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US MARKETS
On Friday from the Bilderberg conclave at Davos, appointed European Central
Bank President, Mario Draghi proclaimed that Europe had averted financial disaster and
cited the improvement in euro zone markets in recent weeks. He said it was the ECB’s
duty to guard against deflation as well as inflation. The fact of the matter is that he and
his friends at the Fed arranged a currency swap of $1 trillion of which the ECB dispersed
$660 billion to 523 EU banks, at 1% interest for three years. He also cut interest rates
twice and extended loans for 1 to 3 years. Mr. Draghi could be expected to take the easy
Anglo-American way out. He is fully Illuminati trained and that is where his orders
emanate from.
He continued about how the conclusion of a fiscal pact, the ESM, the European
Stabilization Mechanism, where budgets and fiscal spending policies would be
determined by unelected, Treasury appointees, who have been officially immunized by
the EU government. Mr. Draghi makes no note of these qualifications and forgets to let
us know that in this new ESM pact all the nations lose their sovereignty. 2
As yet, after a month, there is no evidence that the funds had reached the real
economy. The banks that just received the funds at 1% interest have been depositing
them at ¼% interest with the ECB. They have not lent to each other because bankers
say they do not trust each other. What a sad state of affairs. In addition to the above the
ECB now accepts loan collateral of much lower quality than previously was approved. As
you can see there were a lot of facts Mr. Draghi deliberately left out.
Now the banks have to use these funds to refund old and new debt and lend to
keep the economies afloat. They also have to play their parts in keeping the six problem
nations afloat.
Concerning the subject of Greece we were told last Friday a deal would be
announced but nothing has happened as yet. The outlook is grim and the fundamentals
are terrible. We won’t rehash Greece, because we have been over it so many times. We
will wait to see what this week brings.
The Portuguese economy is falling deeper into austerity. Bank lending has fallen
by the most on record. It fell $6.5 in December the biggest monthly decline since
December 197, when the ECB began collecting data. Portugal, if they’ like to recover,
should be using the LTRO funds to make loans to small and medium sized companies.
The Kiel Institute for the World Economy says Portugal would have to have a
budget surplus of 11% of GDP annually. If they had 2% growth, which is a tall order, it
would need a 56% haircut on its debt to get back on a sustainable path to recovery.
Gold finally out of that early on mess, finally had a good month, up just under
10%. That is the best January since 1980. We remember January 1980 well – it was the
final month of the gold rally. Oddly enough the shares topped out in June with gold
trading at $680 to $720. We would like to say that the 3 gold and silver suppressions of
this past 2011 and 2012 has pointed out in stark relief that the US government has been
very actively manipulating gold and silver prices, legally, since 1980. We mention this
because short-term charts are terribly distorted and for us you cannot use them. The
advocates are out again with their charts and believe we hope they are right. As usual as
they have been, they will be wrong. They’ll soon call for reversal and as they do gold and
silver will go higher.
After having loaned the ECB $1 trillion they now tell us we’ll receive QE 3. In
fractional banking that could be $10 to $20 trillion. Any substantial part of those funds
are used and monetized you’ll see some stunning inflation.
Election is in view and employment is not improving. The Fed has pledged that it
is prepared to provide for further monetary accommodation. Inflation is headed higher,
not lower. All that money and credit will influence inflation. Yes, the EU, US and UK
economies will be flat this year and probably slightly higher. What we are doing with QE
3 and other types of stimulus is just extending the game.
If everything is fine why did the US Mint sell 114,500 ounces of American Gold
Eagles with still two days left in January to accommodate buyers? Maybe the total will be
145,000, the largest sale in 1-1/2 years. It’s because people do not trust their economies
and their governments that is why and they are buying gold and silver coins to protect
themselves. They only have to look at the Republican Presidential primaries where
votes are stolen by computer, dead people vote and Ron Paul doesn’t get a chance to
state his case. Our government is a criminal syndicate. All those American gold and
silver buyers know this, and that is why they want gold and silver coins, not fiat dollars.
Finally we are starting to see money managers, hedge funds, and others getting
more bullish on gold. This should lead to short covering in gold and silver and the shares
Here we have QE 3 in the works as we predicted months ago. We said it would
consist of the Fed buying the banks garbage so they have cash to follow the Fed’s
orders. Those orders will be to buy Treasuries, Agencies and to make loans to small and 3
medium companies. Before the Fed bought $1.4 trillion of this paper, mostly MBS and
CDO’s. We never found out what the Fed paid for previous purchases and we won’t this
time either. This is another gift the Fed, or should we say taxpayer gives the to the
banks. What we are seeing in Europe and again shortly here is another stuffing of the
system with money and credit. The Fed is headed down the road of no return and they
know exactly what they are doing. That is playing money and credit creation to the bitter
end. Historically no central bank has had the power to do this. If played out to the end
we have to expect hyperinflationary depression, which will end in a deflationary
depressionary collapse. This will destroy the value of the US dollar and its purchasing
power. The entire system will probably collapse to a great extent including perhaps 60%
of commerce, 40% to 50% unemployment, and the end of the financial system and
resorting to bartering, the social support system and government. They will all collapse,
so you had better prepare for it. All this will be expedited if Ron Paul is not elected our
next president. If he were to be elected he could short-circuit many programs and
policies that are destroying our nation.
The moves by the elitist Fed via the ECB to cover-up the monetary and financial
chaos in Europe and in the US via QE 3 is in part political. Political in France and toward
the next elections. France is a nightmare for the elitists and obviously those in power
want Obama returned. He having done everything asked of him.
As we predicted last fall that QE 3 will come in the form of another bank bailout.
This time it will be the clearing of toxic bonds from the banks’ books, which was done by
buying $1.4 trillion in these bonds previously. We expect $800 billion to $1.3 trillion this
time around. The disbursement of these funds should last 12 to 18 months. These
moves were in part responsible for our change in GDP for the US this year from minus
1-1/2% to 2% to plus 1-1/2% to 2%.
In the latest out of Europe, Germany is pushing Greece to relinquish control over
its budget policies to a euro zone “budget commissioner,” who would be able to veto
domestic fiscal decisions, similar to the powers they want to grant to the ESM.
German logic is if further funds are not dispersed, Greece cannot threaten its
members with default, but will have to accept outside fiscal control with funs. The game
being paid by Germany is dangerous and could lead to immediate default. In addition
any deal made in February by the PASOK government is subject to change in two
months by a new election victor and party in charge. The German position is dumb and
ultimately won’t work.
The Greeks are not going to like or accept the German demands. There will be
demonstrations and the new policies may go nowhere. From the Greek side, when you
have lost almost everything there is little more to lose. Unfortunately, we predicted all
this but few were listening.
After putting the present regime in power 25 years ago in Iran the US has had
nothing but problems, the latest and most important has been the sale of oil in
currencies other than the US dollar. Asked many times, Iran refuses to comply. This is
the main reason the US and Europe are so aggressive in pursuing Iran. Underneath it all
it is all about petrodollars. This is why Iraq was destroyed and Libya as well. The US
could not tolerate Iraq selling oil in euros. Anyone who steps out of line gets zapped, no
matter who it is. At the IMF a year ago director Dominique Strauss-Kahn called for a
different currency to, a new world currency, to end the dominance of the dollar. As a
result he was set up in a hotel in NYC for rape. We immediately pointed out this was a
bag job and so it was, but it got him out of his IMF job, he couldn’t run for the French
presidency and they destroyed his reputation. This shows you how far and even further
the US Illuminists will go to protect their oil monopoly and fixed oil payments in US
dollars only. Strauss-Kahn is a top Illuminist and they still destroyed him. If the dollar 4
becomes only one of many currencies in which oil is sold, the dollar will then collapse.
For the US, the barn door has closed, but the farm animals are already loose.
At Davos this past week the US Secretary of the Treasury, Timothy Geithner,
urged the euro zone to boost its cache of bailout cash and protect Italy and Spain
against the threat of a market rout. At the same time the new IMF leader Christine
Lagarde urged Greece and its creditors to agree on cutting debt burdens.
What we see here is a request for more funds. The Fed just did a swap, a loan,
for $1 trillion for the ECB in behalf of 523 EU banks. Obviously it wasn’t enough and
obviously they would rather borrow from the ECB and the Fed rather than go the
fractional route. We will see more money spilled but never really enough.
While these events ran paramount on Friday night, while most everybody was
enjoying themselves, Fitch cut Italy’s rating 2 notches to A minus. Joining the group n
being downgraded we saw the same medicine applied to Spain, Belgium, Slovenia and
Cyprus.
Last week the Dow fell 0.5%, S&P was little changed, the Russell 2000 gained
1.8% and the Nasdaq 100 rose 1.0%. Cyclicals rose 0.8%; utilities were unchanged;
transports gained 1.2%; consumers fell 0.4%; banks fell 1.4% and broker/dealers fell
3.0%; high tech rose 0.3%; semis fell 0.2%; Internets fell 0.3% and biotechs rose 5.4%.
Gold bullion rose $72.00, the HUI Gold Index rose 9.4% and the USDX fell 1.6%.
Two-year T-bills fell 3 bps to 0.21%, as 10-year notes fell 13 bps to 1.89%.
German 10-year bunds rose again.
The Freddie Mac 30-year fixed rate mortgage rates rose 10 bps to 3.98%; the
15’s rose 7 bps to 3.24%. The one-year ARM’s were unchanged at 2.74% and 30-year
fixed rate jumbos were down 4 bps to 4.46%.
Fed credit expanded $1.5 billion to $2,905 trillion, which is up 20.1% yoy. Fed
foreign holdings at Treasuries and Agencies rose $14.4 billion to $3.406 trillion. Custody
holdings for foreign central banks rose $55 billion yoy, or 1.6%.
M2, narrow, money supply rose $8.0 billion to a record $9.763 trillion. That is up
10.2% yoy.
Total money market fund assets fell $14.7 billion to $2.679 trillion.
Commercial paper rose $3.4 billion to $971 billion. That is down $17 billion from
a year ago, or 1.7%.
A "gold rush" swept through China during the week-long Lunar New Year
holiday this year, with demand for precious metals and jewelry surging since the
Year of the Dragon began.
Sales of gold, silver and jewelry rose 57.6 percent during the week-long holiday
at Caibai, one of Beijing's best-known gold retailers, according to data released by the
Ministry of Commerce (MOC) on Saturday.
Other jewelry stores across the country also saw sales boom during the period,
with customers favoring New Year-themed gold bars, gold ingots and other types of
Dragon-themed jewelries.
"Long treasured by Chinese, gold is no longer owned only by a privileged few,
but has become a new investment channel open to all," said Guan Qiang, assistant
manager at Caibai.
The Spring Festival gives people a chance to preserve and present gold as gifts,
offering hopes that it will increase in value and not be impacted by inflation, Guan said.
During the week-long holiday, which lasted from January 22 to 28, the sales
volume in Caibai and Guohua, another of Beijing's top gold retailers, reached about 600
million yuan ($95.28 million). 5
The figure showed a 49.7-percent increase over that of last year's Spring
Festival, said a report released by the Beijing Municipal Commission of Commerce.
Caibai began selling gold bars as investment items during the 2008 Beijing Olympic
Games, but the trend of buying gold or silver bars during the Spring Festival has really
taken off in the past two years, Guan said.
For Guan and his colleagues, the Spring Festival rush was an exciting but
exhausting experience, as customers flooded the store and surprised clerks with their
purchasing enthusiasm.
"With customers crowding and rushing in, we did not even have time to eat and
drink," said a sales clerk at the gold bar counter surnamed Li.
She said each shop assistant had received hundreds of customers per day and
wrote several times more orders than on ordinary days.
"You can hardly even see the gold bars, necklaces and pendants in the display
case. People seem crazy about gold, snatching it up more like a 'cheap cabbage' than
such a precious metal," said Beijing resident Miao Miao.
"You have to quickly decide whether to make a purchase, or it will be taken away
by others."
Miao was shopping for a pair of gold bracelets to give to her granddaughter as a
gift for the New Year.
"When my daughter was born in 1984, we had no means or savings to buy her
one as a keepsake. We can finally realize this dream by sending it to her daughter,"
Miao said.
However, Chinese do not value gold only in only sentimental terms. The precious
metal is also expected to maintain or increase its value, as evidenced by the surging
investment demand seen around the country, insiders have said.
"To most Chinese, gold is more convenient to cash in than other investment
instruments. Despite common investment risks, the price of gold is clear and easy to
judge," said Guan.
Compared to unpredictable investments, such as those in the stock market or
housing sector, gold is cherished more by Chinese for its increasing value as an asset
as well as the unlikelihood that it will be affected by inflation, Guan said.
China is expected to overtake India as the world's top gold consumer in the next
few years. Strong demand for investments in gold and jewelry will have driven China's
total gold demand to 750 metric tons in 2011, according to the World Gold Council.
Despite the record-high price of gold, the demand for investments in gold and
jewelry has continued to soar, with the market expected to reach about 955.2 metric tons
by 2020, thanks to a growing middle class and a more affluent society, said Binghai,
director of the Shanghai Gold & Jewelry Trade Association.
The Federal Reserve's latest efforts to bolster the recovery with
unprecedented policy tools will hurt the U.S. economy in the long run, a former
member of Fed Chairman Ben Bernanke's inner circle suggested on Thursday.
"Central bank transparency is good, but transparency that delineates future policy
breeds market complacency," Warsh said. "It threatens to undermine the wisdom of
crowds and the essential interchange with financial markets.
The statement is pretty clear that late 2014 is contingent on the evolution of
the economy,” Plosser said today in an interview on CNBC. “It is not a commitment
and it shouldn’t be interpreted as a commitment.
It will depend on how the economy” evolves, he said…6
“I worry about this accelerationist view that we have to go ever faster on the pedal of
monetary policy,” Plosser said. “You run the risk of runaway inflation, distortions in the
marketplace, bubbles and so forth.” Rates near zero are “punishing savers” and could be
leading portfolio managers to take “unwise risks,” Plosser said. While the Fed’s goal has
been to encourage a move to riskier assets, “we don’t know the full consequences of
that,” he said
The NY Fed’s Index of Coincident Economic Indicators shows how putrid
the economic ‘bounce’ is for New Jersey. NYC, due to the trillions poured into Wall
Street bounced well but is now rolling over. The bounce of NYC obviously helped NY
State, but that bounce was modest and is also rolling over.
US Q4 GDP increased 0.7%, 2.8% annualized; 3% was expected. However,
consumption increased only 2%. Inventory growth contributed 2 percent points to the
2.8% growth! Real final sales rose 0.8%.
The Commerce Department greatly boosted GDP by lowering the GDP deflator to only
0.39% from Q3’s 2.56%. This created 2.16% more GDP q/q…Using CPI to deflate GDP
would have produced negative GDP.
The absurdly low GDP Deflator also greatly overstates income, which increased only
0.8%...Government spending declined 4.6% in Q4 and 2.1% for 2011 due to massive
defense cuts. This is the biggest decline since 1971…Part of the surge in inventory
could be inflation.
Consumer Metric Institute: If the highly positive swing in the inventory
number is real, it is certainly not sustainable and when combined with actual consumer
spending the numbers themselves would be prima facie evidence that manufacturers
over-corrected in anticipation of huge holiday spending. Such an over-correction should
lead to reversals in the coming quarters. On the other hand, if the swing is an artifact of
firming commodity prices it is just a further indication that the headline number is
hopelessly noisy subject to erratic phantom movements as the BEA's "deflaters" struggle
to track pricing changes.
And lastly, the volatility of the inventory parts of the BEA's equation continue to
distort the headline number enough to render it useless as a source of genuine
economic information. In the best of times the inventory data provided by the BEA is late
and incomplete, but it is necessitated by the need within the BEA's equations to
reconcile the production based manufacturing portions of their equation to the
consumption based consumer portions. Because of that it is both partly plugged (at least
in the monthly and quarterly updates) and highly susceptible to fluctuations in pricing
levels.
In short, this report is disturbing because of how the headline number masks real
and troubling weakness in the more substantive details
The PCE number was the most-understated and worthless, regularlyfollowed inflation number the Fed could come up with, shy of the “core” PCE deflator, net
of food and energy, which Mr. Bernanke traditionally has been fond of touting.
GDP for 2011 increased only 1.7%. US Debt increased almost 9% in 2011; the Fed’s
balance sheet increased over 20%. $1.22 Trillion of US Treasury debt and QE2.0 and
Operation Twist II produced about $260B of GDP.
How many times can this occur before an implosion occurs?
Employment in Alabama has surged since July 2011; however this has caused great
controversy. 7
Alabama's unemployment rate has dropped more than any of its bordering states
according to the U.S. Bureau of Labor Statistics. According to the data, Alabama's
unemployment has dropped by 1.9% since July 2011 when the rate reached its high for
the year at 10% unemployment…
The legislature passed a handful of measures that were touted as ways to recruit
industry to Alabama.
They included tax incentives for companies to relocate to Alabama and a law aimed at
cracking down on illegal immigration which was sold as an economic development bill…
[Bill passed in June]
[Fed officials and other solons are complicit]
The amount of money the federal government hands out in direct payments to
individuals steadily increased over the past four decades, but shot up under Obama,
climbing by almost $600 billion a 32% increase in his first three years…
According to the Census Bureau 49% now live in homes where at least one person gets
a federal benefit — Social Security, workers comp, unemployment, subsidized housing,
and the like. That's up from 44% the year before Obama took office, and way up from
1983, when fewer than a third were government beneficiaries…
This year, more than 46 million (15% of all Americans) will get food stamps. That's 45%
higher than when Obama took office, and twice as high as the average for the previous
40 years…
The number of people on Social Security disability has steadily climbed since the
1970s, thanks mainly to easier eligibility rules. But their numbers jumped 10% in
Obama's first two years in office, according to the Social Security Administration. That
sharp rise was due largely to meager job prospects since the recession ended in 2009…
The government's role in health care has grown over the past decades, with 45% of all
health spending now coming from the federal government, up from 32% in 1990…
In just nine years, entitlement spending is on track to eat up 61% of the federal budget,
according to the CBO. And unless these programs are cut back, they will soon consume
all federal taxes, one CBO budget scenario predicts…
Due to the Fed, several commodities are surging despite universal
forecasts of global economic decline.
Cattle prices are at an all-time high due to the lowest herd count in 50 years (due to
grain prices last year).
Orange juice hit an all-time high (Looking good, Billy Ray!)…Cash corn is trading
at premium in January for the first time since 1975 (due to tight supplies)…Gasoline
futures hit an all-time high for January.
As we keep asserting, if the Fed were to implement QE 3.0, the inflation surge could be
much worse than the inflation surge that accompanied QE 2.0, which killed economic
growth and fomented global revolt.
In Honolulu… there’s a four-bedroom home priced at $785,000 that has
views of the sun setting over the Pacific Ocean. The beaches of Waikiki are 15
minutes away. Starting this month, the property is available to buyers with a subprime
credit score, limited cash reserves and a 3.5% down payment using a loan backed by
the Federal Housing Administration. Without the agency, a buyer would need a 20%
down payment and an unblemished financial history for a jumbo mortgage… The
agency increased the size of mortgages it’s willing to insure to as high as $793,750 in
Hawaii and $729,750 in the costly real estate markets of states including California,
Florida, and Virginia. 8
Freddie Mac Bets Against American Homeowners.
But the trades, uncovered for the first time in an investigation by ProPublica and NPR,
give Freddie a powerful incentive to do the opposite, highlighting a conflict of interest at
the heart of the company. In addition to being an instrument of government policy
dedicated to making home loans more accessible, Freddie also has giant investment
portfolios and could lose substantial amounts of money if too many borrowers refinance.
“We were actually shocked they did this,” says Scott Simon…the head of the giant bond
fund PIMCO’s mortgage-backed securities team…“It seemed so out of line with their
mission.The trades put them squarely against the homeowner, he says.
CBO has released a study comparing the wages and benefits of private
sector and federal non-military workers. The study uses statistical techniques to
make comparisons with adjustments for education level, experience, and other factors.
Here are the overall results:
- The wages of federal workers are 2 percent higher than similar private-sector workers,
on average.
- The benefits of federal workers are 48 percent higher than similar private-sector
workers, on average.
- The total compensation (wages plus benefits) of federal workers is 16 percent higher
than similar private-sector workers, on average…
The percentage of safe assets to total assets in the US economy has been
roughly the same since 1952, at about 33 per cent…The stability of demand for safe
assets has held during a time in which the assets of the financial sector as a percentage
of all assets in the economy have climbed from 25 to 40 per cent, with most of the
growth in total assets being financed through debt rather than equity…
Since the relevant topic is how to prevent a run in the shadow banking system, we’re
primarily talking about debt here specifically, the debt eligible to be used as collateral in
repo and short-term secured lending markets…
Gorton and Metrick have previously argued that the panic wasn’t caused directly
by the revelation that subprime-related ABS values were plummeting; this had already
happened earlier than 2007. The problem was that the lack of transparency in repo
markets meant that investors had no way of distinguishing between repo borrowers
whose collateral was subprime-related and those whose collateral was relatively safer.
So they started raising haircuts, from zero in most cases, indiscriminately across all
repo counterparties. The run was on and so was the credit crunch…
The core problem is that there is no such thing as a safe asset, as the world has so
painfully learned.
”Safe asset” is just a phrase that describes assets perceived to be safe enough.
But we can never completely eliminate the possibility that an asset will go from safe
enough to not safe enough.
US personal income increased 0.5% in December; but 23% of income growth
was due to personal transfer payments. Spending was flat. Savings surged 4% - in
December!!! This does not compute!
Illinois’ unpaid bills may more than triple to $34.8 billion by 2017 unless
lawmakers and Democratic.
Governor Pat Quinn immediately bring Medicaid and pension spending under control,
said a research group. The “potentially paralyzing” backlog, projected to reach $9.2 9
billion when this fiscal year ends June 30, would be fueled by an “unsustainable”
increase in Medicaid spending, according to the Civic Federation, which calls itself a
nonpartisan government research organization
House Republicans are proposing to spend about $260 billion over the next
4 1/2 years on transportation programs, as well as substantially increase the size of
trucks permitted on highways, according to a draft bill being introduced this week…
[Bribing the constituents with more goodies from borrowed money]
Residential real estate prices fell more than forecast in November, showing
distressed properties are hampering improvement in the U.S. housing market.
The S&P/Case-Shiller index of property values in 20 cities declined 3.7 percent from
November 2010 after decreasing 3.4 percent in the year ended in October, the group
said today in New York. Economists projected a 3.3 percent drop, according to the
median estimate in a Bloomberg News survey.
Another wave of foreclosures threatens to keep the pressure on prices and delay
recovery in the industry that precipitated the last recession, underscoring the Federal
Reserve’s view that housing “remains depressed.” More stability in real-estate values
may be needed to persuade Americans to take advantage of record-low mortgage rates.
“We’ve seen home prices take a turn for the worse after showing some signs of a
bottom, and we do think that there is more downside from here,” said Ellen Zentner, a
senior economist at Nomura Securities International Inc. in New York, who correctly
forecast the price decline. “If you get stronger jobs and wage growth, it’ll go far in
alleviating some of the pipeline foreclosures that have yet to happen.
Consumer confidence unexpectedly dropped in January and a gauge of
business activity fell, underscoring forecasts that the U.S. economy will cool after
expanding at the fastest pace since the second quarter 2010.
The New York-based Conference Board’s confidence index decreased to 61.1, lower
than the most pessimistic forecast in a Bloomberg News survey of economists, from a
revised 64.8 reading the prior month. The Institute for Supply Management-Chicago Inc.
said its business barometer declined to 60.2 from 62.2 in December. Readings above 50
signal growth.
Employers aren’t hiring fast enough to drive bigger gains in wages and consumer
spending, while higher gasoline prices are cutting into household budgets. Another
report today showed home prices fell more than forecast in November, eroding the
wealth of families as they seek to rebuild savings.
“This quarter will be a bit slower,” said Stuart Hoffman, chief economist at PNC Financial
Services Group Inc. in Pittsburgh, who had the lowest sentiment estimate. “Consumer
confidence appears to have leveled off, as job growth isn’t quite as good and gasoline
prices have moved back up.”
Business activity in the U.S. cooled in January as orders and employment
slowed, indicating last quarter’s pickup in growth will not be sustained into 2012.
The Institute for Supply Management-Chicago Inc. said today its business barometer
declined to 60.2 from 62.2 in December. Readings above 50 signal growth. Economists
forecast the gauge would rise to 63, according to the median of 57 estimates in a
Bloomberg survey.
Three consecutive readings exceeding 60 are still the strongest since early 2011,
signaling manufacturing remains a mainstay of the expansion even as the world’s largest 10
economy decelerates. Nonetheless, the risk of a recession in Europe prompted by its
debt crisis and slower growth in some emerging markets pose a risk to export growth.
Business activity in the U.S. Midwest grew more slowly than expected in
January, according to the Institute for Supply Management-Chicago's index of Midwest
business activity.
"January's Chicago PMI reading of 60.2 compares to 62.2 in December and a market
consensus of 63.0, but remains quite healthy," said David Sloan, an economist with IFR
Economics.
"Firmer data from other surveys appear to be catching up with the Chicago PMI," he
added. "Internals were generally somewhat softer with the exception of a rise in delivery
times."
Maurice “Hank” Greenberg, the former CEO of American International
Group Inc. (AIG), and the company he runs, Starr International Co. (Starr), have sued
the U.S. Government for the alleged unconstitutional federal takeover of AIG in 2008,
according to Reuters.
The lawsuit seeks $25 billion in damages and alleges violations of the Fifth
Amendment, which says private property can’t be taken for “public use, without just
compensation.” Moreover, Starr accuses the U.S. Treasury Department and Federal
Reserve Bank of New York of wrongly seizing control of AIG and using it as a vehicle to
funnel tens of billions of dollars to AIG’s trading partners, and also alleges that the AIG
bailout was done as “a vehicle to covertly funnel billions of dollars to other preferred
financial institutions including Goldman Sachs.”
“The government’s actions were ostensibly designed to protect the United States
economy and rescue the country’s financial system,” the complaint asserts.
The complaint adds that, “[a]lthough this might be a laudable goal, as a matter of basic
law, the ends could not and did not justify the unlawful means employed. The
government is not empowered to trample shareholder and property rights even in the
midst of a financial emergency.”
The $25 billion estimate reflects what Starr calls the value of the government’s
stake on January 14, 2011, when it swapped AIG preferred stock for 562.9 million
common shares. AIG was once the world’s largest insurer by market value.
The federal claims case is Starr International Co. v. United States, No. 11-779(Fed. Cl.
filed Nov. 21, 2011). The Federal Reserve case is Starr International Co. v. Federal
Reserve Bank of New York, No. 11-8422 (S.D.N.Y. filed Nov. 21, 2011)
JPMorgan Chase & Co. was sued by Germany’s largest cooperative lender
for allegedly making false and misleading statements in connection with the sale
of residential mortgage-backed securities.
DZ Bank AG sued yesterday in New York State Supreme Courtin Manhattan,
saying it bought about $85 million of the securities from JPMorgan based on offering
materials that misrepresented the underwriting standards used to issue the underlying
loans.
"Plaintiff did not know the true facts regarding defendants’ misrepresentations
and omissions in the offering materials, and justifiably relied on those misrepresentations
and omissions," Frankfurt-based DZ Bank said in the complaint. The German lender is
seeking $85 million in damages.
Pools of home loans securitized into bonds were a central part of the housing
bubble that helped send the U.S. into the biggest recession since the 1930s. The 11
housing market collapsed, and the crisis swept up lenders and investment banks as the
market for the securities evaporated.
Tasha Pelio, a spokeswoman for New York-based JPMorgan, declined to
immediately comment on the lawsuit.
The case is Deutsche Zentral-Genossenschaftsbank AG v. JPMorgan Chase &
Co, 650293/2012, New York State Supreme Court(Manhattan).
GOLD, SILVER, PLATINUM AND PALADIUM
Monday started off slow and gold was off $9.70 at 8:00 a.m. EST. Silver was off
$0.35. Spot gold fell $3.00 to $1,729.80, as February fell $3.50 to $1,728.50. Spot silver
fell $0.25 to $33.50, as March fell $0.37 to $33.41. Gold open interest fell 3,546
contracts to 430,165 contracts as silver OI fell 91 to 101,915. The XAU fell 1.65 to
201.03 and the HUI fell 5.91 to 542.79. Generally speaking there still is little interest in
gold and silver markets. We like that, because there are yet all these buyers out there.
The Dow was off 100 and headed toward oblivion and all of a sudden another
miraculous recovery.
Germany wants to administrate Greece and Portugal is showing default
tendencies. The Baltic Dry Index is back at 2008 levels, which is dreadful.
Personal income rose 0.5% in December vs. 0.1% in November. The personal
savings rate rose, after falling, to 4% from 3.5%.
The Fed’s Midwest Manufacturing Index rose 1.7% to 87.4 in December, auto
production rose 1.8%, machinery 2.5%.
The Fed of Dallas Business Activity Index increased to 15.3 in January from -03
in December.
The Dow fell 7 to 12,653; S&P fell 30 and Nasdaq fell 30 Dow points. The 10-
year T-note yield fell to a new low of 1.83%. The yen rose .0070 to $.7625; the euro fell
.0077 to $1.3130; the pound fell .0025 to $1.5691; the Swiss franc fell .0060 to $.9175
and the Canadian dollar fell .0015 to $.9960. The USDX rose .25 to 79.15.
Oil fell $0.65 to $98.90, gas fell $0.06 to $2.87 and natural gas fell $0.06 to
$2.69. Copper fell $0.06 to $3.83, platinum fell $8.80 to $1,614.20 and palladium fell
$6.90 to $689.24. The CRB Index was unchanged at 317.80.
On Tuesday early on gold was up $8.00 and silver $0.29. Spot gold rose $5.80
to $1,735.60, as the outside month closed up $7.30 to $1,738.30. Spot silver fell $0.42 to
$33.08, as March fell $0.31 to $33.22. Gold open interest fell 3,870 to 426,295 contracts.
Siler OI rose 727 to 102,642.
The XAU rose .01 to 201.04 and the HUI fell 1.58 to 541.21. AEM fell 0.69%, or
$0.26 to $37.40; GG fell 0.45%, or $0.22 to $48.39; SSRI fell 0.92%, or $0.16 to $17.25;
PVG was unchanged at $16.21 and PVG.TO rose 1.05%, or $0.17 to $16.40; HEL.V
rose 6.90%, up $0.06 to $0.93 and HLLXF rose 4.55%, or $0.04 to $0.92.
S&P warmed it may downgrade a number of highly rated Group of 20 countries if
reforms are not enacted.
In the first quarter of 1011 compensation for US workers rose 0.4%. At the
moment the CBO has predicted a $1.079 trillion deficit for fiscal 2012. There is still no
Greek bailout and default accomplished.
The second LTRO by the ECB will be for $426 billion.
Syrians are buying up gold as their currency plunges.
Venezuela has received all 160 tons of its gold. 12
China bought 490 tons of gold in 2011, double 2010’s 245 tons. Incidentally,
major gold and silver shares are still being shorted a negative 55% daily on average.
The Dow fell 20 to 12,632; S&P fell 6 and Nasdaq rose 9 Dow points. The yen
rose .0015 to $.7616; the euro fell 0036 to $1.3090; the pound rose .0068 to $1.5760;
the Swiss franc fell .0021 to $.9194 and the Canadian dollar rose .0006 to $.9965. The
USDX rose .9 to 79.26.
Oil fell $0.32 to $98.45, gas rose $0.17 to $2.89 and natural gas fell $0.23 to
$2.48. Copper fell $0.03 to $3.80, platinum fell $26.10 to $1,590.20 and palladium fell
$1.10 to $687.40. The CRB Index fell 1.60 to 312.31.
COMMODITIES
The CRB index rallied 2.5% this week (up 4.0% y-t-d). The Goldman Sachs
Commodities Index rose 2.2% (up 3.4%). Spot Gold jumped 4.3% to $1,739 (up
11.2%). Silver surged 6.7% to $33.79 (up 21%). March Crude gained $1.23 to $99.56
(up 0.7%). February Gasoline rallied 5.0% (up 10%), and March Natural Gas recovered
15.2% (down 7.8%). March Copper gained 3.8% (up 13%). March Wheat jumped 6.0%
(down 1%), and March Corn rose 4.9% (down 1%).
EUROPE
The European Central Bank slashed its purchases of government bonds to
virtually zero last week, as it came under pressure to take losses on its Greek bonds
and despite Portugal coming under renewed attack on financial markets.
Controversy surrounding the ECB’s bond buys has intensified over the last week with
pressure rising on it to take losses on its Greek bonds, – or at least forgo profits – as
part of a previously unthinkable deal to stabilise the country’s finances.
At the same time it remains at the centre of a fierce political tug-of-war,
continuing – with Germany’s backing – to resist calls from France and Italy as well as the
United States, Britain and Russia to be more aggressive in its buying. The bank’s latest
purchases added up to just 63 million euros leaving the total it has spent on bonds since
starting the purchases back in May 2010 at 219 billion euros…
European banks are preparing to tap the European Central Bank’s
emergency funding scheme for up to twice as much as the ECB supplied in its debut
€489bn auction last month, providing further evidence of the sector’s liquidity squeeze.
Several of the eurozone’s biggest banks have told the Financial Times that they could
well double or triple their request for funds in the ECB’s three-year money auction on
February 29
Euro-zone central banks have bought sovereign bonds from the euro
zone's indebted periphery countries since last summer to the amount of EUR217
billion ($275 billion) as of Jan. 13. Both the former German central bank president Axel
Weber as well as former ECB executive board member Juergen Stark left their positions
because of these purchases…
Nowotny suggested that he doesn't see a larger role for the ECB in solving the euro
zone's debt crisis. 13
The European Central Bank remains firmly opposed to any restructuring of
its Greek bond holdings as the debt was acquired for monetary policy purposes,
according to two people familiar with the Governing Council’s stance. While the ECB
faces pressure to join private-sector investors in taking losses on Greek debt, the central
bank sees this as potentially damaging to confidence in the institution… International
Monetary Fund Managing Director Christine Lagarde said… that European governments
and other public holders of Greek debt may have to increase support if private creditors
don’t go far enough.
Europe can’t let efforts to strike a deal with creditors in Greek debt disable
the region’s credit default swap market, said Christian Clausen, the president of the
European Banking Federation. ‘You have to make sure the documentation is right so it
can be a functioning market,’ Clausen said… ‘We need a functioning CDS market, even
though some politicians don’t like it, we need it. That is the only way we can hedge risk.
Opposition to payouts on Greek credit-default swaps from European Union
policy makers is softening as disputes over a voluntary debt exchange threaten to push
the nation into default. Any agreement between the Greek government and the…
Institute of International Finance on debt writedowns will only bind 50% of investors in
the 206 billion euros ($270bn) of notes being negotiated, Barclays Capital estimates.
Hedge funds may resist a deal, seeking to get paid in full or compensated from
insurance contracts.
Angela Merkel returned to Berlin with the new treaty in the bag, but also
appeared more isolated with her hard line on Greece Germany's campaign to set the
terms for saving the euro was crowned with success when EU leaders sealed
agreement on a new "fiscal compact" for the single currency zone, enshrining Berlin's
insistence on rigour and discipline and establishing a new punitive regime for budgetary
profligacy.
Chancellor Angela Merkel returned to Berlin with the new treaty in the bag, but
also appeared more isolated in Europe in her hard line on Greece and how to save the
country from defaulting on its debt.
All EU countries except Britain and the Czech Republic signed up for the new pact on
Monday night, although Poland and France sparred over who would be allowed to take
part in the twice-a-year eurozone summits which are a feature of the new regime.
Chancellor Angela Merkel cemented her political ascendancy in Europe on
Monday when 25 out of 27 EU states agreed to a German-inspired pact for stricter
budget discipline, even as they struggled to rekindle growth from the ashes of austerity.
Greeks reject German plan for EU budget commissioner Greek officials have
reacted angrily to a leaked German proposal for an EU budget commissioner with veto
powers over Greek taxes and spending
Germany is pushing for Greece to relinquish control over its budget policy
to European institutions as part of discussions over a second rescue package, a
European source told Reuters on Friday.
"There are internal discussions within the Euro group and proposals, one of which
comes from Germany, on how to constructively treat country aid programs that are
continuously off track, whether this can simply be ignored or whether we say that's
enough," the source said. 14
The source added that under the proposals European institutions already
operating in Greece should be given "certain decision-making powers" over fiscal policy.
"This could be carried out even more stringently through external expertise," the source
said. The Financial Times said it had obtained a copy of the proposal showing Germany
wants a new euro zone "budget commissioner" to have the power to veto budget
decisions taken by the Greek government if they are not in line with targets set by
international lenders.
"Given the disappointing compliance so far, Greece has to accept shifting budgetary
sovereignty to the European level for a certain period of time," the document said.
Under the German plan, Athens would only be allowed to carry out normal state
spending after servicing its debt, the FT said.
"If a future (bail-out) tranche is not disbursed, Greece cannot threaten its lenders
with a default, but will instead have to accept further cuts in primary expenditures as the
only possible consequence of any non-disbursement," the FT quoted the document as
saying.
The German demands for greater control over Greek budget policy come amid
intense talks to finalize a second 130 billion-euro rescue package for Greece, which has
repeatedly failed to meet the fiscal targets set out for it by its international lenders.
CHAOTIC DEFAULT THREAT
Greece needs to strike a deal with creditors in the next couple of days to unlock its next
aid package in order to avoid a chaotic default.
"No country has put forward such a proposal at the Eurogroup," a Greek finance
ministry official said on condition of anonymity, adding that the government would not
formally comment on reports based on unnamed sources.
The German demands are likely to prompt a strong reaction in Athens ahead of
elections expected to take place in April.
"One of the ideas being discussed is to set up a clearly defined priorities on
reducing deficits through legally binding guidelines," the European source said.
He added that in Greece the problem is that a lot of the budget-making process is done
in a decentralized manner.
"Clearly defined, legally binding guidelines on that could lead to more coherence
and make it easier to take decisions - and that would contribute to give a whole new
dynamic to efforts to implement the program," the source said.
"It is clear that talks on how to help Greece get back on the right track are continuing,"
the source said. "We're all striving to achieve a lasting stabilization of Greece," he said.
"That's the focus of what all of us in Europe are working on right now."
German unemployment dropped more than economists forecast to a twodecade low in January, bolstering economic growth as the euro region’s fiscal crisis
prompted companies from Spain to Greece to cut jobs.
The number of people out of work fell a seasonally adjusted 34,000 to 2.85 million, the
Nuremberg-based Federal Labor Agency said today. Economists predicted a decline of
10,000, the median of 32 forecasts in a Bloomberg News survey showed. In December,
Italy’s jobless rate rose to the highest since 2004, while in the euro area it stayed at a
14-year high of 10.4 percent.
German retail sales unexpectedly declined in December as consumers’
Christmas-shopping frenzy was damped by uncertainty about the economic
outlook. 15
Sales, adjusted for inflation and seasonal swings, declined 1.4 percent from November,
when they fell 1 percent, the Federal Statistics Office in Wiesbaden said today.
Economists forecast a gain of 0.8 percent, the median of 24 estimates in a Bloomberg
News survey showed. Sales fell 0.9 percent from a year ago. The statistics office said
retail sales were 0.9 percent higher in 2011 than in 2010.
Greece's international lenders think the indebted country will need 145 billion
euros of public money from the euro zone for its second bailout rather than the planned
130 billion euros, German news magazine Der Spiegel reported on Saturday.
The International Monetary Fund (IMF) has signaled that Greece will have to
give up autonomy over its budget if it is to receive the full backing of the international
community for its second €130bn (£109bn) bail-out…In an angry reaction from the
Greek government, the education minister, Anna Diamantopoulou, a former EU
commissioner, slammed the idea as "the product of a sick imagination.
Italian Prime Minister Mario Monti said new European Union rules forcing
governments with excessive debt to reduce it to within an acceptable level have
‘elements of flexibility’ that may make the regime less of a burden. The rule forces
countries with debt over the EU limit of 60% of gross domestic product to cut the excess
by 1/20th a year. The new measures will be phased in over three years, meaning Italian
debt won’t be gauged by the 1/20th standard until approximately 2015.
Portugal’s government owes 1.3 billion euros ($1.7bn) to construction
companies that are struggling to survive the country’s economic slump, according
to the head of the country’s biggest building industry group. The delayed payments are
adding to difficulties in obtaining bank financing and stifling recovery in an industry
where about 200 workers lose their jobs each day
A hike of 1.6 percentage points in value-added sales tax on goods and
services… The aim is to shift the burden of paying for social security from employers to
consumers in a reform, condemned by opposition socialists, that Sarkozy's centre-right
government wants to push through before elections in April that he is tipped to lose. The
sources did not specify whether only the top rate of VAT, currently at 19.6 percent,
would be affected. Other rates, including those on products considered essential, stand
at 7.0 percent and 5.5 percent.
The French stock market, Europe’s second-biggest by value, may fall out of
favor with investors after President Nicolas Sarkozy unveiled plans to unilaterally
impose a 0.1 percent tax on financial transactions.
“Even if the tax isn’t high, market participants who have a choice of stocks trading in
Paris or elsewhere will go elsewhere,” said Yves Maillot, the Paris-based head of
investments at Robeco Gestions SA, which oversees $6.8 billion. “That’s what we can
fear.”
Sarkozy, 57, who faces elections in a two-round vote in April and May, wants to make
good on a pledge he made to impose such a tax when France last year held the
presidency of both the G-8 and G-20 group of countries. He said Jan. 29 that France will
impose the levy starting in August in spite of opposition from banks. The tax will apply to
share purchases, including high frequency trading, and credit default swap transactions.
A France-only levy is opposed by the country’s financial community and its feasibility has
been questioned by the Bank of France. Governor Christian Noyer said on Jan. 16 that 16
implementing such a tax would require resolving “numerous problems,” including making
it applicable across Europe.
“The concern is other countries won’t follow and Paris will lose competitiveness,” said
Matthieu Giuliani, a fund manager at Palatine Asset Management in Paris, which
oversees $4 billion. “For the domestic market, it is one more handicap.”
Italy’s jobless rate rose to the highest in eight years in December as
austerity measures meant to fight the debt crisis helped push the region’s thirdlargest economy toward a recession.
Unemployment climbed to 8.9 percent, the highest since the data series began in
January 2004, from a revised 8.8 percent in November, national statistics institute Istat
said in a preliminary report today in Rome. Economists had expected a rate of 8.7
percent, according to the median of 9 estimates in a Bloomberg News survey.
Prime Minister Mario Monti last month pushed through 20 billion euros ($26 billion) in tax
increases and spending cuts that have further choked growth. The economy shrank 0.2
percent in the third quarter and the government has forecast another contraction in the
final three months of last year, meaning Italy may already be in its fourth recession since
2001.
“We are seeing all the predictable signs of Italy’s deepening recession -- rising
unemployment, non-performing loans trending up, and credit standards getting tighter,”
Vladimir Pillonca, an economist at Societe Generale SA in London, said in an e-mail.
“We are barely at the initial phase of Italy’s recession, and it will get much worse.”
AUSTRALIA
Aussie News
Rattling the cage: Unions ACT secretary Kim Sattler will face pressure to resign her post
over her role in last week's Aboriginal tent embassy riot. Ms Sattler is at the heart of the
controversy surrounding the tent embassy riot on Australia Day, which left Julia Gillard
and Tony Abbott trapped inside a Canberra restaurant for 30 minutes as angry
Aboriginal protesters hammered on the glass-walled venue. Ms Gillard, who was
attending the inaugural national emergency services awards at the venue just 50-metres
from the tent embassy, had to be dragged to safety by her security detail and bundled
into a car with Mr Abbott to escape the angry mob. It was revealed over the weekend
that one of Ms Gillard’s staffers, Tony Hodges, who has now resigned, told Ms Sattler of
Mr Abbott's comments on the tent embassy from earlier in the day, and his whereabouts.
The scrutiny of Ms Sattler's role in the events comes as the Australian Federal Police
confirmed it was re-evaluating an investigation into the involvement of the Prime
Minister's office in Thursday's ugly scenes. Julia Gillard's former press secretary, Tony
Hodges, contacted Ms Sattler on Thursday and told the union leader that Tony Abbott
had claimed it was time for indigenous protesters to "move on" from the tent embassy
and that the Opposition Leader was at a nearby restaurant, The Lobby.
She passed on the information to activists at the tent embassy, sparking furious scenes
that led to Ms Gillard and Mr Abbott being bundled out of the restaurant by the federal
police.
Offshoring: Australia's largest telco Telstra says it is considering moving dozens of jobs
offshore. The telco is looking at moving 73 administrative roles overseas to a company
which is already performing similar work for Telstra. Telstra says another 26 roles will be 17
made redundant due to improvements in technology. The job cuts are part of an internal
review which also suggests a possible 10 new support jobs could be created. In March
last year more than 700 contract positions within Telstra's call centres were moved
offshore.
Woodchip slowdown: The largest family-owned sawmill in southern Tasmania has stood
down 30 workers for a month in response to the shutdown of a woodchip mill in the
north. Industry says Artec is closing its Bell Bay mill because stockpiles have grown
during the forest sector downturn. McKay's Timber told 30 workers at its Bridgewater
and St Helens sawmills they will be laid off until the problem is fixed.
Property prices: A new report has found Perth was the worst performing capital city in
terms of property prices in the December quarter. The RP Data-Rismark home value
index found Perth home prices dropped 1.6 per cent in December and 2.1 per cent for
the quarter. The median house price fell to $450,000 with property prices declining more
than four percent in 2011. Sydney and Hobart were the only two capital cities to show
growth in the December quarter, growing 0.7 and 1.0 per cent respectively. Overall,
Australia's capital city home values dropped by 0.5 per cent over the December quarter.
Leading property research shows there will have to be several more interest rate cuts for
the housing market to improve. Most economists expect another two interest rate cuts
this year, but RP Data research director Tim Lawless says it depends on whether the
banks pass these on to borrowers. Mr Lawless says soaring rents and falling interest
rates are pushing more first home buyers into the property market. First home buyers
now account for a fifth of all owner-occupier mortgages. Some analysts are tipping
house prices will fall even further which Mr Lawless says will help even more first time
buyers into the market.
Growing pains: Fruit and vegetables have just become the latest battleground in the
discount war between supermarket giants Coles and Woolworths. Coles' bid to get a
bigger share of Australia's grocery market kicked off today with a flurry of ads spruiking
discounts on fresh produce. A range of items have been discounted by as much as 50
per cent. The latest round of cuts comes on top of Coles and Woolworths scrambling to
undercut each other on items such as bread and milk. But while lower prices may be
good news for consumers, farmers' groups are renewing warnings that the price war
risks driving growers out of business. And shoppers have been warned that savings on
some items may be clawed back by the supermarkets on other lines. Coles spokesman
Jon Church says the discounts represent a win for both shoppers and producers. But not
all growers are happy. They say the supermarket price wars are making it tough for them
to stay in business. William Churchill, spokesman for peak body Ausveg, says dropping
prices at Coles places pressure on the rest of the industry.
$1.8 million dollar man: The Department of Finance is under pressure to provide more
details of its investigation into entitlement claims lodged by House of Representatives
Speaker Peter Slipper. The former Liberal National Party member has long faced
questions over his use of parliamentary entitlements, but yesterday claimed that the
department has cleared him of any wrongdoing. But the department has yet to confirm
whether it has cleared Mr Slipper and is still waiting to release the outcome of its inquiry.
The investigation into Mr Slipper's spending was sparked after the editor of Queensland
newspaper the Sunshine Coast Daily, Mark Furler, lodged a complaint about Mr
Slipper's spending between July and December in 2009. "He's spent $1.8 million in
travel and office expenses since 2007," he said, "$5,000 on planes and taxis during five 18
days of parliament when it wasn't even sitting, $903 in cab fares in a single day on July
26, 2009," Mr Furler said. Mr Slipper has been forced to repay thousands of dollars in
wrongly claimed entitlements but says he has never intentionally done anything wrong.
Green navy: A US Navy plan to have half its fleet running on alternative fuels by the end
of the decade may provide a boost to Australian producers. US Navy officials are
expected to outline the plans - which include sourcing fuel from Australian producers - at
an international conference on biofuels and shipping in Sydney. Part of the plan includes
having an entire fleet of warships - dubbed the "Great Green Fleet" - running on biofuels
by 2016. The deputy assistant secretary of energy for the US Navy, Tom Hicks, says
alternative fuels have already powered some of the world's most advanced engines in
some of the most challenging situations. "We've tested [alternative fuels] in all of our
manned and unmanned aircraft and we're going through the process and completing the
testing of all of our surface vessels," he said. "To that end, you have some of the most
sophisticated defence platforms in the world - specifically the F-18 Hornet which has
gone Mach 1.7 times the speed of sound." Mr Hicks is in Australia for the maritime fuels
conference hosted by the US Studies Centre and is visiting Australian biofuels producers
looking for products to power the next generation of weaponry.
Modest market: The Australian share market has given up gains made through the day
to end in negative territory, as worries about Europe offset a rally in retail stocks. Despite
today's negative close, the market added $70 billion in January, which is a relatively
strong result. The ASX 200 index and the All Ordinaries Index both eased 0.2 per cent to
close at 4,263 and 4,326 respectively. Woolworths ignited the retail sector today, after
announcing it would sell its Dick Smith electronics business. The company also reported
a 5 per cent increase in total sales across all brands for the first half of the financial year.
Woolworths shares ended the day 1.4 per cent higher at $24.79 and rival Wesfarmers,
which owns Coles, added 0.4 per cent. Discount electronics chain JB Hi-Fi also jumped
on the news of the Dick Smith sale; its shares soared 6.6 per cent to close at $12.60 and
Harvey Norman gained 0.5 per cent. Elsewhere, QR National shares rose 1.1 per cent
despite mining magnate Clive Palmer launching an $8 eight billion lawsuit against the
rail company. Energy company Origin has reported an increase in revenue despite a fall
in production and sales in the December quarter, and investors stripped 2.8 per cent off
the stock, sending it down to $13.76. The banking sector lost ground today as investors
continued to await a resolution on a debt-swap deal for Greece. Westpac was the only
one of the big four to manage gains, rising 0.2 per cent to finish on $21.15. Resource
stocks came under pressure from a fall in metals prices; BHP Billiton lost 0.5 per cent to
$37.48, but Rio Tinto added 0.2 per cent to $69.16. The Australian dollar has risen
against most major currencies through the day. At 4:45pm (AEDT) it was buying 106.3
US cents, 81 Japanese yen, 80.6 euro cents, 67.5 British pence and $NZ1.29.
Commodities also have seen gains; Tapis crude oil closed at $US119.91 a barrel in
Singapore overnight and West Texas Crude Oil was worth $US99.28 a barrel. Spot gold
was higher, buying $US1,735.60 an ounce.
Brisbane home prices plunged the most among Australian capital cities in
2011, as lagging demand weighed on an oversupplied market.
House and apartment prices in Brisbane fell 6.8 percent last year, according to a RP
Data-Rismark report released today. Across Australia’s eight capital cities, prices slipped
3.6 percent last year and declined 0.2 percent in December.
“The oversupply issue, the weaker pace of activity outside the mining areas, and weaker
population growth all combined to see a very weak housing market last year,” said 19
Spiros Papadopoulos, Melbourne-based senior economist at National Australia Bank
Ltd.
A jump in construction spurred by a surge in prices before the collapse of Lehman
Brothers Holdings Inc. has left Brisbane with a glut of homes. In Queensland, mining
areas with soaring prices and rents contrast with struggling tourist destinations,
illustrating the state’s so-called two-speed economy.
Queensland, home to more than A$50 billion ($53 billion) of planned resource projects,
grew 3.5 percent in the three months to Sept. 30 from the previous quarter, compared
with 2.1 percent nationally, according to latest statistics bureau figures.
“Queensland has been the big improver over the last three months,” Craig James,
Sydney-based chief equities economist at Commonwealth Securities Ltd., wrote in a
report dated Jan. 23. “Only a soft housing market is holding back the economy.”
JAPAN
An exodus of manufacturing jobs from Japan may prolong trade-balance
concerns after the nation reported its first annual trade deficit in 31 years.
Panasonic… is moving the headquarters of its $57 billion procurement operation to
Singapore… Honda… said this month it will build its new NSX ‘supercar’ in Ohio as the
company shifts more output to North America.
Jitters from Europe's sovereign debt crisis are now touching Japan, a
country with a long-calm bond market despite fiscal deficits larger than those of Greece
or Italy. In recent weeks, the cost of insuring against default on Japanese government
bonds has increased sharply, nearing the historic peak at the height of the Greek debt
crisis in October. The price for insuring $US10 million of Japanese sovereign debt for
five years was $US155,000 at the recent peak in mid-January, up from $US110,000 or
41 percent two months ago and $US90,000 or 72 per cent since July 2011. The total
amount insured through credit default swaps is $US9 billion. While the amount is small,
it is more than 40 per cent more than the figure a year ago.
ASIA
As the U.S. central bank extends the horizon for its first rate hike, it
changes the Asian equation.
Instead of lowering interest rates, which may have unintended consequences when the
Fed is on hyperextended hold, it may make more sense for some economies to tinker
with currency exchange rates…
The second round of bond purchases, launched in 2010, provoked howls of
protest from Asian official, who blamed it for stoking inflation and sending uncontrollable
waves of speculative money into emerging markets.
HEALTH – Herbalist – Wendy Wilson
GOOD SOLUTIONS FOR BAD ECONOMY
Our challenging economy has created a new breed of consumers who are beginning to
shop and think like the WWII generation. Forget being less wasteful, Americans have 20
moved beyond that to the mindset that “nothing goes to waste.” The Symphone Times &
Trends published a report called, The Downturn Shopper: Buckled in for a Wild and
Crazy Ride. We are all making very different retail decisions than we did just a year ago.
One can speculate if we will have any retail decisions at all if Obama is re-elected (That
was not part of the report, I threw that in). Recently my local talk radio station WBT made
an important point that laid off workers if they find a job can’t afford the gas to drive to it.
Despite the cloudy picture, we can still remain positive as we stretch ourselves to be
more efficient and frugal.
YOUR PERSONAL DECISIONS
Money is personal. The financial markets are affecting your financial power, your
lifestyle, your shopping behavior, your survival strategies and your physical and mental
health. It is no surprise that most people are still pessimistic about their entire future. The
more pessimistic folks are the more they implement money-saving activities. This
translates into more people brown-bagging lunch to work and they don’t visit the vending
machine or Starbucks. They are eating dinner at home, cutting back on entertainment
and instead of fancy vacations they stay close to home with brief trips if they take a
vacation at all. People can no longer afford to not comparison shop for everything. This
financial predicament we find ourselves in is getting serious. One in four consumers is
having difficulty affording the basic weekly groceries. Have you ever visited a friend or
family member and opened their refrigerator to find only a jar of peanut butter, jelly,
pickles and bottled water? I call this “the naked frig” and if you grew up with an always
full frig; this is a shocking sight to see. Many consumers are cutting the fat, tightening
their belts and downloading a mountain of coupons. They are also selecting products
that have expanded uses such as cleaning products and personal care items.
WAYS TO SAVE
Households across America are doing a million little changes that add up to big savings.
For instance, one man discovered that when his wife put a can of soda in his lunch it
cost the family budget an extra $200 a year and he switched to bottled water. Moms
across the country are buying fewer snacks and when they do buy them they are buying
the economy size and putting snack portions into sandwich bags instead of buying the
expensive prepackaged 4 oz size snacks. A whopping 42% discovered that bringing
snacks from home rather than buying them from the snack shack at work or at school
saves a lot. More people now only buy gas at the convenience store and forget the
overpriced snacks and drinks inside. In 2011, 36% of Americans saved a ton of money
not going to the doctor and self-treating at home. I expect that number to increase in
2012. About 35% of the folks who like the spa and beauty salon found they could look
just as good using at-home beauty treatments and instead used the money they saved
to pay down their debts. More high school graduates are saying goodbye to expensive
college tuition and student loans and are finding creative ways to get the training and
experience they need in their fields with online classes and some good ole’ fashioned
mentoring. The Internet has become a vital component as consumers find new moneysaving rituals and online business owners are delivering products and services to the
conservative mindset. About 26% of consumers will research their purchases and 37%
download coupons online. However, it isn’t enough to be cheap and convenient. The
important thing when saving money is that you also get value. Otherwise as the ole’
French proverb says; you’ll be penny wise and pound foolish.
KOOKY OR NECESSARY 21
The dietary health industry has changed over the last thirty years. Experts in the field
back then told us that fortified conventional foods were just as healthy as whole,
unprocessed foods. They also advocated that olive oil, avocados, nuts and whole grains
were not necessary to maintain good health. Well many of those experts are now
deceased from various diseases. Also, the diabetic health experts bounced from sugar
to saccharine, to aspartame, back to sugar and now to natural Stevia. As history shows
us, some things cycle back around. It was predicted thirty years ago that sugar
consumption would decrease and artificial sweeteners would increase dramatically. Just
the opposite has happened because the human palate is accustomed to sweet tasting
foods and beverages. Even water needs a flavor enhancer these days for it to sell to the
masses. More products proudly announce on their packaging “real sugar” instead of
artificial sweeteners or high-fructose corn syrup. There is also a surge in science
validating folk remedies in the area of nutrition and healthcare prevention. Science
seemed to be punished with those old health clichés such as; an apple a day keeps the
doctor away or grandma’s chicken noodle soup fixes the common cold and take cod liver
oil for what ails you - all turned out to be accurate. Yes, science has discovered that
what the ancients used had merit. When Aunt Edna ate raisins soaked in gin to fix her
arthritis and you thought she was nuts only to find that science discovered later that she
was using the gin to extract the polyphenols in the dried grapes to reduce her
inflammation and joint pain. Hey, another home remedy that shifts our perspective and
saves money.
IF IT WORKS…
We seem to have created a culture that just about everything needs a board and a
license. Chiropractors and dietitians over the last generation are required to register and
obtain a license. To hunt or to defend yourself you need a license or permit. To travel,
you need a license. To cut hair for a living you need a license. Can you say “State of the
Industry?” Since the 1990’s in many sectors there has been an invasion by The State
and pharmaceutical companies. Anything that is registered anymore is either State
owned or is major pharma. Can you say “acquisition?” It is like these two sectors have
become two giant pythons that have unhinged their jaws to swallow the free markets
whole. Health professionals usually start out in their industries because they had a
personal interest in healthy lifestyles and wanted to help others only to find their
understanding and perspective of the industry was quite different. What are you to do
after investing years of training and money educating yourself – quit? Health
professionals today face that question.
A SYMBOL
During WWII Rosie the Riveter was a symbol of resourcefulness and economic power.
In 1942 women were asked by government “Can you use an electric mixer? If so, you
can learn to operate a drill.” Rosie worked on B-29 and B-24 Bombers for the US Army
Air Force. The attitude was, “We can do it.” The world needs to rally that same Godfearing, God-enabling attitude. This isn’t about feminism; this is about surviving global
tyranny and the way to do that is with Godly fear, seeking the Lord’s face and asking for
His help. We war against the principalities of darkness and God’s word shows us how to
know the enemies tactics and how to be the victors (Eph 6:10-18). We can stretch
ourselves physically and spiritually and succeed because God can’t lie.
“Every word of God is pure: He is a shield unto them that put their trust in Him.”
Proverbs 30:6 22
“The words of the Lord are pure words: as silver tried in a furnace of earth,
purified seven times.” Psalms 12:6
“Because he has set his love upon Me, therefore will I deliver him; I will set him on
high, because he has known My name. He shall call upon Me and I will answer
him: I will be with him in trouble; I will deliver him and honor him.” Psalms 91:14-
15
“For therein is the righteousness of God revealed from faith to faith; as it is
written, The just shall live by faith.” Romans 1:17
TAKE GOOD CARE
The battle lies ahead. We need to be ready. Taking good care of our spiritual and
physical health is paramount. You honor God when you seek after His ways and take
good care of the body he has given you. You learn to shoot the gun before the war
starts. Likewise, it is easier to prevent illness rather than recover from it. Do all that you
can now to strengthen your body to avoid drug dependency and disease. You must
become self-reliant. Apothecary Herbs can help. They offer organic herbal products
(immune boosting, organ cleansing and more) with a long shelf life. Call for a free
product catalog 866-229-3663, International 803-746-0219 online
Coming soon at Apothecary Herbs is a Valentine’s special where on selected
formulas you can buy one for him or her and get half off on the second (same)
item for yourself. Look for this in the next few days. Be well!
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