Headlines Sell Drama

Headlines convey concern while a message from the market supports a coming turn. This is not revealed as an aid to time the market but rather an illustration of how drama rather than analysis sells headlines. While drama encourages clicks, it is of little use in the world of investing profits.

New York Composite Index:


Headline: Stocks take another pounding amid oil price fears

Stocks took a pounding Wednesday as oil prices edged higher once again amid concerns over how the crisis in Libya will end now that the oil-rich North African country is effectively split in two.

Insecurity has spread through markets as the international community remains at odds about how forcefully to intervene in Libya and the regime of longtime leader Moammar Gadhafi claws back some ground lost to the rebels.

Source: finance.yahoo.com

Labor Market Still 'Sickly"

Again, anyone suggesting an early end to quantitative easing (QE2) is delusional. Headline analysis will skip over this trend.

Challenger, Grey, and Christmas Announced Layoffs (ALO) And YOY Change:


Headline: Planned layoffs spike in February

Don't look now, but one measure of job market health is starting to look a tad sickly.

Employers announced plans to cut 50,702 jobs in February, a 32% increase over January, according to outplacement consulting firm Challenger, Gray & Christmas.

Source: money.cnn.com

Vicious Downward Cycle Intensifying

The vicious downward cycle (see Jim's formula) that started that started in 2001 and rematerialized in 2008 is beginning to intensify in 2011. This suggests an acceleration in the trend toward a lower standard of living for Americans as the shockwaves of public spending cuts negatively impact local, state, and eventually federal coffers. The public sector, contracting under the weight of a massive debt burden, has few options without the bankruptcy protection or ability to devalue. The message from national municipal bond market reflects this “damned if you do, damned if you don’t policy quandary. Expectations calling for an end of quantitative easing will once again be proven premature.

US Federal Budget (Surplus or Deficit As A % of GDP, 12 Month Moving Average) and Gold London P.M. Fixed:


Headline: Wis. governor proposes deep cuts for schools

Even though Walker isn't ordering immediate layoffs, his budget will put tremendous pressure on schools and local governments, which will be asked to shoulder huge cuts without raising property taxes to make up the difference.

Walker's budget includes a nearly 9 percent cut in aid to schools, which would amount to a reduction of nearly $900 million. The governor also proposed requiring school districts to reduce their property tax authority by an average of $550 per pupil.

Source: news.yahoo.com

Ohio union plan like Wisconsin draws protests

Are domestic protests, civil in comparson to their international counterparts, any less significant in terms of social and economic consequences despite the lighter media coverage? The markets say no.

Headline: Ohio union plan like Wisconsin draws protests

More than 5,000 protesters converged on Ohio's state capital on Tuesday as state lawmakers considered a bill like one in Wisconsin to curtail collective bargaining rights for public workers and eliminate their right to strike.

Republican supporters of the Ohio proposal said the limits to public workers' ability to bargain are necessary to give local governments flexibility and help reduce the state's two-year budget deficit of about $8 billion.

"Over time, these contracts have often incorporated demands that frankly belong to public employers rather than employees -- things like specifying the number of workers that should be assigned to a specific job," said Jason Mauk, a spokesman for Ohio State Senate Republicans.

Source: finance.yahoo.com

Mailbox

I would add that the gloves are off for gold and silver. This is happening for a reason.

Eric

When the fraudulent truth of OTC Derivatives surfaces it will lay waste to the international investment banks and distributors.

Jim

Subprime securities litigation could run Goldman's legal tab up by $3.4 billion

by KERRI PANCHUK
Tuesday, March 1st, 2011, 10:41 am

Litigation and regulatory actions tied to Goldman Sach's selling of mortgage-backed securities could cost the investment bank an additional $3.4 billion in legal expenses, Goldman's said in a Securities and Exchange Commission filing this week.
The $3.4 billion is a "worst-case scenario" projection and does not reflect the true risk Goldman faces, but rather what could happen if the firm lands on the losing end of all litigation, a spokesman for the firm said.
The company's projection of greater-than-budgeted for legal expenses puts it in company with Bank of America, Wells Fargo & Co. and JPMorgan & Co., all of which are facing billions in extra legal expenses in 2010 to fight consumer and investor litigation, as well as regulatory actions.
"The firm is involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of the firm’s businesses," Goldman said in its filing. "Many of these proceedings are at preliminary stages, and many of these cases seek an indeterminate amount of damages."
Goldman landed in the firing line of the Financial Crisis Inquiry Commission when the group investigated the causes of the 2008 financial meltdown.
The commission weighed heavily into Goldman Sachs for allegedly pushing subprime mortgage-backed securities while simultaneously shorting the same instruments.
Many of the legal filings pending against Goldman Sachs were filed by purchasers of subprime mortgage securities who are either demanding damages or asking Goldman's to repurchase the securities they sold.
Goldman is also fighting multimillion-dollar lawsuits that claim a similar strategy was employed by the investment bank's marketing of a collateralized default obligation platform, known as ABACUS.

JB Slear
Fort Wealth Trading Co LLC.
866-443-0868 Ext 104
817-717-5489
Fax: 817-764-2537
http://www.fortwealth.com/

An Island of Stablility With Cat 5 Hurricane Bearing Down On It

The Yen described as a traditional island of safety? Investors will find no safety in any island (safe haven) with a category 5 'monetary' hurricane bearing down on it. People will always view the world according to their biases, so arguing against this assertion tends to be a waste of time.

Don’t let your biases establish your perceptions. If the Yen or any other paper money was an island of stability as suggested, the major and broad currency gold price trends illustrated below would characterize a ski slope rather than growing mountain.

Gold London PM Fixed and U.S. Dollar Major Currencies Index Ratio:


Gold London PM Fixed and U.S. Dollar Broad Index


Headline: Investors Are Seeking Safety in New Harbors

For years, whenever significant political or financial turmoil reared its head anywhere on the globe, investors would turn to the U.S. dollar as a safe haven.

Yet as the chaos in North Africa has grown over the past month, investors have largely shunned the dollar and sought shelter elsewhere. They have turned to other traditional islands of stability, buying Japanese yen and the Swiss franc.

Source: online.wsj.com

Between the Lines Analysis of TIC Data Reveals A Market In Turmoil

The frequency of revisions within the TIC data series suggests a paper market in turmoil. One would never know that from the headline interpretations. The revisions are becoming so frequent that historical comparisons are becoming increasingly difficult. Yet, anyone believing that world's paper shufflers will allow data releases such as the TIC to communicate failing demand for key paper markets is likely delusional. The interpretation will be "all-is-well" right up to the point where it is clearly not and spin cannot communicate otherwise.

Major Holders of U.S. Long Term Treasuries:


Headline: China's holdings of US debt jump 30 percent

China, the biggest buyer of U.S. Treasury securities, owns a lot more than previously estimated.

In an annual revision of the figures, the Treasury Department said Monday that China's holdings totaled $1.16 trillion at the end of December. That was an increase of 30 percent from an estimate the government made two weeks ago.

The government made the change to its monthly report based on more accurate information it obtains in an annual survey. That survey more does a better job of determining the actual owners of Treasury securities.

Source: finance.yahoo.com