STOCK MARKET WATCH, Thursday November 12

[ozymandius]

Source: du

STOCK MARKET WATCH, Thursday November 12, 2009

Bush Administration Officials Convicted = 1
Name(s): David Safavian

Bush Administration Officials Charged = 1
Name(s): Richard Lopez Razo

Financial Sector Officials Convicted since 1/20/09 = 11

AT THE CLOSING BELL ON November 11, 2009

Dow... 10,291.26 +44.29 (+0.43%)
Nasdaq... 2,166.90 +15.82 (+0.74%)
S&P 500... 1,098.51 +5.50 (+0.50%)
Gold future... 1,115 +12.00 (+1.09%)
10-Yr Bond... 3.47 -0.01 (-0.37%)
30-Year Bond 4.41 +0.01 (+0.27%)

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U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES..............................................S&P FUTURES

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie, Silver and US$

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This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[ozymandius]

1. Market Observation

Is Gold in a Bubble?
Short answer... Not even close!
BY CHRIS PUPLAVA

With gold reaching an all-time high, which by the way no other asset class can boast, some may be wondering if the bull market in gold is over as it has exceeded its prior peak. In terms of determining bubbles or significant peaks, relative valuation analysis has proven effective in identifying bubbles. As will be shown in the article below, no matter how you want to slice it, I believe gold is by no means close to a bubble, and can easily rally to higher triple-digit figures in the months and years ahead.

Technically, No Major Gold Sell Signals Flashing a Top

Over the past year I have developed two indicators that I use to help identify major gold peaks and troughs. In February of this year both my intermediate term (IT) and long term (LT) gold indicators were flashing warning signs for either a coming correction or a prolonged consolidation period, which I commented upon at the time (Gold, Is the Future Still Bright or Fading?) and warned of a correction. We did indeed correct soon after and then consolidated for several months. Periodically throughout the year I would update my indicators to look for a buying opportunity in gold, and by July both my gold indicators reached significantly oversold conditions reaching levels that have marked major buying opportunities in the past. I presented the following commentary back in July:

Gold & Gold Stocks Setting Up for a Strong Second Half?

In contrast to the last two readings of the indicator north of 2.0, the overbought condition in February resulted in a moderate pullback with a multi-month consolidation to work off the overbought condition. A market that works off an overbought condition through a consolidation rather than a correction is a sign of strength as it indicates that the bears could never really gain the upper hand and drive prices lower. This is what was seen in gold after the February reading north of 4.0, the most overbought reading seen in 26 years, where gold simply consolidated rather than stage a significant correction. The FSO Indicator #1 is approaching -0.5, with readings in this vicinity often marking major bottoms in gold over the last decade.

For me the big key was that the last time my gold indicators reached significantly elevated readings (2006 and 2008 tops), gold corrected sharply while the severely overbought reading in February of this year only resulted in a mild correction and then a consolidation, showing the incredible strength in gold as the bears could never drive gold significantly lower. Now with gold breaking out to all-time highs I thought it timely to check in on my indicators again to see if there were any warning signs of a major top in gold. Surprisingly, neither my IT nor LT gold indicators are at frothy levels even with gold north of $1,100 an ounce. The PFS Group IT gold indicator is just slightly below neutral levels and suggests that gold would have to rally significantly further from here to present a sell signal with a reading north of 1.5.

http://www.financialsense.com/Market/wrapup.htm

[ozymandius]

2. Today's Reports

08:30 Initial Claims 11/07
Briefing.com 525K
Consensus 510K
Prior 512K

08:30 Continuing Claims 10/31
Briefing.com 5700K
Consensus 5700K
Prior 5749K

11:00 Crude Inventories 11/06
Briefing.com NA
Consensus NA
Prior -3.94M

14:00 Treasury Budget Oct
Briefing.com -$150.0B
Consensus -$162.5B
Prior -$155.5B

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

[Hugin]

29. Initial Jobless Claims in U.S. Fall to 10-Month Low (Update1) (Bloomberg)

By Courtney Schlisserman

Nov. 12 (Bloomberg) -- Fewer Americans than anticipated filed claims for jobless benefits last week, signaling the worst employment slump in the post-World War II era is easing as the economy expands.

Initial unemployment claims fell by 12,000 to 502,000 in the week ended Nov. 7, the lowest level since January, Labor Department figures showed today in Washington. The number of people receiving jobless benefits dropped, as did those getting extended payments.

Firings may slow as the loss of 7.3 million jobs since the recession began in December 2007 probably means many companies have already cut staff to bare minimums. That may not stop the jobless rate from climbing further after reaching a 26-year high in October as the shortest workweek on record gives employers room to increase hours before taking on staff.

The drop in claims is “reassuring, but these levels are still consistent with job losses,” said Jonathan Basile, an economist at Credit Suisse in New York. “We’re not getting a strong enough vote of confidence yet from claims to say companies have stepped up their hiring and greatly reduced their pace of layoffs.”

More here... http://www.bloomberg.com/apps/news?pid=20601103&sid=aIZH1yENtgNM

_______________________________________________________________________________________________________

No mention that this easing may be due to the impending 'Holiday Season'... Which typically sees more hiring and in this up-side-down year, apparently, sees less firing.

[ozymandius]

3. Oil hovers above $79 ahead of US supply report

SINGAPORE – Oil prices hovered above $79 a barrel Thursday in Asia as investors eyed signs that U.S. crude demand remains weak.
.....

The American Petroleum Institute said Tuesday that crude supplies rose last week, and traders will be closely watching to the Energy Information Administration's inventory report later Thursday.

"Crude is encountering a lot of resistance at the $80 level because of the supply overhang and no clear signs of demand growth coming back in the U.S.," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
.....

In other Nymex trading, heating oil was steady at $2.06 a gallon. Gasoline for December delivery rose 0.73 cent to $2.00 a gallon. Natural gas for December delivery fell 1.2 cents to $4.49 per 1,000 cubic feet.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

4. Asia markets slip as rally peters out; Europe flat

TOKYO – Asia's four-day stock market rally petered out Thursday as investors turned cautious. European markets were little changed.

Markets across Asia rose in early trading following another gain overnight on Wall Street and news that South Korea left its key interest rate at a record low, signaling that most Asian central banks are in no hurry to raise borrowing costs as their economies recovery. Australia also reported an unexpected surge in the number of jobs last month.
.....

Japan's Nikkei 225 Index dropped 67.2 points, or 0.7 percent, to 9,804.49, while Hong Kong's Hang declined 229.64, or 1 percent, to 22,397.57. South Korea's Kospi slid 1.4 percent to 1,572.73

In mainland China, Shanghai Composite index reversed an early gain to dip 0.1 percent at 3,173.2.

European markets opened narrowly mixed, with Britain's FTSE up 0.3 percent to 5,281.18. Germany's DAX was unchanged at 5,668.470, while France's CAC 40 traded flat at 3,812.49.

http://news.yahoo.com/s/ap/20091112/ap_on_bi_ge/world_markets_19

[ozymandius]

5. Report: 10 states face looming budget disasters

SACRAMENTO, Calif. – In Arizona, the budget has grown so gloomy that lawmakers are considering mortgaging Capitol buildings. In Michigan, state officials dealing with the nation's highest unemployment rate are slashing spending on schools and health care.
.....

The report by the Pew Center on the States found that Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin are also at grave risk, although Wisconsin officials disputed the findings. Double-digit budget gaps, rising unemployment, high foreclosure rates and built-in budget constraints are the key reasons.
.....

Several state legislatures have been unable to enact long-term fixes. Instead, they asked voters or governors to make the call, or used accounting gimmicks to put off the hard choices until later.

http://news.yahoo.com/s/ap/20091112/ap_on_bi_ge/us_state_budgets

[tclambert]

20. The view from Michigan:

This scenario has been replaying every year for quite a while. The governor (Granholm, a Democrat) proposes a mixture of painful budget cuts and painful tax increases. The Republicans in charge of the State Senate (especially their leader, Mike Bishop) stand firm (or stubborn) that they want no tax increases and that the shortfall can be made up just by cutting "waste." As an example of waste they will point out $1.73 wasted on paper clips or something even more insignificant, until one week before the budget is due. Then they will come out with their alternative proposal, and it's always the same: Cut schools, road maintenance, police, and prisons. Seems their definition of "waste" is a lot like other people's definition of "basic services."

Oddly, in opinion pieces lamenting the state's problems, Republicans will say, "What this state needs to do is improve schools, fix the roads, reduce crime, and cut taxes." There is never any suggestion how to do the first three more efficiently or more cheaply, nor any acknowledgment that known means of achieving the first three require more money, more government spending, nor any sign of awareness that the fourth goal directly contradicts the other three.

This is what passes for serious political debate in Lansing.

[ozymandius]

46. That's just sad beyond infuriating.

"Waste = basic services" is the common theme among the Republican majorities in Georgia's state houses. A reduction in education funding has been embraced in direct contradiction to campaign promises made by Republicans who ran on issues regarding improving education. Among the promised improvements was a reduction in class sizes. Class sizes have increased over last year's population. Next year's budget cuts will increase class sizes more. Teachers in Georgia have been furloughed.

One begins to think that education really does not matter much to the old Republican wigs that rule our lives.

[Demeter]

50. Indoctrination=Good, Education=Bad

The Modern GOP: It's like Animal Farm and Animal House, combined in unholy synergy.

[ozymandius]

6. US risks following Japan's example of stagnancy

WASHINGTON – Heavy government stimulus spending and near-zero interest rates did little to end a "lost decade" of stagnation and mushrooming debt in Japan. Some economists and lawmakers say the U.S. may wind up following the same trajectory.

Despite early signs of recovery and a strong U.S. stock market rally, fears persist that the failure to generate new jobs or ignite more consumer spending could drag the economy back into recession, or result in a protracted Japan-like period of poor economic and stock-market performance.
.....

Japan is President Barack Obama's first stop on a tour of Asia beginning Friday — and the gloomy world economy will be high on the agenda. Both Japan, beginning in the 1990s, and the U.S., in the most recent economic crisis, had credit and housing bubbles and both engaged in huge amounts of overborrowing leading up to sharp economic downturns. And both used historically low interest rates and government stimulus spending to try to lift their economies out of the ditch — with questionable results in Japan.

http://news.yahoo.com/s/ap/20091112/ap_on_bi_ge/us_lost_decade

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Ozy here: I object to this paragraph -

One other difference is that Japan's crisis was largely created by corporate debt excess, much of it borrowed against property with inflated prices, rather than personal debt and housing-market failures as in the United States.

The writer evidences ignorance to the corporate debt structure, really a change in the rules, that allowed investment banks to borrow (or leverage) 30:1 to buy overpriced assets such as MBS and real estate.

[Hugin]

21. I object to this wording....

"... fears persist that the failure to generate new jobs or ignite more consumer spending ..." The "or" here implies that jobs and consumer spending are independent, instead of intimately linked. It should read something like;

"... fears persist that the failure to generate new jobs leading to more consumer spending ..." Will it never be admitted that the destruction of the Middle-class is one of the root causes of this problem?

Supply-side magical thinking is ingrained in the mindset... and until it is purged, nothing will change.

[Demeter]

37. Let's Face It: If Economists Had to Buy Malpractice Insurance

there would be a lot fewer of them cluttering up the airwaves.

[ozymandius]

7. U.S. Index Futures Drop; S&P 500 Set to Fall From 13-Month High

Nov. 12 (Bloomberg) -- U.S. stock-index futures dropped, indicating the Standard & Poor’s 500 Index will retreat from a 13-month high, after Chinese Premier Wen Jiabao said the world faces a gradual and uneven recovery.
.....

Futures on the S&P 500 index expiring next month retreated 0.5 percent to 1,090.8 at 9:49 a.m. in London. Dow Jones Industrial Average futures lost 0.4 percent to 10,214. Nasdaq- 100 Index futures declined 0.5 percent to 1,774.25.

The S&P 500 has rebounded 62 percent from a 12-year low in March, recovering almost half of its plunge from a record in October 2007. The rally occurred as government stimulus measures and Federal Reserve interest rate cuts helped end a four-quarter contraction in the U.S. economy. That’s helped push the index to 22 times reported earnings, the highest since 2002, according to weekly data compiled by Bloomberg.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aXWU_mQkgkL0

[ozymandius]

8. Latest Futures Numbers

S&P 500 -2.30 1094.00 11/12 5:46am

NASDAQ -10.00 1773.75 11/12 4:57am

Dow Jones -14.00 10245.00 11/12 5:24am

[ozymandius]

9. Wall Street Faces ‘Live Ammo’ as Congress Aims to Unravel Banks

Nov. 12 (Bloomberg) -- Seven Wall Street lobbyists trooped to Capitol Hill on Nov. 9, hoping to convince Representative Paul Kanjorski’s staff that his plan to dismantle large financial firms was a bad idea.

They walked out with a sobering conclusion, according to the accounts of two attendees who requested anonymity because the meeting was private. Not only was Kanjorski serious, he planned to offer the legislation as early as next week -- and it just might pass.

Today marks a decade to the day that President Bill Clinton signed the repeal of the Depression-era Glass-Steagall Act that split investment-banking from lending and deposit-taking. The repeal allowed the creation of Citigroup Inc., the financial colossus now propped up by $45 billion in taxpayer rescue funds. Financial firms are scrambling to prevent Congress from re- imposing the act.

.....
John S. Reed, who headed Citicorp for 14 years before the 1998 merger with Sanford “Sandy” Weill’s Travelers Group Inc. that created Citigroup, last week apologized for his role in creating the company. He said lawmakers were wrong to repeal Glass-Steagall, likening the separation it created to a ship with compartments so that a single leak doesn’t sink the whole vessel. Alan Greenspan, the former Federal Reserve chairman, also favors breakups in some cases.

http://www.bloomberg.com/apps/news?pid=20601087&sid=az7AcisnxsCA&pos=1

[ozymandius]

10. The Kanjorski “We’re Tough on TBTF” Headfake (Naked Capitalism)

Dear God, if you read the media, you’d really think the Congressional huffing and puffing at the banking industry was going to solve the “too big to fail” problem, or even make much of a difference.

Folks, I hate to tell you, these remedies fall so far short of what it would take as to constitute a complete joke. And I am cynical enough to believe that the industry is secretly delighted, its bitter howls to the contrary (now it admittedly may be a shocker to them that they might have to be a wee bit inconvenienced in the interests of appeasing the public). Remember the lesson of the Barney Frank derivatives bill: even that weak offering was watered down to nothing. The Kanjorski salvo is the first round, and the banks are going to get this cut back, substantially. And Kanjorski has unwittingly played into their hands. But the theater certainly is impressive.
.....

Now admittedly, the Kanjorski proposal would reinstitute Glass Steagall by splitting commercial banking operations from investment banking and thus lead to some pretty dramatic surgery at JP Morgan (hiving off Chase Manhattan), Citigroup, and Bank of America. But while that would affect the scope of operations (and thus the pay packages, since top level pay is correlated with asset size of the entity) of the highest ranks, it would have comparatively little impact at the business unit level.
.....

The crisis bailed out the global capital markets. Look at where the Fed’s rescue the markets programs were directed. Once you got past the first, the Term Auction Facility, they were directed at credit markets that are the playground of a fairly small number of very influential capital markets firms (an indicative list: Goldman, JP Morgan, Citigroup, Morgan Stanley, the old Merrill part of BofA, plus the trading operations of major international banks like UBS, SocGen, Barclays, DeutscheBank). Simply splitting off capital markets businesses does absolutely nothing to reduce the risk they represent to taxpayers. A massive safety net has been thrown underneath them, and no one save Goldman’s PR department believes that they won’t be bailed out when one of them goes off a cliff again.
.....

Now there are a bunch of things the officialdom COULD do to reduce the size of the public’s exposure, and I see them nowhere on this list. One is to bar proprietary trading and monitor overnight positions to make sure banks don’t simply start taking significant (as opposed to short-term) directional bets on customer order flow desks. Second is to force any systemically important firm to get out of the commodities business. We have commodities exchanges that perform the socially useful function of commodities hedging for end users. There is no reason for governments to backstop that. Principal trading similarly not socially productive and should not be in firms that have recourse to the government checkbook. Capital markets players should also be prohibited from offering bridge loans to customers (that is consistent with the Glass Steagall idea).

http://www.nakedcapitalism.com/2009/11/the-kanjorski-were-tough-on-tbtf-headfake.html

[ozymandius]

11. Rosenberg: U.S. unemployment rate headed for 12.0-13.0%

David Rosenberg thinks the unemployment rate is headed much higher than anyone anticipates. If you recall, back in January when the stimulus package was crafted, the Obama Administration felt that passing the bill would mean an unemployment rate which would top out at 8.0%. As the situation deteriorated, the President recognized that 10.0% was more likely – a number we just got last week. But Rosenberg is the only one (except Meredith Whitney) who is talking about 12-13%.
.....

Here’s what Rosenberg says:

There are serious structural issues undermining the U.S. labour market as companies continue to adjust their order books, production schedules and staffing requirements to a semi-permanently impaired credit backdrop. The bottom line is that the level of credit per unit of GDP is going to be much, much lower in the future than has been the case in the last two decades. While we may be getting close to a bottom in terms of employment, the jobless rate is very likely going to be climbing much further in the future due to the secular dynamics within the labour market.

But in a nutshell, to be calling for a 12.0-13.0% unemployment rate is meaningless except that it is very likely going to be a headline grabber. The most inclusive definition of them all, the U6 measure of the unemployment rate, which includes all forms of unemployed and underemployed, is already at 17.5%. The posted U3 jobless rate that everyone focuses on is at 10.2% (though if it weren’t for the drop in the labour force participation rate, to 65.1% from 66.0% a year ago, the unemployment rate would be testing the post-WWII high of 10.8% right now). The gap between the U6 and the official U3 rate is at a record 7.3 percentage points. Normally this spread is between 3-4 percentage points and ultimately we will see a reversion to the mean, to some unhappy middle where the U6 may be closer to 15.0-16.0% and the posted jobless rate closer to 12%. This will undoubtedly be a major political issue, especially in the context of a mid-term elections and the GOP starting to gain some electoral ground.

As I indicated when the employment numbers came out last week, we should expect the labor force participation rate to increase during recovery as discouraged workers come back into the labor force. The fact that the opposite is still happening means the unemployment rate will move higher (although 13% is sure to induce a double dip and I am not seeing this as a base case at this time).

http://www.creditwritedowns.com/2009/11/rosenberg-u-s-unemployment-rate-headed-for-12-0-13-0.html

[ozymandius]

12. Understatement of the Year: “Recovery Hampered by Unemployment” (Ritholtz)

This has to be the understatement of the year: Fed Officials Say Recovery Will Be Hampered by Unemployment.

Here’s the money quote:

“Certainly, there are scenarios in which the unemployment rate might still be at a frustratingly high level and might not have moved much, in which still the overall conditions in the economy would justify beginning to tighten.”

-Dennis Lockhart, Atlanta Fed President.

http://www.ritholtz.com/blog/2009/11/understatement-recovery-hampered-by-unemployment/

[Tansy_Gold]

14. And what, exactly, would those scenarios be, Mr. Lockhart?

What an appropriate name. Like Davy Jones of Pirates of the Caribbean I think this jerk has his heart locked away in little box so it doesn't affect any of his bias toward the greedy.


What an asshole.


Checkin' in long enough to read and rec.


:hi: Ozy!




Tansy Gold

[tclambert]

15. On futher questioning , Ritholtz admitted that, under certain scenarios, rain might be wet.

For something so obviously true, he sure threw in a lot of weasel words: "scenarios," two "mights," two "stills," a "much," an "overall," and the grand finale "justify beginning to tighten."

[AnneD]

18. Maybe it is just menapause......

but I find it harder to suffer fools spouting 'information' like this anymore. We know what the problem is, now what are you doing about it?
I am going through a lot of drama here on the job so I will be cutting my posts down for a bit (much loved principal removed, parents protesting at the sups office, land grab by developers, community fighting back,etc). More drama than the Tonies. I am ready for my close up, Mr. DeMille.

[ozymandius]

45. Ritholtz? Or did you mean Lockhart?

Barry Ritholtz, it seems, was making fun of Lockhart with his equivocal verbal shimmying.

[tclambert]

48. Sorry, sorry, mea culpa.

Replace "Ritholtz" with "Lockhart" @ all. Whoever said it, it's still funny.

[tclambert]

16. When asked if puppies were cute, Ritholtz replied:

"Certainly, in some possible cases in which appearance and behavior might exceed the nominative mean of other animals, or observable objects in general, the overall attractiveness might justify opinions of favorableness from some quarters."

[bread_and_roses]

27. ROFL - perfect! (n/t)

[Dr.Phool]

31. Tasmanian Devil

[DemReadingDU]

32. ok, must finally ask

What is puppy Sara wearing on her head?
(or maybe I shouldn't really ask, lol)

[Dr.Phool]

34. At this moment it looks like a waste basket.

In the picture, it's a visor for a baby.

My wife works for the agency that handles foster care, and found that at work, brought it home and put it on her. I got a picture, and she hasn't had it on since.





She just got back from wrestling with 2 adult labs at the dog park.

[Roland99]

33. Fedspeak. Another of Greenspan's legacies.

[ozymandius]

13. Have a nice day, everyone.

:donut: :donut: :donut:
Work calls.

:hi:

[nc4bo]

30. Basking under the nice day vibes. It's a jungle "out there". nt

[ShockediSay]

17. Wasn't Scooter Libby a convicted Bush Administration Official? nt

[AnneD]

19. Yes but I think....

he was pardoned before he even served a day-something crazy like that.

[tclambert]

22. Wikipedia is just a few clicks away . . .

From : http://en.wikipedia.org/wiki/Scooter_Libby

Irve Lewis "Scooter" Libby was convicted of 4 counts: "one count of obstruction of justice; two counts of perjury; and one count of making false statements to federal investigators."

Judge Reggie B. Walton "sentenced Libby to 30 months in federal prison, a fine of $250,000, and two years of supervised release, including 400 hours of community service." "On July 2, 2007, when Libby's appeal of Judge Walton's order failed, President Bush commuted Libby's 30-month prison sentence, leaving the other parts of his sentence intact." So, no prison, but not a complete pardon, either.

"As a consequence of his conviction in United States v. Libby, his license to practice law was suspended by the Supreme Court of Pennsylvania in December 2007. On April 3, 2007, the District of Columbia Bar suspended his license to practice law in Washington, D.C., and recommended his disbarment pending his appeal of his conviction. On March 20, 2008, after he dropped his appeal, he was disbarred by the District of Columbia Court of Appeals, in Washington, D.C., at least until 2012, when he is eligible to apply for reinstatement."

[Hugin]

23. 2007 was before the Dems "sweeping victory"...

However, there has been precious little conviction happening since they took office.

Also, the 'conviction enumerator' at the top of the OP is primarily concerned with the economic crimes committed which led directly to the current economic crisis. (Granted, largely starting under the Bush Administration, but, also largely continuing to this day.)

[AnneD]

42. Usually I check....

But I had to dash off to work and am just now checking in. Thanks TLC.:fistbump:

[UpInArms]

24. dollar watch

http://quotes.ino.com/chart/?acs=NYBOT_DX&v=i

Last trade 75.364 Change +0.202 (+0.26%)

Dollar Testing 15-Month Lows as Investors Weigh in on Risk Appetite

http://www.dailyfx.com/forex/fundamental/article/what_fed_watches/2009-11-12-0354-Dollar_Testing_15_Month_Lows_as.html

The Economy and the Credit Market



Are monetary policy officials and market participants worried about the same thing when it comes to the US dollar? Certainly not. Central bankers and government officials are concerned about stabilizing growth, keeping inflation inline and providing financial stability. Off the radar, there is also the desire to keep FX volatility to a minimum; and there may even be an unspoken approval of the currency’s weakness as it bolsters trade and thereby opens a very-welcome stream of income. However, in the long-term these decision makers know the importance of a strong dollar when it comes to the United States’ position in the global economy. A permanent fall in the greenback’s influence will almost certainly mean the same for the nation in other regards. However, these are long-term concerns. For the immediate future, trades are concerned primarily with risk appetite and the dollar’s relationship to this underlying fundamental driver. As for sentiment, the Dow and gold are clear readings of headlong optimism; but the reliance of this move on sentiment is growing more and more clear each day. At this pace, the market will eventually hit a level where the market can no longer ignore the discrepancy with fundamentals and a correction will ensue. Until that day, though, the dollar likes like it is still firmly on the short-side of risk appetite. Even the IMF remarked that it seemed the dollar was playing the role of funding currency for the carry trade.



...more...

The Divergence Between Gold and Silver is too Remarkable to Ignore

The Divergence Between Gold and Silver is too Remarkable to Ignore

Gold shot to another record high through Wednesday’s close; and this time the advance wouldn’t be worn down later in the session. The strength for the currency seems to be partly fundamental and partly speculative.

North American Commodity Update

Commodities - Energy

Crude Finds Strength on Rising Emerging Market Demand but Not Enough to Lead to a Breakout

Crude Oil (WTI) - $79.00 // -$0.05 // -0.06%

Crude reported for another relatively quiet US session Wednesday as the combination of the Veteran’s day holiday, steady risk trends and delayed Energy Department inventory numbers offered little impetus to spark a new trend. Looking at liquidity, volume was exceptionally light in the front-month contract. The API figures for the week ending on November 6th did little to leverage bullish expectations for the more market moving DoE figures scheduled for release on Thursday. According to the group, crude stockpiles rose 1.217 million barrels following the previous period’s 3.276 million contraction. Gasoline and distillate stores similarly rose 1.403 million and 640,000 barrels respectively. Looking ahead to tomorrow’s figures; analyst forecasts are somewhat mixed. The government is expected to report a 1 million barrel jump in inventories through the end of last week along with a 350,000-barrel drop in gasoline and 700,000-barrel contraction in distillate holdings. For those more concerned about the bigger picture and ultimately the break from this past three/four week congestion pattern, we will also have to watch their estimates for demand. Last week’s implied demand reading for crude was 14,079 million barrels not far from a 14-month low.

As for global supply and demand, news over the past 24 hours shows a mixed picture. On the supply side, producers are trying to compensate for the drop in prices by increasing volume. This in turn further deflates price. OPEC reported its compliance levels were down to 60 percent with the 11 nations defined by the formal 24.845 million barrel a day limit actually pumping 26.523 million barrels. On the other hand, demand is looking up – especially for emerging markets. China reported crude imports surged to its second highest level on record in October on 4.5 million barrels a day for the period. With a strong pace of growth behind it, consumption trends keep the economy thirsty. However, it is the restrained appetite for the commodity in the industrial world (and the US) that will really define the larger trend.

<snip>

The Divergence Between Gold and Silver is too Remarkable to Ignore

Spot Gold - $1,117.40 // $11.60 // 1.05%

Gold shot to another record high through Wednesday’s close; and this time the advance wouldn’t be worn down later in the session. The strength for the currency seems to be partly fundamental and partly speculative. Sentiment was on the rise throughout Thursday’s session; but the pace was certainly reserved. Buying on economic considerations seems to be able to fill the gap. Inflation expectations are on the rise with iShares’ TIPS inflation linked bond index rising to a new 13 month high for the day. There seems to be a belief that central banks will start to fight inflation before a speculative collapse (and perhaps actively diversify away from dollars along the way) as open interest on the futures market is at its highest level since January 2008. Speculators are clearly interested in what will happen next.

Spot Silver - $17.61 // $0.26 // 1.50%

The divergence between price action in silver and gold is growing far more prominent. Whereas the more precious metal is climbing to record highs on a near daily basis; the more accessible commodity is more or less set within congestion with modest daily changes. This says something about general risk appetite and the highly speculative nature of gold’s record-breaking run. Silver is more closely tracking crude and the dollar which are awaiting a clear sign for investor sentiment before making critical moves. As for speculative presence, open interest in the futures market just recently fell back from their highest levels in 15 months – despite the three-week high in price.

...more...

[MattSh]

25. Pfizer and Kelo's Ghost Town.

The Supreme Court's 2005 decision in Kelo v. City of New London stands as one of the worst in recent years, handing local governments carte blanche to seize private property in the name of economic development. Now, four years after that decision gave Susette Kelo's land to private developers for a project including a hotel and offices intended to enhance Pfizer Inc.'s nearby corporate facility, the pharmaceutical giant has announced it will close its research and development headquarters in New London, Connecticut.

The aftermath of Kelo is the latest example of the futility of using eminent domain as corporate welfare. While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other "desirable" elements. Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation.

That's especially galling because the five Supreme Court Justices cited the development plan as a major factor in rationalizing their Kelo decision. Justice Anthony Kennedy called the plan "comprehensive," while Justice John Paul Stevens insisted that "The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue." So much for that.

Kelo's silver lining has been that it transformed eminent domain from an arcane government power into a major concern of voters who suddenly wonder if their own homes are at risk. According to the Institute for Justice, which represented Susette Kelo, 43 states have since passed laws that place limits and safeguards on eminent domain, giving property owners greater security in their homes. State courts have also held local development projects to a higher standard than what prevailed against the condemned neighborhood in New London.

If there is a lesson from Connecticut's misfortune, it is that economic development that relies on the strong arm of government will never be the kind to create sustainable growth.

Yeah, from the WSJ, believe it or not... ===> http://online.wsj.com/article/SB10001424052748704402404574527513453636326.html

.

[Hugin]

26. Thanks for posting a followup, MattSh.

Kelo and New London were a big issue when I first started posting on DU... and it appears to have turned out as I thought it would at the time.

:tsk:

[Demeter]

38. Pfizer Could Give Goldman a Run for The Booby Prize

GS could use Pfizer as the minor league source pool for their Pirates R Us franchise.

You wouldn't believe what they did to Michigan, both Ann Arbor and Kalamazoo.

[Hugin]

28. Home-Purchase Index in U.S. Plunges to Lowest Level Since 2000 (Bloomberg)

By Bob Willis

Nov. 12 (Bloomberg) -- Mortgage applications to purchase homes in the U.S. plunged last week to the lowest level in almost nine years as Americans waited for the outcome of deliberations to extend a government tax credit.

The Mortgage Bankers Association’s index of applications to buy a house dropped 12 percent in the week ended Nov. 6 to 220.9, the lowest level since Dec. 2000. The group’s refinancing gauge rose 11 percent as interest rates decreased, pushing the overall index up 3.2 percent.

The drop in buying plans points to the risk that the recent stabilization in housing will unravel without government help. In a bid to sustain the recovery, Congress passed and the administration signed a bill last week to extend jobless benefits and incentives for first-time homebuyers, adding a provision that also made funds available to current owners.

“Uncertainty over the housing tax credit sent some tremors through the market in recent weeks,” Michael Larson, a housing analyst at Weiss Research in Jupiter, Florida, said before the report. “But now that Congress has extended and expanded the credit, we should see demand pick back up.”

More... http://www.bloomberg.com/apps/news?pid=20601087&sid=a1_pyNFw6mbg&pos=5

[DemReadingDU]

35. Treasury pay czar 'very concerned' pay rules could cause bailed-out firms to lose talent

11/12/09 Treasury concerned' pay rules could cause bailed-out firms to lose talent

The Obama administration's pay czar said Thursday that he is "very concerned" about scaring away top talent at seven firms that took the biggest bailouts.

"The determinations I render I design first and foremost to make sure those companies thrive and that the taxpayers get their money back," said Kenneth Feinberg, the Treasury Department's special master for executive compensation.

Feinberg spoke following reports that American International Group Inc. CEO Robert Benmosche was threatening to leave after chafing under Feinberg's oversight of pay at the firm. Benmosche said Wednesday he was frustrated but planned to stay on.

Feinberg didn't learn about Benmosche's purported threats to leave the company until reading those news reports, he told reporters after his speech.

But he said Benmosche had told him that Feinberg's pay rules for the 25 highest-earning employees would cause key personnel to leave, making it difficult for the company to return its taxpayer bailouts.

more...
http://finance.yahoo.com/news/Obamas-pay-czar-concerned-apf-2387308583.html?x=0&sec=topStories&pos=2&asset=&ccode=


Excuses, excuses. As if we taxpayers would ever get our money back anyway.

What if the high-paying execs were in an accident and died. That is a loss of 'talent' too.

[Dr.Phool]

36. Or a dream come true.

[Hugin]

41. I guess the 'talent' will leave... To all of those 'healthy' TBTF banks out there.

:rofl:

[ozymandius]

47. I wonder if that "talent" includes scrubbing floors.

Now that would be a useful and, for once, honorable job for such a talented lot.

[Demeter]

39. That Cartoon Is Just Sad

As compensation for the fairy dust that's been flying around Wall Street, and the Greater Depression everywhere else, this Weekend Economist will continue the saga of Walt Disney and his technicolor dream machine. (Find the hidden quotes).

When we last visited "the happiest spot on earth"

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x490971

or whatever the hell the slogan is, we only got as far as Silly Symphonies. But now we are getting to Mickey and all his friends, and the feature-length animations of Disney's Golden Age. So come along Friday night and beyond as we visit Wonderland, Neverland and all points in between, in this world and in DisneyWorld.

[DemReadingDU]

40. FDIC Orders Banks to Prepay $45 Billion to Build Fund

11/12/09 FDIC Orders Banks to Prepay $45 Billion to Build Fund

U.S. lenders will prepay three years of premiums to replenish the government’s deposit insurance fund drained by the fastest pace of bank failures in 17 years, the Federal Deposit Insurance Corp. decided today.

The FDIC board approved the payments today at a Washington meeting to raise an estimated $45 billion for the fund that slipped into a deficit at the end of the third quarter. Banks had backed the prepayments over special assessments to bolster the fund as the U.S. closed 120 lenders this year.

The action satisfies the deposit fund’s “need for liquidity without imposing undue burden on the industry,” FDIC Chairman Sheila Bair said at the meeting.

A surge in failures has pushed the industry-supported fund into a deficit for the first time since 1991, according to agency estimates. The FDIC had set aside $32 billion for 2009 failures expected through June 30, and estimates bank failures through 2013 will cost $100 billion.

The banking industry said paying assessments in advance would be less expensive than other alternatives.
.
.
FDIC-insured banks will pay their premiums for the fourth quarter and the next three years on Dec. 30. Banks can seek an exemption “if the prepayment would significantly impair the institution’s liquidity, or otherwise create extraordinary hardship,” according to a summary of the final rule.

more...
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4D2fp02SSn8&pos=6

[Demeter]

51. That's Going to Go Down Like a Cup of Cold Sick

How many years in advance will they prepay in the end, do you think?

Why don't they just call it collecting for those Bush years when FDIC collected NOTHING?

[Roland99]

43. Nordstrom shares fall 3% after Q3 fin'l report

per MarketWatch breaking news ticker thingie.

[Roland99]

44. Disney profit rises 18%

Disney profit rises 18%
http://www.marketwatch.com/story/disney-profit-rises-18-2009-11-12

CHICAGO (MarketWatch) -- Walt Disney Co. said its fourth fiscal-quarter profit rose 18% on improved results at cable network ESPN and syndication sales of "Grey's Anatomy" and "Desperate Housewives." The Burbank, Calif.-based entertainment conglomerate /quotes/comstock/13*!dis/quotes/nls/dis (DIS 30.18, +1.13, +3.89%) said it earned $895 million, or 47 cents a share, compared with a profit of $760 million, or 40 cents a share, in the prior year's fourth quarter. Excluding an item, the company said it would've earned 46 cents a share in the latest three months. Revenue rose 4% to $9.87 billion from $9.44 billion. Analysts polled by Thomson Reuters expected to see a profit of 41 cents a share on sales of $9.31 billion

The rise in profits sure isn't from their theme parks. Although they've kept occupancy at the resorts up and attendance at the parks up (trust me, they've been quite crowded even at times I wasn't expecting it to be) they've done so with huge discounts (stay 4 nights, get 3 free; free admission on your birthday; extending the annual pass to 15 months when bought by end of 2009; etc.)

They also suspended development, for all intents and purposes, on the Flamingo Crossings on the west-side of Disney (more retail, hotel, dining, etc. for the more budget-oriented vs. the Downtown Disney side of things)

[Demeter]

52. I'm sure that they can afford the discounting

Don't cry for Disney.

[Roland99]

53. Oh, I'm not!

[Festivito]

49. Debt: 11/10/2009 11,986,954,033,520.56 (DOWN 3,068,507,844.23) (Tue)

(Debt a little higher, FICA side down. No report was posted for Veteran's day. Good day to all.)

= Held by the Public + Intragovernmental(FICA)
= 7,588,373,933,038.29 + 4,398,580,100,482.27
UP 298,454,946.90 + DOWN 3,366,962,791.13

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 308-Million person America.
If every American, man, woman and child puts in $3.25 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.74, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 10 seconds we net gain another American, so at the end of the workday of the report, there should be 307,908,318 people in America.
http://www.census.gov/population/www/popclockus.html ON 11/07/2009 08:19 -> 307,879,272
Currently, each of these Americans owe $38,930.27.
A family of three owes $116,790.81. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 32 days.
The average for the last 22 reports is 4,143,397,332.37.
The average for the last 30 days would be 3,038,491,377.07.
The average for the last 32 days would be 2,848,585,666.00.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 174 reports in 253 days of Obama's part of FY2009 averaging 7.33B$ per report, 5.07B$/day so far.
There were 249 reports in 365 days of FY2009 averaging 7.57B$ per report, 5.16B$/day.
There were 29 reports in 41 days of FY2010 averaging 2.66B$ per report, 1.88B$/day.
Above line should be okay

PROJECTION:
There are 1,167 days remaining in this Obama 1st term.
By that time the debt could be between 13.6 and 18.0T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
11/10/2009 11,986,954,033,520.56 BHO (UP 1,360,076,984,607.48 so far since Obama took office.)

FISCAL YEAR DEBT CHANGE, Sep 30 prior year to Sep 30 named year:
(One "* " for each 40B$ reached)
FY1994 +0,281,261,026,873.94 ------------* * * * * * * WJC
FY1995 +0,281,232,990,696.07 ------------* * * * * * * WJC
FY1996 +0,250,828,038,426.34 ------------* * * * * * WJC
FY1997 +0,188,335,072,261.61 ------------* * * * WJC
FY1998 +0,113,046,997,500.28 ------------* * WJC
FY1999 +0,130,077,892,735.81 ------------* * * WJC
FY2000 +0,017,907,308,253.43 ------------WJC
FY2001 +0,133,285,202,313.20 ------------* * * C&B
01-WJC +0,053,598,528,417.78 ------------* WJC 31% of FY, 40% of FY-Debt
01-GWB +0,079,686,673,895.42 ------------* GWB 69% of FY, 60% of FY-Debt
FY2002 +0,420,772,553,397.10 ------------* * * * * * * * * * GWB
FY2003 +0,554,995,097,146.46 ------------* * * * * * * * * * * * * GWB
FY2004 +0,595,821,633,586.70 ------------* * * * * * * * * * * * * * GWB
FY2005 +0,553,656,965,393.18 ------------* * * * * * * * * * * * * GWB
FY2006 +0,574,264,237,491.73 ------------* * * * * * * * * * * * * * GWB
FY2007 +0,500,679,473,047.25 ------------* * * * * * * * * * * * GWB
FY2008 +1,017,071,524,649.92 ------------* * * * * * * * * * * * * * * * * * * * * * * * * GWB
FY2009 +1,885,104,106,599.30 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * B&O
09GWB +0,602,152,152,000.60 ------------* * * * * * * * * * * * * * * GWB 31% of FY, 32% of FY-Debt
09-BHO +1,282,951,954,598.70 ------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * BHO 69% of FY, 68% of FY-Debt
FY2010 +0,077,125,030,008.80 ------------* BHO
Endof10 +0,686,600,876,907.62 ------------* * * * * * * * * * * * * * * * * Linear Projection

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
10/21/2009 +000,260,615,642.06 ------------********
10/22/2009 -054,881,746,021.15 -
10/23/2009 -000,105,634,856.79 ---
10/26/2009 -000,680,933,964.04 --- Mon
10/27/2009 +000,626,474,250.98 ------------********
10/28/2009 +000,798,039,832.64 ------------********
10/29/2009 -019,769,093,363.09 -
10/30/2009 +031,206,306,633.43 ------------**********
11/02/2009 +091,997,621,963.98 ------------********** Mon
11/03/2009 +000,189,596,548.58 ------------********
11/04/2009 -000,084,777,046.07 ----
11/05/2009 +008,148,647,528.82 ------------*********
11/06/2009 -000,072,128,565.19 ----
11/09/2009 +000,009,587,108.80 ------------****** Mon
11/10/2009 +000,298,454,946.90 ------------********

57,941,030,639.86 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008 while Bush was in power JUST BEFORE fiscal year end.
Bush admin borrowed $962,245,245,654.01 in those last 124 days in office crossing two fiscal years.
$360,093,093,653.42 in last 12 days of FY2008, and $602,152,152,000.59 in subsequent 112 days before leaving office.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=4142193&mesg_id=4142221