Morning Call [7:12am ET] Canada Day eh! No holiday here. No visiting Queen either. But party on Canada while the rest of us trade a market that turned ugly late yesterday afternoon.
Rather than wait until the market close, “Moody's Investors Service sent a shudder through financial markets when it said late Wednesday it has placed Spain's AAA sovereign rating under review for a possible downgrade because of worsening economic prospects,” reported AP.
I’d like to make a snide remark about Warren Buffett, but I’ll take the high road and point to the fact that today Spain raised $4.3 billion in an oversubscribed five-year bond sale at low interest rates, causing a Spanish Treasury official to remark that the Moody's warning went "totally unnoticed." And this morning (at 7:04am ET) the Euro future has rallied +0.84%, taking the US Dollar down -0.50%.
Hence the conditions are right for a good day for equities to nip the apparent collapse in the bud. The S&P future is up +2.50 (+0.24%) to 1026.75 and the DJIA is up +20.00 to 9722.00. If those prices hold and strengthen later in the day, it should also be a good day for Gold (future at 1243.30) and Silver (at 18.64), although there is no movement presently.
Along with the weak dollar, most of the commodity prices are higher. Lumber, for instance, is up $10 (+5.41%) to $195. The US Bonds are quiet to this point, but may weaken if the Dollar stays soft today.
These are interesting markets to say the least. Having broken through technical support at 1040-1050 on the S&P, it won’t take much to push prices off a cliff as happened in the final 90 minutes yesterday.
Party on Canada, but I am guessing you wish your markets were open today, just like many of us wish we could trade around the clock the way the bankers do.
ADDENDUM 8:30am ET: A moment or two after I published this morning, the US equity futures rolled over and went negative. But the $USD is still weakening and the Euro strengthening, so maybe the Fed and ECB want to own the equity markets in America and Europe as well. However, I do think there will be a temporary plug put in the dike this morning, with another attempt to rally the market, to squeeze the shorts who rushed in yesterday afternoon. Should the $USD keep falling, I feel Gold and Silver (futures at 1241.50 and 18.55 respectively) could burst out to new highs.
Have a great day.
CTA Trading Desk Post-Close Report
An unexpected drop in the ISM index lead to a barrage of selling as skittish investors dumped stocks, fearful world economies are headed for the dreaded “double dip” recession. As the downtrend gathered momentum volume surged suggesting disgruntled Bulls began throwing in the towel now that the S&P resides below the 1040 key support. The mid-morning low print saw S&P futures near the 1005 first support mentioned the past few days, before bottoming and doggedly grinding upward for the remainder of the session (S&P-0.32%).
While equities endured a rollercoaster day, their behavior was quite docile compared to the run-away freight train moves in the Euro (FXE+2.38%) and precious metals (SLV-4.2%, GLD-3.73%). Most of us have been conditioned to expect commodity strength amid a crumbling dollar, and Euro strength to produce stock rallies. The action today flies in the face of conventional wisdom probably contributing to the extreme moves in most capital markets.
When typical inter-market relationships deteriorate or break down you can be sure volatility and exaggerated momentum moves will be hallmarks of the day. The trick for independent traders is to quickly recognize the breakdown in correlation and capitalize on an opportunity, leaving others to search for the reasons “why” something is happening.
Several days ago we noted the superb relative strength in gold, one of the few investments hitting all-time highs. Although we expected higher prices we felt if prices knifed back below the May highs (122.49) a red caution flag would be waved with stops to be placed just beneath the uptrend line off the March 2010 lows (120ish). Prices quickly reversed below 122.49 and spent several days holding above the uptrend line before breaking decisively below the support zone two days ago. While gold ultimately may be heading for 5000 the shorter term technical damage should be respected, and reminds all of us “true believers” why stops must be used to limit risk.
While the market is oversold and certainly entitled to bounce the trend is your friend and it appears to be down. It makes sense to book some profits and await a rally (maybe S&P 1080) to reestablish an aggressively short bias. Rallies are suspect until Bulls can show some conviction and that, my friends, will probably take some time.
The US unemployment report is due to be released tomorrow with most traders probably plotting an early departure unless the jobs figures inject some madness into the markets.
Have a great evening.
Comments
Who bought or funded the purchase of those bonds?
...
Moody's downgrading spain = manipulation?
I recall commenting to myself how such an announcement drops the market in a timely and strategic manner, to break support. But to do so to force the market's hand...?
Cara 100 Ratings Changes
Good morning.
CELG - Target Raised to $81 from $80 @ Wedbush. Outperform
NOK - Nokia upgraded to Neutral from Reduce at WestLB
Addendum
Today is one of those explosive days in the market where I could write an addendum every half-hour. Nobody knows what's going to happen next.
spain, greece defaults = deflation?
So if Spain or Greece defaults, isn't that customarily considered to be a deflationary event?
And isn't deflation customarily good for holders of currency?
So why does the Euro tank every time there's the possibility that Greece could decide to default?
I'm really asking. I've been wondering this for a while, but it finally occurred to me that somebody here might be able to shed some light on this.
Re: Addendum
"Party on Canada, but I am guessing you wish your markets were open today,..."
It seems like this has been a pattern for a couple of years now: building crises coming to a climax and then wham...Canadian markets take a holiday. Seriously!
"Today is one of those explosive days in the market"
What's up Bill? This looks like some serious concerted CB effort across the globe in the currency markets. Did the Fed just lend a few trillion US$ to CB's across the globe?
"...where I could write an addendum every half-hour."
Please do :)
Here is the CS take on the market this morning
The tone of markets changed dramatically during the second quarter. The S&P 500 dropped more than 11% during, and traditionally defensive sectors were the relative winners. That much we know. What we don't know is how long and how deep the correction in equity markets will run.
We believe three developments, taken together, played a central role in "taking the oxygen" out of the US equity market. One is liquidity. Or more precisely, the contraction in "excess liquidity" that is now underway. Another is the softening of leading economic indicators that point to a slowdown in S&P 500 EPS growth. And the third is an observed shift in US consumer behavior. Consumer spending is now growing more slowly than labor income. That is traditionally a negative sign for profit margins.
One positive -- we still peg fair value at 1050-to-1150 for the S&P 500 at year-end 2010. So as stock prices have declined, we think expected returns from US equities have improved. If the index moves lower from here, we anticipate putting some of our 10% cash position to work. We will definitely maintain a defensive bias to our recommended portfolio, but we are hunting for an industry or two with solid fundamentals to add to our recommended equity exposure.
Re: Here is the CS take on the market this morning
"And the third is an observed shift in US consumer behavior. Consumer spending is now growing more slowly than labor income."
That reminds me. I was looking over the CPP Investment board's complete list of foreign public equity holdings the other day and was struck by the fact that their second largest holding was Dollar General Corp. (DG). Like a lot of defensive stocks, it has outperformed SP500 for the last two quarters (+40% on a relative basis).
The largest public foreign equity holding of CPP is the Australian Transurban Group (ASX:TCL) which owns and operates toll roads around the world, including majority stakes in Pocahontas 895 and the Capital Beltway HOT lanes project (under construction) in the US.
Re: Here is the CS take on the market this morning
The quickest way to double your money is to fold it in half and put it back in your pocket.
I agree with Bill's observation
And a short squeeze attempt. Many who were waiting for a symmetrical right shoulder got a right pinky. And rushed in.
But hey even bricks bounce :)
I am watching financials for clues. Jpm and $37. Or ability if any financial to exceed and close above yesterdays highs.
Booyah
Edit: that was quick. I guess the short squeeze happened premarket.
Re: spain, greece defaults = deflation?
No attempt to answer your question, but as I begin to understand currency markets the strength of a currency in relation to other currencies is a concept I'm learning, also, the out right "confidence" in the currency to put that currency in your own pocket comes into play......
Also, trying to grasp Bill's constant commentary on how central banks intervene around the globe to shift the Forex market is a challenge......now I know why a highschool friend of mine who went to work for CS to trade currency is aretired man at 50 and I'm still working for a paycheck.... :-)
Media lost...
Here's what just scrolled across my screen from the US media:
"US Stocks Edge Up After Jobless Claims Amid Cautious Trading", Wall Street Journal.
They should just shut up; it's absolutely absurd the nonsense they print.
Headlines on my iPhone 4
U.S. Manufacturing Grows at Slower Pace Than Forecast in ISM's June Index.
Pending Sales of Existing U.S. Homes Fell 30% in May on Tax Credit's End
Stocks in U.S. Extend Losses After ISM Manufacturing, Home Sales Reports
NASDAQ losing at dbl pace of dow
Hey, I did my part. I have spent a lot of money the past couple weeks.
Bill, I picked up the new 2011 mustang 5.0! We drive similar cars :)
But mine is a coupe.
Auto sales data comes out later this afternoon at 2pm folks.
long term charts
long term charts show how most indexs and large cap's are about to fall off a cliff.
w/ lower than usual volume these could all be large non-confirmations but the patterns are as ugly as it gets imho.
the HUI is looking particularly poor as is the Venture exchange. w/ the USD falling here gold doesnt seem to be responding well, but its not collapsing either.
i wonder how gold will behave during prolonged market weakness as im not so sure if will fall as hard as it did in the great crash of 08. a long bullion short miners might be a great insurance plan heading into august.
either way, i believe longer term we will continue to see the broad markets fall year over year while the same old tired message gets trumpeted about investing and stock selection. i suspect by next year gold will begin its parabolic phase as people get sick and tired of losing money in their mutual funds and still get his with MER's.
happy b-day canada
Euro higher and everything lower...
Does this mean Europeans are all liquidating into their close into cash?
Re: NASDAQ losing at dbl pace of dow
Nice car, NYUGrad. And as a coupe, it will be a lot easier to modify into a Hoover wagon, or what, in Canada, we called a Bennet Buggy! :)
http://en.wikipedia.org/wiki/Bennett_buggy
Re: NASDAQ losing at dbl pace of dow
Lol. At this rate I might need to take out the floor board and convert it into the Barney rubble type car, from flinestones.
http://i-love-cartoons.com/snags/clipart/Hanna-Bar...
Re: Here is the CS take on the market this morning
"One positive -- we still peg fair value at 1050-to-1150 for the S&P 500 at year-end 2010."
WSJ thinks 1500 is a nice target and gives "seven good reasons" in an article today.
http://tinyurl.com/39xa45d
Noticing Lumber
Lumber futures are up big.
But WY, RYN, and LPX are down?
Any ideas? Input cost? or manipulation, if that exist?
RIG, FDX
are up, but not GS, JPM, BAC, MS, GE, XOM, CVX
Market/Gold/Dollar
The divergence in the dollar, market, and gold (all heading down) is curious. Dollar busting through 85.
Any thoughts on what this is setting up going forward?
UXG - My PM stock of the year-Update
Initial resource estimate on El Gallo slated to be released July 7. With current price in the mid $4.60 area, this appears to be a low risk entry point. I believe a rebound over $5.00 will occur by this release. El Gallo is loaded with silver and has some gold in an area 500 feet deep and likely to be a large open pit mine. I have complete faith in Rob McEwen! Having spoken personally with top management of UXG, my confidence is very high on positive results of the resource estimate.
On another topic, I have corresponded with the CEO of Exeter Resources. We did discuss possible acquirers. Currently the stock price is in free fall as expected. No news will be forthcoming for at least another 3 months. I am not chasing but expect the price to drop in the low $5.25 range. Currently it is about $6.00
Note- I presently own a large position in UXG, no position in XRA.
1012
The Gann Square of 9 (at least the way I use it) suggested a possible key number at 1012 (SPX went to 1011.5)...the day is still young, though.
Re: UXG - My PM stock of the year-Update
Hi PapaD,
Do you have any mneaf?Which is another RM stock. I have bought and sold
MINERA ANDES numerious times(small 3k pos.now).
Thanks
CE1969
Re: 1012
I think 1009 is being tested. Its supposed to be 3% under the neck.
A Bottom?
I think we may have hit a short term bottom here. The EUR is skyrocketing higher, FDX, BBY, JWN, and a few others I watch are all higher. I wouldn't be surprised to see a bounce here for a few days/week to as high as 1,080.
FD:
Went long PIR at $6.11. The set up on this one is good, down quite a bit after strong earnings and just above the 200 DMA so the trade is a low risk trade.
Minera Andes
No, I never traded Minera Andes in which McEwen has a large position. He also has a large position in Rubicon which has turned out to be a dud so far. Luckily I turned a profit and ran like hell!! Outside of UXG, I have no other position in gold and silver companies. I do play with Eldorado and Silver Wheaton on occasion.
Cara Bahamas 2010 Conference video
To lighten the mood, here (finally) is the conference video that Jack Senett produced along with Vad Graifer's help as the latter was able to solve a technical problem that others could not. Now that's team work!
It takes a while to load, so give it time.
https://caratrading.com/content/cara-conference-20...
I will have it linked to the home page soon.
GS is picking up
GS up on volume at least for the moment.
sP500
Wow! I believe they call the price action in SP500 during the last two hours a cup and handle. Vad can correct me if I'm wrong. :)
Re: sP500
You are not wrong, LOL.
Nailed reversal almost to the minute today. Below is conversation in the room, superimpose the time of the comment on the SPY chart:
[11:04] {Threei} IMO... market bounce time
[11:10] {member} new lows coming
[11:10] {Threei} feels like headfake to me
[11:10] threatening new lows only to snap right back up
Got beautiful long play on LVS on that read, will make "catch of the day" chart.
Re: sP500
"Got beautiful long play on LVS on that read, will make "catch of the day" chart."
The day is still young Vad; you might yet outdo that nice one. :)
Re: Minera Andes
"He also has a large position in Rubicon which has turned out to be a dud so far."
PapaD
From the looks of the yahoo data, Rubicon (RBY) has tripled since March 2004. Not what I would consider a "dud". The stock has gotten beaten down pretty hard since it hit an all-time high in the $5 range about 6 months back but still a pretty impressive longer term story.
Re: Minera Andes
McEwen has done well on everything he owns. I got Rubicon near the top and protected myself with a stop before it started to sink. McEwen has done very nice on Rubicon up until now but I don't feel that the stock will perform well into the near future because they are near the stage of producing a mine which will probably be accompanied by large costs and their need to get additional funds which could involve share dilution. I don't feel this one is for me anymore.
UXG is a different story. It seems that mining El Gallo could be at a relatively low cost and at the rate they keep expanding the mineralization area, the mine life could be very long and productive. Of course, if Silver breaks out to the $25-30 range, profits will be enormous. In the meantime, I am keeping tabs on the positive drill results.
The Process Extends
Email today: "BCBSMA has announced that in order to align with changes enacted by CMS, they will no longer recognize or pay for consult codes (CPT 99241-99245 and 99251-99255) for dates of service on or after September 1, 2010. CMS has stated that they will be increasing the RVU's for Evaluation and Management codes to partially offset this change."
Basically...CMS (Medicare) eliminated paying consultation codes and switched to evaluation and management codes (reimbursed about 25-30 percent less)...if you're a specialist (respiratory, critical care) doing lots of consults (like I am), you get reimbursed at a lower rate than primary care docs per the time spent. So if they're looking for economic stimulus from me...not happening.
Ouch.
Don't you want to save
Don't you want to save Medicare money Ron
BTW E&M codes will go up for
BTW E&M codes will go up for everyone
Last on this subject, if you
Last on this subject, if you are really pissed off about that how about telling the fiscal conservatives to go after the bloated enormous defense budget
Metals Down Big Today
Silver down $.90 and Gold back down below $1200. Interesting considering the move in $USD. This cannot bode well for stocks. There is no way IMHO that the metals go down without stocks following. Lumber has to be short covering or something because the pending home sales number was TERRIBLE.
I read today someplace (sorry, no link) that based on treasury yields the fair market value of the spx is around 800. This market is a long ways from a bottom.
If $1.6 trillion in excess spending beyond revenues (12% GDP) can only get us to this point, I just don't see how we avoid a major down wave without busting the budget.
BOJ tankan key sentiment index better than expected
"The Bank of Japan's quarterly tankan survey of business sentiment released Thursday showed that large manufacturers' sentiment turned positive for the first time in two years, buoyed by strong exports"
http://www.marketwatch.com/story/boj-tankan-key-se...
JPY touched 115 today.
Retail Sales
Hi All - Noted this quip today: Retail sales figures in the past several months have surprised us to the upside more often than not. What we are seeing is that at the margin many of those home owners who are defaulting on their mortgages are instead taking the freed-up cash flow from those non-payments and spending money upon other things. When one is “freed” from the burden of not making a sizeable mortgage payment one has the new ability to spend money on other things i.e. groceries, liquor; new golf clubs; a vacation in Florida, a trip to Las Vegas, etc. Now I see the Regime is unable to secure the borders - how about a card for all to evidence birthplace & identity - I had to present a birth certificate when I got my first driver's license, and subsequently the license for a rental unit and work place. How is Hope & Change working for you today? Happy Trading
Re: Metals Down Big Today
S&P went from 666 to 1220 in 13 months without any significant correction. That is +83% and quite impressive if you ask me, no matter how much stimulus was used to make it possible. I never thought of such performance in March 2009. Fib .618 was hit today. Fib 0.5 is located at approximately 950 and 0.382 at 880. I use the projections to get an idea of proportions. S&P has corrected -17% so far and induced plenty of fear in market participants, especially by busting through 1040. I like that, fear.
Lumber fell from 327 (after doubling in 6 months) to 175 in two months. 327USD/mbf was last seen in 2006. Industry leaders have previously said that the run-up over 300 was due to logistic problems and that a correction was expected when the problems would be resolved. It seems like the logistics are working again. 140USD/mbf was the price when the world economy was about to have (or had...) a melt down in March 2009.
In my opinion, market prices are getting attractive again. At accelerating speed. I like that.
Re: Cara Bahamas 2010 Conference video
Great to see some familiar faces and new faces!
This chart makes me smile
JPM
it has been a magnet to the $39-40 area. Getting back there each time. But today's tail tells me prices will be lower than today's low very soon.
http://bit.ly/c5Vs2q
No position. I stopped following GS after all the hot press and switched to the Morgans
Scripted?
Did the last friday jobs report disappoint? Will this friday's job's report surprise? This week seem's scripted with the "sheeple" all hearded into the sell barn. The fund managers got ripped with a loss right into the close of the month. I'm sure GS made money everyday? The dance, the script.....
$naa50r
below 15.
Do your own homework
28th Ammendment Proposal--True or False?
A proposed 28th amendment is floating around:
"Proposed 28th Amendment to the United States Constitution: "Congress shall make no law that applies to the citizens of the United States that does not apply to congressional members..."
They point out congressional priviledge and protection from proesecutions, etc. Snopes.com says this is mostly false and misleading...however the basic idea of making Congress adhere to what they dole out is....refreshing?????
http://www.snopes.com/politics/medical/28thamendme...
The dike is springing a leak
SACRAMENTO, Calif. (AP) -- Gov. Arnold Schwarzenegger on Thursday ordered about 200,000 state workers to be paid the federal minimum wage this month because the state Legislature has not passed a budget.
Department of Personnel Administration Director Debbie Endsley sent the order in a letter to the state controller, who refused a similar order two years ago and may try to do the same thing this time. Most state employees will be paid the federal minimum of $7.25 per hour for the July pay period.
Schwarzenegger spokesman Aaron McLear said the change should be reflected in state employees' next paycheck. Workers will be paid in full retroactively once a budget is passed.
The Legislature has failed to take steps to close California's $19 billion budget deficit, even as the new fiscal year began Thursday.
Big number problem
I have to confess,I am suffering from "Big number syndrome" but this YouTube visualization helped http://www.youtube.com/watch?v=cWt8hTayupE
Re: A Bottom?
re:PIR
Just pulled up a chart and was stunned to see it traded at like 0.12 or so at the bottom of the plunge 3/09 (or perhaps it has split since then) but in any case, wow, wouldn't it have been nice to pick up a few 100k shares at that price...
Dividends
I'm told that there is increasing pressure on directors of cash rich corps to consider declaring extra year end dividends payable before the Bush tax cuts expire. It makes sense to me. I would rather have 85 cents in December than 60 cents in January.
It is bizzare that the 'powers that are' would raise taxes on dividends paid to Ma and Pa saver during a depression but ceases never wander.
Anyway, for those who invest in companies in order to participate in a rising stream of future dividends (yah right) might be advised to lobby for a year end extra.
Obviously no one knows whether Mr. Dingbat and friends will reset the timer on this stink bomb but year end tax planning starts soon. Be advised.
I've railed against the innumerate idiots that have supported stock buybacks over the last many years. Common sense said to me that given equal tax treatment, excess capital should be returned to shareholders in the form of dividends. I trust corporate managements as much as I trust Barney Frank. If you let either behind you, you are gonna get screwed.
If the Bush tax cuts expire on que, I change my mind. Dividends become evil. Some buybacks may then make economic sense. The devil is in the details as always...
gold behavior
I know this is an old chestnut, but I can't help but notice the difference in gold's behavior today during NY market hours today and how it behaved after market hours. Right up until the last tick in NY, somebody had to sell - presumably gong short. That last move down to 1196 at 4:00 was just priceless. But right after the close, prices have pretty much continuously drifted up.
To me it feels like every now and then, there's a monster sell program that gets turned on, and it runs for a chunk of the trading day - sometimes starting in london, sometimes in new york, and once it is shut down in new york the more fundamental interest starts to reappear and the market trades more normally. This isn't every day - or even every week and in fact I haven't seen it for a while, but when this program appears, I have learned that it is best not to get in its way.
I think I can also tell the difference between a "normal selloff" and one that has the program's fingerprints on it. Today, it felt like the program was firmly in charge. Now of course this could simply be a hedge fund wanting to "get out of gold never mind the price forthwith"; I'm not going to speculate on the motivations for running the program.
Someday, I will be a really clever trader and hop on the bandwagon, but I'm not quite there yet.
Will the program be run again tomorrow? If not, perhaps 1208 is a good buying opportunity. God knows the world hasn't avoided the sovereign defaults issue...
Re: gold behavior
Dave, what would you buy? Miners or Gold ETFs like GLD, GDX or CEF?
What a session yesterday
The market never fails to surprise, which is why it is great to be ready for anything. The numbers failed to impress and a pop was quickly followed by a massive drop.
5 sessions now I've been trading and as the volatility increased I noticed a particular pattern. As worked out yesterday, my entry limit price was way too tight for this increasingly volatile market and gains were being passed up. This was leading to frustration and some awful chasing, which was putting me in the opposite camp of the traders I work with.
But rather than lose the plot as the market bottomed out I stayed because of one predictability I've observed this last year - the market's tendency to rally following such a fall. The huge hole was mostly filled and I look forward to trading more profitably with a looser entry and exit price now. Nothing like a whoooosh down in price that jumps straight over your stop target to frustrate one's trading.
Look at WHR yesterday. multi point moves which in the rally was most appreciated and a 30 point loss in just over 2 months. Pulling itself up yesterday to close above the 200ma on the daily makes me wonder if its bounce time. Looking at SPY gotta wonder if the market is going to roll over and play dead or test previous support first. WHR could be interesting in such a case.
Looking forward to today's surprise.
Aussie govt. gets their revised mining tax in time for elections
http://www.smh.com.au/business/gillard-cuts-mining...
Applies to iron ore and coal only.
Re: 28th Ammendment Proposal--True or False?
Loannetter,
While I liked the proposed amendment:
"28th Amendment will be as follows:
"Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators or Representatives, and Congress shall make no law that applies to the Senators or Representatives that does not apply equally to the citizens of the United States ."
I see it as tongue in cheek.
Since then I have received emails claiming snopes.com is unreliable as an authority on anything based on a wikipedia.com assessment.
My reply:
"For that matter Wikipedia should not be taken as Gospel, but they do ask for others to challenge or offer alternative views.
Tom Friedman referred to wiki as "self-correcting" in one of his books, but I would challenge that view as well. How about self-controversial?
Which leaves us with the age old question, "What is Truth?"
Like everything we need to gather info and decide independently.
US PUBLIC DEBT MOONSHOT
ALOHA!!
Today my family flew into Hilo for a family reunion at the beach house here in Kalapana. We are all taking a well deserved month off, the month of July. Well "off" is all relative, because I am never in the "fully 100% off" mode. Its a strange dynamic to live and breath next to an active volcano as it puts the whole concept of "risk" at a new level, yet that is what I do here. In the shadow of Kilauea I have had some of the best years of my life, so "risk" can be a beautiful thing. Maybe I have turned into a "riskaholic" in my older years, which would be completely against the dictates of any known "financial planner". Yet just putting a USD in your pocket is taking on much more risk than ever before. I think the parameters of how "risk" was once defined is 360 degrees now! In fact "risk" is reverting back to caveman days when just "waking up" was a high risk endeavor! I lay that CHANGE at the feet of the US FED and the multi-decade Congress that perpetuates the continuous eruptions of monetary fraud we keep seeing! That in my mind will make Kilauea Volcano eruptions look like Sesame Street!
Here are the clues and one GIANT ONE ...
JULY 30th US TREASURY
This is why I keep my eye on the US TREASURY as it is the largest debt mover on the planet. Its line items are clues into the perverse PRICE FIXING apparatus that resides at Washington DC. In the past such Congressional and Executive Branch activities would be considered high Treason.
First I will start with a little tell-tale line item. Its a new one that has only been invented the past year or so called GSE INVESTMENT. I would classify this line item "BACKDOOR TARP". The US TREASURY choice of words is important ... INVESTMENT. This is unheard of and Treason to the Founding Fathers. Why is the US TREASURY investing in anything? In truth the US Taxpayer is now backstopping the US real estate market into infinity. On June 30th that line item went up $19BIL USD to record a YTD "INVESTMENT" of $49.3BIL USD. This is more than any one of the three US FED MAIDEN LANE "INVESTMENTS". We all now know what those toxic assets are worth, BBB- or less, in most cases they're all junk! Could this GSE INVESTMENT be the same? The odds are highly favorable. Someone prior mentioned that retail spending has gone up due to foreclosures whereby monthly mortgage payments are no longer paid, but instead spent on "fun things" like "retail therapy". I would suggest there could be a much broader impact on "consumer spending" or 70% of US GDP if income tax were eliminated. Imagine if you no longer had income tax deducted from your pay check!! The US TREASURY is in so much debt that income tax seems utterly useless, other than "fiscal cosmetics".
Next is another little myth buster about how the US Banks are paying into the FDIC to keep your hard-earned savings safe and secure. True some are and some aren't. Some 312 banks went bust since 2007 and those "aren't"! But who is it that has consistently pulled the US Banks out of the fire? Well the line item Deposit Insurance Fund(DIF) put on another $777MIL USD to push the YTD US Taxpayer contribution to FDIC to $35.7BIL USD. So the "BACKDOOR TARP" is never ending ...
Now onto the MOONSHOT ...
You know how long I have been watching the US FED and I used to put out a weekly article(for 30 weeks) just on the US TREASURY and its revenues called REVENUE BREAKDOWN. Well the term BREAKDOWN doesn't even begin to describe what happened on Wednesday, without any fanfare on CNBC or any other market media, or even the blogosphere for which we are all fervent members.
On June 30th, Wednesday, the US PUBLIC DEBT as subject to STATUTORY LIMITS flew past $13TRIL in a mighty MOONSHOT! Now this is different than the DEBT CLOCK, which has already reported numbers past $13TRIL, because the Statutory Limits apply at the US TREASURY, not the CLOCK. I have been eying this flirtation with $13TRIL USD for a month or so and there has been this "dance" right up to $13TRIL and then back down. A month or more of this ... Well finally the $13TRIL mark was broken with a one day $166BIL MOONSHOT to $13.15TRIL. That is the most I have ever seen the US PUBLIC DEBT move up in one days time. Prior BIG DAYS was around $80BIL USD. This day, on June 30th, was DOUBLE the past BIG DAYS! More than DOUBLE!!
The "redemptions" just completely broke down in the face of yet another big weekly $111.2BIL USD debt issuance on June 30th, whereby redemptions only covered $33.2BIL. Every week there is this $110BIL+ debt issue, usually every Wednesday or Thursday. This is the same debt issuance that Niall Fergusen has spoken about recently that will collapse the US TREASURY within two years.
LINK: http://tinyurl.com/252ktzx
Monetary history is replete with debt destroying confidence in currencies. If anyone should know about that phenom its Niall.
Could that have anything to do with the USD crash of late? I mean seriously, with days like June 30th and every seven weeks the US TREASURY prints up way more than a new TARP($700BIL) is the USD and, more to the point, the "debt derivative" really a "safe haven"? Its an IOU for Christs sakes! Its never been anything more than that and it will never be anything more than that, but the safe bet is that it will be much less than an IOU in the future because it will be an IOU ZERO!
So lets now go over and take a "look-see" at how much REVENUES came into the US TREASURY in order to pay for all those outlays, which were recorded at $70.4BIL, along with the $111.2BIL in new debt, Treasury Notes to be exact. Hummmm ... okay gross tax revenues minus refunds equals a "net" tax revenue of $8BIL USD on June 30th. Are tax revenues useless or what? My God ... $8BIL is a pimple on an elephants ass at the US TREASURY! Income tax is a complete waste of time! Anyone who says any different needs to step up to the plate and explain why income tax matters in the face of this much debt and out of control spending. Why? Where is the benefit? I'd love to be convinced there is a benefit ... Yep, that's me asking ...
The C WORD is approaching, warp speed, Captain!
LINK: http://tinyurl.com/256ltuf