Gold is having spasms in London as it drops to 4-month low. Hedge fund dump accelerates.

Gold is having spasms in London as it drops to 4-month low. Hedge fund dump accelerates.

New York Attorney General Eric Schneiderman said he is creating a unit to target multi-state corporate tax fraud schemes, corrupt contractors and firms that rip off public pension funds.

Former AIG chairman, Golub said, "AIG shouldn’t exist," today on Bloomberg Television’s “In the Loop with Betty Liu.” The New York-based company should be split, making independent firms of property-casualty unit and their life insurer.

A rush of fourth-quarter earnings reports from Dow components and data showing declining home prices (down 30% nationwide) weighed on the market. The underlying theme is that there are problems bubbling below the surface from an economic standpoint and those problems simply can't be ignored. As the market has climbed, companies have faced mounting pressure to cook the books in order to impress hedge funds that almost entirely have moved from the short side to the long side.

General Motors said on Thursday that it was withdrawing its application to borrow $14.4 billion from a pool of federal money intended to help automakers. The request had been pending with the Department of Energy for 15 months, said the decision to withdraw was based on the fact that it gave the appearance that they still were on the taxpayer dole and would be perceived to be a great Obama failure.

Ford stock drops but early reported earnings make little sense with revenues up but earnings did not meet expectations in 4th quarter.

 United and Continental merged on Oct. 1, 2010 and the company suffered $325 million net loss during the fourth quarter, their first quarter of merger from writing down good will and worthless assets.
 Abbott Laboratories' (ABT) said it would lay off 1,900 of its work force in response to U.S. policies, and the health-products maker reported a 6.4% drop in fourth-quarter earnings. The elimination of about 1,900 jobs will be primarily in Abbott's U.S. operations. Abbott attributed the cuts to a need to cut costs in the face of changes in U.S. health care and the regulatory environment.
 Boeing Co. gave a 2011 income outlook 15% below analyst estimates on Wednesday, reflecting an unprecedented seven delays in its 787 program and new delays in its 747-8 program and less revenue from the U.S. military.
 3M's fourth-quarter profit fell 0.7% as margins declined.
 Bank of America was also weak after CNBC reported the bank has stopped issuing initial foreclosure notices to homeowners in states that don't require a judge to sign off on foreclosures. The U.S. SEC Commission also charged Merrill Lynch, now owned by Bank of America, with securities fraud for misusing customer order information. Merrill agreed to pay a $10 million penalty.
 Health-care giant Johnson & Johnson reported a 12% decline in fourth-quarter earnings and fell short of Wall Street expectations as the company grapples with product recalls and a slowdown in health-care markets.
 Travelers' fourth-quarter profit fell 30%.
 Verizon Communications added fewer smartphone customers in the fourth quarter and missed analysts' expectations.

The dollar strengthens and gold falls in price as the world discovers the best inflation adjusted returns are found in the USA. The Net long-term TIC Flows for November show a sharp trend reversal as the world buys US dollars and treasuries for a safe higher rate of return like the USA banks have enjoyed at 0.25% cost for the last two years.
With a 0.25% cost and a guaranteed 1.88% return banks make money. While investors are forcing European governments from Greece to Ireland to cut spending as governments prepare to sell $1.1 trillion of bonds this year, demand at Treasury auctions has been the highest on record. The precious metals trend line is now down steeply


World Markets:
The Islamic terrorist group Hezbollah is likely to become the next Lebanese government and exterminate Christians and Jews.

Obama has not brought peace to the Islamic terrorist states they are expanding under him. Mass violent protests erupt among Islamic allies of Obama regime. Obama allies are falling to more extreme anti-Western groups.

Britain’s economy unexpectedly shrank the most in more than a year in the fourth quarter as gross domestic product fell 0.5 percent after increasing 0.7 percent in the previous quarter, the Office for National Statistics said in London today.

The USA lost over $300 Billion in trade with China and that is not counting the theft of our technology. Even Apple Corp profits all go to Chinese workers and hurt America's balance of payments.

Chinese have massive illegalities and sucker sales like Hutchison Whampoa Ltd.’s sale. The Asian criminals are essentially selling their Brooklyn Bridge. Red China engages in practices that are illegal in the Free World. China is creating monopolies and cornering the market in Rare Earth's the way criminal organizations did a century ago. China thus is causing shortages and driving up prices all around the world and they are causing unemployment in manufacturing nations in the Asian ring. Remember China illegally imprisoned two Americans for doing diligent economic research for fear the Americans would expose Red China's economic corruption. Their Nobel Peace Prizewinner was thrown in jail because he accepted the peace prize. China should free the two Americans and let their Nobel Prize winner leave China.

Business trends

This week:
Case-Shiller 20-city Index Nov The Standard & Poor's/Case-Shiller composite index of 20 metropolitan areas declined 0.5 percent in November from October on a seasonally adjusted basis. The closely watched survey showed Single-family home prices fell for a fifth straight month in November and could plumb new lows soon. "A double-dip could be confirmed before Spring," said David Blitzer, chairman of the index committee at S&P. Blitzer defined a double-dip as both the 10 and 20-city composite indices setting new post-peak lows.
Consumer Confidence Jan rose to 60.6 from 53.3 in December
FHFA Housing Price Index Nov showed no improvement after improving 0.7% last month
MBA Mortgage Purchase Index 01/21 fell -12.9% after rising +5% last Month
New Home Sales Dec was manipulated to 329K by dropping the sales number from last month of 290K
Crude Inventories 01/22 rose to 4.84M from 2.62M last week
FOMC Rate Decision Jan TBD
Initial Claims 01/22 454K new claims up from 403K last week and the highest in 8 months.
Continuing Claims 01/22 3991K up from 3861K
Durable Orders Dec down -2.5% after being down only -0.1% last month.
Durable Orders ex Transportation Dec up 0.5% after being up 4.5% last month.
Pending Home Sales Nov up 2.0% after being up 3.5% last month

Today
Jan 28 8:30 AM GDP-Adv. Q4
Jan 28 8:30 AM Chain Deflator-Adv. Q4
Jan 28 8:30 AM Employment Cost Index Q4
Jan 28 9:55 AM Michigan Sentiment - Final Jan


Market Outlook Jan 28, 2011
Dow retreated from 12000 target.

While earnings and economic reports have been poor these past two weeks the market has ignored the news.
Hedge fund manipulators still control the American stock market. This is not an environment for individual investors. The next drop will not be pretty. Economies around the world face a slowdown as government pretends to create useful jobs as good people in private industry are let go because private businesses cannot produce clear profits.

World Markets
Asian markets were down last night. China's market was up 0.1%, Hong Kong down -0.7%, India closed, Jakarta down -0.8%and Japan down -0.3%,

European markets are down this morning in a range of about 0.2% to -0.8% half way through their day.

US pre-market futures are flat about 0.0 % at 9:00 AM EST.