Investors rush to real money
Stocks: -8% ytd, Gold: +5%, Silver: +10% ... 'Bad bank' crisis
"Change has come" -Obama ~ "Get on a personal gold standard" -CRS
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Today's top financial stories ~ January ~ economic calender
By David Bradshaw ~updated hourly~ email ~ links ~ wisdom
Editor, Real Money Perspectives ~ weekly email ~ daily email
JAN 30, 2009 ~ features ~ ((podcast)) ~ gold fraud alert!
Gold prices rose 2% Friday, to a six-month high, on safe haven buying despite a stronger dollar. Gold closed in NY up $18.80 to $927.10/oz., rising 5% ytd, while silver rose $.32 to $12.67/oz. for a 10% rise ytd.
* "Investors scrambled for the safety of gold and bullion-backed assets such as exchange-traded funds this week. "ETFs were up another 15 tons yesterday," Simon Weeks, director of precious metals at the Bank of Nova Scotia, said, adding safe haven demand was driving the market," reports Reuters.
* "More investors are coming around to the notion that the precious metal may be the best option to protect against a possible economic catastrophe. Among the surprise new buyers? Star hedge fund manager David Einhorn. He writes, "Our guess is that if the chairman of the Fed is determined to debase the currency, he will succeed. Our instinct is that gold will do well either way: deflation will lead to further steps to debase the currency, while inflation speaks for itself," reports BusWeek.
* "Gold is poised to go above $1,000 soon. If we continue to see bad economic conditions and deterioration in the financial markets, I think we could see that next month," said Carlos Sanchez, a precious metals analyst at New York-based specialty commodities firm CPM Group to CNN.
* "We’re seeing gold buyers come back in and slap on the anti-dollar hedge.The Fed is running out of ammunition. They can’t take rates any lower, so they’re going to start buying treasuries to push down yields," said Ralph Preston, a futures analyst at Heritage West Futures in San Diego reports Bloomberg.
* "Officials from the Obama administration are holding around the clock meetings with senior Wall Street executives on how to create a new government bank to buy bad assets. A 'bad bank' is necessary, but major banks still have to be taken over and gutted, Ken Rogoff told CNBC.com in Davos... Obama Says Wall Street's Bonuses Are 'Outrageous', reports CNBC.
* "The stock market is set for a 7% drop in January, not boding well for the rest of the year. U.S. stocks drifted lower on Friday, under the cloud of another heavy earnings session and key economic data. Gross domestic product fell 3.8% in Q4, less than economists had feared. Stocks fell sharply Thursday as economic data illustrated the weakened state of the economy and as more companies reported weak earnings," reports MW.
Jan. 29th Market News ~ Global wealth: 40% destroyed
* "The past five quarters have seen 40% of the world's wealth destroyed and business leaders expect the global economic crisis can only get worse. An "almost incomprehensible" amount of cash had evaporated since the financial crisis took hold. "Business will be very different," said Steve Schwarzman, chairman of Blackstone to the World Economic Forum in Davos," reports Telegraph.
* "Russian prime minister Vladimir Putin has called for concerted action to break the stranglehold of the U.S. dollar and create a new global structure of regional powers. Mr Putin's bargaining power is weakening by the day. Russia's foreign reserves have fallen by 34% since August to $396 bn," reports Telegraph.
* "Barack Obama's grim test of statesmanship: The deeper problem is that a West addicted to Ponzi credit has put off the day of reckoning with ever more extreme monetary policy with each downturn, stealing prosperity from the future. Central banks will have to extricate themselves from their venture into the bond markets without setting off a bond debacle in 2010 or 2011. Governments will have to map out of a path of Puritan discipline year after year," writes Ambrose Evans-Pritchard in London Telegraph.
* "President Barack Obama will keep seeking bipartisan support in Congress despite being rebuffed by House Republicans who voted against a $825 billion economic stimulus package. The legislation passed the House by 244-188 Wednesday without a single Republican in favor," reports CNBC.
*"My Bipartisan Stimulus Let's cut taxes and spend more: There's a serious debate in this country as to how best to end the recession. The average recession will last five to 11 months; the average recovery will last six years. Recessions will end on their own if they're left alone. What can make the recession worse is the wrong kind of government intervention," writes Rush Limbaugh in today's Wall Street Journal.
* "Under the Obama-Limbaugh Stimulus Plan of 2009: 54% of the $900 billion -- $486 billion -- will be spent on infrastructure and pork as defined by Mr. Obama and the Democrats; 46% -- $414 billion -- will be directed toward tax cuts. Then we compare. We see which stimulus actually works," says Rush.
* "A call to utilize the current global economic crisis as a panic in which governments worldwide can move to nationalize banks is emerging from the 2009 World Economic Forum in Davos. The forum's founder, Klaus Schwab, told CNN yesterday the current global economic slowdown is a "transformational crisis" that should be utilized to shape a "new world," reports WND.
Jan. 28th Market News ~ Stocks rally on 'bad bank' idea
* "Financials soar on talk that 'bad bank' may fly: Shares of U.S. banks posted strong gains Wednesday on reports that the Obama administration may adopt a plan to buy bad assets in the financial system and create a so-called bad bank to hold them," reports MW.
* "Fed sees a recovery timeline: Central bankers keep key rate at all-time low, while suggesting possibility of Treasury debt purchases to thaw lending. Fed forecasts a second-half recovery," reports MW.
* Swiss America CEO Craig R. Smith was a guest on The Savage Nation radio show discussing with host Michael Savage Obama's new Treasury Secretary Tim Geithner and the latest Obama-nomic stimulus plan. Listen.
* "If Obama's first week on the job is any indication of the next four years, we need to be involved now more than ever before. Writing letters, sending fax and e-mails, making phone calls and having all 300 million of our voices heard may be our only hope. Sitting back and hoping in hope is no longer an option," writes Craig Smith at WND.
* "DO THE MATH!: The Federal government has just TWO choices to keep America afloat; generate more revenue by raising taxes, or inflate the money supply. BOTH destroy wealth! With $40 trillion in household and business debt and $75 trillion in government debt it will take at least three generations for the U.S. to dig out of this bottomless pit," see Total U.S. debt chart.
* "$646,214 Per Government Job: House Democrats propose to spend $550 billion of their two-year, $825 billion "stimulus bill" (the rest of it being tax cuts). Most of the spending is unlikely to be timely or temporary. Strangely, most of it is targeted toward sectors of the economy where unemployment is the lowest. Spending $214.5 billion to create or save 330,400 government jobs implies that taxpayers are being asked to spend $646,214 per job. Does that make sense?" asks WSJ.
* "House of Cards: People right now are putting all their hope onto Obama’s stimulus plan. Even as the subprime mortgage fallout continues its ripple effect across the economy, fiscal storm-watchers have an eye on the next gathering cloud: nearly $1 trillion of consumer credit card debt. Defaults are up; in November, the percentage of charge-offs rose to 5.62%," reports WashIndp.
* "The Fed: Life after zero: With rates about as low as they can go, Fed policymakers won't be talking about more cuts at Wednesday's meeting. The Fed said in its statement last month that it would likely keep rates near zero "for some time" due to the weakness in the economy," reports CNN.
* "Experts are divided on which threat is worse for the global economy, deflation or inflation, but gold is a safe bet in either outcome, Morgan Stanley said in a research note. "Gold looks to be the investment area that provides significant upside under the inflation-rebound scenario and relative resilience in the deflation scenario," reports CNBC.
Jan. 27th Market News ~ Stocks bounce, grope for bottom
* U.S. stocks closed mildly higher on Tuesday, extending the prior session's modest gains. Home values in 20 major U.S. cities fell at a record 18.2% in the 12 months ending in November, Standard & Poor's reported Tuesday. In the past year, prices were down 33% in Phoenix, 32% in Las Vegas, and 31% in San Francisco," reports MW.
* "Corporate bellwethers in the US and Europe on Monday slashed more than 76,000 jobs from their payrolls to confront the deepening economic downturn, marking one of the most brutal days yet for workers on both sides of the Atlantic. US corporate groups such as Caterpillar, General Motors, Sprint Nextel, Texas Instruments, and Home Depot led the retreat," reports FT.
* "President Barack Obama will visit Republican leaders on Capitol Hill Tuesday to try to build momentum for an $825 billion package he says is urgently needed to keep the U.S. economy from sinking into an even deeper recession. Obama wants to hear their ideas. If there are good ideas -- and I think he assumes there will be -- that we will look at those ideas," reports CNBC.
* "Economic Cures Are Like Booze for an Alcoholic: The government wants to ensure that consumers, whose spending accounts for about 70 percent of gross domestic product, can borrow and spend. This makes as little sense as using easy money and housing incentives to cure the effects of easy money and over-investment in housing," reports Bloomberg.
* "Money and Our Future: All believers in freedom have reason to rejoice today. In 12 to 18 months from now, it will be obvious that there is nothing the new administration can do to patch things up. Obama will be humbled by the market just as Bush and Clinton were before him, but this time the humbling will overwhelm any attempts to patch things up or put a spin on the much-needed upheaval," reports LewRockwell.
* "The White House is promising new reviews of the "obligations" to the government by broadcasters who "occupy the nation's spectrum" just as the president has targeted conservative talk radio icon Rush Limbaugh for a public attack, raising concerns over the possible restoration of the "Fairness Doctrine," a policy that failed as unneeded and unconstitutional two decades ago," reports WND.
Gold's time arrives
* "Gold’s time may have come. The precious metal, as gold bugs will tell you, is unique. As a traditional store of value, it is a hedge against inflation. As a financial asset without any corresponding liability – unlike stocks or bonds – it also provides protection against the forces of deflation. And while investors can’t decide whether inflation or deflation is the bigger threat, gold prices have soared," reports FT.
* Over the last week gold prices have rushed to 3-month highs as downbeat economic news and Wall Street earnings disappointed investors. Growing global recession worries and currency uncertainty has boosted demand for precious metals, the world's ultimate form of money.
* "Over the past several months, the United States Mint has announced a series of actions and policy changes that make it more difficult for the average individual to buy gold. There have always been plausible or semi-plausible explanations, but the consequence of each action has been to limit or discourage gold ownership," reports SeekingAlpha.
* "More than a year into the global financial crisis -- a collapse in currency values by countries desperate to save their economies from ruin -- one of economists' worst fears, is becoming a greater risk," reports Reuters.
* "Gold's weekly close last week violated the downtrend tops line, this puts gold in position to retest the $1,000 previous top. Noting the length of this consolidated down flag formation and the fundamentals, if gold exceeds the previous high, the pent up demand should send gold up to the $1,250.00 range," reports Jim Carrillo, Sr. Broker at Swiss America.
Jan. 26th Market News ~ T-Bond 'bubble' leaking air
* "Gold investors were the most bullish ever in a Bloomberg News weekly survey, predicting gains as investors seek a haven from economic turmoil. Twenty-eight of 31 traders, investors and analysts surveyed from Mumbai to Chicago on Jan. 22 and Jan. 23 advised buying the metal."
* "Investors are getting out of currencies and getting into gold," said Simon Weeks, director of precious metals at the Bank of Nova Scotia. "The relationship between gold and the U.S. dollar appears to be broken at present," said Fairfax analyst John Meyer," reports Reuters.
* "The Treasury bond 'bubble' looks like it's leaking air. Over the last three weeks, investors have been selling U.S. Treasury bonds heavily, giving the 30-year Treasury bond's yield this week its biggest weekly jump since 2001. The sudden rise in lending rates complicates the U.S. push to lower mortgage rates and other consumer borrowing costs and kick-start the fragile American economy," reports CNBC.
* "U.S. stocks tentatively advanced Monday, as investors appear willing to focus on McDonald's results and blockbuster pharma deal rather than Caterpillar's "disappointing" results and a big layoff wave," reports MW.
* Gold Gleams as Safe Haven: "The true secular measure of currencies is gauged against gold, as the metal extends to fresh record highs against the British pound, three-month highs against the euro, three-week highs against the U.S. dollar, said Ashraf Laidi, chief market strategist at CMC Markets to MW.
* "There is a lot of cash on the sidelines. If gold breaks above $900, it will be in all the headlines and people will chase that and push it higher ... "Where do you hide if you want to be defensive? There are fewer and fewer places," reports CNNMoney.
* "As the Obama economic team huddled last weekend to hammer out the framework of their plan, three options have been bandied about: 1) Nationalizing the banks. 2) Creating a government-owned "bad bank" to take the toxic assets off of the bank's balance sheet. 3) Continuing the Bush Administration rescue plan of pumping in taxpayer money on an as-needed basis," reports NYPost.
* "With much of the financial system in Britain and the United States edging toward a possible government takeover, the 2009 agenda at Davos, "Shaping the Post-Crisis World," seems to have concentrated minds on the here-and-now more than past themes like climate change and globalization. The pendulum has swung and power has moved back to governments," reports IHT.
Jan. 23rd Market News ~ Stocks 3rd down week, gold shines
* "The U.S. government’s decision to pledge billions of additional dollars with strings attached to Citigroup and Bank of America may be nationalization by another name, according to former bankers and regulators," reports Bloomberg.
* "As the pound continues its free-fall against the dollar — down by nearly a third in a year — rumors run wild that U.K. banks are headed en masse into the arms of the government. Cratering bank stocks led members of parliament on Wednesday to call on the government to outright nationalize Royal Bank of Scotland (RBS) and Lloyds Banking Group," reports Moneynews.
* "World stock markets fell for the 11th time in sixteen sessions this month on Friday. Losses in Europe and Asia and another collection of weak earnings reports in the U.S. pushed stocks lower as the market's recent flirtations with its lows of last year continued. The Dow retreated back below the 8000 mark in recent trading, falling 159 points, or 2%, to 7964," reports MW.
* "Gold is still in a bull market as a capital preservation asset. There is a big disconnect between paper and physical gold market. Many factors are aligning; mine production is down, central bank selling is down. Gold has been in an orderly 8-year bull market, the longest in history, and has not turned into a mania yet," said Mark Hansen, CPM Group director of trading to CNBC (3 min. video).
* "Barack Obama has spoken often of sacrifice. Americans should be prepared to face "trillion dollar deficits for years to come." What he might have said was that the nations funding the majority of America's public debt -- most notably the Chinese, Japanese and the Saudis -- need to be prepared to sacrifice. They have to fund America's annual trillion-dollar deficits for the foreseeable future," reports WSJ.
* "Today investors are struggling to regain confidence in U.S. stocks, bonds and commodities -- all pummeled in 2008. As U.S. stock indexes search for a bottom, more pundits are expressing hope that the worst is over. I say we must define our terms carefully. Faith and hope are often confused - but they are both based on substance, not symbolism," reported Swiss America CEO Craig R. Smith.
* "Political symbolism has triumphed over substance in Washington, therefore we recommend investors move onto a "personal gold standard" immediately with diversification of at least 10-25% of their assets and retirement funds into physical gold coins for safety, liquidity and growth," according to Mr. Smith. Special Report: Surviving & Thriving
Jan. 21st Market News ~ "New Deal" strategy flawed
* "US stocks resumed their downward slide on Thursday after more downbeat economic data and earnings reports, this time from Microsoft, which tumbled 8.2% after warning it was unable to provide sales and earnings forecasts for the rest of the year and unveiled plans to cut 5,000 jobs," reports FT.
* "Leave the New Deal in the History Books: The quickest way to strengthen the credit system and begin the end of this crisis is to get money into the economy for true job creation, and not into government work programs. The way to do this is to slash taxes. The U.S. corporate tax rate, currently the highest in the world, should be cut to 0%," reports Mark Levey at WSJ.
* "President Obama believes that if we do not act quickly, this recession could linger for years – and America could lose the competitive edge that has served as the foundation for our strength and standing in the world. That's why the President has put forth an American Recovery and Reinvestment Plan that will jumpstart job creation and long-term growth," reports WhiteHouse.gov.
* "Just as the stars were aligned for Wilson, Roosevelt, Johnson and Reagan, they are aligned for Obama. Simply put, we enter his administration as free-enterprise, market-dominated, laissez-faire America. We will shortly become like Germany, France, the United Kingdom, or Sweden — a socialist democracy in which the government dominates the economy, determines private-sector priorities and offers a vastly expanded range of services to many more people at much higher taxes," reports TheHill.
* "What can the Obama team really do? He plans a rescue for banks - above and beyond the $825 billion fiscal stimulus. He will "reform" health care - our guess is that he will want to make a system of European-style national health care his legacy contribution. He will offer more guarantees, more bailouts, more stimulus. He will probably turn the banks into quasi-public utilities, heavily regulated, with little appetite for risk and little taste for capitalism. "Creeping nationalization," is how Bloomberg describes the process," reports DailyReckoning.
* "President Barack Obama’s economic team is pushing to complete a bank-rescue plan that can be twinned with the $825 billion stimulus package being negotiated with Congress to alleviate the rapidly deepening financial crisis. The package is likely to include a $50 billion-plus program to stem foreclosures, fresh injections of capital into the banks and steps to deal with toxic assets clogging lenders’ balance sheets," reports Bloomberg.
* "Gold may average higher for each of the next three years and climb to a record driven by increased demand and a declining dollar as governments ramp up spending to battle the global recession, according to Morgan Stanley," reports Bloomberg.
* "If things were to really unravel, banking holidays are certain and a stash of monies is strongly recommended. The only thing that will protect you is real money, gold. If the bears can be conquered than we look forward to $1000+ gold," reports CommOnline.
* "Data released Thursday was decidedly gloomy: construction on new homes took another turn for the worse in December, falling more than 15% to 550,000, the lowest on record. First-time applications for state unemployment benefits rose 62,000 to a seasonally adjusted 589,000 in the week ending Jan. 17," reports MW.
Jan. 21st Market News
* "Timothy Geithner, President Obama's choice for Treasury Secretary says Obama is planning a new rescue package. Geithner is on Capitol Hill today facing questions on his personal income taxes and the financial bailout," reports MW.
* "Biblical debt jubilee may be the only answer: As one bail-out succeeds another at ever more inflated price tags, rescue fatigue is becoming palpable. People are bewildered, fearing that good money is being thrown after bad. There is no guarantee that the measures will succeed. The vast scale of government borrowing may exhaust the stock of global capital. In the end, the only way out of all this global debt may prove to be a Biblical debt Jubilee. Creditors are not going to like that," reports Ambrose Evans-Pritchard at Telegraph.
* "The S&P 500 will likely head back down toward its recent lows before the end of January where it will form a base, but it’s not time to buy the index yet. “The long term is very clear, once consolidation is out of the way … we’ll probably be heading lower later this year, into 2010," Chris Locke, MD of Oystertrade.com Management, told CNBC Wednesday.
* "U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini, who predicted last year’s economic crisis," reports Bloomberg.
* "The entire U.S. economy is a Ponzi tower waiting to fall," according to Pimco's Bill Gross. He calls it “our Ponzi-style economy.” When the world’s biggest bond fund manager — whose investments are dependent on the value of the dollar — says the U.S. economy is a Ponzi scheme, people should wake up and take notice," reports Trumpet.
* "For Ponzi schemes to succeed, they must expand faster than the request for redemptions. If they do not, they will collapse. This is what happened to Bernard Madoff, the largest Ponzi scheme in history. The same is about to happen to capitalism. Although capitalism is not a Ponzi scheme, credit-based economies and Ponzi schemes share the same fatal flaw. Both must constantly expand or they are in danger of collapse, reports MarketOracle.
* "Flight-to-quality buying on concerns about the banking sector and sagging U.S. equities enabled gold to break its inverse relationship with the U.S. dollar and close sharply higher Tuesday," reports DowJones.
* "Speculation that the recession will deepen as banks continue to fail boosted the appeal of precious metals as a haven. 'Gold is gaining on systemic fear. These governments are going to have to infuse more money into the financial system, and that will eventually lead to inflation,' said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago to Bloomberg.
* "A sharp-sell off on Wall Street Tuesday highlighted the challenges facing the new administration of President Barack Obama, who is inheriting a stock market that collapsed during predecessor George W. Bush's second term, according to a leading market tracker," reports MW.
Jan. 20th Market News
* "Barack Obama is expected to call on the country to embrace a new culture of responsibility when he takes office at noon. The inaugural crowd Tuesday could reach two million people, one of the largest gatherings in Washington's history. Mr. Obama will take the oath of office with his hand on the Bible that once belonged to the last president to hail from Illinois, Abraham Lincoln," reports WSJ.
* "On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord. We come to proclaim an end to the petty grievances and false promises, the recriminations and worn out dogmas, that for far too long have strangled our politics. We remain a young nation, but in the words of Scripture, the time has come to set aside childish things," said President Obama.
* "On the night of the election, President Elect Barack Obama said '...at this defining moment, change has come to America.' The question is, will that change include a change in direction for the markets? If history is any indicator, the answer is not so fast. Januaries following a presidential election are not as strong and are even worse after the oval office changes parties," reports CNBC.
* "President-elect Barack Obama's most pressing challenge as he mans the helm of the U.S. is to steer it to safer economic shores. But once the economy turns around, tax hikes are all but inevitable, some experts say. And those higher taxes may not be limited to high-income Americans," reports MW.
* "As George Walker Bush watches Barack Hussein Obama be sworn in as the 44th president of the United States, he may be among the few happy Republicans in Washington. Those who have been meeting with the 43rd see a man comfortable in his own skin, confident history will vindicate his decision to wage war on terror and proud of having foiled numerous plots to attack America," reports WklyStandard.
* "I want our new president to succeed. I truly do. But for that to happen, he has to think outside the box and get away from business as usual in Washington. What better way for that to happen than to make some serious decisions in the first few weeks of his presidency to show that he is in charge, not his lawyer friends in the ACLU. He could show us he is a president who will make the unpopular decisions regardless of who they upset as long as they are good for America," reports Craig R. Smith at WND.
Jan. 19th Market News
As we pause to reflect on how much progress America has made in tearing down the wall of racism on MLK Day 2009, let us remember that the movement to establish ethnic justice in the U.S. has been lead by God-loving Americans over the last three generations under the leadership of men like Dennis Peacocke, John Perkins, Dr. Tony Evans and Dr. Edwin Cole.
* "The ethnic issue has been falsely framed in the terms of races, and there is only one race - the human race," said Dennis Peacocke founder of Strategic Christian Services in TheBigPicture. "The whole racist debate is over the issue of evolution. The doctrine of evolution presupposes, justifies, stands on the assumption, that because of the struggle for some races to evolve beyond other races that some races are in fact superior and other races are inferior. The Bible does not teach that."
* "Anything is possible in America," declared the man who will confront economic crisis and two wars when he takes office. "Despite the enormity of the task that lies ahead, I stand here today as hopeful as ever that the United States of America will endure - that it will prevail, that the dream of our founders will live on in our time," the president-elect said at the conclusion of a musical extravaganza that featured U2, Beyonce, Bruce Springsteen and a host of other stars," reports AP.
* "In his final acts of clemency, President George W. Bush on Monday commuted the prison sentences of Ignacio Ramos and Jose Compean, two former U.S. Border Patrol agents whose convictions for shooting a Mexican drug dealer ignited fierce debate about illegal immigration," reports AP.
* "Rich donors and the federal government will spend $170 million, or more, on the inauguration of Barack Obama. The government estimates that it will spend $49 million on the inaugural weekend. Washington, D.C., Virginia and Maryland have requested another $75 million from the federal government to help pay for their share of police, fire and medical services. And then there is the party bill," reports ABCNews.
* "The incoming Obama administration is considering setting up a government-run bank to acquire bad assets clogging the financial system, a person familiar with the Obama team's thinking said. Outgoing Treasury Secretary Henry Paulson and FDIC Chairman Sheila Bair both said on Friday a government bank was one of a number of ideas U.S. regulators had been discussing," reports Reuters.
* "Monetary union has left half of Europe trapped in depression: A great ring of EU states stretching from Eastern Europe to the Celtic fringe are either in a 1930s depression already or soon will be. Each is a victim of ill-judged economic policies foisted upon them by elites in thrall to Europe's monetary project – either in EMU or preparing to join – and each is trapped," reports Telegraph.
* "U.S. stocks will struggle with a heavy dose of bad earnings news that could dash investor hopes for an Obama rally in the week ahead. Washington though will be the center of attention for part of the week, as Barack Obama is sworn in as President on Tuesday," reports CNBC.
* "Interest in gold as a haven from risk lifted the precious metal Friday from the one-month low it hit in the previous session. "The more problems we see in the banking sector and the financial sector in general, the more attractive gold as a hedge against such risk will be," said Commerzbank analyst Eugen Weinberg to Reuters.
* "The appreciation gold has achieved over the past eight years is remarkable. Gold's 16.3% average annual change between 2001 and 2008 against the US dollar has made it one of the world's best performing asset classes this decade, but oddly, gold continues to be ignored by many. I expect this inattention to change in the year ahead," reports GoldMoney.
Jan. 16th Market News
* "U.S. stocks on Friday ended with daily gains and weekly losses after an up-and-down day that had some of the biggest financial companies hit. The Dow closed at 8,281.22, up 68 points, leaving it down 3.7% from last Friday's close. Citi announced a plan to split into two units, with brokerage and retail asset management, local consumer finance and a special asset pool," reports MW.
* "Last fall, as the Fed and Treasury rode to the rescue of one financial institution after another, they took great pains to avoid doing anything that smacked of nationalizing banks. They may no longer have that luxury. The government is suddenly dealing with banks that are 'too big to fail' and yet unable to function as the sinking economy erodes their capital," reports NYTimes.
* "The taxpayer-funded Wall Street bailout known as TARP falls $1 trillion short," says Economist Nouriel Roubini. "Even if you use all of the rest of the TARP money — $350 billion — to recapitalize banks, we're going to need another trillion to bring capital bank to where banks can start lending again," reports Moneynews.
* "There are reasons to suspect that U.S. Treasuries will continue to be a safe haven for capital going forward. The argument that China, Japan, and others will not continue to fund ‘the greatest sovereign bond bubble of all time’. Rather, with president-elect Barack Obama warning last week of "trillion-dollar deficits for years to come" and the CBO forecasting a $1.2 trillion deficit before Mr. Obama unleashes his first stimulus package, there are legitimate reasons to fear that appetite for U.S. Treasuries will eventually wane," reports Fallstreet.
* "Gold to the rescue in 2009 as financial forces overwhelm challenging fundamentals. GFMS Ltd expects gold to help safeguard investors against government profligacy in 2009; prices to remain volatile and dips are possible, but followed by a strong bull run," reports MineWeb.
Jan. 15th Market News
* "Think you can successfully steer the U.S. economy through the financial crisis and recession? Well, give it a go by playing The Bailout Game! A group of web developers at Blue Earth Interactive have created a free online game that allows you to pick and choose who gets a slice of the $700-billion bailout package," reports NatPost.
* "The Bailout Game is an online recession-era version of Monopoly, except instead of engaging in the capitalistic venture of buying, you’re doling to keep everything from falling to pieces. You an “Ask a Greenspan” for advice, draw “Federal Reserve,” “US Treasury” and “Current Events” cards, and your score is the stock market index," reports World.
* "The stock market's late Thursday turnaround had the DJIA snapping its longest losing streak since early October in the wake of Lehman Brothers' collapse. "We're certainly trying to march back," said Peter Bookvar, equity strategist at Miller Tabak. It's too soon to say if it's a natural pullback from that rally or do we resume that downward trend," reports MW.
* Wholesale-level inflation fell 1.9% and jobless claims climbed back atop 500,000. The average long-term fixed mortgage loan's interest rate fell below 5% for first time on record.
* "U.S. foreclosure activity jumped 81 percent in 2008, with one in every 54 households getting at least one filing notice, suggesting various state laws and private programs to slow the process have been ineffective, RealtyTrac reported on Thursday," reports Townhall.
* "The United States economy is only halfway through a recession that started in December 2007. Real GDP growth contraction in 2009: first quarter 2009: -5%; second quarter 2009: -4%; third quarter 2009: -2.5%; fourth quarter 2009: -1%--adding up to a yearly real GDP growth of -3.4% for the U.S. in 2009," reports Forbes.
* "As Barack Obama looks back to Franklin Roosevelt's first inaugural address -- the only other such address that came smack in the middle of an economic meltdown -- I hope he pays special heed to Roosevelt's words on America's bankers, who then as now had plunged the nation into an economic abyss."The money-changers have fled from their high seats in the temple of our civilization," Roosevelt proclaimed. "We may now restore that temple to ancient truths," reports WashPost.
* "It is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression," reports CNBC.
Jan. 14th Market News
* "The only certainty about the gold price in 2009 will be volatility. The financial crisis has seen daily swings in the gold price widen five times over for US-Dollar investors. But that doesn't mean the 2009 gold price will cause more sleepless nights than owning stocks, bonds or currencies," reports Thisismoney.
* "In 2009 and beyond, the 6-year upward trend for precious metals should continue, while real estate, equity markets and even bonds will likely decline. To make money in these troubled times, you will need an even higher allocation in precious metals. It is critical investors hold physical bullion and not a paper proxy or derivative. Physical bullion is the only asset that is not someone else’s liability," reports BMG.
* "Banks around the world flashed signs of pain Wednesday, sparking a broad stock drop as investors fretted that the credit crisis that spurred last year's historic market slide is not quite over yet. A bankruptcy filing at Nortel, weak retail sales data, and profit warnings also helped to dim investors' mood," reports MW.
* "The Fed Beige Book found that the U.S. economy continued on its downswing in early December through early January. Both commercial and residential real estate are suffering from tighter credit standards and a drop in lending activity," reports MW.
* "Silver looks attractive to Graham Bibby, managing director at Richmond Asset Management, as he believes it is slightly undervalued. He explains his investment rationale for this precious metal, as well as gold," reports CNBC (video).
* "Gold, investors' traditional safe haven in times of financial turmoil, experienced record levels of trading last year. Gold turnover increased by 58% in 2008 to a record $20.2 trillion, according to International Financial Services London, a body that promotes the City of London," reports Telegraph.
Jan. 13th Market News
* "When bad investments happen to good people, there's only one thing to do short of weeping: Turn to Plan B. That's where most of us are now. We're viewing the shards of our broken retirement nest eggs and making choices we'd hoped to avoid. We might have to work harder to slash debt, cut spending, and save more. Plan B means seizing the reins in every area of our finances over which we have control," reports ConsReports.
* "The timing and strength of the global economic recovery are highly uncertain. Our economic system is dependent upon the free flow of credit. The government may need to inject more capital into banks," Fed Chairman Ben Bernanke told the London School of Economics Tuesday.
* "Since the early 1990s the idea of controlling inflation at all costs has been so compelling that central bankers have ignored such unintended consequences as bubbles in the housing and stock markets. But these were big enough, when they burst, to trigger a worldwide slump. Not lords of finance surely; more like high priests," reports Economist.
* "Citigroup and Morgan Stanley are combining their retail brokerages into a joint venture controlled by Morgan Stanley, sources said. There is increasing interest among banks to boost assets under management in their brokerage businesses to diversify their sources of revenue," reports Reuters.
* "The dollar was broadly firm, hitting one-month highs against the euro, as struggling equity markets cranked up demand ahead of a European Central Bank meeting on Thursday which is expected to cut key interest rates by .5% to 2%," reports Reuters.
* "Many people are wondering why gold isn’t exploding upwards while others believe gold has topped out and is set to decline. The truth is most likely someplace in between the two as the battle between bulls and bears rages on," reports Jim Carrillo, Sr. Broker at Swiss America.
* "This chart shows gold nearly quadrupling in US dollar terms since early 2001, a phenomenal bull over a 7-year span where the S&P 500 eked out a pathetic 11% gain! This bull has had two stages. In Stage One, gold was largely driven by the US dollar bear. But in Stage Two, investment demand usurped the dollar to gain gold’s driver’s seat," reports Zeal.
* "Precious metals are facing a tug of war. On one side, we have a flight to safety and long term down trend in the dollar that help gold. On the other hand, the dollar has rallied over the last six months and demand for everything has fallen as the economy weakens, putting pressure on the precious metals. As a result, gold has been trading sideways," reports VRtrader.com.
Jan. 12th Market News
* "U.S. stocks fell Monday for a fourth consecutive session at the unofficial start of what is expected to be an especially dreary earnings season. Energy, materials and financials led broad market declines. After the close Alcoa reported a $1.2 billion loss on declining metal prices and extensive restructuring," reports MW
* "President-elect Barack Obama has asked President Bush to seek the remaining $350 billion of the $700 billion financial industry bailout, and Bush agreed to do so. Obama's fellow Democrats, who control both houses in Congress, have expressed reservations about releasing the remaining money unless stricter limits and protections are placed on how the aid is used," reports CNBC.
* "No matter how bad things are, someone always comes along to propose a 'solution' that is guaranteed to make the situation much worse. Please consider the following ideas. Scary Idea #1 Anatole Kaletsky (London Times economist) is Proposing to Punish Savers and make them spend money. #2 Obama Says 'If Paul Krugman (NY Times economist) Has a Good Idea … Then We're Going to Do It'. #3. Time Magazine is making The Case for Bigger Government," reports MISH.
* "Oil prices fell below $40 a barrel Monday on concerns over global economic growth, with key U.S. corporate earnings results expected to give a new reading on crude demand in the world's largest consuming nation. Economic worries outweighed factors that would normally boost the market - Mideast tensions, signs that OPEC was implementing large-scale production cuts," reports AP.
Jan. 9th Market News
* Last week gold closed down 2.5% while the major U.S. stock indexes shed between 4-5% on disappointing employment, retail, durable goods, and housing data.
* "The U.S. economy lost 524,000 jobs in December, closing out the worst year for job losses since World War II, the Labor Department said Friday. Nearly 2.6 million jobs were lost in 2008, with 1.9 million destroyed in the past four months," reports MW.
* "The dollar rose against the euro after a U.S. government report showed payrolls shrank last month less than some economists forecast. 'We are short of a complete disaster,' said Jens Nordvig, a senior currency strategist in New York at Goldman Sachs Group Inc.," reports Bloomberg.
* "Wall Street stocks slumped Friday following a report showing a huge decline in jobs. 'A lot of people thought it was going to be a lot worse,' said Anthony Conroy, head trader at BNY Brokerage," reports CNN.
* "Merrill Lynch has revealed that some of its richest clients are now insisting on the purchase of gold bars, shunning derivatives or "paper" proxies. Clients are alarmed by the state of the financial system and signs of political instability around the world," reports Telegraph.
* "Investors seeking a safe home for their money are ploughing billions of dollars into the precious metal in a bid to preserve their wealth. Demand has now reached such unprecedented levels that the Perth Mint, Australia's biggest wholesaler of gold coins and bars, has been forced to ration its sales," reports DailyTelegraph.
* "Cashing In on Gold: Gold prices may spike above $1,000 in 2009," says Ahki Kamkolkar, head of futures at Halifax Investments. Sean Darby, head of regional strategy at Nomura International suggests investors adopt a "depression-led" type of strategy when buying equities in the next 12-18 months," reports CNBC.
* "Obama and the Democrats are taking a historic gamble, not only with their careers but with the country. If this monstrous stimulus package, plus the trillions in hot money, do not work; if the two ignite rampant inflation, rather than real growth, we are all out of options. The toolbox is empty. And what will follow may truly resemble the 1930s," reports WND.
* "China has bought more than $1 trillion in American debt, but Beijing is starting to keep more of its money at home, as the global downturn has intensified - a shift that could pose some challenges to the U.S. government in the near future but eventually may even produce salutary effects on the world economy," reports IHT.
Jan. 8th Market News
* "Gold will average $910 an ounce in 2009, according to the median forecast of 20 analysts, traders and investors surveyed by Bloomberg. "The four biggest bulls see $1,000 gold by the end of 2009."
* "A single [or equal] price for all major one-ounce gold bullion coins is a significant sign that gold is regaining its function as money again. Gold buyers are no longer sensitive to the shapes of and the images on gold coins; instead, they are interested in their weight," reports FinSense.
* "U.S. stocks dropped Thursday as Wal-Mart Stores Inc., the world's top retailer, scaled back earnings expectations, citing a worse-than-expected December sales performance. "Wal-Mart had been the stand-alone shining star, one of the two stocks up on the Dow last year," said Art Hogan, chief market strategist, Jefferies & Co.," reports MW.
* "President-elect Barack Obama said Thursday the recession could "linger for years" unless Congress pumps unprecedented sums into the US economy, making his highest-profile case yet. "I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible," reports CNBC.
* "The forecast of a jaw-dropping $1.2 trillion one-year federal budget deficit will make it harder for President-elect Barack Obama to win broad support for a massive stimulus package that would add even more to the red ink," reports McClatchy.
* "The blind are leading the blind at the US Treasury, the Federal Reserve and in the White House (present and future). In addition, we have thieves at the highest places in the financial industry (investment banks and commercial banks) - the thieves that demand (and get) the US Government to reimburse them for their losses. Part of the problem is that the Federal Reserve is essentially a cartel cemented together by law when banks join forces with the US Government. If you haven't watch the G. Edward Griffin video summarizing his classic book 'The Creature from Jekyll Island'," reports Vrtrader.
* "There is talk of a U.S. government bond bubble, with US Treasury bills yielding little or nothing and government bond yields plunging everywhere as central banks creep towards a Japanese-style zero interest rate policy (Zirp)," reports FT.
Jan. 7th Market News
* "U.S. private-sector employers shed 693,000 jobs in December, far worse than expected and pointed to more ugly news from the government's jobs data due later this week, a private employment service said Wednesday," reports CNBC.
* "Unwilling to let the free market work, U.S. policymakers have adopted the audacious goal of trying to kick-start a deeply flawed financial system; a system grounded upon unsustainable increases in asset prices and debt. These policies are destined to fail. One potentially amiable outcome would be to string out the losses over many years, thus avoiding the jarring consequences that would otherwise result from Wall Street imploding inside of a few weeks," reports FallStreet.
Jan. 6th Market News
* Tuesday gold prices briefly dipped below $840/oz. early, then rallied back above $865/oz. in the afternoon as bargain hunters shrugged off the dollar's recent strength.
* "Safe haven buying could feature on dips, with foreign exchange market volatility and geopolitical risk making gold a safer alternative investment. It's expected that external factors will continue to be the main driver for gold," wrote economists at Action Economics.
* "As a result of the global scope of the recession, there is no country that wants its exchange rate to appreciate. The clear alternative to the dollar in 2009 is not other currencies but that ancient form of money: gold. Precious metals could emerge as a hedge for investors suspicious of central banks and fearful that inflation will be the simplest solution to the challenge of global deleveraging," reports FT.
* "U.S. stocks pared an early rise Tuesday as a rally in energy shares lost some steam as crude oil hovered around $49 a barrel, and as investors digested new data that largely confirmed a bleak view of the nation's economy," reports MW.
* "After fleeing to the safety of US Treasurys, investors are moving back into stocks and corporate bonds in search of profits. "A lot of money has been hiding in Treasurys," says Mike Larson, an analyst at Weiss Research's Money and Markets newsletter," reports CNBC.
* "The long-held assumption that US assets - particularly government bonds - are a safe haven will soon be overturned as investors lose their patience with the world's biggest economy, according to Willem Buiter, a former Monetary Policy Committee member who is now at the London School of Economics," reports Telegraph.
* The Corruption of Money: "Today we are living through a crisis of conservatism. The financial crisis has brought to a head a growing dissatisfaction with the corruption of money, says Lord Robert Skidelsky in SMH. "The crisis has rightly led to a revival of interest in John Keynes. But he was a moralist as well as an economist. He believed that material well-being is a necessary condition of the good life, but that beyond a certain standard of comfort, its pursuit can produce corruption, both for the individual and for society."
* "Crude-oil rallied above $50 a barrel Tuesday, propelled by evidence that members of the OPEC cartel will announce production cuts as well as by heightened tensions in the Middle East, where Israel widened its ground offensive against Hamas in the Gaza Strip," reports MW.
* "New orders received by U.S. factories plunged a much-greater-than-expected 4.6% in November, the fourth straight monthly decline and a sign the sharp drop in manufacturing is deepening the recession. Pending sales of existing U.S. homes dropped to a seven-year low in November," reports CNBC.
Jan. 5th Market News
* "The dollar gained as President-elect Barack Obama crafted a package of infrastructure spending and tax cuts to create 3 million jobs. Further oil appreciation should anchor precious metal prices in an environment of increased currency volatility," reports Bloomberg.
* "President-elect Barack Obama plans to propose huge tax cuts for businesses and middle-class workers that will total up to $310 billion. Obama plans to ask Congress for a stimulus package of $675 billion to $775 billion," reports Politico.
* "U.S. stocks closed lower on Monday after a short-lived rally attempt as investors shifted through December sales results from automakers which, while poor, were not as awful as expected," reports MW.
* "The End of the Financial World as We Know It: Incredibly, intelligent people the world over remain willing to lend us money and even listen to our advice; they appear not to have realized the full extent of our madness," reports NYTimes.
* "Investors see little need to hold dollar assets as the Fed floods the world with greenbacks, the U.S. budget deficit swells to more than $1 trillion and with the trade gap exceeding $57 billion. Treasury yields fell to records last year and rates dropped below zero last month for the first time as investors sought the safety of government debt," reports Bloomberg.
* "As Israel's Operation Cast Lead against Hamas terror infrastructure in Gaza entered its tenth day, IDF soldiers were holding fights against Hamas gunmen near the Gaza Strip border on Sunday overnight, Israel Radio reported. Some 40 rockets landed in Israel on Sunday, scoring direct hits in Sderot and Ashkelon, but causing no casualties.
* U.S. stocks rose last Friday as investors looked began 2009 by shaking off one of the most bruising years on record. The worst annual performance for Wall Street stocks since the Great Depression ended with a modest rally on the final day of trading as the Fed pushed ahead with its plan to buy $500b mortgage-backed securities.
* "Despite some analyst calls that markets bottomed in November last year, investors should not get too euphoric, as stocks have still a way to go lower. According to the charts, November was not the low for the U.S. markets experts tell CNBC.
* "The dollar is on a life-support system, powered by the ongoing bull speculation in bonds. Virtually all non-conformist observers predict that the bond market is doomed and it is already on its last leg. They expect that bond values will fall into the abyss, followed by the dollar," reports SafeHaven.
Dec. 31st Market News
* "Gold remains the best performing metal for 2008. All roads point to gold continuing its ascent in 2009," said Jonathan Barratt, of Commodity Broking Services in Sydney, reports Bloomberg.
* Gold prices rose 14% in December on safe haven buying and recent developments in the Middle East, where Palestinian militants attacked southern Israel with rockets igniting a new war. "The Israel Air Force on Tuesday evening unleashed a massive strike on a network of Hamas-dug tunnels in the southern Gaza Strip, according to Haaretz.
* In 2008 gold prices rose for an amazing eighth straight year, topping $1,000/oz in March then bottoming at $710 in November. Gold is the best performing asset of the 21st century!
* "Flight-to-safety will still be the main driver of gold prices as the US fiscal and trade deficits get unmanageable, the weaker dollar could help gold break through $1,200 an ounce," reports Miningmx.
* "Gold is the only commodity that did not give up over 70% of it's value in this recent commodity debacle. Gold retraced only 30% of its value. This is very impressive given the fact that deflation on a world wide basis is occurring. History shows gold as the ultimate and longest lasting store of value - not worthless fiat currency. Remember that! I want to be long on the day when gold gaps up $500 an ounce and you can't buy it at any price," reports Vrtrader.com.
* "International demand for gold coins has picked up as people strive to take charge of their own financial destinies in an uncertain investment world. In addition, the recent credit crunch has led to a further uptick in demand for coins across the world," reports Mineweb.
* "This chart is the distillation of all global supply and demand for gold since 2001.There is not another investment that can even approach such performance in the incredibly chaotic markets we’ve witnessed over the last 7 years. Gold is already in an elite class of its own," reports Zeal.
* "On the euro's tenth birthday, eurozone's single currency is an unquestioned part of daily life for 330 million people. Market eagerness to push the euro to sterling parity, and to defiant highs against the dollar, yuan, ruble, and rupee, is an undeniable stamp of confidence. But success is bitter-sweet. The eurozone itself is in deep recession. A currency surge at this juncture is a cruel blow for export industry," reports Telegraph.