 YR YLD – .02 = 2.76%OIL – 1.60 = 99.52GOLD + 9.70 = 1350.50SILV + .05 = 20.99 Stocks were higher for most of the day, with the S&P 500 looking at record territory. Prices dropped as the session wore on. Copper futures slid as much as 3 percent to the lowest level since July 2010 as signs of slowing economic growth in China sparked concern demand will slump. (We told you about that yesterday.) Yesterday we marked the 5 year anniversary of the bull market and the 14 year anniversary of the bear market. Today, we remember the date 3 years ago, when the ground shook and a wave washed over the eastern shore of Japan. The Fukushima Daiichi nuclear plant, which exploded and underwent three core meltdowns, continues to spew radiation into the air and sea. Decommissioning is expected to take decades. Another earthquake could send radioactive fuel rods into another meltdown. There are still questions about whether to re-start other nuclear facilities in Japan that were idled following the disaster at Fukushima. Demonstrators have been marching by the thousands in Tokyo to mark the anniversary and to protest against nukes. Perhaps the most troubling thing is after three years there is no full explanation on what went wrong at Fukushima, and how to avoid a recurrence. The situation in Ukraine remains on the verge of a meltdown. Diplomatic …

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Wednesday, November 27, 2013 – Evangelii Gaudium and Happy Thanksgiving

Evangelii Gaudium and Happy Thanksgiving by Sinclair Noe DOW + 24 = 16,097SPX + 4 = 1807NAS + 27 = 404410 YR YLD + .03 = 2.74%OIL – 1.40 = 92.28GOLD – 4.40 = 1238.60SILV – .11 = 19.80 This has been a quiet week on Wall Street; the two major features have been record highs for the DOW and the S&P and 13 year highs for the Nasdaq, combined with light volume. Now normally, light volume on record highs would be an indication the market has run out of steam and is ready to roll over. But this is a holiday shortened week; the markets are closed tomorrow for Thanksgiving, and then just very, very quiet day on Friday. So, it’s difficult to read much into the price and volume other than to say, there is a pause for the holiday. Happy Thanksgiving. Plenty to be thankful for; the S&P 500 has climbed 2.8 percent in November, poised for the third straight monthly gain. The S&P 500 is up 27% this year; the Nasdaq is up 33% year to date. Economic data today shows fewer workers filed applications for unemployment benefits last week; that’s a good report for the labor market. The Thomson Reuters/University of Michigan final index of consumer sentiment in November unexpectedly rose to 75.1 from 73.2 a month earlier, and came in higher than expected. The Conference Board’s index of leading indicators, a gauge of the economic outlook for the next three to six months, rose …

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Tuesday, November 05, 2013 – Hey Guy, Remember the Fifth of November

Hey Guy, Remember the Fifth of November by Sinclair Noe DOW – 20 = 15618SPX – 4 = 1762NAS + 3 = 393910 YR YLD + .06 = 2.66%OIL – 1.00 = 93.62GOLD – 2.70 = 1312.90SILV + .05 = 21.81 Today is election day in much of the country. In 1872, Susan B. Anthony was arrested for trying to vote. If you don’t vote today, at least remember the people who tried to make sure you have the right to vote. Today is also Guy Fawkes Day. In 1605 Fawkes led the Gunpowder Plot, a plot to blow up the English Parliament. That didn’t work and he was hanged. The plot is recognized with bonfires to this day, and those strange white masks with the smiling, mustachioed guy that have become popular with protesters from New York to Cairo. Also, the word “guy”, comes from Mr. Fawkes; nobody used the word before he came along. Hey guy, where you going with that mask on your face? Stocks moved lower today but the Dow Industrials wiped out most of a 117 early morning decline; this followed two days of gains for the Dow and the S&P 500, while the Nasdaq stretched its winning streak to three sessions in a row. Treasury prices pulled back for the fourth day of losses in the past 5 sessions. According to data released by CoreLogic Tuesday, home prices rose 0.2% in September as the annual pace hit 12%; that’s the fastest annual pace since …

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Tuesday, September 03, 2013 – Welcome to September

Welcome to September by Sinclair Noe DOW + 23 = 14,833SPX + 6 = 1639NAS + 22 = 361210 YR YLD + .10 = 2.85%OIL + .89 = 108.54GOLD + 15.70 = 1413.20SILV + .75 = 24.38 Well, we still haven’t started the war, yet. Congressional leaders from both sides of the aisle lined up in support of military intervention. The Senate Foreign Relations Committee opened a hearing and grilled Secretaries Kerry and Hagel. Tomorrow, Kerry and Hagel are scheduled to appear before the House Foreign Affairs Committee. The debate is shifting away from “Did Assad use chemical weapons?” to “What should be done about it?” Clarity of objectives seems to be a work in progress. Maybe all the talk will eventually consider the possible consequences of a military attack on Syria. Is it really possible to bomb a country and avoid deeper involvement? So far, the politicians are trying to work it out in a logical progression; if A, then B. That’s not always how it happens in war. Logic gets thrown out the window. At this time of crisis, it is worth remembering another time, 30 years ago in October, 1983 when US warships bombarded Lebanon, the country located next to Syria. Within weeks, the US Marine barracks in Beirut was blown up by a massive truck bomb that killed 241 American servicemen: 220 Marines, 18 sailors and three soldiers. The truck driver/suicide bomber was an Iranian national whose truck contained explosives that were the equivalent of 21,000 …

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Monday, June 10, 2013 – New Journalism and Cyber Wars

New Journalism and Cyber Wars by Sinclair Noe DOW – 9 = 15,238SPX – 0.57 = 1642NAS + 4 = 347310 YR YLD + .05 = 2.21OIL – .26 = 95.77GOLD + 2.40 = 1388.00SILV + .26 = 22.05 Last week, the Guardian, a British newspaper, published classified information on phone and internet monitoring by the US government, as well as classified information about how the US has been conducting cyber attacks around the globe. Today we learned that the guy who leaked the classified information to the Guardian is a guy named Edward Snowden; he’s 29 years old; he got the classified data while he worked for Booz Allen Hamilton, a private contractor. Snowden recently moved to Hong Kong. Still waiting to hear if he’ll be extradited. For several years now, my friends Pat and Linda Gorman have invited me to speak at the economic conferences each year. Each day, here on the radio I talk about the economic news of the day, so when I speak at their annual conference I try to make those presentations about big trends. In 2011, one of the trends I brought up was something I labeled New Journalism, based in part on the Wikileaks model. In 2012, another trend was CyberWars. I’ve expanded on those ideas in this presentation I made this past April. So, I went back and looked at that speech over the weekend. I’ll share some of it with you today. The idea of New Journalism was that we …

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Thursday, May 02, 2013 – Dying to Work for Slave Wages

Dying to Work for Slave Wages by Sinclair Noe DOW + 130 = 14,831SPX + 14 = 1597NAS + 41 = 334010 YR YLD – .01 = 1.63OIL + 3.04 = 94.07GOLD + 9.30 = 1468.40SILV + .18 = 23.93 Yesterday the Federal Reserve left interest rates unchanged and announced they would continue buying $85 billion a month in Treasury bonds and mortgage backed securities; they might increase or reduce the purchases depending; they blamed politicians for fiscal policy, or lack thereof. Today, the European Central Bank cut interest rates for the first time in 10 months, promising to provide as much liquidity as eurozone banks need well into next year and to help smaller companies get access to credit. The ECB lowered its main interest rate by a quarter percentage point to a record low 0.50 percent in response to a drop in eurozone inflation to an annualized 1.2%, well below its target level, and rising unemployment. ECB President Mario Draghi said the central banks was “ready to act if needed’, should more be required to boost the eurozone’s economic health. Sounds good; doesn’t mean much. The late moves by the ECB probably won’t do much to lift the economic health. The best analogy I heard today was that the ECB action is like opening the windows in a convertible when the top is already down. In recent months there have been growing calls for European countries to move away from austerity measures. Both French President Francois Hollande and newly-elected Italian Prime Minister Enrico Letta …

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Thursday, April 11, 2013 – Banks Behaving Badly

Banks Behaving Badly by Sinclair Noe DOW + 62 = 14,865SPX + 5 = 1593NAS + 2 = 330010 YR YLD – .01 = 1.79%OIL – 1.15 = 93.49GOLD + 1.70 = 1562.00SILV + .01 = 27.76 The markets went up today because the market has been moving higher. Nothing in the news to derail the trend. Jobless claims fell far more than expected in the latest week, dropping to the lower end of the range for the year. Retail executives forecast improved same-store sales in April after mixed results in March. Other economic data showed import prices slipped 0.5 percent last month, in line with expectations, while export prices fell 0.4 percent, signaling inflation pressure remained tepid and would allow the Federal Reserve to continue with its current monetary policy. Most of the shorts in the market have been pummeled already; if you’re waiting for a pullback, you’ve probably run out of patience. The trend is up; at least for now. And we are in earnings season. I’m waiting for the big banks to post results. Right now the banks are generally trading below book. Citigroup trades at about 14 percent less than tangible book value,and Bank of America trades at a 7 percent discount to book value. JPMorgan, the biggest US bank by assets, and Goldman Sachs, the fifth-biggest, trade for 28 percent and 9 percent more than tangible book value, respectively. One of the concerns is that the banks still hold toxic assets on their books, and …

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