Sometimes truth and honesty wins against political corruption deceit and hubris. Let the Chinese communists shoot the people who are involved in naked shorting. The Gold to silver ratio changes back.
No sooner than we see the divergence of gold from silver prices… silver catches back up. But that means that there is just speculation again not real concerns over currency losses.
Yesterday speculators responded with anger to Germany extending the German ban on naked shorting. Naked shorting is like your neighbor selling your home with the promise to borrow the home from you as soon as they can. You do not have to give them permission to sell it or borrow it, you may have no intention of ever selling it to the naked short seller, or you may even be planning to sell it yourself. Meanwhile the value of your home plummets because there are so many people offering to sell your home. You lose a fortune (it is impossible for you to come out ahead) if you want to sell it and buy a different home that is not naked shorted/sold. Naked shorting is the illegal process in America of selling shares of stock that you do not own. Germany made it illegal a few years ago but like fools they listened to a few wall street highwaymen who said Americans are dumb. So the Germans put an expiration date on their wise law against that form of highway robbery. Yesterday the highway robbers were shorting German stocks in retaliation for extending the German ban on naked shorting. It is impossible to catch all naked shorting. We need a treaty with China to take their dissidents who seek American liberty… in exchange for the communists taking Americans who do naked shorting. The communists would take care of the world's naked shorting problem permanently.
Yesterday CT. Democrat Senate candidate Blumenthal was caught in a John Kerry lying blunder. Near the end of the Vietnam War, starting in 1970, all deferments of military draft eligibility were eliminated and America went to a lottery for drafting men. At that time the only way to avoid active duty in Vietnam was to join the Coast Guard or the Reserves. Only rich kids and political contributions or connections could buy a safe Coast Guard or Reserve position. Former Senator Bayh of Indiana got his son such a position, as did the wealthy father of Dan Quaile. Such intentional avoidance of service or "risk avoidance" (some say cowardice others say shrewdness) is a political liability. Not only did the Democrat Candidate Blumenthal get a cherished appointment to the reserves to avoid having to go to Vietnam, but also he was caught on tape lying and saying he served in Vietnam. Coincidentally the CT Supreme Court unanimously told the very aggressive self-serving lady seeking Blumenthal's abandoned CT Attorney General position that she, by state law, is incompetent to be an Attorney General. That reversed the decision of the lower court political hack judge who first said that she was qualified. Sometimes truth and honesty wins against political corruption deceit and hubris.
World Markets:
We believe the worst of the current market decline is just about spent. Volume on this last decline was still quite low showing the decline lost momentum. Yesterday the market tested some people dearly again and came close to recent lows. The data still looks like the next three-month bullish cycle has already begun.
People knew about the USA housing bubble back in 2006 but it took until late 2007 for the US housing decline to become evident and for the stock market to even begin to react. It could be some time before the price bubble problem hits China because they have almost a 50% savings rate so they can afford higher housing payments for some time and they have an extreme housing shortage not a glut.
Economic Calendar
This Week
US Net Long-term Treasury International Capital (TIC) Flows rise to $140.5B in Mar vs. $47.1B in Feb. The 90.7 Billion increase is an impressive rebound from the last two months which showed a combined decline of -8 billion. The increase was the highest since April 2008. It seems in June the flow of funds back into the dollar resumed after some moves out in prior months.
The NY Empire State Manufacturing Index recorded a figure of 19.11 in May compared to a reading of 31.86 the month prior. Any positive value is still goodness but the decline in the number was more than expected.
Yesterday:
Building Permits Apr: Down from 680K last month to 606K. But housing Starts Apr rose from 626K to 672K. This implies that the oversupply rate is declining over time.
The main producer price index (PPI) fell 0.1%, seasonally adjusted. The core rate, which excludes volatile energy and food prices, rose 0.2%, the Labor Department reported. That is at a 2.4% annual rate that is not inflationary.
May 19
Core CPI Apr
CPI Apr
Crude Inventories
May 20
Continuing Claims
Initial Claims 05/15
Leading Indicators Apr
Philadelphia Fed
Market Outlook May 19, 2010
The markets yesterday tested investors risk tolerance to shake out the weak hands. The buying opportunity was extended another day.
World Markets
Asian markets were down last night, Shanghai down -0.7%, Hong Kong down -1.8%, India down -2.8%, and Japan down -0.5%.
European markets are down today in the range from -1.3% to -2.2% this morning about half way through their day.
US pre-market futures are down decisively this morning by about -0.7%. As with yesterday and most days U.S. Futures are a snapshot of the moment and do not correlate with what happens by the end of the day. Yesterday it indicated the buying opportunity might be over and today it says this morning there is still an opportunity to buy relatively low.
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