Meredith Whitney Says U.S. May Face Bailout for States: Video

The bailout will be ongoing. Congress recently passed a $26 billion jobs bill to plug holes in state payroll budgets. The move was intended to save thousand of teacher and government jobs. "Free money" is flowing everywhere. It's no surprise that the dollar has rolled over again.

Whitney, speaking with Betty Liu on Bloomberg Television’s “In the Loop,” says the U.S. government may face a bailout for states over the next 12 months.

Source: bloomberg.com

AP sources: Emanuel leaving White House on Friday

Heavy turnover within and around the Administration usually suggests upheaval and cross-currents behind the scenes.

In Washington, Emanuel's departure, though expected by the political world for days now, is still an unquestioned loss for Obama. The president has counted on Emanuel's intensity, discipline and congressional relationships to keep the White House focused and aggressive. The job comes with nearly unrivaled pressure and power.

Source: news.yahoo.com

Pentagon Loses Control of Bombs to China Metal Monopoly

Strategic metals, rare earths and materials are a weapon that can close down the high tech industry of any country that China wishes. Maybe it would be better if the dopes in the US legislative got off the bash China kick they have been playing with.

Jim

Jim,

It takes years to develop these mines, so any supply disruption could have dramatic consequences in the short-term.

Eric

Warning Signs

“The Pentagon has been incredibly negligent,” said Peter Leitner, who was a senior strategic trade adviser at the Defense Department from 1986 to 2007. “There are plenty of early warning signs that China will use its leverage over these materials as a weapon.”

Source: bloomberg.com

Gold Climbs to Record on Wealth Protection; Silver Rises to 30-Year High

Gold will continue to be sought as a safe haven currency that maintains its purchasing against global currency debasement. The crossing of $1,300, while technically meaningless, has awakened new investors to the secular bull that started in 2000. The trend, despite endless misinformation and fear tactics, remains strong.

“The market is still very concerned about developments in the U.S. and Europe,” said Bernard Sin, head of currency and metal trading at bullion refiner MKS Finance SA in Geneva. “People are thinking that gold is one of the only assets to protect their wealth.”

Source: finance.yahoo.com

Caterpillar to build new plant in China

Follow the money from West to East. This announcement reveals the difference between consumption and investment - job creation and destruction.

Caterpillar Inc. said Tuesday it will build a new assembly plant in China to produce small hydraulic excavators, as the company continues to expand out its production capacity in developing regions of the world.

Source: marketwatch.com

Submitted by Bob

WTO says US ban on Chinese poultry is illegal

Lots of posturing and grandstanding as the election approach in the US. This is a dangerous game that could easily escalate beyond simple disputes and a war of words.

The ruling came as the U.S. House of Representatives prepared a vote condemning Chinese currency manipulation and threatening possible trade penalties. But its negative outcome for Washington could bolster Beijing's claims that U.S. lawmakers are bending to protectionist pressure amid high unemployment.

Source: finance.yahoo.com

7-Year Auction Results

7-Year Auction Results:


See earlier treasury commentary

Americans Vastly Underestimate Wealth Inequality, Support 'More Equal Distribution Of Wealth': Study

History’s message about capitalism is clear. The success of capitalism, the mechanism of job creation, innovation, and standard of living with in society, is measured by the tails of the distribution from the mean. In other words, the better capitalism works, the greater the spread between rich and poor. Anything that impedes the flow of capital, the lifeblood of capitalism, tends to lower the standard of living for all. Any reductions in the standard of living tend to affect the middle and lower classes more severely.

The call to redistribution wealth under socialism only works as long as there is wealth (not money printing) to redistribute. If capital flows have been altered, the locus of wealth creation will change. Once the wealth has been consumed within a society, little remains to redistribute.

The respondents were presented with unlabeled pie charts representing the wealth distributions of the U.S., where the richest 20 percent controlled about 84 percent of wealth, and Sweden, where the top 20 percent only controlled 36 percent of wealth. Without knowing which country they were picking, 92 percent of respondents said they'd rather live in a country with Sweden's wealth distribution.

Source: huffingtonpost.com

Junk will live up to its name

Junk bond issuance is soaring while commercial (business loans) and real estate loans, both residential and commercial, are aggressively contracting. When something doesn't add up, it's not long before one side of the trade gets hurt.

Break Down of Total Bank Credit: Year-over-Year Change for Total Loans, Business Loans, Real Estate Loans, Home Equity Loans, Consumer Loans, and Cash Assets for Commercial Banks in the US.

Junk bond borrowers have raised US$168.5 billion in the year to September 15, according to Dealogic, surpassing the full-year record of $163.6 billion. Since that high was set in 2009, you can see that junk bond issuance is running far ahead of all previous levels, extraordinary in the deepest recession since World War II.

Source: atimes.com

From Bob

Goldman Sachs Launches A New PR Push

Who doesn’t have a PR representing them? The art of spinning has become an indispensable tool within a world where perception battles reality on a daily basis. The spinsters have become so skillful that few can discern the difference between the two.

Goldman Sachs launches a new public relations campaign today with a full page ad in the Wall Street Journal touting the company's role in raising capital for a clean energy project.

The clean energy ad is the first of many that will tout the role of Goldman as a good citizen, a person familiar with the matter said.

Source: finance.yahoo.com

European cities hit by anti-austerity protests

Police threw a ring of steel around EU headquarters Wednesday as tens of thousands in a sea of banners from across Europe took to the streets in a worker backlash against painful spending cuts.

Similar demonstrations were planned across the continent, from Poland to Portugal and Latvia to Cyprus.

The more the public protests and fights public spending cuts - austerity, the more devaluation or the printing press will be accepted, thus, used as the solution to the problem. Either way, austerity or currency debasement, the general standard of living declines. Austerity measure affects standard of living directly, while currency debasement is more indirect through loss of purchasing power. The former is highly visible and debatable, while the later is quiet and less noxious.

The struggle between elimination of social program through free markets forces inevitably reminds me of the following quote from science fiction movie the Matrix 1999:

The Matrix is a system, Neo. That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it.

Source: news.yahoo.com
Source: imdb.com

U.S. Dollar Is `One Step Nearer' to Crisis as Debt Level Climbs, Yu Says

The old idiom of the writing's is on the wall suggests doom or misfortune. The recent breakdown of yet another head and shoulders pattern provide further support that the writing's is on the wall for the U.S. dollar. The minimum measured move forecasts a break of the 2009 lows. In time the public will come to recognize the severity of these technical break downs through real world consequences that cannot be ignored.

U.S. Dollar Index ETF (UUP):

The U.S. dollar is “one step nearer” to a crisis as debt levels in the world’s largest economy increase, said Yu Yongding, a former adviser to China’s central bank.

Any appreciation of the dollar is “really temporary” and a devaluation of the currency is inevitable as U.S. debt rises, Yu said in a speech in Singapore today.

Source: bloomberg.com

5-Year Auction Results

The term direct bidders suggest US institutional investors that circumvent the primary dealers that traditional underwrite the bulk of government bond sales. Direct bids, as compared to Dealer bids, are impossible to trace. The trends of decreasing dealer and increasing direct participation reflects a significant change in how these auction are being funded since 2009. This change in money flows most likely reflects the growing strain within the sovereign debt markets that certain interests would rather not be recognized.

I will be watching the coming 7-, 10- and 30-year auction results.

Average Percentage of Total Accepted Bids Primary Dealers, Direct and Indirect Bidders since 2009:


Source: treasurydirect.gov

U.S. Mint Suspends Sales of American Eagle Gold Coins (Update1)

I picked up my last Eagle just a week ago. Well, there goes the lowest premium one ounce. European Central banks are curtailing selling gold. Asian central banks are buying gold. $1650 is within reach.

Jim

Jim,

Suspension of sales, in other words shortages, reflect a market in which price does not represent an equilibrium between supply and demand. Organizations such as GATA have communicated this message of control for years. Perhaps the clarity of supply and demand economics will be the mechanism that brings the message to the masses.

Eric

The U.S. Mint suspended sales of its 1-ounce ``American Eagle'' gold coins after soaring commodity prices led collectors and investors to deplete supplies.

It is the first time in two decades that the Mint halted sales of the coins, which are made of 22-carat gold from domestic mines. The coins also contain small amounts of alloy for hardening.

Source: bloomberg.com

Massive cash piles could see miners chase unwieldy empires

Another option is to return cash to investors in the form of dividends. That is, unless they are taxed to death.

S&P Gold (Formerly Precious Metals Mining)*
*S&P Gold from 1945, Barron's Gold Stock Index from 1939-1945, 1922-1939 Homestake Mining:

Recent takeover bids by BHP Billiton (BLT.L) (BHP.AX) and Vedanta (VED.L) show that a bounty of cash from high metals prices may entice miners to chase pricey takeovers and build unwieldy conglomerates.

Source: mineweb.co.za

From Bob

Banks Keep Failing, No End in Sight

It's called consolidation of power through culling of the weak and the protection of the connected.

The largest number of bank failures in nearly 20 years has eliminated jobs, accelerated a drought in lending and left the industry's survivors with more power to squeeze customers.

Source: online.wsj.com

From Bob

Millionaire Pitcher Complains Broke Fans Aren't Paying To See Him Throw Balls

Tampa Bay has been hit especially hard by the slump in real estate, tourism, and shipping. Talented MLB pitchers, usually fierce competitors, do not acquire their multi-million dollar contracts based on their economic 'vision'.

Last night, Tampa Bay Rays pitcher David Price complained about attendance at a home game, tweeting: "Had a chance to clinch a post season spot tonight with about 10,000 fans in the stands....embarrassing."

The next quotation says it all,

"Not everyone in the Bay Area is drawing million-dollar salaries on multi-year contracts. Florida in general, and the Tampa area in particular, have suffered worse than just about any area of the country, at least among baseball markets. When I bring my family to a game, we’re lucky to get out of there for less than $150. Most families right now just can’t swing that kind of scratch. Even those of us who are lucky to be keeping our heads above water have to pick and choose which games we go to. A Monday night games against the Orioles, where we might clinch the playoffs, or the playoffs themselves? I’m saving my money for the latter—and frankly, I’m a bit worried how much it’s going to cost me to get to a playoff game. But I’m lucky enough that I can do it."

Source: businessinsider.com

From Bob

Gold is the final refuge against universal currency debasement

It's called beggar thy neighbor economic policies. As the world begins to awaken to the global currency debasement, an arduously slow process from the public’s perspective, gold's relentless and accelerating rise will reflect the strength of this refuge.

States accounting for two-thirds of the global economy are either holding down their exchange rates by direct intervention or steering currencies lower in an attempt to shift problems on to somebody else, each with their own plausible justification. Nothing like this has been seen since the 1930s

Source: telegraph.co.uk

Ken Fisher Dubs New Normal `Idiotic,' Sees `Great' Decade Ahead

Debating or positioning against the secular trends is extremely unwise. Those willing to recognize the secular trends, such as the continuation of the depressionary box are likely to be characterized as different, possibly 'idiotic'.

U.S. Large Cap Total Return Index (LCSTRI); S&P 500 Total Return Index to Gold Ratio:


El-Erain, interpreting the direction and consequences of the secular trend, knows that currency debasement won't create jobs. He also understands that increased regulation will do little to mitigate the consequences of the debt collapse of the previous expansion. Capital, following risk and reward and similar to great migration from London to New York during the previous transition, will continue to move from New York (West) to Shanghai (East) regardless of consensus interpretation.

Fisher said the concept of a “new normal” is “idiotic,” pitting him against money managers including Mohamed El-Erian, the CEO of Pacific Investment Management Co., which coined the term to describe a world of high unemployment, more regulation, and the shrinking importance of the U.S. in the global economy.

Source: finance.yahoo.com

Report: US would make Internet wiretaps easier

Only the naive think it's not easy right now. This is why Research in Motion (RIMM) is getting so much domestic and international flak for their highly secure email service. Soon they will be forced to provide a backdoor key.

The issue at hand is whether or not it's legal for big brother to mine and warehouse sensitive information without end-user consent.

Broad new regulations being drafted by the Obama administration would make it easier for law enforcement and national security officials to eavesdrop on Internet and e-mail communications like social networking Web sites and BlackBerries, The New York Times reported Monday.

Source: news.yahoo.com

Chicago Fed: Economic Activity Weakened in August

The Chicago Fed National Activity Index (CFNAI) has been decreasing at an increasing rate since March 2010. Economic activity is either rising or falling at an increasing rate. The calls for another New Deal II will intensify as the economy continues to stall in 2010-2011.

Chicago Fed National Activity Index (CNFAI) and S&P 500 Average:

Led by declines in production- and employment-related indicators, the Chicago Fed National Activity Index decreased to –0.53 in August from –0.11 in July. None of the four broad categories of indicators that make up the index made a positive contribution in August.

Source: chicagofed.org

Thanks Bob.

US Treasury stumbles selling Citi shares

Dear Jack,

Getting private funds to commit to an investment laden with large, unrecognized risks is much more difficult than public funds.

Eric

NYC about 35 years ago I was with a group of Japanese businessmen, the senior guy
was talking about the meeting next day with 'shitty bank.'
Nice guy that I am , I helped him with the pronunciation, in private.

Perhaps his pronunciation is now correct

Jack

The US government is in danger of missing its deadline of divesting all of its Citigroup shares by the year-end after a fall in stock market trading volumes prompted authorities to slow down sales in July and August.

Source: www.ft.com

Europe’s central banks halt gold sales

Do you think they are asking for their lease material back too?

Jack

Jack,

Asking, probably. Getting, I doubt it.

Eric

..."In the 1990s and 2000s, central banks swapped their non- yielding bullion for sovereign debt, which gives a steady annual return. But now, central banks and investors are seeking the security of gold....

...“Clearly now it’s a different world; the mentality is completely different,” said Jonathan Spall, director of precious metals sales at Barclays Capital."

Source: ft.com

The Crumbling of America

The history channel has aired a show called The Crumbling of America. One cannot watch the show without associating the decline in America's infrastructure with its fading global economic influence. The show should be a thought provoking watch for all Americans. I no affiliation with the show or history channel.

Trailer:


Source: shop.history.com

Risk of trade war rises as key US committee backs tariffs on China

That which seems so blatantly foolish from a historical perspective often reveals itself as mere component within a greater plan. Installment of trade sanctions and/or currency wars on a critical lender will carry consequences and profit potential that can only be characterized as planned.

I am watching the U.S. dollar and the bond market closely now. If the blatantly foolish path is chosen, it will be no accident.

The adoption of the measure by the Ways and Means Committee on Friday means it will now be voted on by the House of Representatives on Wednesday.

"China's exchange-rate policy has a major impact on American businesses, and Americans jobs, which is what this is all about," said Sander Levin, a Democrat from Michigan and chairman of the committee.

Source: telegraph.co.uk

From Bob

Stocks extend gains to fourth week

U.S. stocks rose, sending benchmark indexes to a fourth weekly gain as signs of improving demand for capital goods, technology products and consumer items eased concern that the economic rebound is slowing.

The reason matters little as the rally was front run by leveraged capital flows weeks ago. As of 9/21, leveraged flows into the S&P 500 (stocks) have increased. Further headlines will read "September rally extended."

Money Flow Table:


Source: washingtonpost.com

US Long Bonds Remain An "Enron-like" Train Wreck

Surging trend energy in bonds continues unabated since April 2010. REV(E), or trend energy, illustrates the strength of the surge. Trend energy as of August 2010 is approaching the all-time high in December 2008. This has been achieved while price remains roughly 20% below the all-time high. The divergence of trend energy with price only reinforces the power of the trend.

US Long Bonds ETF (TLT)


At some point capital flows based on reality economics will override the short-term illusion. The unusual change in the distribution of buyers at the Treasury auctions some developing cracks in the global economic facade. Besides, technical analysis based solely on nominal (US dollar) trends is extremely myopic and largely useless during periods of aggressive currency debasement. The real or unbiased currency adjusted trend in US long bonds remain an "Enron-like" train wreck that few are willing to acknowledge. The sad truth for the public is that capital flows require zero "official" recognition to force change.

Long-Term U.S. Government Bonds Total Return Index (LTGBTRI) to Gold Ratio:

Gold Ingores Spin

The campaign to marginalize gold buyers and holders never stops. The attacks will only get worse as price climbs higher and higher. The following video is appropriated titled Investor Network

2:29 -

"Ridiculous bubble being brought about by people that don't know what they are talking about."

Classic stuff.

U.S. Is Bankrupt and We Don't Even Know It: Laurence Kotlikoff

Hardly. The market's know it. The US has been using currency debasement through the use of the printing press for years. Technically speaking, the US has been in on-going default since the London gold pool lost control of gold in 1968 and bonds began their journey as certificates of confiscation.

Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

Source: bloomberg.com

From Bob

Pace of new home sales second slowest on record

New homes sold at the second-slowest pace on record in August, signaling that the housing market will remain a drag on the economy.

The second break in the secular downtrend within housing is a big concern for an over-leveraged, consumption-driven economy. The article characterizes this concern as a "drag". I would characterize it as an anchor. The dead-weight of housing ensures more bailouts and "save me" stimuli.

New Home Sales And Change YOY, SA


Home prices struggle while gold soars. The relative comparison illustrates an anchor-like drop to at least the 1980 lows.

U.S. Median Home Price (MHP) to Gold:


Source: finance.yahoo.com

Volcker Spares No One in Broad Critique

Volcker goes ballistic.Resignation from the Administration invite a conclusion that something beyond what we know if awfully wrong.

Jim

Anyone watching the news flows with a discerning eye has to see the same thing. Expect a lot of economic and policy surprises towards the end of 2010 and throughout 2011.

Headline: Volcker Spares No One in Broad Critique

Former Federal Reserve Chairman Paul Volcker scrapped a prepared speech he had planned to deliver at the Federal Reserve Bank of Chicago on Thursday, and instead delivered a blistering, off-the-cuff critique leveled at nearly every corner of the financial system.

Former Fed Chairman Paul VolckerStanding at a lectern with his hands in his pockets, Volcker moved unsparingly from banks to regulators to business schools to the Fed to money-market funds during his luncheon speech.

Conflict For Global Resources Provides Interesting Negotiations

Hi Bob,

Those all important rare earth metals provide excellent negotiating leverage.

Eric

Japan kicked things off on September 7, with the "arrest of a Chinese boat captain" in disputed waters.

Amid Tension, "China Blocks Crucial Exports to Japan Rare earth minerals"are used in manufacturing and weapons production.
Source: nytimes.com

China arrests 4 Japanese against backdrop of diplomatic battle
Source: cnn.com

Japan to free Chinese boat captain amid row
Source: bbc.co.uk

Warren Buffett: "We're still in a recession"

Billionaire investor Warren Buffett said the U.S. economy remains in recession, disputing this week's assessment by a leading arbiter of economic activity that the downturn ended more than a year ago.

Finally a moment of clarity filters through the spin dominated news feed. I guess you have to be a billionaire before horse blinders are no longer considered fashionable. While liquidity and the printing press can give the illusion of a recovery, it does little to provide real or debasement adjusted growth. This is why the stock market can continue to rise despite putrid business conditions.

Source: news.yahoo.com

Significant Technical Damage In The Dollar Going Unrecognized

Has anyone noticed significant technical damage to the dollar amid all the election rhetoric and Administration reshuffling confusion? A weak currency is good for everyone, right? If there was a time for a "line in the sand" currency intervention, it would be now.

Gold is neither blind nor bubble-like to this technical reality.

U.S. Dollar Index ETF (UUP):

Gold Shares: Subtle Changes Within The Trend Suggest Outcome Few Expect

Yesterday Dan's commentary and charts on jsmineset.com illustrated the under performance and out performance of the mining shares relative to bullion and stock market, respectively.

I would also like to add this analysis by illustrating the building strength within the gold shares group not captured by the widely followed indices such as the XAU and HUI (Huey).

The Gold Miner's Index has decisively broken out of its cup-and-handle formation. This breakout brings a minimum measured move into play.

Gold Miners Index ETF (GDX):


The junior miners, a subset within the mining group, are displaying exceptional relative strength to majors (major producers). This relative strength is revealed by the surge in the juniors to majors gold share ratio illustrated below.

Juniors to Majors Gold Share Ratio:


All of this positive action is supported by the long-term secular breakout of the gold stocks from the 30-year consolidation. Money flows into the gold shares will only intensify as recognition of the significance of this breakout increases.

S&P Gold (Formerly Precious Metals Mining)*
*S&P Gold from 1945, Barron's Gold Stock Index from 1939-1945, 1922-1939 Homestake Mining


Watch long-term, relative money flows closely. The subtle changes within the trend already suggest a peformance outcome that few expect.

S&P Gold (Formerly Precious Metals Mining)* to Gold Ratio:
* S&P Gold from 1945, Barron's Gold Stock Index from 1939-1945, 1922-1939 Homestake Mining

Unusual worry for economy: Is inflation too low?

Classic headline designed to confuse the issue at hand. Inflation/deflation is a product of confidence of nation's debt and fiscal management. When gold is tied to the circulating currency and confidence wanes, deflation is the end result. When it's not, the end result is an increased velocity of money - i.e. get rid of the stuff before it devalues further. This is currency-driven or cost push inflation. As long as confidence in a nation's debt and fiscal management deteriorates under a fiat monetary system, something we are seeing right now across the globe, inflation is inevitable. To suggest that inflation is too low is an effective misdirection tactic.

It might seem like prices are rising wherever you look, from medical care to college tuition. Yet to the Federal Reserve, they might not be going up fast enough.

The Fed says a little more inflation might be just the thing to start a chain reaction that would ultimately create jobs -- and avoid a spiral of falling prices that could damage the economy.

Source: finance.yahoo.com

Geithner: Banks can meet capital rules with profits

More of have one's cake and eat it too analysis.

If capital rules and accounting standard were indeed "tough", there'd be no profits to report. It, however, works to at least placate a public looking for bailout retribution.

Treasury Secretary Timothy Geithner said on Wednesday U.S. banks should be able to meet new higher capital rules through future profits without crimping lending in a way that would harm the recovering economy.

Source: finance.yahoo.com

Gold hits record high after Fed rates signal

Step back from the spoon-feed analysis to view the bigger picture. Gold is rallying not as a result of the Feds actions but rather the inability of their actions to alter the trends. In other words, capital is voting with their feet that the Fed is not in control of the trends or the consequences of their actions.

Gold hit record highs for a fifth consecutive session on Wednesday after the Federal Reserve signaled it stood ready to inject fresh cash into the economy, knocking the dollar and whetting investor appetite for bullion.

Source: finance.yahoo.com

The Exodus Continues

The metaphor of rats jumping from a shinking ship comes to mind. This clears the way for the new New Deal II.

Financial bailout chief announces resignation

Herb Allison, the head of the government's $700 billion financial bailout program, announced on Wednesday that he would resign.

Allison said in a letter to his colleagues in the Treasury Department's Office of Financial Stability that they had accomplished a great deal.

Lawrence Summers to leave economic council, return to Harvard

President Obama's top economic adviser, Lawrence H. Summers, will step down as director of the National Economic Council after the November elections and return to a teaching post at Harvard University, the White House announced Tuesday.

The departure of Summers, 55, will complete the turnover of three of Obama's four top economic advisers as the administration struggles with the political fallout of a stubbornly weak economy.

The Dangers Of Layers

Interesting and a little scary story about dangers of layers between you and your holdings.

I strongly advise you to take possession of real gold and silver, at anywhere near today's price, while you still can. The fundamentals indicate rising prices for decades to come.

Source: silverstockreport.com

China's Wen Threatens Japan With More Action Over Jailed Captain

China’s Premier Wen Jiabao threatened more retaliatory action unless Japan “immediately and unconditionally” releases the fishing captain detained two weeks ago in disputed waters, Xinhua News Agency said.

Wen spoke in New York, where he and Japan’s Prime Minister Naoto Kan are to attend the United Nations General Assembly. Tensions between Asia’s two largest economies are rising over rival claims to a group of uninhabited islets and outcrops about 200 miles (322 kilometers) off the northeast coast of Taiwan.

This minor incident is related to a broader conflict over control of global resources.

The islands are in the East China Sea near natural gas fields that the two countries agreed to jointly develop in 2008. The agreement has yet to be implemented, and China broke off talks on the issue when the captain was detained after his boat collided with two Japanese Coast Guard vessels.

Source: finance.yahoo.com

Bubble Comparisons

Nick,

The markets must be the ultimate teacher.

Regards,

Eric

Hi Eric,

I have finally finished my study on bubbles. All up I plotted 50 bubbles from stocks to commodities to indices.

Bubble Comparisons:

Source: BubbleComparisons

You can find all the associated charts & various comparrisions charts along with all the famous bubbles from history past. The Tulip, South Sea, Rail, Poseidon & other bubbles. The conclusion is that the Precious Metals bubble has yet to begin. We have only got on the board so to speak & the real moves still in front of us.

The comparrision chart below speaks volumes & is worthy of posting.

Cheers Nick
sharelynx.com

Fed policy hint hits stocks as dollar slides

World stock markets fell Wednesday while the dollar dropped to a near five-month low against the euro after the Federal Reserve indicated that it was ready to provide more assistance to the flagging U.S. economy.

Capital flows represent the flight to safety associated with global currency debasement. The rising trend in equities reflects a portion of these flows.

The rise in German equities during the Weimar Experience must be heeded as a warning for the equity bulls. A trend sustained by currency debasement is not sustainable. The negative divergence of trend energy with the S&P 500 reflects what certain to be one of many cracks in the façade of this currency-driven up trend.

S&P 500 with NYSE Volume:


Source: finance.yahoo.com

Home construction jumps 10.5 pct in August

Home construction increased last month and applications for building permits also grew. The gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector.

Try not to be lured in by the spin. A one month up tick in building permits and housing start doesn't mean much. The year over year change in building permits turned negative in June and has accelerated to the downside ever since.

Building Permits And Change YOY


Source: news.yahoo.com

Fed lays groundwork for possible further easing

Count on it. As long as the media outlets continue spin the threat of deflation based on government "crafted" measures, the public will willingly accept more free money based on the misconception that free economic lunches exist. Free economic lessons do not exist. This lesson, unfortunately, tends to be lost within the education process that separates generations.

The Federal Reserve on Tuesday inched closer to fresh steps to bolster a sluggish U.S. recovery, saying it stood ready to provide more support for the economy and expressing concerns about low inflation.

Source: reuters.com

Weak Hands Constantly Culled Despite The Trend

Advance to 4:46 for a brief discussion on gold. This interpretation, which is replayed often, helps explain why the weak hands are constantly culled despite the trend.



Source: Should Fed Expand Balance Sheet? - CNBC.com

Former officials oppose US renminbi bill

Similar to spewing threats within a burning building. The Chinese that anything that restricts global trade will only worsen the downturn in the economy.

“Our experiences in negotiating with China make it clear that passing legislation which will result in punitive duties on Chinese imports will not induce China to move faster on exchange rate reforms,” the former officials say. “We need to find ways to achieve better market access, rather than threatening to destroy it through poorly timed legislation

Source: ft.com

Classic Trend Energy Divergence With Price In Gold Shares

Hello Eric:

Its time I let U Know How much Jim and I Appreciate U keeping us in the loop with Your Wisdom And Great Charts.

Arlen

Arlen,

There's an increasing number of precious metals miners (and various dollar hedge plays) displaying the classic trend energy divergence with price. This setup is revealed in the following chart:

Gold Miners Index ETF (GDX):


This surge of trend energy to new highs while price consolidates or underperforms often illustrates professional accumulation, or the setup of the weak hands, before the organized mark up. The new highs in REV(E) in 2010 while price languished under the 2008 price highs reflected this professional accumulation.

This professional accumulation is often associated with a technical formation known as a Swiss stair.

Once all the weak hands have been squeezed out, they will be compelled to buy again into the organized mark up.

Regards,

Eric

Policy Makers Can Do Little To Halt Dollar Slide, Brazil's Meirelles Says

There's very little policy makers want to do about it. The key word is WANT. The strong global fiat policies, lead by the dollar, is nothing more than public reassurance for the cameras. If it were otherwise, the global gold price would be declining.

Brazilian central bank President Henrique Meirelles said the dollar is weakening because of problems in the U.S. economy and there’s very little policy makers can do about it.

“No country in the world can hold the dollar,” Meirelles said today during a speech in the city of Curitiba. He said his comments weren’t specifically tied to the Brazilian currency’s value.

Source: bloomberg.com

Silver looks ready to rip

The gold to silver ratio (GSR) suggested an acceleration in the global fiat currency debasement and the potential for silver to rip ahead months ago.

BNP Paribas obviously thinks the price of silver is about to go on a tear.

It has agreed to pay $US20.58 an ounce for 680,000 ounces of the white metal to be delivered from December through to June 2012. That compares with a closing price on Friday in New York of $US20.79/oz (although intraday it poked its head above $US21/oz).

Source: theaustralian.com.au

QE2 in round trillions

When you're dealing with a debt failure with a 100 handle in front of the trillions, anything below a trillion won't be considered 'shock and awe'. The real 'shock and awe' will continue to come from the public in terms of the consequences of these actions.

Here is a back-of-an-envelope guess by David Greenlaw at Morgan Stanley on what the Fed can expect from a second blitz of bond purchases, or `Shock & Awe’ as he calls it.

If Ben Bernanke does a further $2 trillion (on top of the $1.7 trillion already in the bag) the yield on 10-year US Treasuries will drop 50 basis points to around 2.2pc.

Source: blogs.telegraph.co.uk

From Jack

Stocks extend Sept. rally; S&P breaks out of range

Cause and Effect.

Connected money sets up the (September) rally from late July to early September. This is the cause. The media 'interprets', the effect as a means of shaping perception. This is the effect.

Stocks extended their September rally into a fourth week Monday as investors hoped for more moves by the Federal Reserve to prop up the economy.

Buying accelerated after the Standard & Poor's 500 index broke through the high end of its recent trading range. Technical analysts see that as a hopeful sign for the market.

Source: finance.yahoo.com

So, will Obama will get the 2010 Nobel Prize for economics to go with his
2009 Nobel Peace Prize ? Amazing!

Jack

Jack,

It doesn't take much to cause an up tick in the positively biased, nominal GDP. The transition of confidence from the public to private will follow a similar path as the Great Depression. Regardless of official proclamations, the pendulum of confidence will be pushed in one direction by the persistently sluggish economy.

Regards,

Eric

Source: marketwatch.com

Wasteland: Europe stalked by spectre of mass unemployment

Unlike the great transition in the 30's Depression that saw massive job loss through the mechanization within and transition away from agriculture, this great transition will be characterized by massive public sector job losses. As confidence in the public sector continues to ebb, capital will follow that transition from public to private assets. That transition, unfortunately for most Western economies, is moving from West (New York) to East (Shanghai).

"Major job losses are on the way in the public sector as the Government slashes spending, and we doubt that the private sector will be able fully to compensate for this. Indeed, we suspect that firms will become increasingly cautious in their employment plans, reflecting their concerns that the intensified fiscal squeeze will hold back growth."

Source: independent.co.uk

From Bob

US Pensions Are Massively Underfunded, And Have Ridiculously Rosy Assumptions

The world still thinks in nominal or US dollar returns. 7.8% is completely doable under the Weimer Model, but the return will be an illusion. Real or constant currency returns, rarely quoted in general media, is the critical metric for establishing purchasing power and standard of livings.

The country's 15 biggest public pension systems have an average expected return of 7.8%, and only a handful recently have changed or are reconsidering those return assumptions, according to a survey of those funds by The Wall Street Journal.

Source: businessinsider.com

Now Brazil Is Intervening To Weaken Its Currency, As The Competitive Devaluation Cycle Heats Up

Several months ago the British Pound took a hit. Soon afterwards, it was the Euro's turn. Last week the Bank of Japan took steps to weaken the Yen. Now the Brazilian Real appears to be headed behind the global liquidity woodshed.

These competitive currency devaluations, designed to benefit one nation at the expense of another, only temporarily redistribute rather than alter the size of the economic pie. Yet, despite minimal long-term impact, there's no end in sight for fiat devaluations. Why? Currency devaluation or the cheapening of previously issued bonds through on-going default maintains the status quo. Yes, it punishes saving and savers within the paper world, but that voice is relatively quiet in terms of influence.

Fear not, the world of risk and reward vote with their feet. As the fiat world continues its on-going default, capital both large and small, continues to move into the safety of gold (and silver). This is reflective in the persistence, secular up trends in the global fiat price of gold.

British Pound Gold


Euro Gold


Yen Gold


Real Gold


Source: businessinsider.com

From Bob

Regulators close 6 banks in Ga, NJ, Ohio, Wis

The public has filed this under who cares, but the consequences of the endless FDIC backed bailouts continue to effect the U.S. dollar and global fiat.

With 125 closures nationwide so far this year, the pace of bank failures exceeds that of 2009, which was already a brisk year for shutdowns. By this time last year, regulators had closed 94 banks.

Source: finance.yahoo.com

Natural Gas Revisited by Connected Money

Back in April 2010 I flagged bullish inflows into Natural Gas (NG) as a precursor to rising prices.
The setup preceded what is best characterized as a short-covering rally until June. The bearish trend and lack of support into the first leg of weakness prevented a technical breakout. The first sign of trouble was the huge long liquidation from “connected money” into the June rally. When this liquidation was not followed by aggressive accumulation into the July weakness, the rally fizzed.

Two months later, ‘connected players’ have begun to aggressive repurchase NG. As price tests and slightly breaches the April 2010, commercial traders, figuratively speaking, have bought NG will both hands. The inflows after a challenge and slight break of the near term swing low hints at comparisons to the Fall of 2007. It was the second wave of buying from late 2007 to early 2008 that sparked an aggressive rallying in NG.

I must reiterate that NG’s technical position remains challenging to say the least. Commercial money’s aggressive push on the long side, however, must be watched carefully. NG is a volatile market that tends to breakout in sympathy with the leverage money setup from connected players.

Natural Gas ETF and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

IOUs not likely to hurt California local governments

Of course it wouldn’t. The printing press has become the universal solution to all monetary and fiscal problems since 2000. In a strange ‘coincidence’, gold has been in a bull market since 2000.

The credit ratings of California local governments are not likely to suffer if the state government issues IOUs amid its budget stalemate, Moody's Investors Service said in a report released on Friday.

Source: finance.yahoo.com

Exit Harry Schultz, pursued by a bear?

I have read a lot of Harry Schultz's work and thoughts over the years. His market vision is exceptional for those that do not recognize his work. Schultz knows from the lessons of history that all hell can break loose with little to no warning regardless of consensus expectation(s). His words echo warnings signs displayed in capital flows and secular trends of key markets.

A famous veteran gold bug, who called the Crash of 2008, is now calling for sudden hyperinflation. But he warns he may not be around to comment on it.

My headline paraphrases Shakespeare’s most famous stage direction (from The Winter’s Tale). But I’ve added a query, because Harry Schultz says that, after closing his International Harry Schultz Letter [IHSL] at the end of the year, he will write regular “Big Picture Editorials” to be included with the Aden Forecast, which will take over his subscription obligations, “for as long as my health allows.” He’s 87.

Schultz describes this scenario as “a genuine risk” and comments:

“Hyperinflation can be triggered in several other ways. Trustfailure (my new word) is the controlling element, which triggers Fearflation (another new word). E.g., a Comex gold delivery default or a major Too-Big-To-Fail bank failure or a self-propelling domino bank-run are all possible triggers. A bond market implosion will result from any of the above, even if it isn’t itself the trigger.”

Source: marketwatch.com

Consumer sentiment weakest since August 2009

Consumer sentiment unexpectedly worsened in early September to its weakest level in more than a year, as distress over jobs and finances intensified among upper-income families, a survey released on Friday showed.

Consumer expectations have breached August 2009 swing low. This brings the February 2009 low into play by 2012. Consumer Expectation and the price of gold are highly inversely correlated. That is, as consumer expectations declines, the price gold rises.

University of Michigan Consumer Expectations (CE) and Gold: A Correlation Study

Florida 'Cash for AC Clunkers' rebate program goes cold

The foundation of fiat (paper money) is confidence in those that oversee the debt and fiscal management. If these programs were for profit businesses, it wouldn't be long before they failed.

Caught in the middle: Homeowners who leaped at the chance to score a $1,500 rebate for replacing their old heating and cooling systems with more energy-efficient models and ensuring that their homes’ duct systems had little leakage.

Source: news-press.com

From Bob

Federal Debt Held by Foreign & International Investors

The rise and acceleration of federal debt held by foreign and international investors relative to national income (GDP) vastly exceeds any historical comparison.

Federal Debt Held by Foreign & International Investors As a % of GDP (FDHBFINGDPR) and the London P.M. Fixed Price of Gold (GOLD):


If gold attempts to balance attempts to equilibrate price with external liabilities, its price would rise to shocking levels.

Federal Debt Held by Foreign & International Investors (FDHBFIN) and the Equilibrium Price (FDHBFIN/OZ)

Florida Land Bust

The highly leveraged housing markets went bust once the cheap credit stopped.

A long time friend was recapping a tough year in which he had to sell four homes in his deceased parents' estate in Florida now. Homes purchased for $52,000 in 1972 were appraised at $32,000, with the explanation that over 50% of all homes in Florida were in foreclosure now. That's a land bust.

Peace to you and all,
Steve

State Adds Jobs–300 in Manufacturing, 400 in State Government

Government remains the dominant employer at the State and Federal level. This, however, is not sustainable as long as tax revenues, the lifeblood of the public sector, continue to contract.

While the number of seasonally-adjusted federal and local government employees dropped, the state added 400 employees. Meanwhile the number of Wisconsinites in the manufacturing sector increased by only 300 on a seasonally-adjusted basis.

Source: maciverinstitute.com

Man Vs. Machine: The New Kings Of Wall Street

It takes more than a machine and mathematical algorithms to create vision of the future. This is the difference between knowledge and wisdom. Markets are moved by the invisible hand of capital as described by Adam Smith's Wealth of Nations well before the advent of high frequency trading.

The rapid-fire growth of high-frequency trading, HFT, has spawned a new breed of market mavens whose backgrounds are far different than the traditional suit-clad Wall Street titans.

Source: finance.yahoo.com

Third world America

Tough choices continue to be made as local budgets are slashed from decreasing tax revenues. I would add that third world countries do not have the luxury to print currency to fund their stimulus and injection programs, so the headline is a bit too "shock and awe" for me. The stark reality of contracting government services on a society increasing dependent on them can give the impression of a transition into a 'third world' from a country used to a high standard of living.

Even with interest rates at unprecedented lows, there is anxiety about the possibility of a double-dip recession. Sales of existing homes are at their lowest level in 15 years, and new home sales plummeted this summer to the lowest levels on record. Property and sales tax revenues have shrunk. And nowhere is this more apparent than at the local government level, where officials are being forced to roll back the everyday hallmarks of modern civilization.

Source: www2.macleans.ca

Gold - 1972 or 1979?

Hello Lance;

I cannot speak for Jim directly, but I seriously doubt that he presented 1979 as a model or setup that will precede “The Top”. The trend energy and cycle work suggests the potential for strong non-linear run into 2012, but I highly doubt that will mark the end.

Does this setup reflect 1972 more than 1979? For those motivated to make comparisons, I suggest a detailed review of the 1930’s as a proper cycle comparison. The great debt implosion was/is the driver behind the currency debasement of 1929-1946 and 2000-2016. The break in the secular up trend of debt creation in 1934 marked the beginning of the painful debt liquidation phase. We have only breached an intermediate trend line within larger secular up trend. Simply put, the recent acceleration of gold is an acknowledgement of more pain to come.

Total Credit Market Debt As A% GDP:


Gold was officially fixed between $20 and $35, so many analyst review the 70’s for cut and paste analysis.

Gold P.M. Fixed


An extensive study of the past trading masters reveals the shared characteristic of market vision. Jim’s market vision is simply exceptional from my perspective. For those traders out there, the fact that he’s not a PAST master, and chooses to discuss markets with the public is beyond fortunate. If the consensus agreed with Jim's market vision, I would be worried.

Sincerely,

Eric

Eric,

First of all, thanks for all your fantastic work -- especially your work on long-term cycles. I have found it extremely helpful and it has contributed immensely to my patience and conviction with my investments. Actually, my question is about long-term cycles.

Jim Sinclair has likened now to 1979 when gold was hovering around $400. That would imply imply the parabolic peak of this cycle will be reached in 2011.

But I tend to agree with Murray Pollitt, who likens today to 1972. That would still imply a parabolic-like peak for next year, but not THE parabolic peak.

Pollitt's take would also line up with the views of Egon Von Greyerz and Martin Armstrong, who predict a leg up into next year followed by a significant correction, followed by a long rally into the final peak price. It also lines up with Alf Field's view that we are in the "Major Three" leg, which will soar the price to $3500, followed by a correction of 30%, and then its final parabolic rise.

I think this also lines up with your views in that I always see a magnet pulling the gold price up into 2016 in your charts.

To me, 2011 is the year the underlying reality of the world's economic condition starts to become apparent to the masses. The key word is "start". Then the real recognizing begins, a process that could unfold for years and easily lead into 2016. Let us remember that most pension funds and retirement funds still have no clue about gold. That is all yet to come.

Anyway, I have never disagreed with Jim. But I do on this one. What's your take?

Cheers,

Lance

Poverty in the U.S. spikes

The forces at work, while being used for political gain, represent a shift in investment, capital flows from New York (West) to Shanghai (East). As money and investment flows from West to East, so does the general standard of living.

Poverty Hits 50 Year High:
The nation's poverty rate jumped to 14.3% in 2009, its highest level since 1994, and the 43.6 million Americans in need is the highest number in 51 years of record-keeping, the government said Thursday.

The Office of Management and Budget defined the poverty threshold level as less than $21,954 for a family of four in 2009. The poverty rate increased for all racial groups except Asians.

Source: money.cnn.com

Thanks Bob

FedEx 1Q profit doubles; will cut 1,700 jobs

About ten years from now Harvard business students will be doing case studies on the Great Jobless Recovery of 2003-2008 and 2009-2012.

The world's second-largest package delivery company did raise its financial outlook after its first-quarter net income doubled. But the projections for the second quarter and full year fell shy of Wall Street expectations, and the stock dropped almost 3 percent in premarket trading.

Source: finance.yahoo.com

Japan PM says ready to step into forex markets again

Couple of comments on the Japanese intervention in Yen:

• Are markets nothing more than a collection of 'official' interventions as increasing suggested by trading experts? Or, are the trends a manifestation of capital flows dominated by Adam Smith's invisible hand?
• The Yen should provide an interesting case study for those still in doubt. The Japanese government, whom has been trying to stop the Yen's appreciation for months (see chart below), has escalated its battle against the primary up trend in recent days (see comments below).
• As I have suggested many times before, any intervention against the primary trend is a waste of money.

Japan's prime minister signaled on Thursday that authorities would keep intervening to curb yen strength as sagging manufacturing confidence underscored the threat the currency poses to the fragile economic recovery.

Yen and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:


Commercial traders, likely supporting the BOJ, have been attempting to slow the Yen's appreciation since July 2010. There will be counter-trend reaction when time is right, but no amount of intervention will reverse the primary trend.

Source: finance.yahoo.com

Foreclosures Rise; Repossessions Set Record

This spells more stimulus and competitive currency devaluations in the future. Soon the consequences of the stimulus and infinite liquidity (cure) will be as painful as the effects of the debt implosion (disease).

US foreclosure activity rose in August from the previous month, and banks and lenders took ownership from homeowners at a record pace, according to a new report released Thursday.

Source: cnbc.com

Thanks Bob.

Gold Miners ETF - Breakout

Breakout!

Rising trend energy has been forecasting a breakout since May 2010. The chart below illustrates the minimum measured move of the cup and handle formation.

Gold Miners ETF (GDX):

Retirement on Hold: American Workers $6 Trillion Short

This required a study? The American household is over leveraged to USA, Inc. USA, Inc is currently being debased to protect interests other than American households.

The study, conducted by Boston College's Center for Retirement Research, says savings have been squeezed by declines in stock and housing values.

Source: finance.yahoo.com

States cutting benefits for public-sector retirees

An outcome that will be replayed in nearly all States across the U.S.

After telegraphing his intentions for months, Christie spelled out the details of his proposal Tuesday. They include: repealing an increase in benefits approved years ago; eliminating automatic cost-of-living adjustments; raising the retirement age to 65 from 60 in many cases; reducing pension payouts for many future retirees; and requiring some employees to contribute more to their pensions.

"We must reverse the damage caused by fairy-tale promises that have fattened benefits and pensions to unsustainable levels," the governor said.

Source: finance.yahoo.com

Massive fish kill reported in Louisiana

It's basic chemistry. Massive injection of hydrocarbons and chemical dispersants is certain to change Gulf's oxygen saturation. Once that saturation below a certain level, many species die.
Independent research also indicates that much of the oil still sits at the bottom of Gulf. Massive influx of hydrocarbons is the cause. Any disruption on the building blocks of the food chain, such as phytoplankton, will eventually affect all marine life in and around the Gulf. It is the microscopic or unseen changes that could prove to be the most damaging.

Fish kills are fairly common along the Gulf Coast, particularly during the summer in the area near the mouth of the Mississippi, the site of this kill. The area is rife with dead zones -- stretches where sudden oxygen depletion can cause widespread death. But those kills tend to be limited to a single species of fish, rather than the broad sort of die-off involved in this kill.

And therein lies the concern of Gulf residents, who suspect this may be yet another side effect of the catastrophic BP oil spill.

Source: news.yahoo.com

Global Stock Prices to Gold Ratio Illustrates Hemorrhage versus Injection Cycle

The Dow Jones World Stock Index priced in gold illustrates the cycle of hemorrhage vs. injection during a depressionary box. The 2003 to 2007 injection phase is represented by a trading box where that was bounded by the reaction low and 23.6% retracement of the previous hemorrhage cycle. The 2009 to present injection phase is also represented by a similar box. If it is to achieve a similar duration, there's going to be a lot more injection (currency devaluation) compared to 2003. This largely explains gold's unexpected strength in terms of mainstream media interpretation.

Dow Jones World Index to Gold Ratio:

Japan intervenes in currency market to weaken yen

Intervention against the secular trend compares to swimming against the current. A lot of energy is expended for little gain. The swimmer tires in time and the current re-establishes direction.

This will be a good model for those that believe that governments rather than the free hand of markets control it all.

The bigger winner in Japan is gold priced in Yen.

Japan waded into the currency market Wednesday for the first time in six years, buying dollars to weaken the surging yen, which is battering famed Japanese manufacturers like Toyota and Sony after spiking to 15-year highs

Source: finance.yahoo.com

Continuous Commodity Index Chart From Trader Dan

Dear CIGAs,

I do not know about you guys, but I am shuddering at what I think is getting ready to occur here in the US…

Click image to enlarge today’s CCI chart in PDF format with commentary from Trader Dan Norcini

Dan,

There's no stopping this cyclical advance that has years to run.

Eric

Spot Commodity Prices: CRB Spot Index (1947 - Present);
16-Raw Industrial Spot Price (1935-1947);
Great Britain Wholesale Price of All Commodities (1885-1935)


Source: jsmineset.com

Gold Prices Surge, Top $1,270

Gold prices were popping Tuesday as investors turned to gold as safe-haven asset after a slew of disappointing economic data.

What about the dollar's safe haven status? This gold hype will attacked by the spinsters, agnostic about gold at much lower prices, through the use of labels, fear, and misdirection. Meanwhile, the secular trend continues to plow ahead without or without the spinsters' support.

Jim is right, gold doesn't need consensus approval to run.

Many emails have come in saying there is no way gold can go to $1650 by January. My response to those people is you are WRONG, it can.

Many emails have come in saying the dollar is a safe haven and that I am wrong, it will never see .7200 and lower. My response to those people is you are WRONG, it can.

Many were offended for some reason when I drew the comparison between now and 1979. My response to those people is you are WRONG, the comparison is valid.

I am on my way to the Middle East and Africa, but will not be out of contact.

Respectfully,
Jim

Careful about saying never to an unexpected run. I have said this many time before, the setup while not identical is eerily similar.

Gold, London P.M. Fixed:


Back on July 10th, I finished the Bullish Money Flows in Gold with the following question: Are you ready for the unexpected?

Well, are you?

Source: finance.yahoo.com

Krugman: Slap Tariffs On China, And Let Them Stop Buying Our Debt

Just as I got done writing about increasing popularity of beggar thy neighbor policies, a headline suggesting the U.S. could slap tariffs on China. Words like global savings glut, and the marginalizing of Chinese buying of our debt makes it seem as if such actions would not generate adverse consequences for the United States. Capital, driven by secular trends, continues flow from West to East regardless of the old paradigm or words suggesting otherwise.

As for China not buying our debt, well... they're already paring back their holdings, but between our Fed, and the global savings boom, it just hasn't been much of an issue. Yields are very close to their all time lows despite China clearly losing its appetite for USTs. And to the extent that Chinese selling of bonds would hurt the dollar then, well, obviously to Krugman that'd be a good thing.

Source: finance.yahoo.com

Jump in retail sales sends stock futures off lows

The 'expectations game' is taken straight from the spin handbook. Better or worse than expected this or that drives a market higher or lower.

Secular trends could care less about expectations. Consumers, shell shocked from job loss and chronic under employment remain reluctant to spend. Fiat money, such as the dollar, are debasing as sovereign nations default through inflation on an ongoing basis. Retail sales are measured in U.S. dollars. The ongoing debasement of the U.S. dollar makes the retail sales time series biased over time. Thus, any interpretation, such as short-term deviation from expectations is meaningless without a correction of the time series.

Gold-adjusted retail sales, an unbiased time series, illustrate not only a declining but accelerating secular down trend. Any short-term positive reaction in U.S. equities has more to do with the ongoing fiat devaluation rather deviation of an economic time series from expectations.

Gold-Adjusted Retail Sales (RSGLDR) and YOY Change:


The general weakness in retail sales is confirmed by sluggish and deteriorating auto sales.

Auto Sales (AS) and YOY Change:

The Commerce Department said retail sales rose 0.4 percent, slightly better than the 0.3 percent growth forecast by economists polled by Thomson Reuters. The sales report Tuesday falls in line with data over the past two weeks that has indicated the economy is growing slightly faster than economists expected, but still remains sluggish.

Source: finance.yahoo.com