International stock markets plunge as Great Depression fear grows.

International stock markets plunge as Great Depression fear grows. California faces $25.4Billion in municipal bond defaults.

International stock markets plunge as Great Depression fear grows. California faces bankruptcy as it spends an additional $6 Billion to create a 25.4Billion deficit this fiscal year. In just six months, instead of cost cutting California deficit spending increased 24%.

International trade wars reminiscent of the Great Depression loom as Obama says USA will continue to take unilateral action to offset China and S. Korean currency manipulation.

California and New York remain the municipal trouble spots of the USA. Fear of another freeze up of municipal bonds loom. Now Bonds are put at risk by the 2.5% FED inflation goal and municipal bond defaults. The first FED purchases will be today!

Jimmy Cramer panics and finally tells listeners to buy gold now the run-up is over. In the mean time the trades show the smart funds have begun unloading their gold investments. Jimmy is the architect of pump and dump for the funds. A soon as his fund buddies have their long term gains and their stocks are at their 52 week highs he tells his investors to accumulate while the funds begin selling. Ignorant and outrageous statements are being made now to offload fund gold investments on ignorant listeners.

Cisco gave a poor prognosis for the future revealing that the corporate spending on productivity has slowed.

Iraqi government gels after a year of squabbling.

World Markets:
Nine Russian reporters were beaten to death this year. The latest had his head, hands and legs crushed with a baseball bat. The Russian government is also prosecuting another reporter with a crushed skull who they still accuse of slander. He is no longer aware of his brain damage and the prosecution amounts to persecution of his family now.

The Chinese consumer leader who complained when his son was poisoned by Chinese milk supplements was sentenced to two years in prison.

It is likely the EURO will come under pressure now and the dollar will rebound because Portugal, Spain, Italy, and Ireland have more rioting. 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. A core product cost inflation of 1% to 2.5% is the goal. The inflation of raw materials prices could be much higher but the efficiencies of production improve to offset raw material price increases.

Goldman expects oil price surge in 2012 as world economies all grow in unison.

Economic Calendar
Wholesale Inventories Sep rose 1.5% after rising 0.8% last month and then shifting 0.4% from this month back on to last month. In other words they want us to believe that the federal government is so incompetent that their methodology errors are 50% of the thing they are trying to measure. Most competent organizations can keep errors to less than 10% of what they are measuring or else they go out of business. The USA should fire the department that generates the figures and bid the work to private companies.
MBA Mortgage Applications 11/05 +5.8% -5%
Initial Claims 11/06 - 435K declined from 457K, good
Continuing Claims 10/30 - - 4301 declined from 4340, good
Trade Balance Sep -44B Imbalance declined from -46.3B, good
Export Prices ex-ag. Oct 0.7% rose from 0.3%, good
Import Prices ex-oil Oct 0.3% remained same 0.3%, OK
Crude Inventories 11/06 -3.3M declined further -2M, inflation is considered good now
Treasury Budget Oct -140B deficit declined from -176.4B, also good

Yesterday
Disney, Cisco, and others surprise with losses and downbeat forecasts.

This week:
Nov 12 9:55 AM Mich Sentiment Nov -

Market Outlook Nov 12, 2010

Market continues showing topping

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 new 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 core price 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.


World Markets
The first FED treasury purchases will be today!

Asian markets plunged last night. China's market was down -5.2%, Hong Kong down -1.9%, India down -2.1%, and Japan down -1.4%.

European markets are down this morning in a range of about -0.2% to -0.9% about half way through their day.

US pre-market futures were down about -0.6% at 7:30 AM EST.