The FED needs to increase interest rates to foster a more solid U.S. economy.

The FED needs to increase interest rates to foster a more solid U.S. economy.

Yesterday, the New York contract advanced 21 cents to $87.06, the highest since Oct. 8, 2008. Finally prices are rising again which is what the FED wants to end the world deflationary spiral which brought oil down from $140 per barrel. But once interest rates begin to rise the cost of debt will rise and the value of fixed rate bonds will begin to decline. That should push money into stocks.

The FED did not cause the price of Gold and Silver to set new records again yesterday. Gold advanced to a record as concern that some European governments may be unable to raise taxes further to pay interest, boosted demand for a protection of wealth. Silver reached a 30-year high of more than $28 an ounce. Will it retract and cover gaps in the run-up? No doubt Gold will be a $900/oz again in ten to twenty years if Americans regain control and cut big government and union extortion. But that may result in rioting of the millions of people who have come to America for the good life and not to contribute to society. There are also a lot of dysfunctional California potheads who are living on their inheritance. Unfortunately it is a fact that pot and other drugs cause the rewiring of brains such that the affected people think they are owed a living, that it is their right, and that as an American they have rights to hot meals, a house, a car, and a cell phone. Yes, drugs do that to you. You think like Obama and Bill Clinton who also experimented with drugs. The American drug pandemic of the 1960's has given us our liberal/progressive/socialist movement. People on drugs see nothing wrong with illegal aliens trying to get a piece of the action too.


World Markets:
European market joined American markets in rising to the levels just before the mortgage derivatives lies and corruption of the US Senate Banking Commission torpedoed the US economy.

It is likely the EURO will come under pressure now and the dollar will rebound because Spain and Ireland still have major problems. QE1 had little effect on the dollar and there is little reason to suspect Qe2 will have much more. The main effect is to raise inflation expectations so that businesses must put their cash back to work.

Silver and copper are not reserve currencies but hoarding of copper and coal resources has already begun in China. Gold prices have peaked as have silver but there is apparently manipulation of the silver pro-shares because silver is not used in reserves.

Is this fact or fiction? It is a fact, even though exports do not explain what is happening in China. China's factories ramped up their production last month and were buoyed by an influx of new business, highlighting the strength of the world's second-largest economy. The official purchasing managers' index (PMI) rose to 54.7 in the month from 53.8 in September, blowing past expectations. The HSBC PMI, a private survey, climbed to 54.8 from 52.9. This is primarily from the effects of collaboration resulting in internal growth because the Baltic Dry Index (international trade) has not picked up significantly. This is capitalism and freedom to keep what they earn that is driving growth in China. The Baltic Dry Index (Jimmy Cramer's gauge of the world economy) has continued to bump downward. Look at.
http://www.bloomberg.com/apps/quote?ticker=BDIY:IND


Economic Calendar
Last Friday.
Nov 5 8:30 AM Nonfarm Payrolls Oct including government up 151K after being down -41K last month
Nov 5 8:30 AM Nonfarm Payrolls - Private Oct up 159K this month an up 107K last month
Nov 5 8:30 AM Unemployment Rate Oct remained at 9.6%
Nov 5 8:30 AM Hourly Earnings Oct - increased 0.2% after increasing 0.1% last month.
Nov 5 8:30 AM Average Workweek Oct - at 34.3hr up from 34.2 hr last month.
Nov 5 10:00 AM pending Home Sales Sep slipped down -1.8% after rising 4.4% last month
Nov 5 3:00 PM Consumer Credit Sep showed debt increasing 2.1B after declining -3.3B last month

This week:
Nov 9 10:00 AM Wholesale Inventories Sep -
Nov 10 7:00 AM MBA Mortgage Applications 11/05
Nov 10 8:30 AM Initial Claims 11/06 -
Nov 10 8:30 AM Trade Balance Sep -
Nov 10 8:30 AM Continuing Claims 10/30 -
Nov 10 8:30 AM Export Prices ex-ag. Oct -
Nov 10 8:30 AM Import Prices ex-oil Oct -
Nov 10 8:30 AM Trade Balance Sep
Nov 10 8:30 AM Export Prices ex-ag. Oct
Nov 10 8:30 AM Import Prices ex-oil Oct
Nov 10 10:30 AM Crude Inventories 11/06
Nov 10 2:00 PM Treasury Budget Oct
Nov 11 8:30 AM Initial Claims 11/06
Nov 11 8:30 AM Continuing Claims 10/30
Nov 12 9:55 AM Mich Sentiment Nov -

Market Outlook Nov 9, 2010
Since Oct 28, 2009 our market cash flow index has shown cash flow out of the market and the flow out hit its peak the third week of May. Cash has recently been flowing in but has stopped again and on a cash flow adjusted basis the recent highs in the market averages did not surpass the previous high and it is still as low as during the free-fall following Lehman's collapse. Therefore it tells us this mini-bear market is still active. It would be a bad idea to short commodities even though we do expect another market decline soon. We expect the FED to be successful and for deflation to end this year. We would buy at cyclic lows and be wary of shorting the market other than to balance out alpha trades where quality is bought and weak companies in the same sector are sold short.

The regular market indices shot up Friday to the level just before Lehman's collapse. We would finish taking profits at this time and stay out or begin a balanced plan to buy and short the market. World dry goods trade remains at about 75% below its May 16, 2008 high. Therefore this next economic expansion will be strong and China will become a consumer as well as a producer and gradually join the free world. One thing pushing up the market is hedge fund income reporting. The funds like to spruce up their annual report by buying more of what they already have so that their prices peak near their reporting date.

World Markets
Asian markets were down last night. China's market was down 0.8%, Hong Kong down 1%, India up 0.4%, and Japan down 0.4%.

European markets are up this morning in a range of about 0% to +0.8% about half way through their day.

US pre-market futures were up about 0.3% at 8:00 AM EST.