Japan has joined the PIIGS and is on the edge of financial collapse.

Japan has joined the PIIGS and is on the edge of financial collapse.
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If Japan’s interest rate rises just 0.2% on their national debt then 70% of their national income would go just to paying the interest on their national debt.
A shortage of parts from disaster-ridden Japan is very likely to force Toyota to shut down its North American factories and impact roughly 25,000 workers. It’s not clear how long Toyota will be forced to close its facilities.

Warren Buffet is depicted as having become irrational and mentally unstable on GE/MSNBC/Pravda this morning.

Portuguese bonds fell and the cost of insuring the nation’s debt rose to a record and the Euro weakened after Moody’s Investors Service said a bailout is inevitable. The interest Portugal pays on 10-year bonds climbed to 8.76%. Moody’s cut its rating on Portugal’s debt for the second time in three weeks, saying another downgrade may follow and the winner of elections in June will probably tap Europe’s bailout fund with “urgency.” The downgrade “is further evidence of the sovereign decay in the area. The European Central Bank will probably raise interest rates this week to contain inflation.

The Treasury Department predicts the U.S. will hit its $14.294 trillion debt limit no later than May 16.
The Federal Reserve needs to monitor inflation “extremely closely,” Chairman Ben S. Bernanke said yesterday, a day before minutes of the latest policy meeting are released. QE@ will end and interest rates could creep up.

The stock market is testing the head and shoulders now. From a charting standpoint, some look at the "Very Strong to Very Weak Ratio" to see if the stock leaders are indeed leading. and trending higher. What is important is the "fractional ratio between the two which can be calculated by dividing the leaders by the weak. The differential is 1.06 which is a positive because and means that the Very Strong to Very Weak Stocks are "pulling the rest of the market up. That is not too good at all because the historical median is 1.36 on a market rally, and it goes above 10 in strong rallies. But this could be partially due to QE2 that stimulates acquisitions which usually boost the weak takeover candidates. QE2 stimulates debt creation that is the problem that started the recession so we are gaining today at the price of selling our future. That is called socialism and it only lasts until the socialists expropriate all individual wealth

US Auto & Lt Truck Salesfor March are a week overdue as rumors of a slowdown loom due to Japanese parts shortages.
US government shutdown is looming.
Oil just hit a 30-Month High.


World Markets:
Ireland's ratings were lowered to 'BBB+/A-2 but may now be stable.

China's stock market prices are in a triangle formation and will breakout probably within a week or two. At this point we believe the breakout will be down because most of the world is tightening belts now and letting interest rats rise to slow demand for debt. Higher rates will put extreme pressure on countries like the "PIIGS", Portugal, Ireland, Iceland, Greece, and Spain that have done little to balance their budgets. Spain will be the next to fall and socialist unions may riot. The contagion is spreading in the EU.

US Market Highlights

Latest reports
IS Manufacturing Index Mar dropped to 61.2.from 61.4
Construction Spending Feb fell -1.4% or -2.5% depending on whether last -0.7% or the manipulated -1.8% is correct. When the numbers look bad and they take spending numbers they receive and move them backward that is corruption because in another week they will have to adjust the present numbers as well. Either always compare final numbers a week later or compare them at the end of the month. They do but not and could have a 5-wk interval last month and a 3 or 4 week interval this month.
Auto and truck sales still not being reported.

This week
Apr 05 10:00 ISM Services
Apr 05 14:00 Fed Minutes
Apr 06 07:00 MBA Mortgage Index
Apr 06 10:30 Crude Inventories
Apr 07 08:30 Initial Claims
Apr 07 08:30 Continuing Claims
Apr 07 15:00 Consumer Credit
Apr 08 10:00 Wholesale


Market Outlook April 5, 2011
The high prices we are seeing are due to QE2 (easy credit) which is about to end and the artificial interruption of energy supplies by the socialists in the oval office that is likely to continue. He FED is now poised to raise interest rates to be able to attract cash to fund the Obama national spending spree.

Treasury two- and five-year notes extended their loss and Germany begins to lose as well on bets the world’s biggest economies continue to run up deficits. The dollar and the cost of debt will cause Americans to suffer as long as Obama spends OPM to keep his ACORN welfare state aspirations alive.

The markets all appear to be topping out. To us it looks like the 47dma is no longer a support level but instead has become the resistance level for a topping trend (head and shoulders) line.

S&P
http://finance.yahoo.com/q/ta?s=%5EGSPC&t=1y&l=on&z=m&q=l&p=m50&a=m26-12-9&c=

We think the next stock market support level will be down at Nov 4, 2010 levels.

We need to warn you now to liquidate gold and silver as this could be like the market in 1973 or 1978 when the markets rose and then fell and hit old bottoms. Under Jimmy Carter's malaise he cut energy supplies just as Obama is doing. The current move is in anticipation of a repeat of 1981. That was a one-time occurrence because the USA went off the gold standard in 1970 under President Nixon.

The success of President Ronald Reagan was due to his selection of intelligent advisors not socialists and gold fell rapidly from $800/oz to $200/ox and stayed very low for almost 20 years. President Reagan was a supply-side advocate and ended the artificial shortages that president Jimmy caused in everything from toilet paper to gold.


World Markets
International trade shows that the world economy has only revived about 25% not the 60% shown by the stock and commodities markets. That means 60% of the stock market rise from the 2009 lows could evaporate as the initial rise evaporated under Jimmy Carter. See:
http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Asian markets were down last night. China closed, Hong Kong closed, India down –0.1%, and Japan down –1.1%.

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 down at about -0.51 % at 6:30 AM EST.