The Bear Returns.
Baltic Dry Index. 2280 -71 (Down 45.8% since May 26, 2010.)
LIR Gold Target by 2019: $3,000.
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry Hazlitt
We have entered the second half of 2010, with austerity programs being implemented all across Europe, and the US economy starting to stumble. The bear market has returned it seems. This despite 2 to 2.5 trillion of new money, of mostly bankster rescue programs in the last two years, from the Fed and US Treasury, in an ever more desperate Keynesian attempt to try to head off Japanese style deflation visiting the G-7 economies. While the trillions of new money in global stimulation, at least 5 to 6 trillion dollars globally but who’s counting, were great for the banksters and great vampire squid’s bonuses, and gave us a “green shoots” recovery of a very sickly sort, very little trickled down to mainstream USA nor to every Tom, Fritz and Henri across Europe. A very difficult summer lies ahead before we enter the stock market’s traditional crash season of Autumn. Although this year with the emergence in US stock markets of High Frequency Trading programs, aka front running, the only game in town, and Wall Street’s specialist “special liquidity providers” able to pull their special liquidity at will, every single trading day has the risk of turning into another May 6th “flash crash.” “Abandon hope all ye who enter here,” should now be carved above the NYSE on Broad Street.
The monthly Coppock Indicators finished June:
DJIA: +269 Down. NASDAQ: +460 Down. SP500: +290 Down.
The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (Commenced 30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. Given the weakening BDI, and the ECRI weekly leading indicators signalling recession ahead, it is probably safer to assume that the great stock market bounce has ended and that we are entering a new bear market, or alternately, resuming the old one after a protracted bear market rally.
"…it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now."
Cyril Moulle-Berteaux. Managing partner, Traxis Partners LP. May 6, 2008. WSJ.
Biggs Cuts Stock Investments by Half as Risk of Recession Grows
July 3 (Bloomberg) -- Concern governments around the world are curtailing stimulus measures too soon spurred Barton Biggs to sell about half of his stock investments this week.
Biggs, whose Traxis Partners LLC gained 38 percent in 2009 when he bought equities after the Standard & Poor’s 500 Index fell to a 12-year low, sold most of his U.S. technology holdings, he told Bloomberg Television yesterday.
Signs the U.S. economy is weakening convinced Traxis to reverse course as the S&P 500 posted a weekly slump of 5 percent, bringing its loss since April 23 to 16 percent. Biggs, 77, said yesterday he cut bullish bets by about half since June 29, when they made up 70 percent of his fund.
“I can change my mind very quickly,” Biggs, who manages $1.4 billion, said in a telephone interview following the Bloomberg Television appearance. “I’m not wildly bearish, but I don’t want to have a lot of risk at this point. I just want to have less exposure at a time like this.”
The withdrawal of government stimulus, including the U.S. Senate’s vote against extending unemployment benefits on June 30, may turn a “soft patch” into a recession, he said. The second recession in three years isn’t inevitable should “rational politicians” take action to avert it, he said.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=auMV9NaJR.tk&pos=1
Crude hits lowest price in nearly a month
Gasoline loses nearly 8% this week, while natural gas posts slim weekly gains
SAN FRANCISCO (MarketWatch) -- Crude-oil futures on Friday fell to their lowest level in nearly a month, a lackluster end of a week that brought oil down 8.5%.
Oil held on to losses after the government reported that U.S. nonfarm payrolls declined by 125,000 in June, even as the unemployment rate unexpectedly dropped from the previous month. A steeper-than-expected decline for factory orders also did little to tip the price balance the other way.
The negative end of the week snapped oil out of its weekly winning streak, as crude had ended the previous three weeks in the black.
------The oil contract hit an intraday low of $71.54 a barrel, hampered by the mixed jobs report and declining factory orders.
Factory orders declined 1.4% in May, their biggest drop in 14 months.
The unemployment rate dropped to 9.5% in June from 9.7% in May, the lowest level since July 2009.
Also, private-sector payrolls expanded by a modest 83,000 in June, lower than the 115,000 increase expected by economists polled by MarketWatch. Total nonfarm payrolls tumbled 125,000 in June after surging 433,000 in May.
-----Oil futures had posted steep losses on Thursday as various economic data rekindled worries over a slowdown in global growth and its potential impact on energy demand.
"Worse-than-expected U.S. economic data increased the concerns about an economic recovery and led to massive selling pressure on the commodity markets," said analysts at Commerzbank in a note published before the release of the jobs data.
In other energy news, Russia's oil production hit a record high in June and remained above 10 million barrels a day for the 10th month in a row, Reuters reported, citing an unnamed industry source.
This performance means Russia remains the world's top oil producer, ahead of Saudi Arabia, according to the report.
http://www.marketwatch.com/story/oil-futures-trade-flat-ahead-of-us-jobs-data-2010-07-02
Orders to U.S. Factories Declined in May More Than Forecast
July 2 (Bloomberg) -- Orders placed with U.S. factories declined in May more than forecast, a sign that manufacturing may be starting to cool.
The 1.4 percent decrease in bookings was the biggest since March 2009 and followed a revised 1 percent gain in April, the Commerce Department said today in Washington. Economists forecast orders would drop 0.5 percent, according to the median projection in a Bloomberg News survey.
Manufacturers are seeing a pause in demand after the industry helped the world’s largest economy emerge from the worst recession since the 1930s. Today’s figures underscore the Federal Reserve’s concerns that the European debt crisis poses a risk to a self-sustaining U.S. recovery.
“Manufacturing has been the star of the economy this year so any signs that conditions are turning would cause some concern,” Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said before the report. “The demand for products is slowing.”
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aNCmvpr8vsFA
In “the next Greece” news, surprisingly it might not be on the wrong side of the Atlantic. Below today’s NY Times on Abe Lincoln’s State of Illinois, where the last Governor is on trial for allegedly attempting to sell President Obama’s old Senate seat for personal gain. Far from getting better, in our crazy upside down, inside out world on fiat money, the end is getting nearer by the day. President Obama’s and Nobel Laureate Krugman’s solution to the massive unrepayable debt problem? Print, borrow and massively spend more! Stay long precious metals. Sadly it’s going to get a whole lot weirder yet before the whole fiat currency reserve standard comes crashing down. Why not just give everyone a tax deferment for a year.
“This sucker could go down.”
President George W. Bush. September 2008.
Illinois Stops Paying Its Bills, but Can’t Stop Digging Hole
CHICAGO — Even by the standards of this deficit-ridden state, Illinois’s comptroller, Daniel W. Hynes, faces an ugly balance sheet. Precisely how ugly becomes clear when he beckons you into his office to examine his daily briefing memo.
He picks the papers off his desk and points to a figure in red: $5.01 billion.
“This is what the state owes right now to schools, rehabilitation centers, child care, the state university — and it’s getting worse every single day,” he says in his downtown office.
Mr. Hynes shakes his head. “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says. “That is obscene.”
For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.
Then there is the spectacularly mismanaged pension system, which is at least 50 percent underfunded and, analysts warn, could push Illinois into insolvency if the economy fails to pick up.
States cannot go bankrupt, technically, but signs of fiscal crackup are easy to see. Legislators left the capital this month without deciding how to pay 26 percent of the state budget. The governor proposes to borrow $3.5 billion to cover a year’s worth of pension payments, a step that would cost about $1 billion in interest. And every major rating agency has downgraded the state; Illinois now pays millions of dollars more to insure its debt than any other state in the nation.
“Their pension is the most underfunded in the nation,” said Karen S. Krop, a senior director at Fitch Ratings. “They have not made significant cuts or raised revenues. There’s no state out there like this. They can’t grow their way out of this.”
More.
http://www.nytimes.com/2010/07/03/business/economy/03illinois.html
We end for the weekend with more on all that is wrong with today’s casino capitalism. Somehow, hiring a trader to do a compliance officer’s job “writing training materials for graduate recruits” seems an unlikely use of Mr. Perkin’s talents. Hosting the company golf outing at the Dolder Grand Zurich seems more appropriate for a start.
Swiss broker hires Steve Perkins - who did a 'stupid thing' in trading $520m when drunk
A Swiss commodity broker has confirmed it will take on Steve Perkins, the oil trader banned for illegally trading $520m (£340m) in a drunken blackout, calling him a "good man who did a stupid thing".
By Rowena Mason Published: 6:03PM BST 02 Jul 2010
Starsupply Renewables SA hired Mr Perkins to work in Geneva just two days after the UK regulator said he must not trade for five years. Mr Perkins, a 34-year-old broker from Essex cornered 69pc of the global oil market in the middle of the night in June last year, costing his former employer, PVM Oil Futures, $10m in losses.
He claims to have bought the 7m barrels of oil during an alcohol-induced stupor following a golfing weekend of heavy drinking.
---- The company said yesterday that it would "voluntarily" uphold the FSA's judgment and restrict Mr Perkins from engaging in any regulated market activity for the duration of the ban.
The broker will join the company despite the FSA's warning that "Mr Perkins poses an extreme risk to the market when drunk".
A spokesman for Starsupply said Mr Perkins had attended an alcohol rehabilitation program and has been sober for almost a year, saying "it is important that this continues".
He added that the company has been in negotiations with the broker for some considerable time.
"We believe Steven Perkins is a good man, who did a stupid thing. The sanctions legitimately imposed on him by the FSA will be honoured. The damage caused by Mr Perkins actions over a year ago was substantial and we empathise with those affected.
"However, we believe in rehabilitation. We want to give Mr Perkins an opportunity to rebuild his career in a different direction. Mr Perkins first task will be to assist with the writing of training materials for graduate recruits."
----- Starsupply Renewables, which is the world's biggest biofuels brokerage, has a code of conduct published on its website promising that its staff "reveal and report all information truthfully, without manipulation or misrepresentation".
“The hottest places in hell are reserved for those who in times of great moral crises maintain their neutrality”
Dante.
Sunspots – Global Cooling.
A 22 year colder world? (From 2004?)
Spotless Days July 02
Current Stretch:0 days
2010 total: 35 days (19%)
2009 total: 260 days (71%)
Since 2004: 803 daysTypical Solar Min: 485 days
http://www.spaceweather.com/
Sunspot cycle 24: Together with sunspot cycle 25, the next two global cooling cycles. The new “Dalton Minimum?” Thirty two months now with low sunspots numbers, and counting. June was the 32nd month of yet another low number of 13.5 http://en.wikipedia.org/wiki/Dalton_Minimum
Smoothed sunspot numbers (SSN). 2007, Oct. 0.9. The end of cycle 23.
Sunspot cycle 24: Nov 1.7. Dec 10.1. 2008 Jan 3.4. Feb 2.2. Mar 9.3 April 2.9. May: 2.9. June 3.1. July 0.5. August 0.5. Sep 1.1 Oct. 2.9. Nov. 4.1 Dec 0.8. 2009 Jan 1.5. Feb 1.4. Mar 0.7. Apr 1.2. May 2.9. June 2.6. July 3.5. Aug. 0.0. Sep 4.2. Oct 4.6. Nov 4.2. Dec 10.6 2010 Jan 13.1 Feb 18.6 Mar 15.4. April 7.9, May 8.8, June 13.5.
Sunspots. http://solarscience.msfc.nasa.gov/SunspotCycle.shtml
The count. http://sidc.oma.be/products/ri_hemispheric/
Why a New Minimum. http://sesfoundation.org/dalton_minimum.pdf
The “Carrington Event,” September 1, 1859.
http://science.nasa.gov/headlines/y2008/06may_carringtonflare.htm
Are Sunspots Different During This Solar Minimum?
----The same data were later published [Penn and Livingston, 2006], and the observations showed that the magnetic field strength in sunspots were decreasing with time, independent of the sunspot cycle. A simple linear extrapolation of those data suggested that sunspots might completely vanish by 2015.These observations caused researchers to wonder whether the characteristics of sunspots are different now than in other solar cycles.
http://rs6.net/tn.jsp?et=1102678927575&s=1&e=001UyfO_wN_C81IrqYbA3w8N3hkc9KCTd3b8zGDXYSyIqfs4WqgttvCceErdow7pOYUPq1VjzV52Gys14jzZ86u_Cfl4pUoOrsCLnR6j8T6J0sqSWAceSG0JDfK9x8Cij2iSMIUEfQlhro=
GI.
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