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WARNING:   The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions. It may contain errors and you should not make investment decisions based solely on what you believe you have read here. Do your own research, it is your money. If you lose it, it is your responsibility, not ours or your grandmothers! The editor may or may not have a position in any securities discussed. The editor may have held a position in a security earlier, or in the future.

Watch Greece  Election Day coverage is dominating the news coverage today, as it should.The market is positive as we suspected, because a degree of uncertainty will be removed.The results will roll in tonight.We will be glued to the television, flipping between channels to catch the latest “breaking” headline.
It's all so Sad  It’s the day before elections in the U.S. and around our house is a heavy cloud of resignation that the big O will win going away.I was looking at my flagpole this morning.There is no cord on it.I deteriorated and frayed away a couple of years ago.You see, I haven’t flown a flag for four years. 
Stage is Set  Non-Farm Payrolls released this morning indicating a gain of 171,000 jobs in October with Unemployment clicking back up to 7.9%The Birth/Death adjustment added 90,000 jobs to the raw numbers.Good thing or we could have had a “bad” number four days before the presidential election. 
Greek Leviathan We need to keep our eyes on the eurozone.It looks like the leviathan is about to raise its head again to spread fear through the markets.We have chronicled the on again, off again negotiations between Greek government officials and the troika representatives since last June. 
Markets are Open  The damage from Hurricane Sandy is now being addressed by local, state and federal authorities.How do you get water out of the subway?This morning’s reports are encouraging that some transportation into NYC will be restored today.Complete recovery is going to take time. 
AAPL Profit up 24.2%  Last night AMZN and then AAPL gave the bears the meat they wanted.Both companies missed earnings.AAPL, notorious for sandbagging on earning’s estimates said their profits would decline this holiday season.Analysts’ projected next quarter’s earnings at over $15.00 per share, AAPL brought them down to earth at 11 and change.This is AAPL’s trick; they always talk down the next quarter. 
Currency War  China is the world’s largest gold miner.China does not allow gold to be exported.The government buys all gold mined that is not sold on the market.China also buys gold through Hong Kong and imports it. 
Facebook Surprise  Facebook (FB) gave investors a gift with higher earnings last night after market close.FB’s advertising revenue was up 36% in the third quarter.FB now gets 14% of its advertising revenue from mobile ads, up from zero six months ago.This was greeted with approval as GOOG is struggling to convert ad revenue to mobile devices.More than half of FB users accessed Facebook on a mobile device in September. 
It Happens  How much bad news can the market take before investors get scared and take their blocks home?UPS reported a lower quarterly profit this morning, blaming slowing global trade.3M cut their profit outlook, blaming currency concerns.Harley Davidson posted a 27% decline in net income.DuPont cut earnings expectations and announced the company would cut 1,500 jobs. 
Volatility Ahead  Caterpillar (CAT) reported earnings before the bell this morning, and spread a pall over the market.CAT beat earnings $2.54 vs. $2.22 Gotta love those special one-time gains!The company missed revenue projections and lowered revenue projections by $1.6 billion for 2012. 
Blue Chip Friday  McDonalds (MCD), General Electric (GE) and Microsoft (MSFT) all reported disappointing earnings this morning.This follows the Google (GOOG) mess yesterday.So much for the “Blue Chips” leading the market higher! 
Jobless Claims Spike  The parade of suspect economic indicators continued this morning.Weekly Initial Jobless Claims bounced to 388,000.As you may remember, last week’s 339,000 was questioned as it followed an unbelievable drop in the Unemployment Rate.There was an explanation that “a large state” did not report quarterly numbers.” 
Housing Recovery  Housing Starts were up 15% last month.At 872,000 units, this was the highest rate since July 2008.Single family structures represent the largest segment of the market.They rose 11% to 603,000 while multi-family units climbed 25.1%.Building Permits showed an increase of 11.6%. 
Aid for Spain?  Spain was able to sell $6.3 billion dollars in short term notes this morning.Rates were 2.823% on 12-month and 3.022% on 18-month.This follows Standard & Poor’s cut in Spain’s sovereign credit rating to one notch above junk on Friday.S&P cited Spain’s reluctance to seek a bailout in their downgrade.Bond buyers seem more certain the money is coming to the rescue.All things in due season? 
Table is Set  Retail Sales scored a beat this morning, recording a 1.1% increase for September.Economists expected 0.8% growth, and we got a nice revision higher for August, up to 1.2% from the original report of plus 0.9% growth.Appliances and electronics were the strongest sectors (thanks iPhone 5). 
Bigger Pie Guy  We are finishing out a disappointing week in the markets.We have been down every day since the slide started last Friday.You remember Friday, that is the day the Labor Department released September’s Non-Farm Payrolls and updated the Unemployment Rate. 
Twilight Zone  I quite recommending Chinese stocks a couple of years ago when I realized you couldn’t trust any of the accounting by companies or government economic reports.It was like looking through a dirty glass into an opaque ball.Watching the release of the Initial Jobless Claims numbers reminded me of an episode of Twilight Zone. 
Welch Under Bus?  Last Friday after the Bureau of Labor Statistics (BLS) released Non-Farm payrolls that only added 114,000 jobs but dropped the Unemployment Rate to 7.8% (a four year low) prompted a tweet from Jack Welch, former CEO of General Electric.His tweet read “Unbelievable jobs numbers…these Chicago guys will do anything…can’t debate so change numbers.” 
Merkel to Athens  Protesters greeted Angela Merkel on her visit to Athens today.Greek demonstrators blame Merkel for government cuts to wages and benefits.It is all so unfair to Greek citizens that became accustomed to running debts on the backs of a strong euro currency union. 
Slowdown Fear  World markets are under pressure this morning.Investors are worried if the world economy is headed into a recession or worse.HSBC’s China Services Sector PMI released last night, surprising the market at 54.3Last month’s reading was 52.0 so this was a nice improvement in the services sector.The IMF lowered their growth forecast for East Asia to a seven year low of 7.2% 
Fudging Numbers Take the money Please! That is what Mario Draghi, President of the ECB, sounded like during yesterday morning’s news conference. Draghi said “There is a tendency to identify conditionality with harsh conditions. Conditions don't need to be necessarily punitive.” 
Waiting on Spain  The Bank of England (BoE) kept interest rates at 0.5% this morning, and did not add to their QE program.The European Central Bank (ECB) kept their interest rates at 0.75%.Initial Jobless Claims were up from last week but lower than the market expected, so what is not to like?The market is rallying, but we won’t be surprised by weakness going into close. 
Riots in Iran, Gold Missing?  Iran’s President Mahmoud Ahmadinejad has his hands full in Tehran.Demonstrators closed down the Grand Bazaar in the south part of Tehran.Bassij militia forces were sent in to quell the riots.The Grand Bazaar is home to money changers and gold dealers.The Iranian “rial” has lost almost half its value in the last week. 
Ring of Fire  Bill Gross of Pacific Investment Management Co. (Pimco) is known as the “Bond King.”PIMCO’s flagship Total Return Fund has $260.9 billion dollars under management, making it the largest bond fund in the world.He was famously wrong last year, when he pulled away from U.S. Treasuries fearing a rally that would knock down their value.We all know long term interest rates just kept going lower. 
Silver & Solar  We are almost always bullish on precious metals. Since QE3 (to infinity) every investor should own some precious metals.Precious metals are not an investment, they are a trade.And the trade makes a lot of sense right now.Gold and Silver are money.If you are holding money, why not put it in precious metals? 
Manufacturing Slowdown  The Chicago PMI dipped below 50 for the first time in three years this morning.The manufacturing number was expected to come in at 52.8, down from 53.00 last month.Any reading under 50 on Purchasing Managers Index (PMI) represents a contraction in activity.Capital equipment orders were at a seventeen month low. 
Gradually, the Suddenly  The NFL announced an end to the referee lockout.The market rallied!That wasn’t the real reason, but that is as good a reason as the Spanish budget announcement. The Spanish government announced their 2013 budget this morning and you would have thought the clouds opened for word on high.

Spain, Greece Convulsions  Spain and Greece are experiencing protests over austerity…again.Greek unions have shut down shipping, airports, museums and tourist monuments over proposed cuts in pensions, public wages and welfare benefits.Trains are parked and hospitals are only offering reduced service. 
The Economic Machine  Ray Dalio, founder of Bridgewater Associates was on CNBC last Friday morning.Bridgewater is one of the country’s most successful hedge funds with $130 billion dollars under management.Mr. Dalio would not be concerned with our pittance of investments, but we can learn from him. 
Future is Now  Richard Fisher, head of the Dallas Federal Reserve Bank, spoke to the Harvard Club in New York City last week.This speech was one week after the FOMC meeting that announced infinity.Mr. Fisher makes no secret he is a “hawk” on monetary matters.He is consistently against printing more money to prop up the U.S. economy. 
Spanish Bail-out  Spain is closer to accepting a bailout from the eurozone this week.Interest rate pressures have been moderated by the ECB bond buying plan announced this month, but the country needs more than just low interest rates.Unemployment moved a step higher on the last report.The government is struggling to cut spending. 
Fiscal Cliff Approach  Ben Bernanke, Chairman of the Federal Reserve, met with the Senate Finance Committee yesterday to caution/warn them about the dangers of the “Fiscal Cliff.” We would have loved to have been in the room.Reuters has the story. 
Coordinated Action  If every central bank prints money, does anybody devalue their currency?The Bank of Japan increased their Quantitative Easing (QE) pocketbook this morning.The Yen was gaining too much value against other currencies, so what is a government/bank to do?Knock the heck out of it! 
War in the Air  There is war in the air, and it is not in the Middle East.We have watched U.S. Embassies under attack and protests in the street by Muslims that are “offended” by free speech.What have we not seen?Chinese protestors in Beijing 
Eurozone Rancor  The market looks to be taking a breather today after the hard charging rise last week.The New York Empire State Manufacturing Index fell to a minus 10.4 in this morning’s report.It was expected to be a negative number, but by a smaller amount than last month’s minus 5.8Perhaps this was one of the metrics the FOMC was looking at last week.They were right to be concerned. 
King Dollar...Dead!  Uncle Ben and his minions drove a nail in the coffin of the U.S. Dollar yesterday.King Dollar (to use Larry Kudlow’s term) is dead.This is the 1970’s all over again, and worse.The Fed is going to purchase $40 billion dollars in mortgage backed securities (MBS) every month, for as long as they have too. 
Too Little, Too Late  Initial Jobless Claims climbed higher last week.This morning’s report came in at 382,000This was 15,000 higher than the market expected, the biggest miss in two months.41,000 unemployed on extended benefits ran out of time, and have to find a job. 
Party Time?  The German Constitutional Court ruled the eurozone’s permanent bail-out fund, the ESM, and the “fiscal treaty” plan do not violate the German constitution.Let the party begin.This clears the final hurdle to launch the ESM, and the accompanying European Central Bank “unlimited” bond buying program. 
Where Were You?  Where were you on 911?I remember the phone call from my wife to tell me about the plane crash into the first tower.She said it was all over the news.We assumed, like most Americans, it was an accident.Maybe a pilot had suffered a heart attack on final approach to LaGuardia or some mechanical control problem. 
Three Legged Stool  Christine Lagarde, head of the IMF said over the weekend she thought Spain and Italy had done enough belt tightening to qualify for a bailout and ECB support.This surprised us as Germany was insisting on the IMF taking the lead on any bailout conditions. 
The Chicago Way  I almost cried last night listening to Vice-President Biden relaying the struggles the administration went through to save our economy.It was heartwarming to hear how he was able to gauge the President’s inner strength as he dealt with one problem after another.“He has never wavered, he has never backed down…he always asks, How is this going to affect the average American’s lives.” 
OMT = QE?  The European Central Bank announced their plan to “backstop” the euro.We have a new term to learn, “Outright Monetary Transactions”, or OMT.Mario Draghi says OMT will denote the ECB’s bond program in secondary markets to “avoid destructive scenarios with potentially severe challenges for price stability in the euro area.” 
Waiting and Wondering  The market is encouraged this morning by information on Draghi’s plan to purchase sovereign debt.The ECB will hold a press conference tomorrow morning, one-hour before the U.S. market opens.We will know more then.Today we mark time. 
ECB in the Spotlight  This week will be focused on the European Central Bank (ECB).They are meeting on Thursday to discuss Mario Draghi’s bond buying plan to lower interest rates for troubled countries.Italy and Spain are pushing for intervention to lower their interest rates. 
Bernanke Perp Walk  We are getting ready for the Bernank’s speech at Jackson Hole this morning.We have been handed a gift with a higher open on news the Budesbank representative on the ECB executive council is threatening to resign.Our market is higher on the belief this signals the ECB is ready to drive the central bank into the ditch printing money. 
Fiscal Cliff  You have probably heard the term “Fiscal Cliff” and may not have recognized what the author or commentator was referring too.The “Fiscal Cliff” specifically refers to changes in tax law and government spending that will occur beginning on Jan. 1, 2013 unless legislation is passed to change present law. 
Monti Merkel Show  The Fed Beige Book will release after lunch at 2:00 p.m. This may be more important than the Bernank’s speech tomorrow at Jackson Hole. It will give traders and investors a peak at the economic information and trends the FOMC will consider at their next meeting. The market has priced in QE3 on a run for the last four weeks. Silver has gained over 10% in the last two weeks. 
Filling the Swamp  Mario Draghi of the European Central Bank (ECB) cancelled his trip to Jackson Hole, Wyoming this morning.He was scheduled to speak to the Federal Reserve organized symposium on Saturday. 
World's Central Bank  Something stinks in markets world-wide.Price action indicates traders and investors are buying stocks to capitalize on future monetary easing.Are we seeing the results of the meetings and phone calls late last month between Obama, Bernanke & Geithner and their eurozone counterparts? 
Double Duh!  The market opened lower this morning, adding to the losses from yesterday. Thirty-minutes into the session a story circulated that Ben Bernanke wrote a letter to Rep. Darrel Issa (R- CA). Darrel Issa is chairman of the House Oversight and Government Reform Committee. Bernanke’s letter told the committee the Fed had the ability to provide more economic stimulus to the U.S. economy. 
QE or Bust  HSBC’s Flash Manufacturing PMI for China surprised the market overnight at 47.8, down from July's reading of 49.5. This set a nine month low and kicked precious metals into afterburner on what the market believes to be an almost sure bet China will turn on the “yuan spigots.” 
Deja Vu All Over Again  Precious metals have been on a good run for the last five weeks.The FOMC minutes from their last meeting that concluded on Aug. 1 will be released today at 2:00 p.m. eastern time.Get ready for volatility in the market, but especially in precious metals. 
Facebook Shenanigans  Facebook (FB) went public three months ago at $38.00Since its IPO; Facebook has fallen to $19.62 today while the wider market has rallied over the summer months.The investment banks have egg on their face over the IPO with recriminations that it was mispriced and an issue with the NASDAQ trading errors when the stock started trading. 
Silence is Golden  We have missed much of the rally of the past two weeks with our SwingTrader recommendations, as we are negative on the current economic situation.Our subscribers to Buy, Sell, Hold and the Dividend Champion Long-Term Portfolio have benefited from the rally.We evidently forgot… 
Skittish Excitement  The Michigan Consumer Sentiment Survey came in better than expected, off the lowest yearly reading of the year.The survey results were released after the market opened this morning.Hanging on any good news, the market took a bump higher in skittish excitement.Traders should have looked deeper. 
Economic Freedom  Few people are vilified by the mainstream media and progressive politicians as much as the Koch brothers.Charles Koch lives in Wichita, KS where he works at the family’s company Koch Industries.His brother David Koch lives in New York City but is active in the business as Executive Vice-President. 
Welcome to Noddy Land  Nigel Farage, head of the U.K Independence Party, appeared on Fox News yesterday. The Independence Party describes itself as libertarian. I don’t know if it is my admiration for plain speaking British politiicans or libertarianism, but it was a hoot watching his interview. A worthwhile six minutes. 
The Charade Continues  Germany reported 0.3% growth in GDP for the second quarter this morning.This helped pull the eurozone’s loss to only 0.2%, which was better than expected.This small lift was not enough to stop the speculation, is the eurozone in recession? 
World-Wide Recession?  Japanese GDP growth slowed to 1.4% last quarter, down from 5.5% growth in the first quarter.This follows the slowdown in China’s exports reported last week.From China to Europe and the U.S., the world economy is slowing.

China Exports Fail  Chinese exports rose by one-percent in July, down from 11.3% growth year-over-year in June.Imports rose 4.7% indicating some shift to domestic demand.June’s import growth was 6.3%.Alistair Thornton of HIS Global Insight observed these were “the worst export growth number since November 2009.” 
Watch Transports  The market is “climbing a wall of worry” according to some commentators.Others believe the market is topping and are predicting gloom and doom.We try to be neutral in trading, as anticipation can be very expensive.We also look at technical patterns for entry prices for our long term investments or stocks we would buy to sell covered calls against. 
Chinese Power  Chinese power plants generated 453.69 billion kilowatt-hours of electricity in July.The Chinese State Electricity Regulatory Commission (SERC) reported power consumption growth of 5.5% for the first six months of 2012. 
Power Economics  Chinese economic numbers are always questionable.The government can report anything they want (or need) as it is part of the propaganda machine that keeps them in power.One of the ways investors have used to gauge the health of the Chinese economy is to review electricity usage. 
Playing Chicken  Last week the “Troika” representatives said “We want to help (Greece) and will stay as long as is needed until you have prepared the package.”The “package” was to be the completed package of tax increases, spending cuts and sale of government assets to meet commitments made by the Greek government early this year.

Politics & Statistics  European markets are trading higher on speculation the European Central Bank (ECB) is preparing a “Bernanke Style” quantitative easing program.In other words, traders and investors believe the time is drawing nigh when the ECB will start printing money…even if they have to do it over German objections. 
No Change - No Joy  The FOMC didn’t announce QE yesterday, the market reacted negatively.They did change their economic observation from the U.S. economy is growing slowly to deceleration.This morning, the Bank of England kept interest rates at 0.5% and did not add to their quantitative easing program. 
FIGS vs Germany  The push and pull playing out in the eurozone between central bankers and governments is interesting to watch. We have chronicled Mario Draghi’s statement that the ECB "would do whatever it takes to save the euro.” The U.S. Treasury Secretary, Tim Geithner, visited Germany and the ECB on Monday 
Waiting on Bankers  German Retail Sales shrank last month by 0.1% from May.German Unemployment is static at 6.8% but the Unemployment Rate across the eurozone stands at a 22-year high of 11.2%May’s Unemployment Rate was originally reported at 10.2% but was revised up this morning to 11.2% along with June’s report. 
Stockholm Syndrome  Tim Geithner, U.S. Treasury Secretary, traveled to Germany over the weekend to meet with the European Central Bank President Mario Draghi and German Finance Minister Wolfgang Schaeuble. 
Draghi Yank?  Spain reported Unemployment this morning, the highest in the eurozone at 24.6%.Almost a third of all unemployed people in the eurozone are citizens of Spain.5.7 million Spaniards are unemployed with young workers most disaffected with unemployment in the 16 to 24 year old age group recording a 53% unemployment rate. 
Hope-athon Asian markets closed mixed this morning.European markets were down and U.S. futures were negative until Mario Draghi, President of the European Central Bank (ECB), took the stage at an “informal” investor’s conference in London.Draghi told attendees the “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.And believe me, it will be enough.” 
Apple Fail  The market was up strongly at open this morning against an earnings miss last night by Apple (AAPL).Earnings per share were short estimates by over 10% and sales were 6.0% below expectations.The market finished yesterday strongly on a Wall Street Journal “inside” scoop that the Federal Reserve was ready to act aggressively to lower unemployment and increase domestic growth. 
Silver Palooza  Last month we ate crow and wrote of our woes owning gold and silver.We had called gold the trade of the year back in December.It had been a rough asset to own, and silver was even worse.Yesterday we bought the ProShares Ultra Silver ETF (AGQ) in the Long-Term Portfolio at $36.00

Skeptical Troika  Grim faced inspectors are set to arrive in Athens, Greece tomorrow.They are traveling on behalf of the "troika” of interests that are bailing the country out. The European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF) are the “troika.” 
Euro Breakdown  Yesterday’s market push higher seemed unreal and we went to what we knew, “technicals.”Like a kid who lost his homework, “The technical’s did it!”Well the technicals didn’t last through today.The market is down sharply.We think there is a chance “the technical's” will dictate the market stage a rally this afternoon.This morning we thought it likely the market would close back even if not higher…now I am not so sure 
Technical Rally  The market is rallying this morning.Why?Was it the disappointing British Retail Sales numbers that showed an increase of only 0.1% rather than the 1.5% increase in May?Or, could it be the Spanish Bond sale of three-year and five-year issues at higher interest rates than last month, and a low bid-to-cover ratio because of lack of interest? 
BRICs & Sachs  Lloyd Blankfein, CEO of Goldman Sachs (GS) appeared at the Economic Club in Washington.Bloomberg conducted the questioning.He covered a wide range of topics.It was interesting to hear his views.One comment he made was concerning emerging markets vs. developed markets for long term investors.His observation was the growth story was intact for emerging markets, specifically mentioning the BRIC countries.These are Brazil, Russia, India and China. 
Bernanke Volatility  We are waiting on the Bernank to testify before congress this morning.The market is up, ready to hang on his every word for some hint of quantitative easing.Like all good Pavlov’s dogs, we hope to be rewarded if we wait for our master to recognize our need! 
Syrian WMD Warning  Syria test fired Scud D missiles last week in a “war game.”The advanced missiles are capable of delivering Sarin nerve gas and other chemical weapons.Washington warned Israel, Turkey and Jordan they should prepare for chemical missile strikes after disclosing Syria had moved part of their arsenal of Sarin, mustard gas and cyanide out of storage. 
No Problems!  China reported GDP growth at 7.6% for the second quarter last night.The report was in line with trader’s expectations.Property sales turned positive in June recording a growth rate of 6.9%.This was the first positive report in eight months.The Asian Development Bank cut their China growth target for 2012 from 8.5% to 8.2%. 
FOMC Disappointment  The FOMC minutes from the June meeting were released yesterday, and as we expected traders hit the “Sell” button on their computers. There just wasn’t enough love in the minutes. It is the traders’ equivalent of throwing a temper tantrum. If you listen closely, you can almost hear the chant “We want QE…We want QE…We want QE.” 
Quiet on the Front  Spain is trying to avoid a bailout by other eurozone countries.Prime Minister Mariano Rajoy announced cuts to unemployment benefits, a cut in civil servants pay (and benefits) along with an increase in the national Value Added Tax (Sales) from 18% to 21%. 
We Have Seen the Enemy  We have seen the enemy, he is us.That old saying should be on all of our minds today as we watch the world bounce from one financial crisis to another.Who is to blame?The Bankers?Sure, Bob Diamond’s Barclays submitted lowball numbers for LIBOR rate setting.Did they do it out of fear the bank could be cut off if other bankers knew how high their borrow rates were? Who cares? 
We Need Earnings!  The market is down this morning as we try to digest the economic news from around the world.The U.S. economy is slowing; the Non-Farm payroll report last week showed fewer new net jobs than are needed to put new entrants in the work force on payrolls. 
Non-Farm Friday  Non-Farm Payrolls disappointed the market this morning, only adding 80,000 jobs in June.This is the third month with less than 100,000 jobs created.Unemployment remained at 8.2% in the official numbers.Manufacturing hired 11,000 while retailers cut 5,400 service employees.Construction only added 2,000 employees nationwide. 
Gambling in London  What better fun on Independence Day than to watch Bob Diamond, former CEO of Barclays Bank, before British lawmakers to explain why his bank actions were different from the Bank of England’s.After all that is the accusation isn’t it? 
War of 1812  The War of 1812 was declared by the United States against Britain because of restrictions England placed on the U.S. in free trade. England had been at war with France (Napoleon) since 1803. Britain was the U.S.’s largest trading partner. They bought 80% of our cotton and 50% of all other exported products. 
Slow Down Trigger  The U.S. ISM Manufacturing number dropped to a three year low this morning.Economists were expecting a reading of 52.0 which would have been down from last month’s 53.5The Index dropped to a disappointing 49.7 which indicates fewer orders coming in than production can support.

Devil in the Details  Bloomberg is banned in China this morning. Their website does not appear in any searches from the mainland. What broke? Bloomberg had the audacity to publish an article yesterday exposing the next possible President of China, Xi Jinping, as a profiteer. Xi’s extended family has amassed a fortune. 
Precious Metals = Trade  We called Gold the Trade of the Year for 2012 on Dec. 29, 2011.Right now we have mud on our face.In our prediction of another great year for gold, we admitted the shiny stuff could go lower for the year if; the dollar continued higher, the U.S. budget was balanced, if eurozone countries don’t leave the monetary union, if no European banks went bankrupt or if Ron Paul was elected President. 
Check-Mate?  The pressure is building to push Germany to do what they will not do.Spain, Greece, Italy and France are trying to execute “check-mate” against Germany.Today, the European Council website published a new…new plan.

Get It Over With  Why not just get it over with?Greece is broke and unwilling to reform government spending.They want other countries to give them money so they can keep government employees on payroll, keep making pension payments to citizens that retired as early as 52 years old, and ignore collecting taxes that are do the government. 
Running Out of Money  The Leaders of France, Spain and Italy met this morning with Angela Merkel of Germany in Rome to forge an agreement before European leaders meet next week in Brussels.The leaders endorsed the idea of a “Growth Package” of one-percent of eurozone GDP, without any explanation of how it would work.Christine Lagarde, head of the IMF, attended a meeting of Eurozone Finance Ministers in Luxembourg yesterday. 
Goldman Confirms Downtrend  Purchasing Manager Index (PMI) readings from China and eurozone countries deteriorated in reports overnight.These indexes gauge the strength of the business going forward as purchasing managers are keeping the pipeline full for future production.HSBC’s “Flash” PMI for China showed the eighth month of declines for that country. 
Moment of Truth  The Federal Open Market Committee’s meeting ends today with release of their statement at 12:30 p.m.The Bernank will hold a press conference at 2:15 this afternoon.The statement release will be a “market mover.”He will use the press conference to “walk back” any wild move in the market in reaction to the statement. 
Central Bank Rally The market is rallying today on Higher Building Permits and lower Housing Starts last month.Greek politicians have agreed to form a government which should be in place by tomorrow.Spain is slowly spinning down the drain in the bathtub of bad credit.Spain auctioned 12-month Treasury bills this morning at 5.07% and 18-month notes at 5.11%. 
Headline Risk Overload  This week we have headline overload.The leaders of the G-20 nations are meeting in Los Cabos, Mexico.President Obama will be meeting with Angela Merkel this afternoon to twist her arm to increase growth initiatives and ease bailout austerity measures.In Athens, New Democracy leader Antonis Samaras is meeting to form a government after elections yesterday gave his party 29.7% of the vote.SYRIZA (party of the Radical Left) came in second with 27% and PASOK (socialist) received 12.3%. 
Socialize the Losses!  The market is continuing the rally from yesterday on enthusiasm for coordinated central bank action next week.The banksters will provide liquidity if elections in Greece create turmoil in financial markets.What is liquidity?Liquidity means the European Central Bank will make paper euros available if there are runs on banks from customers withdrawing funds.They will also provide overnight loans if banks stop making loans to each other out of concern of other banks solvency. 

Pee Wee Herman Market  Asian markets were down across the board overnight.European markets were all down and futures for U.S. markets this morning were lower.U.S. Jobless claims were higher than expected.The market opened even then moved higher to up over 100 points on the DJI.What happened?A rumor that a “grand bargain” was being orchestrated with Germany to back eurozone banks.The story line is this will be announced over the weekend.

Countdown for Greece  We are into the countdown to the Greek vote on Sunday.Interest rates moved higher for Spain after the country agreed to a $125 billion bailout for the country’s banks.Yield on Spanish 10-year bonds hit 6.83% in the secondary market yesterday.Italian debt wasn’t far behind as their debt value fell to yield 6.15% on 10-year’s.Italy sold one-year notes at a 3.972% interest rate.This was a much higher rate, sold with a lower coverage ratio.

$4.136 trillion x 0 = 0.00  Yesterday’s rally disappeared faster than ice cream at Disneyland in the summer. This morning, we are treated to higher futures. The reason given by the talking heads on TV is traders and investors have decided the FOMC will come out strongly for another round of QE next week when they meet. Good luck.

Bailout Half Life  Spain gained $125 billion dollars in bailout funds from Eurozone Finance Ministers on Saturday. The money will go to the government, but Spain is clear the bailout is for their banks. Angela Merkel’s spokesman, Steffen Seibert, said “The Spanish application comes from the state, the money will go to the state, the state is liable and the state takes on the responsibility for the stipulated conditions.”

Salting the Well  Markets opened lower this morning because of surprises in some economic reports out of Europe and the U.S. market’s reaction to Bernanke’s testimony before congress yesterday.It is silly that traders look to Bernanke to telegraph more QE, but that is the reality.

Money Gets Cheaper  The Peoples Bank of China cut deposit interest rates to 3.25% this morning.This cut of 0.25% was the first since 2008.The Bank of England held rates steady at 0.50% and did not announce an increase in their Quantitative Easing program.

Hard Lessons  Francois Hollande has fulfilled one of his campaign promises.Yesterday the French Cabinet lowered the retirement age for some workers from 62 to 60 years of age.The change affects approximately 110,000 workers.To qualify they must have contributed to the retirement system for 41 years, so they would have had to start work at 19 years old.

Fatal Hubris  G7 representatives participated in a conference call this morning to discuss fiscal integration and Spain.Before the call Spain’s Treasury Minister Cristobal Montoro gave an interview on a local radio station.He said “The risk premium says Spain doesn’t have the market door open.The risk premium says that as a state we have a problem in accessing markets, when we need to refinance our debt.”

More Europe, More Pain  Spain wants Germany to rescue the country’s banks, but that is not how the eurozone works.All banks in the eurozone are governed by the countries they are headquartered in.This means there is a patchwork of banking rules and regulations and differences in the perception of safety depending on the bank’s country of origin.

Market in Correction  Irish voters approved the European Fiscal Treaty yesterday with 60.3% voting in favor.Ireland is stuck in a recession with unemployment at 14.3% and those that are working have seen their wages cut or stagnate.The outcome of the election means there will be more cuts in government spending in the future.About half of registered voters participated in the election.

European Redemption Plan  Germany has steadfastly resisted calls for issuance of “Eurobonds” as proposed by France’s new president Francois Hollande.Eurobonds would allow high debt nations to borrow at lower interest rates but put low debt nations on the hook for other country’s debts.Germany, Luxemburg and others are opposed to having secondary liability for Spanish, Greek, Italian and French bonds.

Happy Days are Gone  Overnight, China’s Xinhua News Agency reported the government did not plan on stimulus measures to increase economic activity.This wasn’t what we wanted to hear!The market rally yesterday was a sort of “Happy Days are Here Again” rally.China’s manufacturing sector is slowing and the popular assumption was that a stimulus package was ready to roll out to pump up exports.

Change is in the Air  The Muslim Brotherhood (MB) is up their tricks in Egypt.Mohamed Mursi, the MB’s candidate progressed to the run-off election on June 16 along with Ahmed Shafiq.Shafiq’s election headquarters were firebombed last night.

Iranian Nuclear Danger  Are you ready for the weekend?While the U.S. markets are closed for the Memorial Day weekend, what should we be concerned about?There are plenty of headlines lurking in financial capitals of the world.The Middle East is of concern today.

Who 'Ya Gonna Believe?  HSBC publishes their “Flash” PMI (Purchasing Manager’s Index) every month a couple of weeks before the Chinese government compiles their “official” PMI.Almost every month it seems the HSBC number is worse than the government’s number.HSBC’s China PMI number came out overnight at 48.7 for May, down from 49.3 in April.

Egyptian Elections  Egyptians are voting today and tomorrow in their first free presidential election. This election will narrow the field to the top two candidates for president. With eleven active candidates on the ballot, there is little chance of one receiving 50% of the vote. The run-off election will be in mid-June. Turnout is running very low, perhaps less than 10% of eligible voters, but many expect more voters after work when the temperature cools and tomorrow.

Metalize the Debt?  The Greek people are engaging in self-delusion.Many believe Alexis Tsipras of the SYRIZA party is onto something.They know the country is out of money, but don’t believe other eurozone countries will cut off funds to bail them out.Reuters quotes a 29-year old citizen, Nikos Sokos, “Empty Threats!There’s no way they’re going to kick us out.There won’t be a eurozone if they do that.”

Interesting Week Ahead  This week promises to be eventful.German Finance Minister Wolfgang Schaeuble met this morning with the new French Finance Minister Pierre Moscovici in Berlin.Moscovici wants Germany to endorse a “Growth” agenda for the eurozone.His boss, newly elected French President Hollande, ran on a platform of growth rather than austerity…and reducing the retirement age.

What If?  What if JP Morgan’s “whale” lost so much money in his interest rate trades, the company decides to withdraw from manipulating precious metals because of the danger of another significant loss? What if precious metals were allowed to trade without intervention to cap their rises by gigantic short orders placed by JPM and USBC bank.

Facebook IPO  Facebook filed paperwork with the SEC yesterday indicating the share price in their Initial Public Offering will be $38.00, valuing the company at $104 billion.The company’s net income in the last 12 months was reported at $974 million dollars on sales of $4.04 billion dollars.

Famous Last Words  The Peoples Bank of China cut bank reserve ratio requirements for the nation’s banks by 50 basis points last Saturday.This action was in response to slowing bank lending and economic activity in April.March lending was $160 billion dollars but dropped to $108 in April.

Drip, Drip, Drip  Greece must decide today whether it pays or defaults on $550 million dollars in bonds that are maturing tomorrow.Without a functioning government the decision is clouded.

Greece, Stay Tuned  The Greek government looks like a careening roadster on a mountain road.Entertaining to watch for the wreck that seems certain to occur. The pols are working to form a coalition so new elections won’t have to be called.Don’t for a minute believe this is out of altruism.It is simple political survival.Who knows what those darn voters will do, who will they blame if they have to inconvenience themselves by voting again?

Greek Drama  Alexis Tsipras of the Radical Left Coalition informed Greek President Karolos Papoulias “We did everything possible to form a government compatible with the popular vote, but that was not possible.”Socialist Evangelos Venizelos of the PASOK party is now in the hot seat.

Party of the Radical Left  Greece’s new “man of the hour” is making waves with his demand that Greece renege on its pledges to implement more austerity measures.When the New Democracy Party could not form a coalition government, the task was passed the Alexis Tsipras.Tsipras belongs to the Coalition of the Radical Left party.

Eurozone Splinter?  We tracked the election results out of France and Greece Sunday afternoon and evening.Our interpretation, the gloves are off.Francois Hollande beat Nicolas Sarkozy in Sunday’s French Presidential election.He told supporters “Austerity is not inevitable” as he pledged to fight the eurozone (Germany) to pay for French growth.

BLS Magic  The April Non-Farm Payroll report showed 115,000 jobs added, the smallest amount since October 2011. Luckily…the Unemployment Rate dropped to 8.1% from 8.2%. You can make that happen if you contort the numbers by removing citizens from the “active” workforce.

Arab Winter  Noriel Roubini spoke at the Michael Milken Global Conference yesterday in Los Angeles.He told the audience “The Arab Spring will become an Arab Winter.”Roubini is famous for predicting the U.S. Housing crash in 2005.

Economic Headline Risk  Economic reports rolled in this morning before the market opened from around the world…and it doesn’t look encouraging.The backbreaker was the ADP U.S. Non-Farm Employment report that indicated only 119,000 jobs added last month.This was down from 201k jobs added in March and below expectations of 177,000.The March number was originally reported at 208,000.Funny how those initial reports always sound better!

Earth to Krugman  Paul Krugman writes for the New York Times editorial page. You may be familiar with him for winning a Nobel Prize for Economics in 2008, as a professor of Economics at Princeton University or just as a voice for easy money and a state driven economy. In his eyes, the state can make all of our lives better by plundering our savings through inflation.

Sell in May?  The market rallied last Thursday and Friday making our technical analysis on Wednesday look like the hand painting of a monkey.Our “Bear Wedge” got blown out of the water as the market rallied on earnings beats by AAPL, but against earnings misses by others.Spain and Italy were able to sell debt, but at elevated interest rates and U.S. GDP slowed to a pace only a bureaucrat could love.

Bernanke Put  U.S. GDP fell last quarter down to 2.2% growth.The market expected 2.5%, which was down from 3% in the fourth quarter of 2011.What does the market do?Rally, because shortly after market open the Michigan Consumer Sentiment index came in above expectations at 76.4Wow, the public is excited to be unemployed while our economy stagnates.

Egypt Israel Relations  Today is Israel’s 64th Independence Day anniversary.There are storm clouds over the small nation.Iran’s nuclear program comes to mind, but they are also facing an increasingly hostile Sinai border with the Egyptians.

Why Ruin a Good Thing?  Walmart has been accused of paying bribes to build stores in Mexico. The U.S. bars illegal payments by businesses operating overseas in the Foreign Corrupt Practices Act that was passed in 1977. According to Wikipedia, “The act draws a distinction between bribery and facilitation or "grease payments", which may be permissible under the FCPA but may still violate local laws. The primary distinction is that grease payments are made to an official to expedite his performance of the duties he is already bound to perform.”

Now is the Time  Technical analysis is the humans desire to predict the future based on what has occurred in the past.Looking at past charts does not tell us what the latest headline will be, what the Bernank will do, or if a hedge fund will blow up.The biggest misconception many have of technical analysis is that stocks follow a pattern on their own.

Votes of Suffering  Francois Hollande beat Nicolas Sarkozy 28.6% to 27.2% in the first round French elections on Sunday. They will face each other in a run-off election May 5. Sunday night, commentators saw an opening for Sarkozy to steer to the right to pick up supporters that voted for Marine Le Pen of the National Front party.

Four Problems with the Rally  The International Monetary Fund (IMF) and the World Bank are meeting this weekend in Washington D.C.Christine Lagarde is the Managing Director of the IMF.Recently she said “We need more resources.”The IMF wants member countries to ante up so the IMF can meet the needs of countries that run into fiscal trouble.She believes the global economic outlook is improving but recovery “remains fragile.”

Spain Bond Sale Success  Spain’s bond sale was successful this morning, with good demand.Interest rates were higher than on April 4 at 5.7% on the ten-year, but a collective sigh of relief could be seen in the stock futures before our market opened.Spain paid 5.743% on the 10-year (under the 6% threshold) and 3.463% on the 2-year offering.

British Inflation to end QE  The Bank of England warned inflation will come down slower than expected.Deputy Governor Paul Tucker said inflation was “uncomfortably high.” Food, clothing and energy prices led to a reading of 3.5% last month.The BoE has been printing money for the last year to stimulate the economy. The current $520 billion quantitative easing program is scheduled to end in May.It looks like they got what was coming to them, and their citizens.

Time Running Out  Spain was able to sell $4.2 billion dollars in 12-month and 18-month maturities this morning. This was above the $3.4 billion they hoped to sell, as demand was good. Interest rates were much higher than last month, but the market was relieved the sale didn’t bust and leave paper unsold.

Spanish Debt Offering  Interest rates on Spanish 10-year government bonds rose above six-percent this morning for the first time since December.The government admitted the economy is probably tipping back into recession.Spanish unemployment stands at 22.9%, with youth unemployment at around 50 percent.

Friday Blahs  China reported first quarter GDP growth of 8.1% this morning.This was down from 8.9% in the fourth quarter of 2011 and below expectations of 8.3%.Chinese Industrial production grew 11.9% and Retail Sales increased at a 15.2% rate.Poor devils.

Theft or Robbery  Income taxes are due this weekend.We worked over the three day Easter weekend to finish ours.Many are rushing to complete the task.We even had to file a return for our youngest daughter.She has a drive-up teller job at the local bank.She works after school and Saturday mornings.She was dismayed when writing her check.

Growth Trap  The sell off yesterday caused some drama in what has been a long positive run since the week before Christmas.You may be re-evaluating some of your holdings that looked good when the market was going up almost every day.We are starting earnings season, and there are sure to be some surprises and some disappointments.

An Apple Strategy  The market fell Monday in reaction to the bad job’s number that came out on Friday.The question now is if damage has been done to investor’s confidence that will cause them to pull away from committing new money that the market needs to move higher.AAPL set a new high.Is this confidence or a continuation of a momentum play that will end badly?

Lord Voldemort JPM's trader in London, Bruno Iksil, holds positions so large as to move the market.Market insiders call Bruno Iksil “Lord Voldemort” after the dark character in the Harry Potter series.Lord Voldemort was the villain that was also referred to as “He Who Must Not be Named.”

Non-Farm Payrolls  The Bureau of Labor Statistics released the March Non-Farm Payroll report this morning.The U.S. economy gained 120,000 jobs.This was half February's 240,000, and less than the expected 203,000.

Market Anomaly  An anomaly is developing in the market. Precious metal mining stocks are getting taken to the woodshed. GDX (Gold Miners ETF) is trading at levels last seen in May 2010. Gold was selling for about $1200 an ounce in May 2010. It is presently trading for over $1600 per ounce.

A Nasty Infection  Just when you thought that nasty infection you had been fighting was finally whipped, it comes back. The eurozone is impacting our markets again. Spain intended to sell 3.5 billion euros worth of government bonds this morning. The Spanish government admitted yesterday their debts would continue to rise this year and reach 79.8% of GDP. (The U.S. is over

Stay Bullish  Factory Orders came in slightly lower this morning than economists expected.The U.S. Treasury sold four-week notes at 0.055% interest and 52-week notes at a 0.19% yield.The month note interest was a little lower than the last auction; the one-year’s a little higher.

Chinese Crony Capitalism  China reported their “official” Manufacturing PMI for March this morning at 53.1This was better than the USBC flash PMI reported on March 22 at 48.1Any number over 50 means growth in the purchasing managers index, while a number under 50 means there is some contraction in orders.

Favored Traders Prt. 2  The Hunt brothers cornered the silver market in 1980, but ended up bankrupt when the Comex Mercantile Exchange (CME) would not let them open any more contracts, effectively locking them out of the market. The biggest buyer of silver in the world was not allowed to buy, the price of silver fell from $50 to $21 in less than two months.

Favored Traders Prt. 1  The accusations of manipulation in the precious metals market has been around as long as I have been producing galtstock.I am not a black helicopter guy (unless they are low flying and try to take my tin foil).Sometimes, small strands of information start to add up to a larger picture.And the picture ain’t pretty.

Crude Oil Fear Play  Iranian Foreign Minister Ali Akbar Salehi announced this morning that his country is willing to restart nuclear talks next month.The International Business Times reports the talks may be held in Turkey.President Obama met with Turkish Prime Minister Recep Tayyip Erdogan earlier this week in South Korea.The President said “I believe there is a window of time to solve this diplomatically, but that window is closing.”

Wrong...Again  Princeton physics professor William Happer wrote an opinion piece title “Global Warming Models Are Wrong Again” in the Wall Street Journal, you can read the article or watch a short video interview with Mr. Happer

Headline Risk  The market looked to open this morning with a positive bias, we thought it would fail after the lackadaisical trading last week.While we think the bull market is still intact for now, the dip last week didn’t bring the heavy volume we need to take us higher.Support is at 1375 on the S&P, and it looked like we needed a bigger dip than the 1386 we saw on Friday.

Currency Building  How do you build a currency?If you are a small country and want to import products from your neighbor, they will require you pay for imports in their currency.They most likely would not want your “wampum.”

PMI Poker  USBS released their “flash” PMI for China last night.It surprised the market with a reading of 48.1Any reading over 50.0 indicates growth from Purchasing Managers, a reading under 50.0 means fewer orders and slowing growth.Overnight, the European Manufacturing PMI came out at 47.7, Services PMI was reported at 48.7.

Dow Theory  Dow Theory holds that market averages have to confirm each other.If manufacturers are producing more widgets, then they have to ship them to markets.If earnings are going up in one sector, then they should be going up in another.Simple enough.But, if stock prices are going higher for manufacturers but not for transportation companies, Dow Theory raises a flag.

Syria, Iran & Russia  A Russian “anti-terror” Marine squad arrived in Syria yesterday.The year old rebellion in Syria has been put down by President Bashar al-Assad’s military and police.Over the last few months, there have been videos and stories filtering out of the country detailing the crackdown.

Looking for Trouble  The week looks to start where we left off last week. Markets appear stable and ready to continue the ascent that started last fall. Our main concern, as always, it to identify problems around the world that are festering. What will be the next problem to grab the market’s attention? What will cause buyers to step back and wait for clarity before buying stocks?

Still a Bull  The market continues look like it wants to move higher.I always watch CNBC’s “Fast Money” in the afternoon for a recap of the market.I appreciate the panel’s insight and comments on the “hotspots” in activity.Earlier this week, Guy Adami observed ‘the market doesn’t give you this many times to get short; I think it is headed higher.’

Death of Gold  The death of gold has been discussed in print and on television business shows.We don’t believe it.The argument is attractive, now that fear has receded over Greece going bankrupt and the eurozone collapsing.The VIX (fear gauge) has plummeted.The market looks attractive, even at the recent elevated highs.

Monetize the Debt  The business television shows are headlining a story in the New York Times by Greg Smith.Mr. Smith resigned from Goldman Sachs this morning.He was an “Executive Director” in London.He had worked for GS for 12 years, starting as an intern while attending Stanford.His parting gift to GS is to write “the environment now is as toxic and destructive as I have ever seen it.”

March Madness  March Madness is upon us, and it is going to be hard to concentrate on the market for the next three weeks. We all have our favorites, and will be disappointed if they make an early exit from the tournament. Basketball is a spectator sport for most of us that are vertically challenged. At 6’ 1” and two left feet, I am at a distinct disadvantage on a basketball court.

Confused Market?  Eurozone Finance Ministers are meeting this morning in Brussels to finalize the Greek bail-out deal.The “new” Greek bonds started trading on the secondary market this morning.The shortest maturity, at eleven years, were priced to yield 19% while the thirty-year issues were yielding 14%.

Full Speed Ahead  The Senate held a vote yesterday to allow the Keystone Pipeline XL to be built without the State Department’s approval. The Keystone XL has been studied by the State Department since 2008 and was refused a permit to cross the border with Canada.

Read Between the Lines  Yesterday was sure surprising in the market.Every indicator told us the market was going lower to look for support. We expected a “dead cat bounce” after Tuesday’s dip, with an mid-day failure to 1130. Precious metals looked weak, even crude oil traders were looking for a shelter.

Marking Time  Asian markets traded lower overnight, taking their cue from the sell-off in U.S. markets yesterday. After we touted the strength of Australia’s economy yesterday, they released fourth quarter GDP overnight. It was tepid at plus 0.4%, half of what economists expected.

Too Far, Too Fast  The Reserve Bank of Australia bank held interest rates steady at 4.25% this morning. You may wonder; how can they do that? Australia exploits their natural resources. They are a major supplier of raw materials to China and India. China and India represent one-third of the world’s population and are export driven economies. Australia’s unemployment rate was recorded at 5.1% in January.

Turbulent Times  The week looks to be interesting in the markets. China’s Premier Wen Jiabao addressed the National People’s Congress this weekend and lowered China’s growth target this year to 7.5%. This is the goal since 2004. He told the attendees the government is targeting an inflation rate of 4% in 2012, the same as last year.

Eurozone Unemployment Up  Eurozone unemployment hit 10.7% in January. Greek and Spanish unemployment pushed the numbers to the worst level since the eurozone was formed in 1999. Greek unemployment sits at 23.3% and Spain comes in second worst at 19.9%.

Who is Buying Gold?  Gold and silver got pummeled yesterday. While you and others were selling who was buying? China. China is now the world’s largest producer of gold and silver. China does not allow gold to leave the country. Once it goes in, it doesn’t come back out. China encourages its citizens to buy gold and silver.

World Awash in Cash  The European Central Bank announced $699 billion dollars was sucked up by eurozone banks in the second Long-Term Refinancing Operation (LTRO). This follows the first round of $637 billion in the week before Christmas. The market has been on a roll ever since. In the interim the Bank of England (BOE) has increased the size of their quantitative easing program.

Marriage Made in Heaven  GM is up to old tricks again. After going bankrupt, taking money from the government, burning their bond holders and shedding all of their money losing units…they want to buy seven percent of Peugeot! Peugeot! Peugeot is a French automaker that builds some of the ugliest little cars you can find in the world since Yugo went out of business decades ago.

Cut Government?  G-20 Finance Ministers met this weekend in Mexico City. Observers hoped for commitments from participants to bolster funds at the International Monetary Fund (IMF). Bankers want to see more money available to throw at the next problem in Greece, Portugal, Spain or Italy.

Retail Sales Downer  Retail sales are disappointing as results come in from major retailers.Gap, Inc. reported a 40% drop in profits in the fourth quarter.Sales were $4.28 billion, down from $4.36 billion a year ago.Gap (GPS) operates Banana Republic, Gap, Old Navy and the Athleta chain.

If It Moves, Tax It  President Obama released his corporate tax plan this morning.It was billed as lowering rates and eliminating loop-holes.It didn’t.It lowers the top rate, but installs a one-of-a-kind global tax on corporations that do business overseas.So, Coca-Cola and Apple would have to pay the U.S. government on income derived from sales in China and Europe.

iPad Trademark  Apple (AAPL) is locked in a trademark dispute in China that has halted sales of the iPad, and threatens their launch of the third generation iPad that is rumored to hit the market next month. AAPL bought the rights to the iPad name in 2009 through an intermediary British company, IP Application Development Limited from Proview Taipei.

Bankrupt Since 20 B.C.  European Finance Ministers met into the early morning hours in Brussels before hammering out an agreement to extend another $172 billion dollars to Greece.European markets traded and closed lower on the session.On the other hand, U.S. markets are trading higher, chasing a mythical goal of 13,000 on the DJI.

Free Ice Cream  Today the House and Senate are slated to vote and will approve reduced Social Security contributions for the remainder of the year, extended unemployment benefits and continuation of Medicare payments to doctors.

Trust but Verify  The Greek bailout is moving along slower than Greece would like, but looks to be approved next week according to reports this morning.Eurozone Finance Ministers held a conference call yesterday.Luxembourg’s Prime Minister Jean-Claude Junker chairs the meetings.

What is the Trigger?  The market rallied yesterday AT EXACTLY 30-minutes before close.We were not on guard as we had passed the one-hour before close time without buying pressure.Was it the announcement that New Democracy leader Antonis Samaras would sign a document in support of the austerity measures, or something more sinister?

Money Everywhere  Retail sales grew at a tepid 0.4% rate last month.This was half the increase expected by economists.Business inventories continued to grow at 0.4%The numbers raised questions because “Core Retail Sales” reported a 0.7% increase.

Greek Cuts Approved  It might as well have been Nancy Pelosi telling the Greek parliament to vote for the austerity package.She famously told the U.S. House to pass health care legislation “so that you can find out what is in it” in the spring of 2010The problem is the Greek’s know what is in the legislation they passed last night.

30 Seconds to Midnight Greece’s truculence is on full display today.Workers are on strike.Politicians are resigning rather than vote for the austerity measures required to gain access to more funds.Greece’s largest police union said it would issue arrest warrants for international lenders for subverting democracy.

Crisis Averted  European Finance Ministers decided to go ahead with a meeting today in Brussels.The stated purpose is to consider Greek politician’s agreement to conditions so a new round of rescue funds can be advanced before Athens faces default on March 20.After all night negotiations were ended in the wee hours of the morning, no agreement was reached by representatives of the Greek government and leaders of the three political parties.

Day in Limbo  Today looks like another day in limbo.Investors and traders are watching the negotiations in Greece drag on.There were protests yesterday in Athens.The Greek Prime Minister is walking a tightrope to broker an agreement on three different fronts.The market is treating this as a done deal because failure could throw Europe into a financial crisis.

Statistical Manipulation  Federal Reserve Chairman Ben Bernanke is appearing before the Senate Banking Committee this morning.We have one eye on the hearing and one on our computer, watching for a statement to set off a market reaction.Sure to come up today is the “great” Non-Farm payroll report released last Friday before the market opened.

Punxsutawney Phil Predicts...Last Thursday, while we were all busy with the stock market, we missed the biggest predictor of weather and markets known to man, Punxsutawney Phil came out to see this shadow.With this simple act we now know to expect six more weeks of bad weather and stock market turbulence.

Entertaining Market  The National Bureau of Labor Statistics released Non-Farm payrolls numbers this morning.Employment grew by 243,000 in January, more than the 150,000 expected.This was the best report since last April, and the unemployment rate dropped to 8.3%, the lowest reading since February 2009

Vaporized Money  It is official now, the MF Global missing $1.2 billion dollars from customer accounts may have ‘Vaporized.’That was the report in the Wall Street Journal last weekend.This was the characterization made by ‘someone close’ to the investigation.It seems the last week of trading at MF Global was somewhat ‘chaotic.’

Facebook Rally  The market is off to the races this morning, led by the technology sector.We will call it the “Facebook” rally.The market is buzzing with the chance to buy in.I’ll pass.Expectations of a $10 billion offering have been lowered to only $5 billion.Morgan Stanley is running the lead on the underwriting.AAPL hit new all time highs yesterday and again this morning.

CBO Gloom & Doom  The Congressional Budget Office (CBO) estimates real GDP growth this year at 2% and the deficit will top $1.1 trillion.This represents 7% of the U.S. GDP.The CBO expects unemployment to stay above eight percent for the remainder of this year AND all of next year.

Slowing U.S. Economy  Friday morning the Bureau of Economic Analysis released their preliminary number for fourth quarter U.S. GDP.They reported the GDP grew at 2.8%, much better than the 1.8% reported in December.The market expected 3.0% growth but again, the reading was the best reading we have had since last March (3.1%).

Europe's Final Act  Ford (F) reported nice sales growth this morning, but missed on earnings. Proctor & Gamble (PG) missed on the top line, but earnings beat estimates. What’s the market to do? It looks like we are going to drift lower as we wait for the latest Greek drama to play out.

Hair Trigger Ben  Yesterday the Federal Open Market Committee concluded their two-day meeting.The market was proceeding as we expected; soft and looking to settle into a slow descent to consolidate the gains from the last four weeks, but the Bernank couldn’t leave well enough alone.

A Box of Chocolates  I had the pleasure of watching the President’s State of the Union address last night.The night was full of high drama.Not really, I just always wanted to say that.I was prepared to suffer through a populist rant that would continue his campaign for re-election.I saw the results of an online betting service that placed odds on the favorite phrase the President would use.

Destroying the Dollar  Precious metals have been on a nice run higher this year.We called gold our Trade of the Year on Dec. 29th when the GLD etf closed at $150.34.GLD is up 7.9% since our call.We saw heavy selling in December, attributable to hedge funds liquidating positions to raise money to cover redemptions. Why is gold going back up?

Turbulence Ahead  The market is watching Europe…again.Bondholders made their “last and best” offer to Greece over the weekend to rework their existing debt.The proposal is off to the eurozone finance ministers for their blessing.This is like sending a contract to a lawyer.Does anyone believe they won’t suggest some changes?

Low of the Year  The market is watching as Greece negotiates with creditors today.G20 Deputies meet on Monday to work on agenda items for the meeting in Mexico this summer.The World Economic Forum is being held next week in Davos, Switzerland.The Federal Reserve Open Market Committee (FOMC) meets next Tuesday and Wednesday.

Hypothecation  is when a borrower pledges collateral to secure a debt.The borrower retains ownership of the collateral, but it is “hypothetically” controlled by the creditor who has the right to seize possession if the borrower defaults.

Need More Money  The market is optimistic more money will soon be available to pump into the eurozone monetary system.The International Monetary Fund announced they would seek to raise $600 billion dollars in additional capital.Five hundred billion dollars would be for struggling eurozone countries with a $100 billion dollars as a “protection buffer.”

Optimism Reigns  Spain was able to borrow money much cheaper this morning than they did in December.Spain sold 12-month and 18-month notes at 2.049% and 2.399% respectively.These rates were almost half of their rates a month ago.This comes after Spain’s credit rating was downgraded two notches on Friday.

I Have a Dream  It is all in the headlines. S&P to cut eurozone credit ratings. This knocked the U.S. market down at open this morning. There are denials and “no comments” but the stories are probably accurate. France will lose its AAA rating and maybe Austria. The Netherlands and Germany look safe.

ECB Put  Italy and Spain sold debt this morning at lower than expect interest rates.Spain planned on selling $6.35 billion dollars in bonds, but doubled the issue because of demand.Italy only had to pay 2.735% on twelve month bonds, down sharply from the almost 6% yield at their last auction in mid-December.Italy will offer another $6 billion tomorrow with longer terms.

Change is in the Air  There have been rumors around the market the White House was working on a “grand refinancing” plan to put money in voter’s pockets this spring.The idea is to allow ANYONE who is current on their mortgage payments for the last six months to refinance at today’s lower interest rates.

Rare Air  Stocks are off to a rally this morning.Why?Does anybody know?Just go along for the ride.Yesterday we were reminded of the continuing soap opera of Merkel and Sarkozy as they advance their prescription to solve the euro’s problems.The value of the euro fell.

They're Back  The market is hesitant this morning.Merkel and Sarkozy met in Berlin, and the world waits for the latest twist and turn. The market has been on a good run while the politicians have been on the Christmas and New Year’s holiday…but good times can’t last forever.

Sanction Politics  The market received good news this morning with Non-Farm payrolls increasing 200,000 in December and the Unemployment rate dropping to 8.5%.The private sector added 212,000 jobs with a slight contraction in government employment.You would think the market would have shot higher on better employment numbers, you would be wrong.

Bull by the Tail  Tuesday’s market was a great surprise to start the year. Pundits are quick to reference the first few days of trading in a new year setting the tone for the rest of the year. We don’t know about that, but the price action told us the market was ready to break higher and rally.

UniCredit on the Ropes  Italy’s UniCredit bank tried to sell shares this morning to raise money.The bank offered $9.75 billion dollars worth of stock for sale at a 69% discount to Tuesday’s closing price.The only buyers were other sponsoring banks, purchasing 24% of the offering.UniCredit’s stock plummeted 9.9% on the stock market and trading was suspended.

Relevancy  The markets are up sharply on a good ISM Manufacturing Index reading this morning.We should have seen it coming.The markets have acted better since Christmas because…the politicians are on vacation!

Adjust or Lose  The last day of a tough year is upon us.I will be glad to close the books on 2011, as it has been our toughest year.After beating the market averages every year for the last three, we took it on the chin this year.

2012 Trade of the Year  What happened to gold and silver?How in the heck did the best investment for the last eleven years turn into the worst investment in the last four months?Well not exactly the worst investment, you could have been in NFLX, RIMM or MCP for some real pain.

Downward Drift  Italy sold $11.7 billion dollars in six-month notes this morning at an average interest yield of “only” 3.25%, down from the record yield of 6.5% they paid last month.Italy also sold $2.2 billion in two-year bonds, yielding 4.85% compared to 7.81% last month.They have another debt sale tomorrow of three and ten-year debt.

Home Alone  Italy is scheduled to sell $11 billion dollars worth of debt on Thursday in three and ten year bonds.Interest rates on their existing debt edged higher this morning, to 7.13% on ten-year bonds.For comparison, German ten-year bunds were priced to yield 1.92%.

One Good Man  The Senate approved lower Social Security contributions and extended unemployment benefits this morning by Unanimous Consent.The House of Representatives followed shortly after with a nearly empty chamber.All we needed was one good man.

Santa Claus Rally?  Is this a Santa Claus rally, or are we just melting up and trading in the same range we have been in for the last five months?Yes…and Yes.But in the next couple of days that may all be thrown out with last month’s bathwater.

Nuclear-Quantity Medicine  The European Central Bank (ECB) opened the spigots this morning on cheap euros, and European banks gobbled up $637 billion dollars on new three-year terms.The amount exceeded all estimates, with most traders expecting $400 billion dollars in demand.This was the largest one day action in the market by the ECB in its history.

Social Security Unfix  The House of Representatives is voting this morning to disapprove the Senate version to extend a payroll tax cut into 2012. Like Paul Harvey used to say “Now for the Rest of the Story.” The House passed a one-year extension of the 2% lower Social Security contribution last Saturday.

Eurozone Manuvering  Eurozone Finance Ministers had a three-hour conference call this morning.They want members to pledge an aggregate $260 billion dollars to the International Monetary Fund (IMF).This money would be earmarked for eurozone countries that were under credit duress.

Old Rivalries Recriminations are in the air, as the eurozone struggles to spin the proposed fiscal integration.Fitch has placed nine European countries on “credit watch negative” but affirmed Frances “AAA” rating…for now.British Prime Minister David Cameron cast the lone dissenting vote against fiscal integration last weekend.

Dead End Road  The market is struggling with the aftermath of the European Summit.What are the answers?It seems we are all believers now.We finally believe German Chancellor Angela Merkel when she says the European Central Bank should not print money.This means the eurozone countries need to cut budgets and raise taxes, the bankers are not going to save them with inflation and cheap interest rates.

Rally In the Cards  We have a short letter today, as Wednesday is one of our busiest days in the market.We do all of our adjustments on our covered calls and it is easy to get caught up in the market fluctuations.The market was down sharply this morning after the overnight futures market indicated a positive open.Futures changed to negative the closer we got to time for the markets to open.

GLD-SLV Ready, Set, Go  Precious metals didn’t like the answers out of Brussels.What!The ECB is not going to print money?There is more to be written on this topic…the debt crisis is not over yet and before it is, we believe the European Central Bank will have to engage in quantitative easing.They will end where all central banks end, the buyer of last resort for debt that no one wants.

Yo-Yo Market  Friday’s market signaled “Happy Days” are here again.Today’s market resembles a drunk that woke up the morning, asking “What did I do?”European leaders congratulated themselves on Friday.Plans were made to meet after the first of the year to start negotiating a treaty for eurozone countries to sign.

Eurozone Agreement, Maybe  European Leaders met last night and today in Brussels, Belgium.Thursday night’s negotiations went late in the night to gain an agreement from all 17 nations in the eurozone monetary union plus six of the EU countries that do not use the Euro.This morning three of the hold out countries agreed in principal, leaving Britain as the only holdout.

Time to be Cautious  The eurozone debt crisis has been making headlines for 22 months.In all that time, in all the rescues, in all the proposals; have the politicians lived up to the rhetoric and actually stopped the crisis in its tracks?The answer is why we are negative on the market right now.

Maastricht Treaty  The European Union is governed by the Maastricht Treaty. It was signed on February 7, 1992 and then ratified by the signatory countries over the next sixteen months. The Maastricht Treaty set in motion the “three pillars” of the Union. The first pillar addressed Community; the European Commission and the European Parliament.

Eurozone Credit Watch Monday traded as we expected, except for the Financial Times report that six eurozone countries with AAA ratings, including France and Germany, would be put on “credit watch negative” by Standard and Poor’s.

Week's Landscape  We are sending out Monday’s letter Sunday night to help you for the week. Before the Asian markets open tonight, let’s look at what the next week holds. Tomorrow we get British Services PMI and European Retail Sales.

Fed's Dollar Velocity Play  Inflation is not caused by the amount of money in the market place.Inflation is caused by the velocity of money.What did the Federal Reserve do on Wednesday?They increased the velocity of money.European credit markets were slowing as banks didn’t know who they could trust and the European Central Bank was faced with a potential shortage of dollars.

Fed Meddling  If give you two good D-cell batteries for two bad batteries plus a nickel, how much are my two good batteries worth?Since the dead batteries are worthless, didn’t I just sell my new batteries for a nickel?Let’s see, the Federal Reserve just agreed to loan the ECB dollars for 0.58% interest (a 58 cents a year on $100 bucks) in their “dollar liquidity swap” program.

German Domination  Soft power is best practiced by those with a long term view.American’s are too impatient.We want it all solved…now.When you take a longer view, you see that sometimes history seems to be on a merry-go-round.If you miss it this time, just wait, it will come back around to you.I read an interesting article yesterday courtesy of subscriber George O.

Silver Surge Ahead  The market is off to a rally this morning on good news from retailers over the weekend. We have more promises out of the eurozone of another “new plan” to solve the fiscal problems of countries under pressure in the bond markets.

Eurozone Changes Coming  Eurozone finance ministers are meeting in Brussels next Tuesday and Wednesday. The pressure is building to take some decisive action.European equity markets have been down for the last seven weeks.While we enjoyed Thanksgiving dinner yesterday, interest rates for eurozone countries edged higher.

Bund Auction Fail  Earlier this morning, Germany held a bond auction…and nobody came.Get ready America…the contagion is coming.Germany is the eurozone’s strongest economy.Germany had $8.1 billion in 10-year bunds for sale this morning.The government offered 2% interest on the bunds, but found takers for just over half of the offering.

IMF & EFSF Grand Bargain  Mario Draghi, the new President of the European Central Bank, asked bankers at a conference in Frankfurt last week about the European Financial Stability Facility (EFSF) “…where is the implementation?”He wants to know why everyone is looking for the ECB to backstop the eurozone bond market.What happened to the EFSF borrowing $800 billion to lever up so they would have lots of dry powder?

Interest Rate Blowout  Protesters were out in Athens, Greece and Milan, Italy yesterday.Both countries have new governments, both need to pass more budget cuts, both have lost the confidence of bond buyers.Spain and France are on the cusp of joining the club for austerity.

German ECB Power Play  Germany and France are at odds over the European Central Bank’s (ECB) purchases of sovereign debt.Germany does not want the ECB to buy sovereign bonds to force interest rates down either at issue or in the secondary market.France does.Germany wants the ECB to keep a clean balance sheet.France wants the ECB to be the “buyer of last resort.”

ECB; Sterile or QE?  Italy’s bond interest rates moved higher in the secondary market yesterday to 7.01% on ten-year bonds.This came after the troubled country sold five year bonds at 6.29% on Monday.Spain’s sovereign interest rates rose to 6.29% and French ten-year bond interest rates moved higher to 3.59%.

Range Bound, Rolling Over  Turn out the lights, the party’s over.The market is sitting on the head of a needle, which way does it fall?On one hand over 70% companies have met or beat earnings estimates in the just completed quarter.On the other hand, the eurozone is falling apart.Interest rates are firing higher across the board.The contagion is spreading, and it is becoming obvious the politicians cannot keep up with the changing landscape.

Keystone XL Delayed  Last Thursday, Obama’s State Department extended the project review process on the Keystone XL pipeline project until after the presidential elections.A decision was due by the end of the year, but politics dictated a delay.The Keystone XL pipeline was designed to transport up to 700,000 barrels of oil per day from Canada’s tar sands mining area to refineries in Texas.It has been under review since 2008.

236 Years of Honor  Today is Veteran's Day in the United States. Yesterday was the 236thbirthday of the founding of the United States Marine Corp.I talked to an old friend this morning who left his leg in Vietnam, and thanked him for his service to our country.He attended lunch in Kansas City yesterday with other Marines.I thanked him for his service, and suggested he puff out his chest today.

Eurozone Interest Rates Higher  Italian interest rates spiked yesterday to over 7%.The market went into hyperventilation mode, selling everything except mom’s kitchen utensils.We had the biggest one day loss on the DJI since August.Why?Because the talking heads say 7% marks the point of unaffordability for nations to pay off their debt.

Ten Cannots  The “Ten Cannots” were written by William John Henry Boetcker around 1916.I am in good company in mistaken these as from Lincoln.Evidently the National Park Service did in the early 1990’s as did Ronald Reagan.The Gipper cited the “Ten Cannots” in his speech to the Republican National Convention in 1992.

Mom's White Carpet  Some people can’t wait to throw a wrench in a well oiled machine.Some kids can’t wait to take off their muddy shoes before running across mom’s white carpet.Have we tired of the Papandreou and Berlusconi musical?Earlier this year, Berlusconi had to cancel his CD release of love songs because of the mounting credit problems in Italy.

Bond Buyers Cautious  Eurozone bond prices are climbing this morning.Italian 10-years crossed 6.66%...a bad sign and the highest since 1997.Prime Minister Berlusconi is under fire with rumors flying he will resign.Leaders of his PDL party are urging him to resign or face crumbling support from his center-right coalition.

Runaway Train  Jon Corzine resigned from MF Global this morning and hired a criminal attorney.The FBI wants to look at the books for evidence client funds were used to cover losses from the proprietary trading desk.Here is a guy that left Goldman Sachs under less than happy circumstances, served as a U.S. Senator, ran the state of New Jersey into the ground, and now has blown up a quiet brokerage company with his grand ideas of leverage and a “big bet” on European debt.

Crazy Like a Fox  The European Central Bank (ECB) surprised the market this morning with an interest rate cut of 0.25% to 1.25%.President Mario Draghi met the press for the first time after the announcement.He replaced Jean-Claude Trichet on Tuesday.Draghi told reporters the rate cut decision was unanimous by the ECB’s 23 member governing council.

Greek Soap Opera  Greece was at the center of traders and investor’s minds yesterday.Now I understand why mother and grandmother liked soap operas.They keep you riveted with the daily twists and turns.The drama.I never did, and still don’t enjoy watching contrived stories designed to suck in my interest and bleed away the time I have to spend on productive activities.

Groundhog Day  The market is lower today thanks to the soap opera that is called the eurozone.Greek Prime Minister Papandreou announced the country would hold a referendum vote on the rescue plan agreed to in Brussels last week.He said he needed greater political support to implement the austerity plans called for by eurozone leaders.It is as if Papandreou awoke from a slumber to utter this nonsense before he went back into his den for the winter.

Outside Month  You may have heard the term “outside day.”Today we conclude an “outside month.”What is the importance of this chart pattern?An outside day occurs when a trading day’s high is higher than the previous day and the day’s low is lower than the previous day.Many times in our SwingTrader, we will sell a stock if the price trades lower than the previous day’s low.

Winners and Losers  The eurozone ‘plan’ has restored confidence in the markets and we had a fantastic rally yesterday.Actually, we had a serious case of short covering yesterday by traders that bet on the end of the world, and lost.

Bumble in Brussels  European leaders were up most of the night solving the riddle of how to solve the sovereign debt crisis in the eurozone.I wrote to our premium subscribers last night:

All About Europe  The market today is all about Europe.This act has been going on so long, everyone just wants relief.Just before the market opened this morning, the German parliament approved the enhanced EFSF “plan.”Futures shot up.

No Good Deed Unpaid  Italy owes $2.6 trillion dollars in sovereign debt, which is 120% of the country’s GDP.They have to roll over 83 billion euros worth of bonds in the next year and refund a total of 600 billion euro in maturing debt over the next three years.Italy is the third most indebted country in the world.Sunday, eurozone leaders asked Prime Minister Silvio Berlusconi to enact an emergency growth plan that includes some austerity measures.

Banquet of Consequences  A couple of years ago, I loaned a friend (Bill) $1,000,000.Bill was in trouble with the IRS and had a piece of property that was free and clear.He offered to sell it to me for the million, with the promise to sell it at a profit within few months.Bill assured me this was safe as the real estate was worth much more than a million dollars.As a backup to the sale, he would buy it back from me within a year, with 6% interest, if he couldn’t get it sold.

Do No Harm  We see the problem with sovereign debt, how do countries, or states, escape from the debts that threaten to bankrupt them.The answer is the same every time.Quit spending.The difficulty is convincing politicians to go against their self interest.The electorate wants more benefits, government employees want higher wages, and lower level governments want revenue sharing.

Who is Next?  The market looks weak this morning on reports of disagreement on how to use the expanded EFSF to prop up banks and countries that are under pressure.French President Sarkozy flew to Germany yesterday to meet with Angela Merkel and the IMF.After the meeting, all were grim faced and no statement was made to the press.

Fooling Some People  Nicolas Sarkozy, President of France, is flying to Germany today to meet with Angela Merkel (German Chancellor) and Jean-Claude Trichet (outgoing President of the European Central Bank).The “deal” he thinks they had to prop up banks with the new enhanced EFSF is falling apart.

Precious Metals Pair Trade  Precious metals have been beaten like the neighbor’s dog, and given us an opportunity.Silver is down almost 40% from its high in the spring.Gold is 13% off its high at the beginning of September.The kicker is, platinum is off 20%.Why is that important to know?Because platinum is 30 times scarcer than gold, plus we need it.Platinum is used in catalytic converters. About half of the world’s production goes into the exhaust systems for new cars and and developing countries are buying cars.

Broken Promises  The G20 Finance Ministers concluded their meeting in Paris Saturday with promises to make sure European banks had adequate capital and access to funds.The EFSF now has 440 billion euros in its arsenal to buy dodgy debt and can intervene in markets to buy sovereign debt without the issuing country’s request.

A Plan to Have a Plan  Slovakia passed the enhanced European Financial Stability Facility (EFSF) on Thursday.It cost Prime Minister Iveta Radicova her job.When the first vote failed, it was seen as a loss of confidence in her administration.Slovak President Ivan Gasparavic plans to dismiss her today and will begin talks with political parties next week to form a new cabinet.

No Problems Here  Slovakia approved the expanded European Financial Stability Facility (EFSF) and the market fell.Good news, bad news?We are decidedly bullish for now.The market touched 1220 yesterday on the S&P 500.This was the first strong resistance, but we don’t think the market is ready to turn lower yet.That just seems too perfect and markets are not perfect.The play seemed to invite shorts to jump in and force the market down.

Don't Worry, Be Happy  Slovakia voted down the enhanced European Financial Stability Facility (EFSF) yesterday.The markets hardly flinched.We didn’t get final word on the defeat until after U.S. markets closed.But it didn’t matter.

The Hidden Hand  Belgium bought the consumer lending division of Dexia bank for $5.4 billion.Wait a minute…didn’t Moody’s put Belgium on credit watch Friday?I guess another $5.4 billion won’t matter.Belgium, France and Luxembourg have agreed to guarantee up to $120 billion dollars in bank borrowing and bond sales for the next ten years.Belgium’s share is 61%, guess another $73.2 billion doesn’t matter, even if it represents 15% of the country’s GDP.

So Much Hope, So Little News  The market is full of enthusiasm this morning because French Prime Minister Nicolas Sarkozy and German Chancellor Angela Merkel met yesterday to discuss recapitalizing eurozone banks.The discussions assume Greece sovereign debt is worth less than the 79% agreed to in July or an outright Greek default.So what is Greek debt worth?50% of face value, or less?

Rate Cut Friday  After setting a new 52-week low, the market has been on a good run this week.It is no surprise the market is giving some of it back this morning.Traders are always anxious to take profits off the table on Fridays.Who knows what can happen over the weekend?

Going Flat for Safety  Going into the worst of August and September we were long in precious metals in our premium service portfolios.The idea was one of owning “non-correlated” assets.We viewed precious metals as rising or falling independently of the equity markets.We all know how that ended.We ignored the old saying of traders “Throwing the Baby out with the Bathwater.”

Occupy Wall Street  It is not even spring and the kids are restless.Not really, but the community organizers are.And they are creating an “attractive nuisance” in Manhattan.You may not have heard about the protesters that are camping out in Lower Manhattan.They claim to represent the 99% of Americans that “are being trampled on by the financial elite.”

Economic Stupidity  The market opened lower this morning,bottomed then turned back higher…call it "Turn around Tuesday." Federal Reserve Chairman Ben Bernanke appeared before the Joint Economic Committee this morning and gave us a few tidbits.He said the economic recovery is “close to faltering…

Promises...Promises    Greece’s Finance Minister Evangelos Venizelos released a statement yesterday that 2012’s budget would not meet the targets agreed to last year with the European Commission and International Monetary Fund.Eurozone Finance Ministers are meeting in Luxemburg this afternoon.

It's Gonna Get Worse  The Economic Cycle Research Institute ECRI released a report last week to their clients forecasting a recession for the U.S. Lakshman Achuthan, the ECRI’s managing director, said “It’s either just begun, or it’s right in front of us.But at this point that’s a detail.The critical news is there’s no turning back.We are going to have a new recession.”

Bulls and Bears in a Scrum  The market spiked higher this morning on good news in the Weekly Jobless Claims numbers.The market expected 420 thousand but was surprised with a drop to only 391 thousand new claims last week.Continuing claims increased slightly.GDP increased at a 1.3% rate, better than the expected 1.2%The GDP price index was up at 2.5% indicating inflation pressure in the U.S. economy.Economists expected a 2.4% number which was the same as last month.

What Does Dr. Copper Say?  Dr. Copper, the commodity with a Ph.D. in economics, is telling us all is not well.Cooper has fallen from $4.22 to $3.25 per pound in the last month. That is 23%, and most of it has come in the last nine trading sessions.Copper has tried to rally this week but looks to have succumbed to selling pressure.

Eurozone Fail Possible  The market is rallying like there is not a care in the world.What?Slovenia is set to vote on expanding the size of the European Financial Stability Facility (EFSF) this morning.Finland votes tomorrow and Germany and Austria later in the week.Greece is voting on an increase in their property tax today.The European Commission wants to upgrade the EFSF from its present 440 billion euro plan to support only Greece, Ireland and Portugal.

Optimistic Monday  We are greeted by a rally in the market today after some tentativeness at open.Traders were encouraged by the G-20 Finance Ministers and IMF meeting this weekend in Washington, D.C.Inspectors are going to return to Greece this week.They will confirm progress by Greece to meet requirements to receive an 8 billion euro tranche of funding in the next two weeks.

Everyone Knows  We have finished the week, and if you’re like me…you are worn out.We would have to look back to fall of 2008 to find a worst week for stock markets.

Huge Rally Ahead?  We breathed a sigh of relief yesterday as the S&P bounced off 1114 and turned higher to close at 1129.Asian markets opened last night, and were not convinced, they headed lower.European markets opened and pushed lower.Our futures markets wanted to continue the rally from Thursday, but were eventually overcome by the “feed in” from overseas.

Growing Dead Plants  Today is ugly.I read one precious metals blog whose title was “A Bad Day to Quit Sniffing Glue!”If you can’t laugh at gallows humor, what does it take?The market fell out of bed yesterday afternoon.Everyone looks at the Federal Reserve Statement for explanations.There aren’t any.If you parse the words, we see an admission “that economic recovery remains slow.”

Chasing Yield  Safe haven stocks have done very well in the last few weeks as investors moved from riskier small caps to larger stable companies to weather the storm. Something else has happened. Fixed Term investors have finally thrown up their hands and decided to buy large-cap dividend paying stocks. A five year treasury bond pays 0.87% interest; why not buy a nice safe utility stock that pays 3%?

Twiddle-Dee, Twiddle-Dumb  The market sighed in relief yesterday with two hours remaining in the trading day. Greek Finance Minister Evangelos Venizelos said the country held “productive and substantive” talks with the troika of the ECB, IMF and European Commission.Greece needs the next tranche of 8 billion euros by the beginning of October, or state paychecks and pensions will start bouncing.It appears there was a little miss-direction in the statement.

Politics, Debts & Taxes  President Obama had a press conference this morning to unveil his proposal to pay for the “jobs plan” he released last week.Key to the “balanced approach” the president presented was the “Buffett tax” to raise taxes on “millionaires and billionaires” so they would pay their “fair share.”I have placed the key words that test well with focus groups in quotes for you.

Bankers, Gamblers and Investors  One of the part time jobs I had in college was selling advertising for a small weekly shopper.I didn’t last long as the sales commissions were too meager to afford fifty-cent per gallon gasoline.But, I learned one thing.Printers could not buy green ink.Thirty-five years ago, the government was suspicious of anyone buying quantities of green ink, they might decide to make some money!

Euro Hot Water  The situation in Europe is starting to boil.Will the Frog jump out, or die in the hot water?For the last eighteen months we have been covering the eurozone credit mess.Lately, it seems that is all we write about.Here we go again.The market is acting like nothing is wrong.Don’t buy into it.There is just an absence of news headlines to scare the be-jesus out of traders and light up the computer trading programs.

Drachma Drama  The market opened flat this morning, but regained its footing on a hope and a prayer.Retail sales for August were flat rather than showing even the slightest growth analysts were expecting.This morning we thought anything less than a glowing retail sales would throw the market down.How many times had we heard about good retail sales in the last month?

2008 Redux The market rallied yesterday in the last hour when the Financial Times reported Italy was in negotiations with China to buy sovereign debt.One of my seeming insurmountable problems as an investor is to get past being a contrarian.How was this interesting piece of news to be believed when it was 9 p.m. in Rome and past midnight in Beijing?

Eurozone Whack-A-Mole  Interest rates on Greek debt are at crisis levels as bureaucrats play whack-a-mole with the eurozone monetary union.One year yields are quoted at 98% and two-years at 55%.Credit default swaps (CDS) pricing reflects a 91% chance of default in the next five years.

Ecuador Oil and China  The Energy Information Agency (EIA) estimates Ecuador’s oil production and crude oil exports at 285,000 barrels of crude oil in 2010. As a member of OPEC, Ecuador is one of Latin America’s largest exporters of crude oil.

Housing Perfect Storm  Fixed mortgage rates have fallen to the lowest levels since 1951, according to Freddie Mac.The average rate for a 30-year mortgage is quoted at 4.12% and 15-year rates are at 3.33%. Ten-year Treasury bond interest rates are at an all time low of 1.99%.Mortgage rates track the ten-year note interest rate, as most mortgages close out within that time frame.

Legal Eurozone Rescues  Germany’s Constitutional Court ruled early this morning that rescues extended to Greece, Ireland and Portugal by Germany and the other eurozone countries are not illegal. Under the European Union Maastricht Treaty, that governs the eurozone monetary union, countries are not allowed to assume other country’s debts. German law requires parliamentary approval of financial matters.

Middle East Noose Tightens  The Arab Spring we have watched develop in the last six months is morphing into a realignment of the Middle East that threatens stability for the region.Long time allies Turkey and Israel are now drifting apart.The U.N. released their report on the Gaza flotilla debacle last year.The U.N. found that the Israeli blockade of Gaza was legal, but they may have used unreasonable force in stopping the Turkish ships.

German Court to Rule on Eurozone Rescues  The German Federal Constitutional Court is set to rule on the country’s participation in the eurozone rescue efforts.Obama is going to address a joint session of congress on Thursday.On the later, we expect an “infrastructure construction bank” and more spending.Obama is not going to change, when you are a Keynesian, everything requires more government spending.

A Tough Day  The U.S. Justice Department filed suit this morning to block AT&T’s deal to buy T-Mobile for $39 billion dollar deal.A Justice Department spokesman said the merger would reduce competition and result in higher prices, fewer choices and lower quality for consumers.AT&T said they would seek an expedited hearing so the “enormous benefits of the merger can be fully reviewed…the government has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter.”

China Questions  Something funny is going on in China.The Yuan has been appreciating faster than in the past, their stock market is not performing as well as other Asian markets, and another interest rate hike looks likely at the end of September.The recent flurry of accounting problems at Chinese public companies may be catching up with the hot market.

BAC Problems  News out this morning that Bank of America (BAC) is selling 13.1 billion shares of China Construction Bank (CCB) for $8.3 billion in cash.This represents about half of BAC’s shares in CCB.This comes on top of the Berkshire Hathaway investment in BAC of $5 billion last week.Why does BAC need all this money?Investors and traders took the company’s stock to the woodshed last week before Buffett put money up on a “vote of confidence.”

Buffett's Billions  Yesterday, just before the market opened, Berkshire Hathaway (BRK) invested $5 billion dollars in Bank of America (BAC).Warren Buffett said, “Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it.I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That’s what customers want, and that’s the company’s strategy.”The market price of BAC jumped 22% at open as this was seen as a “vote of confidence” in BAC.

Kick Em When They R Down  There are some people in business that want to win.There are some people in business that will do anything to win.There are some people in business that after winning, kick you when you are down.Put the CME in this group.Gold ran to a record high over $1900 per ounce on Monday.

Living Like Greeks  Yesterday we proposed the bottom may have been set at 1101 to 1120 on the S&P 500.Please don’t take confidence from this.After a bit of a false start this morning, the market is following through on yesterday’s rally and looks to close higher today.We couldn’t script it better.What we don’t know is what happens the closer we get to 1204 on the S&P index.

Contrarian Alert  Has the last month left you pulling your hair out?U.S. GDP growth has slowed to where we must have decimal points on the readings to make sure they are positive.Inflation popped in the last CPI.Some companies are lowering their forecasts.Everybody is talking about the world going into a recession.Debbie Downer couldn’t make it sound any worse!

Transports Leading Indicator  Two news items are influencing the market today.Libya and the eurozone.The rebels in Libya captured one of Muammar Al Qaddafi’s sons Sunday and he is on the run.Rumors are circulating that he may have fled to Algeria.Rebels now hold much of Tripoli and claim to have captured his other two sons today.Qaddafi appeared on television Sunday and claimed he was in Tripoli and would “stay until the end.”It may be closer than many thought a few days ago.

Death Cross on the S   The market continues to fear problems getting worse in Europe. We also have to digest an announcement from Hewlett Packard (HPQ) that the company was exiting the personal computer business and discontinuing their struggling TouchPad. The stock dropped this morning like a hail stone from 40,000 ft

Our Crowded Hour  Initial jobless claims came out this morning higher than expected, continuing claims were also higher. Existing home sales were less than expected, but the economic report that grabbed everyone’s attention was the CPI. Consumer Prices jumped 0.5% last month. Economists expected a 0.2% increase. The Philadelphia Manufacturing Index dropped like a hot rock to minus 30.7 Economists expected an anemic but positive 3.9 number.

U.S. Days of Rage  Dad stopped by this morning for coffee, as he does every day.At 91 years old he walks and drives slower than he used to, but gets around and is still sharp as a tack.Our conversation turned to my niece who is touring Europe this week.She told her parents about visiting one of the concentration camps in Germany yesterday.

To Infinity and Beyond  Industrial Production numbers came out this morning just before the market opened.The number was stronger than expected at a 0.9% increase compared to expectations of 0.5%.One caveat…the number includes electrical production.How hot has it been?Over most of the U.S.?Beware of numbers that can be misleading.Market futures were off early this morning over GDP numbers coming out of the Eurozone.

Buyers Euphoria  The New York Empire State Manufacturing Index came out this morning.It was terrible at minus 7.70.Analysts expected a minus 0.40 reading after a minus 3.80 reading last month.What does it mean?Verification of the terrible growth numbers we have been seeing.Manufacturing activity is not picking up, it is sliding backwards.Good news just keeps coming.

Blood in the Water  Retail sales numbers came out this morning.The Commerce Department reported retailer sales climbed 0.5% in July, in line with expectations.This number showed continuing strength in the retail sector and spending by consumers.Last week’s reading on Consumer Sentiment came out and they were the worst since May 1980.The Michigan Consumer Sentiment index came in at 54.6 compared to July’s reading of 63.7

Gold Margin Hike  The CME Group raised margin requirements 22.2% for gold contracts on the Commodity Mercantile Exchange (COMEX) to take effect beginning today.This has caused the gold market to sell off, as traders must close contracts if they cannot meet the new maintenance margin requirements.Will this be a repeat of the actions taken by COMEX against the silver market in May?

Arab Spring-American Fall? Riots continued in Britain last night. Over 16,000 police were called out in London’s poor neighborhoods, so trouble moved to other areas. Reuter’s reports street thugs in running battles with police in Manchester and Liverpool. The government has authorized police use of water cannons and baton “rounds.” These are cylinder shaped projectiles that do not penetrate the skin. They can be made of foam, rubber, or wood. The latter have the longest range and are the most potent.

Reflex Rally?  London is besieged by rioting for the last three evenings following the shooting of Mark Duggan during an arrest.There was a peaceful protest in the Tottenham neighborhood Saturday night.The crowd became unruly.This gave teenagers and other near-do-wells an excuse to riot, burn and vandalize businesses and vehicles.Over 370 people have been arrested, with more than 16,000 police now called out to control the evening crowds.

Day of Reckoning  The morning arrived, even though I didn’t look forward to it.Market opening today seemed like an appointment with destiny.The old west quip that “Nothing concentrates the mind like a public hanging” came to mind over the weekend.What caused such foreboding feelings?

The Jones Family  We got a great number for the Non-Farm payroll report this morning.Asian markets had sold off overnight, and European markets were trading lower.Futures for the U.S. market were slightly negative but started shifting to positive as we approached the release of the Payroll numbers.The U.S. economy added 117 thousand jobs in July compared to only 46 thousand in June.This was enough to drop the unemployment rate to 9.1% from 9.2%.

European Flu  The U.S. market has caught the European Flu.This morning, Britain’s FTSE 100 index closed down 3.43% at 5393.14, its lowest level since last September 10.France’s CAC 40 closed down 3.9%European markets dropped after European Commission president Jose Manuel Barroso said the eurozone credit crisis is threatening to engulf Spain and Italy.

Reversal Day?  The market looks like somebody threw a bucket of red paint all over my computer screen.What do we do…buy stocks.We are busy in the market today.Our Long-Term subscribers had sold stocks for the last five weeks…and now it is time to buy.We have bought nine positions this week.

While You Were Sleeping  The House of Representatives passed the debt ceiling bill last night, and the Senate is expected to take it up today.This news has kept the headlines full during the ups and downs of the negotiations.It is easy to become fixated on a “big event” like the debt ceiling.It becomes THE STORY on all the business channels and crowds out coverage of other events.

Market Up, Market Down  Congress and the President negotiated a tentative deal to raise the debt ceiling late Sunday.The markets reacted with the predicted gap up at open this morning.You could almost hear “Happy Days are here Again.”The music stopped when the Manufacturing ISM numbers came out thirty minutes after the market opened.Economists expected a reading of 54.8, which was slightly less than the 55.3 reading of June.The Institute of Supply Management estimated manufacturing activity with a reading of 50.9 in July.Any reading above 50 shows growth, below 50 is contraction.This number was the worse number since July 2009.August 2009 broke above 50 and we have shown good growth numbers since then…not anymore.

Checkmate or Draw?  Second quarter GDP numbers came out this morning.The U.S. economy grew at a sick 1.3% annualized rate, this after the first quarter’s 0.4%, and fourth quarter’s 2.3%.Don't think the numbers are improving.There is a disturbing trend of the Commerce Department reporting better numbers than real, the revising them.First quarter growth was originally reported at 1.9% and 2010’s fourth quarter was revised down from an original 3.1%Count on the gang that can’t shoot straight!We wonder what the second quarter’s real numbers were?

The Tallest Midget  The market is up today on hopes the House will pass a bill, send it to the Senate and then onto the President for his signature.The House is going to vote on Boehner’s new plan that reduces the deficit by $915 billion over the next 10-years and raises the debt ceiling $900 billion.House Leader Boehner drew up this plan rather than take the Penny Plan out of committee.

The Penny Plan  The drama in Washington has taken some twists and turns in the last 24 hours, and not in the conservative’s favor.The progressive members of congress have a natural ally in most of the mainstream media that are adept at placing all the blame on the House conservatives, or specifically the “Tea Party.”

Home Sales & Construction  The Case-Shiller Home Price index was released this morning.It showed the second straight month of softening prices in the housing market.Home prices in 20 cities fell 4.5% in the year ended in May.Detroit, Las Vegas and Tampa were down over April and Phoenix was unchanged.April’s numbers were revised to show a 4.2% year-over-year decline.

Will the Sun Come Up Tomorrow?  What would happen if congress doesn’t raise the debt ceiling?Will the Sun will come up tomorrow?What would happen if roughly half of the federal employees were laid off on August 3rd?That would mean almost one million new people that are highly educated doing something productive, and paying taxes, rather than living on money forcibly collected from other productive people. Only in Washington would this sound like a bad idea.

Buy Silver on Dips The Hong Kong Mercantile Exchange (HKME) announced the start of trading in silver futures contracts this morning.The futures contracts will be conducted in dollars.This follows the HKME initiating gold futures trading in May.Silver demand grew 17% globally from 2008 to 2010.Chinese demand during that same time grew 67%.China accounted for nearly 23% of global silver consumption last year.

Counting Days  Leaders of the seventeen eurozone countries are meeting today in Brussels.French President Nickolas Sarkozy and German Chancellor Angela Merkel met last night to hammer out an agreement between the two leaders.They were evidently successful as a draft proposal was presented, and immediately leaked to the press.

Act like Old Money  Can you ‘feel’ the market? I like to think so. The rally yesterday didn’t surprise me. The President called a news conference to applaud a breakthrough in negotiations to raise the debt ceiling. The market went wild. Gold and silver fell. Crude oil moved higher. Stocks went on a run to have the biggest up day of the year. Except…it was a lie.

Sham Wow Budgeting  The market got some good news this morning with better than expected Building Permits and Housing Starts numbers.Being oversold after seven sessions of weak trading it is natural to expect a snap back rally.The market also seems to accept the increasing likelihood that the Eurozone leader’s meeting on Thursday will decide on a long term arrangement to extend rescues to faltering countries.The U.S. Congress seems to be finding a way to avert a stalemate over increasing the debt ceiling.

Credit Watch Redux  The markets are down this morning on spreading credit concerns from the eurozone and the seemingly stalled negotiations over raising the debt ceiling in the U.S.Don’t kid yourself; there is a lot of activity going on in the background.Whether any of it is helpful, we will see.

Precious Metals Rally  Gold is setting highs as it marches against the fallacy of fiat currencies. Silver set its new high on April 28th in a parabolic run-up. It is now being drug back to life. The Comex raised the margin requirements on Silver to take some of the steam out of the market. It seems they had more open contracts than could be delivered! That did the trick, knocking the iShares Silver Trust etf (SLV) down from $48.35 to $31.97 in two weeks. The Spdr Gold Trust etf (GLD) lost 4.3% at the same time.

Debt Ceiling Games  Legislators and President Obama are meeting daily to try to wear each other down on their positions regarding the debt ceiling. We understand there are two trillion dollars in savings identified from the meetings earlier in June with the Vice-President.

Chinese Fly Over  Fed Chairman Ben Bernanke appeared before the House Financial Services Committee this morning. It was typical sparring over Fed policy from conservatives and justification for past spending from democrats. Bernanke kept the option of QE3 on the table if the economy softens and needs “additional policy support.”

Barrel of Rotten Apples  Overnight the markets were devastated by concern over Italian debt.Spain was also starting to be mentioned as the next concern for a rescue.It appeared that the eurozone finance ministers were losing control of the contagion spreading across the weakest countries in the monetary union.Asian markets were off as much as 3%.European markets were trading lower and futures pointed to a gap down for U.S. markets. 

Grand Bargain, Dead  The market opened under pressure this morning on news from oversees.Friday, interest rates on Italian debt started climbing.This morning, the credit default swap (CDS) annual premium on Italian debt jumped to a record high and 10-year bond yields were quoted over 5.7%.This is 300 basis points higher than German Bunds. 

It Takes Two to Fight  President Obama wants to meet with Congressional leaders over the weekend on the debt limit.House Speaker John Boehner said yesterday there was a 50/50 chance of a deal to raise the debt ceiling in the next couple of days.Optimism is a rare commodity in Washington.We think it is over-rated when it comes to these negotiations.

What to Watch  ADP released their Non-Farm Employment Change this morning and surprised the market.We expected an increase over last month’s 36,000 gain.Economists projected a 60,000 gain; the report came in with 157,000 gain in employment last month!Initial jobless claims and continuing claims were slightly better than expected.Right at market open, Chain store sales numbers came out showing growth 1.5% greater than last month.Is it any wonder the market was off to the races this morning?

China Soft Landing  China’s economy has led the world out of the credit crisis, expanding at a ten percent rate last year. First quarter growth, for 2011, was recorded at 9.7%, and economists expect the second quarter eased to a 9.4% annualized rate. These high rates of growth cannot be maintained without creating inflation, so China is trying to slow the growth of their economy through raising interest rates and tightening the availability of money.

A Dose of Cold Water  Factory orders came in better this morning than last month.We were a little under projections, but a positive number is good news.The market liked it and had a positive bias on open this morning.

Are You Prepared?  We started out this morning with a bang in the markets.Mid-morning we were concentrating on the markets and news. As I started MarketToday, we had a bang of another sort.Two teenage babysitters with three little kids blew out a tire in front of our house.They were on the way to the swimming pool.They were helpless, so I went out to change their tire.

Irrational Exuberance  If I had $2.3 trillion dollars, what would I do?That is the predicament the Fed finds themselves in.They have expanded their balance sheet $2.3 trillion dollars buying mortgage backed securities (MBS) and U.S. Treasuries.The last round of Quantitative Easing ends today.

Crude Oil Manipulators  Last Thursday morning, before the market opened, the International Energy Agency (IEA) announced the coordinated release of 60 million barrels from strategic petroleum reserves held by oil consuming countries. The U.S. contributed 30 million barrels of this additional supply. The release was to take 30 days.

On the Hook Again?  More information on the importance of a satisfactory resolution to the Greek credit mess is hitting the market every day.We have raised the concern many times that if Greece defaults or if their debt is restructured, their bonds would be downgraded to “junk” status.This would trigger bank insolvency across Europe because banks would have to .write down Greek debt assets.

Volatile Week Ahead  The Greek credit problem is like a case of poison ivy, it just won’t go away. Last week we heard the vote by Greece to approve deeper cuts in spending, entitlements and the sale of assets would occur this Tuesday. This morning, we learn the debate will begin today, but a vote on the “framework” will not occur until Wednesday.

Cut Cap Balance The negotiations in Washington to raise the debt ceiling have been eclipsed by events around the world. That is about to change. House Majority Leader Eric Cantor (R-Va.) from the House and GOP whip Senator Jon Kyl (R-Ariz.) ended participation in the “Biden” meetings yesterday. Why? Democrats would not drop their demand for increasing taxes as part of the package.

Uncharted Waters  The last 24 hours has been full of events and headlines that individually could make the markets turbulent.Put them all together and we have a real “witches brew” of information.Bernanke started it off yesterday with his press conference that left the market wondering...

Bernanke-Rally Killer  The Federal Open Market Committee (FOMC) finished their two day meeting today, and released their statement just before lunch today.Interest rates were kept the same, and the Fed maintained the policy of keeping interest rates “at exceptionally low levels for an extended period of time.”The FOMC reduced their forecast for GDP growth in the U.S economy from the range given in April.

Know When to Fold 'Em  We have written about the Greek credit situation so much in the last sixteen months, I feel like I need to buy some Uzo, and have a stiff drink.I have described the situation every way I can, covering all of the permutations and hazards the situation can expose us to as investors.We have had a taste of the fear a Greek bankruptcy could cause in equity markets for the last six weeks.

Never a Borrower or Lender Be  The Greek crisis continues.Markets rallied going into the weekend on optimism that a solution would be found over the weekend to extend more aid to Greece.Prime Minister Papandreou shuffled his cabinet and replaced his finance minister on Friday.He appealed to the country that more austerity measures must be approved.

Gut Check Time  The market has pulled back.It is almost back to where we started the year.Retail investors are doing their job, selling out of fear.Do you have a plan, or are you reacting to every headline?Were you deluded into thinking the market would only go up?

Not Just Greece, Anymore  Greece is in turmoil.Protesters are throwing Molotov cocktails in Constitution Square, close to the Parliament building.Riot police are standing their ground using tear gas to slow the crowd, but the mix is toxic.Prime Minister Georges Papandreou has offered to resign.He is a socialist and his party enjoys a majority in the parliament, but events are rapidly spiraling out of control.

Regulatory Overkill  “Most biotech products coming to market today are five to ten years old.Some are much older.If personal computing had to jump the same kind of preclinical and clinical hurdles as biotech companies, we would still be using computers the size of suitcases with cathode ray tube monitors.

Glass Half Full, Half Empty  Nouriel Roubini is an Economics professor at New York University’s Stern School of Business. He famously predicted the housing credit crisis in 2005. He warned the IMF in September 2006 that “the U.S. was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession.”

China Trade Grows  China released their May trade balance numbers this morning. Exports grew by 19.4% over May 2010 to $157.16 billion. Last week, China reported manufacturing activity had slowed in May! Of course it did, April exports grew at a 29.9% rate over April 2010

Steady as She Goes  It may not be as bad as we think.The market has been in a down trend since April 29.This can be unsettling.But what did you expect?Candy cane dreams and ice cream for breakfast?We went through earnings season relatively unscathed, profits were generally good.Surprises were fewer than hoped, but companies continued to deliver profits.

Beware of Dead Cats  Since the first of the month, the market has been down every day.Six in a row, if today finishes the way it has started.We expect the market to bounce higher somewhere as nothing goes in a straight line.This phenomenon even has a name, a “Dead Cat Bounce” as in even a dead cat will bounce when falling.You may also hear the term “reflex rally.” Think of the market as a rubber band, when it gets stretched moving lower, the reflex is to pull back.

You are What You Eat  Any parent knows the challenges raising kids.After four girls, I am a better man.Albeit, more cautious with my words of criticism, but a better man.A challenge we all face is matching our actions to our goals.We tell our kids, if you want to be successful…you have to work hard.You have to study to make good grades.90% of life is showing up.In business and life, we always want to address issues before they became problems that are more difficult to solve.

Another Credit Crisis Blooming  Mercedes-Benz sales rose in May by 7.4%.The company sold 118, 931 vehicles according to Bloomberg.Sales growth was led by Brazil, Russia, India and China, the original BRIC countries.This was the best May since 2008.What is a company to do that has the breeze at its back?Look to see what is gaining on them!

Intractable Negotiators  The U.S. Bureau of Labor Statistics released the May Nonfarm payrolls numbers this morning before market open.The market expected 169 thousand jobs which are down from the 244 thousand added in April.The numbers were terrible, coming in at only 54 thousand jobs added.

Williams %R Technical Indicator  Technical trading involves divining a stock (or commodity) chart for indications of a future move up or down. Most technical traders do not look at the fundamentals of the company such as dividends or profitability. It is all in the charts. Subscribers have asked me, ‘what technical indicators do you use to select your SwingTrader recommendations?’

Five O'Clock Somewhere  This morning’s premarket looked orderly, although it seemed certain the market would open lower.Asian markets closed mixed and European markets were mixed.What happened?ADP Non-Farm employment change came in much lower than expected.When I say MUCH lower, how about 38 thousand…economists were expecting 178 thousand additional U.S. jobs last month.

Summer Follies  Robert Shiller was on Fox Business this morning; he said home prices could drop for the next 20 years. The S&P Case-Shiller home price index showed a steady decline in home prices with a drop of 0.77% from February to March. The 20-city index showed a price decline of 3.61% in the last year. This was the eighth straight month of declining prices. Homes are now priced at the same level as nine years ago.

YHOO vs. Alibaba  Have you heard about the Yahoo vs. Alibaba controversy?A short history…Yahoo hired a new CEO (Carol Bartz) in January 2009.This was after the failed takeover by Microsoft.The idea was to bring in a seasoned professional to help right the ship at Yahoo (YHOO).

U.S. Economy Struggling  Economic reports this morning are not encouraging.Gross Domestic Product grew for the first quarter at an anemic 1.8%.Initial jobless claims for last week were 24 thousand higher than expected (10 thousand more than the previous week).I can almost hear Bill Clinton intoning “I feel your pain.”Oh, wait wrong president.It appears the consumer needs a hug, Consumer Confidence was slightly better than last month at -48.4 on the Bloomberg survey.

Unloved & Unwanted  Funny things happen in the stock market.Sometimes investors and traders will get so scared, they throw the baby out with the bathwater.Last week, the commentators on CNBC were talking about Cisco Systems (CSCO).They decided buying now was like buying a falling knife.It was better to wait for a good quarter or good news to reverse the fall.Who wants to step in front of a speeding car going down a hill?

Do You have Dead Money?  Many investors like to buy great dividend paying stocks and hold them.We do this in our Long-Term Portfolio to great effect.But when does owning a dividend paying stock become “Dead Money?”

Throw the Bums Out  When a company is failing and bought out, generally the acquirer will replace the old management.This is understood because if they were any good, the company wouldn’t have been for sale.Harsh…yes.It is what it is, natural selection.

Greeks Bearing Bonds  Fitch downgraded Greek debt this morning to a B+ rating.This is four notches below investment grade.Fitch also placed Greece debt on a negative rating watch.Ten-year yields on Greek sovereign debt bounced to a record high of 16.59%.We have written about the eurozone credit problems for 16 months now.When news gets this old, and shoes keep dropping, it is easy to fall into a comfort zone, thinking “Oh, there they go again, but it doesn’t matter.”

IPO Foolishness  We are late writing today, as we had errands to run this morning.LinkedIn (LNKD) went public today at $45 per share.It immediately shot to $122.69 per share before settling back to a 'value' price of $94.25 at closing.Can you spell i-n-t-e-r-n-e-t b-u-b-b-l-e?

Whose Money is it Anyway?  You may have an IRA or 401k.Our premium services are for self manage investors, many of our customers are investing their retirement accounts.Why do you have your money in a tax sheltered retirement account?Was it for the tax savings when you made the contribution?For the employer match?The tax advantage when you take distributions?The ability to pass it on as inheritance tax free?

Deals...Treaties...Jobs  Oil giant BP’s deal with the Russian oil company Rosneft fell apart overnight.BP signed a contract to help Rosneft develop Arctic oil prospects in the Kara Sea.Russia has more Arctic acreage than the U.S. and Canada combined.The deal was announced in late January, and immediately challenged by BP’s Russian partners, TNK-BP.

To Bail...or Bail Out Dominique Strauss-Kahn was arrested in New York City on Saturday for rape and false imprisonment.He is alleged to have attempted to rape a 32-year old hotel worker in his bedroom, chased her down the hall when she escaped and dragged her back to his bathroom where he assaulted her again.

Gold/Silver Ratio  Unless you live under a rock, like in the Geico commercial, you know the silver market has been in turmoil for the last two weeks. You many have heard about the Gold – Silver Ratio. Volatility in precious metals is high enough to cut into an experienced trader’s bankroll. A little discussion on an old term and its implications may be timely.

Dog and Pony Show  Crude oil sold off yesterday, dropping almost 4%. This happened because the U.S. inventory report showed a large build.Gasoline inventories increased when the market expected a drawdown in supply.A funny thing happened overnight.Crude oil rose in Asian markets.Why?Because, the use of crude oil is not an American phenomenon.

Relax...Enjoy...Relax    I talked with a subscriber yesterday, who happens to be a financial advisor.This is one of the great joys in running notes with our subscribers, discussing economics and what we see on the horizon.Where are the opportunities?

Absurd China Trade Policy  Representatives from China and the U.S. are concluding the “U.S.-China Strategic and Economic Dialogue” meetings today in Washington.Treasury Secretary Tim Geithner places foreign exchange rates for the dollar/yuan, intellectual property rights and U.S. firms access to investment in China as U.S. goals.

A Game of Chicken  Are you asking yourself, “Why are the markets up this morning?”Commodities are higher, crude oil, gold and silver.Did anybody read that COMEX is increasing the margin requirements on silver at close of business today?Margin requirements have also been increased for crude oil, cotton, ethanol, corn and cocoa. Did anyone see the headlines over the weekend, “Greece may Drop the Euro.”

Crude Oil in Flux  Oil, gold and silver are all looking to bounce today after a jolting sell-off in most commodities.Private Non-Farm payroll numbers came in better this morning than expected.It appears more people have decided to look for work though as the unemployment rate jumped to 9.0% from the previous reading of 8.8%

History Repeats...Again  The market is pushing lower this morning on lower crude oil and precious metals.Initial claims for jobless benefits hit an eight month high in the Labor Department report released this morning.No matter how hard the Fed has tried, they have been blowing hot air into a leaky balloon.

E.U. Bailout Window Open  The market looks weak this morning.Portugal agreed to a $116 billion dollar bailout overnight from the International Monetary Fund (IMF) and European Central Bank (ECB).They joined Ireland and Greece in receiving financial aid.The rescue package is for a term of three years.

Political Earthquake  The earth might as well have shook on Monday.You have probably heard the news.I have to chime in with my take.This is the biggest news that has happened in almost eight years!There are recriminations to go around inside the government.Were they hiding criminals?

Reflections on Omaha  The market has gapped up this morning on news that Osama Bin Laden was killed over the weekend in Pakistan.News ignited some impromptu patriotic public demonstrations.It seemed traders and investors soon looked around and realized economic drivers may not have changed that much with the death of a terrorist.The market fell back later in the morning.

What Happens in Omaha  I woke up in Omaha next to the Thomson-Reuter’s production truck.I supplied coffee and restroom facilities to the crew.Omaha is busy getting ready for the Berkshire-Hathaway (BRK) meeting.CNBC has the inside of the Qwest Center; other news organizations are in the parking lot.Everyone is looking for a scoop or an angle on the weekend.

Big Oil=Big Profits  Exxon Mobil (XOM) reported a 69% increase in earnings, making $10.65 billion last quarter.This was the second largest quarterly profit in the company’s history.The only larger profit was in the fourth quarter of 2008, the last time oil traded over $100 per barrel.XOM increased production by 10% over the first quarter of 2010.

FOMC...Party On!  The Federal Open Market Committee (FOMC) concluded their meeting today in Washington.Their statement reaffirmed the commitment to QE2 and holding interest rates at low rates for an extended period.GLD hit a new high, silver popped off the consolidation it was building after the sell off yesterday.

Liability Management Exercise  The Euro is hitting new 52-week highs as the dollar is grinding out 52-week lows.We understand the dollar being pummeled, a direct result of the U.S. monetizing debt on a grand scale.The Fed is meeting through tomorrow, and is expected to continue ‘steady as she goes’ with QE2.It would be easy to explain the euro strength as a natural reaction to dollar weakness.In today’s money markets, it seems there is no normal.

Guilty as Charged  Who should the Justice Department investigate? The president wants to know who is causing high gasoline prices. President Obama told a rally in Reno, Nevada, “We are going to make sure that no one is taking advantage of the American people for their own short-term gain.”

Dollar Carry Trade  The dollar carry trade is alive and well.What is the dollar carry trade?Using dollars, that offer no return, to buy anything (commodities) that is getting more expensive.Simple deal to quick profits.Our SwingTrade subscribers made 35% on a one day silver trade this week.Where will it all end?

Buy Buy Buy, Sell Sell Sell  The market is off to the races this morning.The dollar is getting creamed. Crude oil is pushing higher, along with gold and silver.All is well with the world.Sleep tight, don’t worry.INTC, YHOO and IBM all reported good earnings.Just two days ago, you couldn’t find a buyer for stocks.After S&P downgraded the outlook for U.S. debt, it was like ‘Can we leave on summer vacation early?”Stocks fell across the board.

Do You Think I'm Stupid?  The fallout from S&P downgrading the outlook on U.S. debt looks to have a short life. The market is trading higher this morning. We all have to be cautious not to follow the “herd mentality” that seems to have taken over otherwise intelligent ‘investors.’ We have chronicled the dangers facing the U.S.

Ol Time Religion  The market got a dose of Ol’ Time Religion this morning.S&P cut the outlook for U.S. debt to “Negative” from “Neutral.”During morning pre-market trading, the DJI took a quick 100 point drop.The White House rushed spokesmen out to downplay the significance of the change.

Meltdown Catalyst  Doom and Gloom seems to be rampant around the market, maybe that is why I can’t get a feel for the next move.Almost everything I read predicts the market wants to move lower to test support.This would normally cause my contrarian streak to look at the bullish argument.If everyone thinks the market has to move lower, it will most likely move higher.

Circling Vultures  The Bond Vigilantes are circling, looking for a corpse.Who will it be?It looks like Greece is the “winner” this week.Greek debt dropped in value yesterday.Ten-year bonds sold at a discount to yield 13.26%, the highest since 1998.Two-year note interest rates jumped to 17.96%

Dueling Budget Proposals  The President is scheduled to release his budget proposal after lunch today. Sadly, this will be after we go to press, so I will not be able to comment. Perhaps it is better. The ultimate truth is the government could take ALL of the assets of the Forbes 400, and not have enough money to pay the DEFICIT FOR ONE YEAR. After they take everything the richest Americans own, who would pay taxes next year?

Level 7 Market Fear  The market is off sharply this morning. It is following the lead of Asian markets that closed down more than one percent. Markets were shocked by the uncertainty from Japan increasing the severity rating of the nuclear accident that occurred a month ago.

Government Open till 5/16  Congress and the White House agreed on a budget for the balance of this fiscal year late Friday night. Major news outlets sighed at the ‘disaster averted.’ We wonder. The U.S. national debt ceiling is authorized at $14.29 trillion dollars. That is all the money the government can borrow. Treasury Secretary Tim Geithner estimates the U.S. will have borrowed that amount by May 16th.

Budget Poker  We can’t get through today without commenting on the budget battle that dominates the news programs. It seems like an orchestra building to a crescendo. CNBC has a countdown clock until the lights turn out in Washington. My thoughts…so what. We now know that President Obama is not a poker player.

Stick to Your Guns  You have to admire a trader that can stay with a trade or “stick to your guns,” so to speak. We also admire professional traders that manage their risk carefully. Occasionally, headlines tell the story of those that don’t do either very well.

Twilight Zone Investing  Earnings season starts next Monday when Alcoa (AA) reports after market close. We expect earnings to be relatively good and reinforce the recent market strength, maybe even push the indices to new highs. The horizon for investors is farther in the future. We have our eyes set on the summer. We see problems. We ask, ‘Why would I chase the market here, only to sit on losers in a few months?’

Government Actions  This morning, China’s Central bank bumped interest rates for the fourth time in the last six months. U.S. House Budget Committee Chairman Rep. Paul Ryan unveiled his budget blueprint for 2012. Senate Leader Harry Reid and House Speaker John Boehner went to the White House this morning to meet with the President on this year’s budget.

Where is the Market Going?  Where does the market go from here? We feel like a kid in a dark stairway, trying to open the overhead door into the attic. The S&P 500 is pushing against the record 1343 from Feb. 18.

Paid Pump and Dump  We sent out our results email this morning, because we are proud of what we do. This goes out at the same time I received a letter from a law firm to participate in a class action lawsuit against Panera Bread (PNRA), and an email from a penny stock site warning me about stock scams.

Market Discipline  Today is the last day of the month and quarter. The market has been on a heck a run, with what looks like the largest first quarter gain in 23 years. I was reading some lists of investment advice. It never hurts to go over some of the basics. We offer premium services for online investors, to help you make money. Many times what we offer is discipline.

A New Energy Plan  The President appeared this morning at Georgetown University to call for the U.S. to cut its oil imports by one-third over the next 10 years. Many economists believe higher gasoline prices will act as a brake on the economic recovery.

Less Murky Market  Two of the moving parts of the market are becoming clearer, or at least less murky. Traders and investors know QE2 is going to end, and the future looks less rosy when viewed through these glasses. The eurozone credit crisis looks more and more like a train wreck in slow motion.

Lies and Statistics  Personal Income numbers this morning rose less for February than expected, but Personal Spending increased more. What does it mean? Is the consumer back? This was the eighth month of spending increases. Most of the added spending appears to be in food and energy. According to the Commerce Department, spending adjusted for inflation was up just 0.3% rather than the 0.7% reported number.

Partnership Perils  We reported two months ago that Russia signed a deal with BP to drill in the Arctic. Russia controls more Arctic acreage than the U.S. and Canada combined. Today, the New York Times reports that BP lost a court ruling concerning operations in Russia.

Teflon Market  Volume is suppressed in the markets as traders and investors look over their shoulders. How do we keep going higher with all of the problems? One commentator called this a ‘Teflon market.’ Nothing sticks…earthquake…ok…dubious military action….ok….credit crisis…ok. Thank you sir, can I have another?

Portugal Melt Down  Portugal’s socialist government must eat a bitter pill. To meet the requirements for a debt rescue from the European Central Bank (ECB) they must cut social spending. Prime Minister Jose Socrates has vowed to resign if the plan is defeated.  The Socrates' government believes the package of cuts to state spending and pensions must be passed or the government will have to apply for an international bailout through the International Monetary Fund (IMF).

World Improvers  The markets looked to open higher this morning on better news out of Japan as they work to gain control over the nuclear facility damaged by the earthquake and resulting tsunami. Gov. Andrew Cuomo of New York wants to close the Indian Point nuclear generating plant that is 24 miles north of New York City. His staff scheduled a meeting with the Nuclear Regulatory Commission today.

AT&T buys T-Mobile  AT&T announced a deal to buy Deutsche Telekom AG’s T-Mobile USA for $39 billion dollars. According to Reuters, the combined companies would be the largest wireless operator in the U.S. AT&T is currently the second largest after Verizon. T-Mobile is presently the fourth largest in the U.S.

No Fly Libya  The U.N. Security Council approved the enforcement of a ‘No-Fly’ zone over Libya last night. Wow, kind of like bringing the Beer after the picnic is over. Two weeks ago it might have helped. It may have encouraged the protesters and rebels who were fighting to take their country from the clutches of Qaddafi. Now, it is just a gesture.

Natural Gas Rally  Natural gas is rallying on the nuclear crisis in Japan. Germany and China have taken action to review their plans for the operation and building of new nuclear generating plants. If the world turns from nuclear, what is left? Coal provides base load power efficiently, but carbon emissions give regulators heartburn.

Skin in the Game  The Producer Price Index (PPI) came out this morning. It climbed at the fastest pace in the last 18 months. The Fed has to love this coming out a day after they told us inflation was in check and they didn’t see any problems. Earth to Bernanke, inflation is everywhere except where YOU look.

Uranium Bull or Bust?  News out of Japan sounds bad, and then gets worse. The tsunami that hit Japan last week after the earthquake in the north shut down 11 of Japan’s 53 nuclear plants. The epicenter of the catastrophe is 160 miles north of Tokyo on the east coast of Japan. The government has requested that citizens curtail use of electricity. This morning they shut down five steel plants to save power.

PIMCO Out of Bonds!  Last Wednesday, the same day our Long-Term subscribers bought an ultra short treasury etf, news came out that shook the market. Bill Gross of Pacific Investment Management Co. (PIMCO) confirmed that his firm had sold all of his Total Return fund’s holdings in U.S. Treasuries. In February the fund held 12% of their assets in U.S. Treasury bonds. This was down from holdings of 22% in 2010.

106 Days and Counting  The clock is ticking… What is going to happen in the Middle East? Qaddafi seems to be putting down the protesters. It is not pretty, but that is reality. When a rag tag group of civilians in Toyota pickups go against a trained military, even poor training and firepower win. The vaulted ‘day of rage’ in Saudi Arabia turned into a “day of rest”

What is Wrong?  China reported a trade deficit of $7.3 billion for February this morning. This was their largest trade deficit in seven years. Asian markets were down across the board, with oil and copper taking it on the chin. China is the world’s fastest growing economy. Their economy is the largest consumer of copper and second largest consumer of crude oil.

A Front Yard Beating  Have you ever been given a job that you dreaded? When I was young, and confronted with a distasteful job, an old timer told me, “I would rather take a beating in the front yard than do that job!”

Contango and Backwardation  Commodities and other hard asset (gold & silver) have been on fire recently, and raise an interesting question. One of our subscribers asked, “What is Contango? What is Backwardation? I hear these terms and don’t know what they mean. I hate it when people use insider language.” Contango and Backwardation are conditions to describe the relationship between supply, demand, cash prices and futures prices in a free market.

Waiting on the Wedge  We wondered this morning what the day would look like. Asian markets were down, except for China. European markets were up early and futures looked positive for U.S. markets. We were not convinced. The unrest in Libya sounds like it is getting worse. Crude oil and precious metals are spiking. One of our favorite ways to look at the market is a point and finger chart.

Market Spasms  This morning’s Non-Farm payroll beat market expectations, with more people working than expected and unemployment below 9% for the first time in over a year. So what gives, why is the market off today? Two distinct problems confront the market today.

IF  Some days, the market does not give us time, or inclination to write a missive. We struggle, we search for a line from some story that we can exploit for your edification. I read a news article about Ken Fisher’s presentation to a group of investors last weekend in the Bahamas. Ken Fisher manages over $43 billion dollars for customers from IBM to the United Nations.

Buffet's Annual Letter  We are busy in the market today, and working on our mailing list problems. I am however, taking time to read Warren Buffett’s annual letter to Berkshire Hathaway shareholders. This is the first year in some time we have not owned Berkshire Hathaway (BRK-B) in our Long-Term Portfolio.

Economy Sagging?  Ben Bernanke, Fed Chairman, testified before the Senate Banking Committee this morning. He doesn’t thing present commodity prices are endangering the economic recovery and said the spike in oil prices does not shake his commitment to QE2. Bernanke characterized inflation as “modest.”

Ignore The Extremes  Last week was a real roller coaster ride! The market was overbought and needed a correction. When we get that overextended, investors and traders look for reasons to sell. The unrest in Libya gave us that reason. The doomsayers always exploit any situation to hype fear. This is natural and to be expected. It is also dangerous to “buy in” on all the doom and gloom. It is just as dangerous to “buy in” on all the gaiety and excitement of a bull market.

The Sick Dollar 
The dollar is trying to get up off the floor after being hammered for the last 45 days. Currency trading is a favorite for many who read the promises of Forex advertisements. I don’t pretend to know anything about the trading of currencies beyond our experience with ETFs.

Bigger Dip Coming  Go have a cup of coffee. Save some money, don’t get in a hurry to buy this dip! We are watching the market to see if 1300 holds on the S&P 500. Yesterday we bounced over the noon hour, and some brave souls came into the market doing some bargain hunting. We think they were early.

Asleep at the Wheel  “We are asleep at the wheel here: choosing to ignore a threat to the global economy that is quite as bad as the credit crunch, quite possibly worse.” That quote is from Jeremy Leggett of the U.K. Industry Taskforce on Peak Oil and Energy Security. He is not talking about the present situation, but the long term outlook for crude oil supply.

Libyan Oil Spike The big news today is the Middle East crisis spreading to Libya. The Libyan situation is a continuation of the protests that brought down the government of Tunisia and then Egypt in the past month.

In Our own Interests  Stupid headlines and statements are always coming across the wires. Today French President Nickolas Sarkozy told the G-20 finance ministers that economic policy coordination was the only way forward, “Giving priority to national interests would be the death of the G-20.” So, why didn’t the U.S. walk out? We could leave our phone number; tell them to call when they had something to talk about that interested us.

When to Sell  We have been busy in the market today, as we are taking our own advice. Trading the market and selling into the strength on our investments. Coca Cola (KO) announced an increase in their dividend this morning. KO was one of our holdings in the Long-Term portfolio, until today.

Protection...Please    The market has now doubled the low of 666 on the S&P 500 set in March 1999. We don’t have any “doublers” in our long-term portfolio. We have moved on from most of the stocks bought in that spring and summer. We still own Proctor and Gamble (PG) and Coca Cola Co. (KO). We are sitting on nice 28% and 33.5% gains in these blue chips. Is it time to take some money off the table?

Drill, Pебенка, Drill  The New York Times had an interesting article today on Russia and Arctic oil exploration. While U.S. regulators are sucking their collective thumbs over offshore drilling, the Russians just signed a deal with BP to drill in the Arctic. Russia has surpassed Saudi Arabia as the world’s biggest oil producer, and intends to stay in the lead. Crude oil sales make up 60% of all of Russia’s exports. 

The New Budget is Here!  The White House unveiled the President’s budget proposal for fiscal year 2012 this morning. The budget proposal for $3.729 trillion dollars predicts a deficit of $1.645 trillion in 2011 with debt 72% of GDP. The budget places a five year freeze on non-discretionary spending.

Mubarak Steps Down  The news today has been wall to wall Egypt. President Mubarak reportedly left Cairo last night for his home in the country after a broadcast that came up short from resigning the Presidency. He turned over most power and decisions to Vice President Suleiman, but planned to stay in office until fall when new elections would be held.

Commodities Climb Higher  Adept traders have played a rise in global grain prices over the last few months. Australia experienced flooding that has affected their mining. This has driven up the cost of coal and many of our holdings in mining companies in the long-term and covered call portfolio.

Nokia CEO E-mail  Stephan Elop, President and Chief Executive Officer of Nokia recently sent an email to his employees. You may have heard about it. There is much discussion about his management style, and if this memo should have been sent, and subsequently leaked. Mr. Elop was formerly the head of the Business Division of Microsoft. He was hired in September 2010 to turn around Nokia.

Be Careful of TIPS   Last fall we recommended that fixed term investors look at TIPS (Treasury Inflation Protected Securities). These are a special treasury bond that pays a set interest rate above the calculated inflation rate.

When does No mean No?  When does “No” mean maybe? Evidently, when you are dealing with Amtrak and U.S. Senators. Gov. Chris Christie cancelled the $20 billion dollar tunnel connecting New Jersey with New York last year. This only encouraged the U.S. largest passenger rail service to enlist U.S. Senators to endorse a plan to spend another $50 million on preliminary engineering and design of a new tunnel.

Duplicitous Obama  The situation in Egypt seems to be reaching a turning point. The world watches for the next round of protests and responses by the government. I am suspicious that the Muslim Brotherhood is working behind the scenes as a dark force. What does it take to manipulate the young people that want a free society and democratic government?

Bernanke has Night Terrors  Federal Reserve Chairman Ben Bernanke gave a press conference today. He was asked about inflation causing the protests in Egypt. Was it the Federal Reserve’s fault? No, he answered he didn’t see any inflation. Bernanke said, “It is unfair to attribute inflation in developing countries to the Federal Reserve.”

Plan for the Worst  The Egyptian government cut off internet service last week in a failed effort to stop the riots in Cairo. They eventually relented and restored service. What will you do, if you lose internet service for a few days? How about cellular service and land line telephones? What if they could not be restored for a week, or month?

How to get Re-Elected  Does politics affect our investments? I believe it does, thus I try to understand regulations and new legislation. Since 2008, you ignore Washington at your peril. Most certainly your net worth is in danger when the congress is in session. There wasn’t a light that turned on in 2008; I only use the credit crisis as a point of reference. Politics affecting business has been going on as long as the two existed.

Inside Egypt  We are all familiar with the Palestinian group “Hamas.” Hamas was split off from the “Muslim Brotherhood” in 1987 as a political wing. Hamas won the January 2006 elections in the Palestinian territories. The U.S. and other countries cut off aid to the Palestinian administration as Hamas is an arm of the Muslim Brotherhood and thus Iran.

Protests in Cairo  Egypt is in turmoil. You have probably seen snippets on the news. It looks like the Middle East will dominate the news this weekend. The events seem to be spiraling out of the government’s control. Hosni Mubarak has been the President of Egypt for almost thirty years.

Is Japan Our Future? Gold, silver, copper, crude oil and natural gas are down today. What’s new? How about Japan’s credit rating? Or rather, what’s old? S&P downgraded Japan’s sovereign debt rating today to AA-. S&P cited the country’s aging population in the downgrade.

Looking for Blame  The Financial Crisis Inquiry Commission (FCIC) has completed their report. It will be released tomorrow. This commission was charged with investigating and reporting on the ‘cause’ of the financial crisis in 2008. The ten member commission broke along party lines, six democrats endorsing the final report and the four republicans dissenting. The report finds fault with the Federal Reserve and Chairman Alan Greenspan for allowing the housing bubble to build on cheap credit.

Kum-Ba-Ya State of the Union  It looks like we are all going to be treated to a real Kum-Ba-Ya moment tonight. President Obama is going to try to thread the needle of painting himself as a deficit hawk while proposing the country make “investments” in a variety of programs and initiatives to build a future that fits his vision.

Counterfeiting the Easy Way  It is looking more and more like Ireland is ground zero of the eurozone credit crisis. The problems are so bad, now all the participants just want to walk away and ignore them. Turn out the lights. I didn’t see it. They ask, 'Are you sure it happened?'

Crude Oil Trade  What happened to crude oil last week? The price was hovering above $90 a barrel as inventories had been moving lower in the last three months. This fit nicely with the market's perception that the economy was improving. As the economy improves energy usage increases. Society needs energy to manufacture things, to heat office buildings, to transport goods to warehouses and on to sales floors across the country. To move imported items to markets, and export items to the port requires energy in the form of transportation fuels.

Dumb Money Chart  What is your plan? A friend’s mother has Alzheimer’s disease, a very sad situation. He is resigned to watching his mother grow more distant. She was a successful professional, and now is not able to take care of herself. Many may not know it, but some patients lose the ability to speak, and just gaze into space with a blank stare.

Rope-A-Dope Obama You may have heard that President Obama wrote an article that was published in the Wall Street Journal today. You can read the president’s article, Toward a 21st-Century Regulatory System. The appearance of the article, probably ghost written, causes a quandary for many.

Does the Market make Sense?  The market gives, the market takes away. Does it seem rational to you how the market is performing right now? The dollar goes down, and U.S. interest long-term interest rates go down? Portugal and Spain sell sovereign debt at higher rates than they would like but everyone says “Ah, but they sold it, and they were oversubscribed!”

Indian Inflation  Every morning I check the world’s markets when preparing the SwingTrader alert for our subscribers. We are looking for confirmation of the trend from market close in the U.S. yesterday, or a change in the direction for traders. What has happened overnight that we need to be aware of?

Do Not be Complacent  Watching the market today can make us complacent. It is not natural to have this much “green on the screen.” Complacent traders and investors are a contrarian signal. As investors become confident that ‘everything is ok’ the forces are building for a splash of cold water in our face. This dose of realism serves to wake us up to the dangers that constantly threaten our portfolio.

Chinese Inflation  The Federal Reserve is pumping money into the U.S. economy. We all know the efforts of the Fed through the term “QE2,” quantitative easing (second round). The intention is to push money into banks at low interest rates, then into the economy as they lend it to businesses and individuals. It is an inexact science. They buy short term treasuries to keep interest rates low, and flood money into the banks. What else can banks do with it?

Sell the News Market  We start earnings announcements this week. Alcoa (AA) reports after market close this afternoon. The company’s stock has bounced higher in the last month, in anticipation of a good report. News keeps telling us the economy is improving, and AA should benefit from increased manufacturing activity. Are we entering a “buy the rumor, sell the news” reporting season?

Mortgage Foreclosure Fail  Sometimes trying to find the pulse of the stock market is like being a nurse looking for a vein. You know it is there, it just seems to hide from you. Like a nurse, a trader has to probe for the blood. The difference is the patient pays for the nurse’s uncertainty, traders pay for their own mistakes.

Skating on Thin Ice  I have had the pleasure of visiting with some of our subscribers over the last few days. This encourages me to keep doing my job of bringing you information you can use to invest. Many of the things we learn in life help us be a better investor. Many of the investment ‘rules’ we learn help us in life also. One of the visits I had concerned “penny stocks.” All of my paid subscribers know two things about our recommendations; we don’t do “penny stocks” or pharmaceuticals.

Best Play on Silver  We made silver our ‘Trade of the Year’ in 2010, and it was a good one.  The silver etf (SLV) was up 82.6% in 2010 The toughest thing to admit, we didn’t follow our own advice for our subscribers in the long-term portfolio. Sure, we bought the AGQ back in June, and then sold it a week later for a 10.8% profit. We traded it a few times in the SwingTrader to good effect. We were too conservative. We wanted the lowest entry price for our long-term subscribers, because we just didn’t want a chance to lose money on it.

Fly First, Report Later  Our newsletter today is short and to the point. We are busy in the market. We are mindful of where our bread and butter is, and it is in doing our job. The reporting comes second. I learned this lesson the hard way when learning to fly. I was very concerned about making the “calls” on the radio, and answering all of the tower’s questions quickly and concisely.

Crystal Ball Investing  We are watching the markets this morning, and am somewhat puzzled by the enthusiasm. Predictions for the next year seem to run the gamut. Where will we end 12- months from last week? Somewhere between 1150 and 1400 on the S&P seems to be the range selected by most commentators. That gives a pretty big barn door to fit into. It is a 10% plus/minus range from today’s readings and probably gives us a pretty good idea of where we may end up. But, how do you get there?

Baby, There is Snow Outside  I have had the pleasure of emailing with subscriber P.T. recently. I always enjoy ‘visiting’ with our subscribers. Many times I am humbled and amazed at the varied careers and accomplishments represented in our subscriber base.

Great Expectations  I was looking through the offers from competing investment newsletters to encourage people to subscribe and pay for their services. At times I have been guilty of promising more than we can possibly deliver. Galtstock is the only investment website I know of that makes all of our past results available at all times. Good or bad, you can look at our past results.

Stop Loss Discipline  Stop losses are a tough discipline to follow, believe me. I still violate trailing stops occasionally. In hindsight, it is always is easy to see a trailing stop left money on the table. When I see this it makes me want to be brave and ‘hang in there’ against the market. But, 9 times out of 10, I would have been better off to stay with the discipline.

Crude Oil Running Higher  We have been watching the price of crude oil climb, and our charge card is suffering every time we fill the car with gasoline. Where will it end? We checked the Energy Information Administration (EIA) website to understand where this market is heading.

Government Forecasts  Heathrow Airport in London has delayed flights due to a winter storm. Up to 200,000 passengers were stranded as the airport is operating at one-third capacity. London only got five inches of snow, but they are not equipped to de-ice planes or clear the runways.

The World is a Hard Place  When the market is good, it is so-o-o much fun. Everything just seems to be rolling along great. Every one of our subscriber services are doing well, it just doesn’t get any better than this… If you are feeling this way, you better look over your shoulder; something might be gaining on you!

North Korea Quiet  North Korea backed away from their rhetoric Tuesday. The S. Korean military conducted ‘live fire’ exercises. This follows the announcement last week of the military drills scheduled to take place between Saturday and Tuesday. N. Korea said they would retaliate, they did not.

Local Debt Woes  There might a new breeze blowing through the halls of power next year. Investors, politicians and now the media are aware of indebted states, underfunded pension plans and out of balance budgets.

Provocation for Compensation  N. Korea is rattling their sword again, inviting a fight. Actually, they are not inviting a fight, they are threatening one. First a little background. On the Tuesday before Thanksgiving, S. Korea was conducting live fire military exercises on Yeonpyeong Island.

Morgan cuts Silver Short Position, Goes Long Copper  J.P. Morgan found themselves with a white tiger by the tail, at least that is the take away from news out in the last few days. We asked if Silver was being manipulated last Thursday, in MarketToday.

Chinese Free Trade Rules  China and free trade are like water and oil. They don’t mix. The Chinese talk a good talk, but are not capable of playing by the rules. We have written often of the necessity to hold their “feet to the fire.”

Cold Cancun  The U.N. Climate Change Conference in Cancun has wrapped up. Just like the confab in Copenhagen last year, this conference was intended to get commitments from “developed” nations to give money to “developing” nations. The reason they need money is to fight global warming. There you have it. Money is needed whatever the pretense.

Watch long-term interest rates  Interest rates are heading higher, and there doesn’t seem to be anything the Fed can do about it. I am always mindful of the old saying “You can’t fight city hall.” In the past, when the Fed announced quantitative easing, it was time to get out of the way. They have deeper pockets than I do.  But, the market may be signaling us to watch for a correction in equities.

Bond Investor Pain  We have warned about investing in bonds for the last six months. Interest rates were held down by the Fed buying spree in Treasuries. This was a set-up for fixed term investors. The last ten days has caught a lot of sophisticated investors with their pants down, (and bond prices). Since the last day of Novemeber, 20-year treasuries have lost 5.3% of their face value due to climbing interest rates...Read more about Fixed Income Rates

Silver Manipulation  What happened when J.P. Morgan (JPM) bought the assets of Bear Sterns? Rumor has it they inherited a huge short position in the Silver market. That would be great, except the price of silver has more than doubled since J.P. Morgan bought the investment bank...Read more about J.P. Morgan

Precious Metals on Sale  The market is caught in limbo as Democrats fight about the agreement between Oh! Bama and Republicans to extend the Bush era tax cuts...Read more on Why Now is the Time to Buy Silver

Remember this Day  Sixty-nine years ago today, Japan attacked Pearl Harbor. This attack led to the entry of the U.S. into WWII. Over 3,500 Americans were killed or wounded in a few hours. Three-hundred fifty aircraft were destroyed and all eight battleships of the U.S. Pacific Fleet were badly damaged or sunk. 

Bernanke Lip Quiver  Bernanke appeared on CBS 60 Minutes last night. If you missed it, you missed great theatre. After a rambling explanation about the concerns of inflation vs deflation, Scott Pelley asked how confident Bernanke was he could control inflation. Bernanke’s lip quivered as he answered “100%.” His lip quivered a lot during this interview. You can see it here.  Bernanke could never play poker, he has too many "tells."...Read more about Fed Inflation target

Offshore Drilling Ban  The Obama Administration backpedaled on plans for offshore oil drilling. Yesterday, the Interior Department placed the Eastern half of the Gulf of Mexico off limits and all of the Eastern Coast for at least seven years. This will give the bureaucrats time to write new regulations for safety...Read more about Unemployment 

Fed Spreads Money Around  The document dump from Wikileaks is all over the headlines and leads off to most news shows. The real story is under the radar because many don’t understand how it affects them. The Fed released a list of companies that received aid yesterday. There were 21,000 transactions under the emergency program of overnight lending...Read More about Fed Emergency Lending

Sovereign Default Risks  Ireland has been in the news for the last three weeks as the confluence of politics, budgets, bonds and investors tugged at the loose strings of the eurozone credit markets. All of the analysis and reporting may leave some questions about the why and how of sovereign debt problems. I received the following questions from a subscriber, and thought they may be of...Read More about the Risk of Default

Next Debt Victim?  The Ireland rescue is now in the drawer, waiting on the government to approve measures to implement it. European markets were down this morning…why? You can paint an old house and put up new wallpaper, but it is still an old house. Interest rates on bonds from Portugal, Spain, Italy, Belgium and France have begun to rise. Even Germany’s Bund saw a spike...Read more about the Crumbling Euro

Ireland Debt Rescue  Ireland appears to be off the credit hot seat for now.   A deal was announced on Sunday to extend credit to their banks and government over the next four years. The EU Finance Ministers and International Monetary Fund (IMF) fashioned a bailout for the country and its banks to the tune of $115 billion dollars...Read More about the EU/IMF Rescue.

Korean Poker  A little over 36 hours ago, N. Korea fired approximately 200 artillery shells at Yeonpyeong Island, S. Korea. The island is recognized as part of S. Korea according to the U.N. The U.S. is sending the U.S.S. George Washington to participate in military exercises in Korean waters.  Is this a bluff, or is...Read More about World Tensions 

Thanksgiving, A Day for Gratitude  We think of Thanksgiving beginning in 1621. The pilgrims had spent their first year in the New World, at Plymouth Massachusetts. The first winter was spent on boats. After landing, they had not had time to erect any structures for the winter. The Wampanoag Indians helped them learn to cultivate corn and to fish, so they would not starve...Read More about U.S. Grant

Irish turmoil sends market Lower  Ireland requested the bailout everyone knew they needed on Sunday. We mistakenly reported elections were Saturday.   We can’t find the story now, but the timing fits what we anticipated for a rescue package announcement...Read More on the FOMC minutes

Natural Gas Bearish Trade  Natural gas is a domestic market that matches supply with demand. Natural gas wells produce year round, but the heaviest use occurs in the winter months for home heating. Natural gas is stored underground in salt caverns. These are generally safe and make sure the supply of gas is plentiful when seasonal demand increases...Read More about the Ben Bernank

Gambling and Trading  Bank of America conducted a survey of big fund money managers last week. The big fish are bullish. They are as bullish as they have been since last April. Do you remember what happened last April? The market went into ‘sell-off mode’ for three months!...Read More about this Contrarian Indicator

Opt Out or Drive  A storm is building over the Transportation Security Administration (TSA) use of full body scanners at airports. If you don’t subject yourself to the radiation, they want to grope you in a private “pat down” to...Read More about TSA Screening

Greek Temper Tantrum  Last night Greece acknowledged they were in violation of the terms of last spring’s International Monetary Fund (IMF)/EU bailout. They have not cut spending enough. The country’s deficit was to be under 8.1% for 2010, but is currently at 9.4% of GDP. The Eurostat statistics agency is auditing Greece’s books to confirm compliance...Read More about Euro Debt Problems

Irish Debt Contagion  The European credit crisis looks to be heating up again. Ireland is under pressure from other Eurozone countries to seek aid for their sovereign debt. Irish bonds have been falling in the last week, as investors looked at their ability to refinance in the future. Ireland’s deficit is expected to hit 32% of gross domestic production this year. CDO’s insuring Irish sovereign debt hit 6.7%...Read More about Irish Debt

Empty Handed Obama   The G-20 Summit closes shop and President Obama comes home empty handed.Germany and China thwarted the U.S. move to balance imports and exports from countries that have large trade imbalances.With 25% of the world economy, the U.S. feels these countries need to increase domestic demand for their manufacturing capacity rather than rely on the U.S. market...Read More about the G-20 Summit

We would never do that   A little love spat has broke out in the closed fraternity of bankers.Alan Greenspan wrote an opinion article in the Financial Times pointing out that China has become a major global economic force, “But it has not yet chosen to take on the global obligations that its economic status requires.”This comment was welcome as the U.S. presses China to let its currency increase in value...Read More about Currency Inflation

235 Years of Honor  Today is the 235th birthday of the founding of the United States Marine Corp. I talked to an old friend this morning who left his leg in Vietnam, and thanked him for his service to our country. He was on his way to a ceremony in his home town and then into Kansas City for lunch with officers and other Marines. I thanked him for his service, and suggested he puff out his chest today. A couple of other calls to “leathernecks” to thank them for their service left me with a lump in my throat.  Lunch today was with an old friend that received a Bronze Star for his heroic actions in Vietnam....Read More about Worcester Wreath Co.

California Debt Grows  Bernanke’s printing money and California is spending it. The Sacramento Bee reports that the state’s unemployment fund has an estimated $10.3 billion deficit. California has borrowed $8.3 billion from Uncle Sugar (federal gov) to continue paying benefits. Now they are looking at a $362 million dollar interest payment due in 2011...Read More about Build America Bonds 

Return to Jekyll Island  The Lords of Finance returned to Jekyll Island last week to reflect on the founding of the Federal Reserve 100 years ago. The Jekyll Island Club Hotel is where six men met in November 1910 to devise a plan for a central bank...Read More about the Federal Reserve

His Mouth is Moving   Sometimes when we do something stupid, we admit it and correct the error. Other times, we double down and try to verify our first action by committing to doing the same thing again. If we are lucky, we will stop after two errs, but the real hard headed will continue to beat their head against the wall with another push to prove they were correct.  This is no where more prevalent than in government.  'If it doesn't work, spend more money to make it work' is the normal operation.  Witness the "War on Poverty."...Read More about QE2

Fed Steps Up Printing  The Federal Open Market Committee (FOMC) committed to buy $600 billion in treasury bonds yesterday to lower borrowing costs for consumers and businesses, according to Reuters. The Fed will buy $75 billion per month through the second quarter. They will also use approximately $300 billion from refunded securities to make additional purchases...Read More about the Latest round of Quantitative Easing

Watching the Fed   The day after mid-term elections brings a wealth of economic news to bear on the market.The U.S. Fed is working to kill the dollar.Australia, India and China are working to strengthen the value of their...Read more about the World Economy.

Obama attends Asian Summit  President Obama is leaving for Asia on Friday, he will not return until Nov. 14, three days after Veteran’s Day. According to the India Economic Times, the President seeks to open markets for U.S. trade and limit “excessive imbalances” in trade. The administration wants China and Germany to increase their domestic demand and reduce reliance on exports...Read More about Presidential Trips

What We Don't Buy  The Wall Street Journal carried a headline Saturday “Watch as We Don’t Buy, Not Just as We Do.” The article is about family finances. It explores how our children see us spending relative small amounts of money on everyday items, because we are thrifty and cautious in our larger...Read More about Disciplined Investing 

Mad Dog Mean  We all get to vote next week, and help determine what the government will do for the next two years. What will it be? It looks like many of the “Tea Party” candidates are going to have some success. We only hope they are a load voice in Washington and not co-opted by “go along to get along” republicans once they enter the hallowed halls...Read More about Why You Must Vote

Beware of Negative TIPS  We wrote about Treasury Inflation Protected Securities (TIPS) in July as a good place to park money if you were concerned about inflation. TIPS can protect your fixed term investments from the ravages of our Federal Reserve’s loose monetary policy...Read More about Parking Your Money

Carpenters See Nails Everywhere  Everything looks like a nail to a carpenter with a hammer. Almost every stock looks like a short candidate to me. The market has priced in all the good news, now it seems we are just waiting on the bad news that will kick us in the stomach...Read More about our Market View

Expectations meet Reality  Elections in the U.S. are one week away. Expectations are that conservatives (Republicans?) will gain control of the House of Representatives and come close in the Senate. Taking control of the House from the democrats (socialists?) will provide a small check on the administration. The exciting thing is that ALL SPENDING ORIGINATES IN THE HOUSE...Read more about Elections and Economies

How about a Double Irish?  We wrote last summer about investor confidence in the economy. Investors felt uncertain about future changes to tax law, cap and trade, and health care legislation. The President has bashed U.S. companies that move operations overseas and do not pay the U.S. corporate more about U.S. Corporate Taxes

The End Game  The finance ministers of the G 20 countries are meeting in S. Korea this weekend. The main topic is how to keep countries from devaluing their currencies for competitive advantage in world trade. The U.S. has proposed that developing countries set targets for stable trade balances with other countries. China and Germany are not in favor of this as it seeks to limit exports on...Read more about Currency Wars

Dine and Dash Underwriting  The home loan mortgage furor seems to be dying down, or is it? New York’s Chief Judge, Jonathan Lippman, instituted a new rule, effective immediately. Attorneys must sign an affirmation that they have reviewed and taken reasonable steps to verify that foreclosure documents are accurate...Read More about the continuing Mortgage Mess

Embargo or Environmental Protection?  Rare earth minerals are the lynch pin of many high-technology devices. We wrote about the importance of Rare Earth Elements on Sept. 2. Rare Earths are back in the news, again. China knows how to pull the levers of ‘Free Trade’ without triggering any of the nasty little problems that come with controlling the market. The World Trade Organization (WTO) has...Read More about Rare Earths.

Can't Fix Stupid  A few months ago workers at an auto parts plant voted down a new labor contract that would have kept the plant open. They wanted to maintain higher retirement payments, and the right to transfer to another plant at the higher wage if their plant closed. I thought, “That is what is killing the rust belt.” Reports at the time were that 600 people would lose their jobs...Read More about Union Self-Emulation

Scum Covered Pond of MBS  Fallout from the mortgage-gate crisis keeps the water swirling in the scum covered pond of mortgage backed securities (MBS) market. Bloomberg reports that the big banks had $47 billion in market cap erased in the last two days ending Oct. 15...Read More about Mortgag-Gate

Mortgagegate Mess  There is another storm brewing in the real estate market, and it may be bigger than the first one that has thrown our economy into a tailspin. The home mortgage foreclosure crisis is heating up across the country as state’s Attorney Generals make headlines with investigations...Read More about the Mortgage Tsunami

History Repeats Itself  Is history about to repeat itself? The Federal Reserve is widely expected to pump more money into treasuries next month. The goal is to push interest rates lower on investments. This punishes savers and encourages riskier investments. The most abused segment of the population is the elderly, as they have a lifetime of savings that are concentrated in “safe” fixed term instruments...Read More about QEII

Land Rush in Texas  There is a land rush going on in Texas. This isn’t chuck wagons and kids on ponies. It is oil men with briefcases stuffed with cash. The Eagle Ford shale formation starts at the Mexican border and runs 400 miles northeast, almost to Houston...Read more about the Eagle Ford Play

Is it Different This Time?  When David Tepper appeared on CNBC Sept. 24th, it was almost like everyone decided “It is different this time.” The market bought into the idea that the Federal Reserve would print money until we could all retire and then somehow miraculously pull away the punch bowl just in time to save us from vicious inflation...Read More about Market Rules

California Dreaming  California passed the California Global Warming Solutions Act in 2006. This law requires the State Air Resources Board to establish limits on greenhouse gas emissions, then monitor and issue regulations to reduce greenhouse gas emissions to 1990 levels...Read More about California Budget Problems

Iranian Sanctions  The U.N. Security Council has tightened sanctions on Iran for the fourth time this summer. Sanctions are meant to bring Iran to the table on their nuclear program. The latest sanctions tightened financial transactions and put pressure on multinational corporations doing business with Iran. Russia cancelled the sale of anti-aircraft missiles. These could have been used to...Read More on the Middle East

War on Savings  Crude oil has been on a tear for the last two weeks. You should brace for gasoline prices at the pump to move higher. The USO (U.S. crude oil) etf is up 12.7% since 9/23. Crude oil is lower this morning...Read More about the Cruel Hoax

Currency Wars  It seems countries can only be accused of manipulating their currency if you have a trade surplus. The U.S. announced quantitative easing last year, and the Fed bought $1.7 trillion in mortgage backed securities and treasuries. The Bank of Japan sold Yen two weeks ago because the value of their currency was ‘hurting their export companies.’ But, they are not “manipulators.” China ties the Yuan to the dollar for the past two years, and they are accused of manipulation?...Read More about Liu Xiaobo

Obama's Grip on the Fed  The Federal Reserve has two new members today. Janet Yellen is the new Vice-Chairman; she is joined by Sarah Raskin. Yellen is from the San Francisco Federal Reserve Bank, Raskin was Maryland’s commissioner of financial regulation...Read More about the Falling Dollar

China Bearing Gifts  The Greek’s gift of the Trojan horse to Troy allowed entry into the city so it could be taken by the hidden solders when the Roman’s were drunk. In a turnabout that only Julius Ceasar could imagine, Greece hosted Chinese Premier Wen Jiabao this weekend...Read more about China buying Influence

IMF cuts European Influence  As a father of four angels (daughters) we never had too many worries. But, as parents, we always watched for events ‘off the radar.’ This was our early warning system. Watching the power brokers in Washington is a full time job, we wondered what shenanigans are they up to ‘off radar?’ We didn’t have to look too far...Read More about the U.S. Remake of the IMF

Obamacare denies Insurance  Just in time to fan more flames against Washington’s fix for our healthcare, McDonald’s has warned the Department of Health and Human Services they may drop health insurance for 30,000 hourly workers in the U.S. at the end of the year...Read More about Mini-Med Plans

Falling Dollar, Rising Market  The end of the month looms and we wonder, what happens next? The market has risen almost 9% in September, one of the best one month gains in years. Before you start high-fiving your wife tonight, you may be interested to know the UUP ETF lost 9.5% in the last month...Read More about Currency Wars

Economics, Art or Science?  Economics as a course of study surely is a Bachelor of Arts not Science. How else do we explain the differing views in the “Art” of economics?...Read More about Fed Money Models

A "Put' on the Market  Which way is the market headed this week? We don’t know. We have been on a three week run higher since August 31. The S&P 500 kissed 1040 that day and has gained almost 10.5% since. What has changed since August that creates so much enthusiasm?...Read More about David Teppen

A New Bully on the Block  One of the triggers for the Japanese attack on Pearl Harbor was U.S. President Roosevelt cutting the supply of crude oil to Japan in July of 1941. Trade and natural resources are weapons that should be used very carefully. It is a dangerous world we live in; it seems there is A New Bully on the Block.

When I am Wrong   Even when you are wrong, can you be right?Sometimes an overabundance of caution can blow up in your face.Investors are wise to “sit on their hands” rather than jump at every concern.  Conversly, we must react to problems before they consume us...Read More about Being Right

What We Don't Know  When asked about the difficulty of invading Iraq in 2003, Donald Rumsfeld famously referred to 'Not knowing what we don't know.' This concept impressed me, as we all delude ourselves into believing we have the knowledge to make intelligent decisions. But then we get slapped by the reality of “real estate bubble” in 2008, or the “Eurozone sovereign debt” crisis of 2010. Who would...Read More about China vs Japan

Not If, But When  Any business that operates vehicles driving on the highways, or planes flying in the air must embrace a central premise; “It is not IF an accident will happen, it is WHEN.” The risk may be miniscule, but the odds eventually catch up with you. How many trips to the grocery store can you take before the car gets “tagged” in the parking lot?...Read More about Financial Oppresion

King of the Mountain  The market is up this morning, but beware; interest rates on 10-year treasuries have reversed their movement of the last week and are moving lower. This signifies concern by investors about the safety of investments in equities...Read More about Bank Failures

Huff and Puff Geithner   Treasury Secretary Tim Geithner appeared before the Senate Banking Committee Thursday. I am reminded of our daughters when they were little. They would threaten to hold their breath if mom and dad didn’t give them what they wanted. Well…go ahead...Read More about Currency Manipulation

Too Much Consuming  The Administration wants to stimulate the economy to increase consumption, hoping this is “what firms need to start hiring.” Do we need to consume more, or invest more? Is the economy improved from the pull of consumption, or the push of investment? We wrote that capital goods production is the best way to build a recovery in the economy on...Read More about the need to Raise Investments

Shot in the Foot, Again!  Microsoft (MSFT) announced Tuesday they would borrow up to $6 billion to fund share buybacks and dividends. Speculation tells us that it may also build a war chest for a big acquisition. But, why borrow money? They don’t need it. On June 30, 2010, MSFT had almost $37 billion in cash and short term investments! They have another $18 million in receivables and other current assets. Why borrow money? Are they going to buy Apple?...Read More about Tax and Immigration Laws

Fear, Hope & Greed  Trading the stock market is an up and down business. There are two types of traders, and I vacillate from one extreme to the other. Trader “A” enters a position to let his winners run, but will exit at the first hint of trouble, even for a loss. Trader “B” will enter a position for a longer term macro reason, and smile if the market moves against him, because he is convinced...Read More about Trading Techniques

NLY: Good Company, Bad Timing  Annaly Capital Management, Inc. (NLY) is one of our holdings in the Galt’s Long-Term Portfolio. NLY is organized as a Real Estate Investment Trust (REIT) for tax purposes. This means they pay out 95%, or more, of taxable profits to unit holders (shareholders). As an REIT, NLY does not have any tax liability...Read More about Annaly Capital

We Have Seen the Future  Ed Hammer, an engineer at General Electric invented the compact florescent light (CFL) bulb. His department was responding to the energy crisis in 1973, and working on technology to save electricity. The idea to twist florescent tubes into compact bulbs worked, but was expensive because...Read more about Green Jobs

Cuban Model...Unworkable   El’ Presidentie Fidel Castro of Cuba told writer Jeffery Goldberg of the Atlantic Monthly that “The Cuban model (Soviet style communism) doesn’t even work for us anymore.” Wow, this ought to come as a surprise to some in Washington.   Just think, we might start exporting GM cars (made by our government) to Cuba to replace the 1958 Chevy’s they have been driving since Castro locked down the country...Read more about why We Like Precious Metals

Gridlock is Good  President Obama is facing the unpleasant future of a congress controlled by the opposing party. This will make it impossible for him to push through more socialist programs. It will also give him the perfect “enemy” to lay all the blame for his failures at their feet. The good news for business is “gridlock is good.”...Read More about the 2010 Political Campaign.

Speak Truth to Power Intel's C.E.O., Paul Otellini was at the Technology Policy Institute’s Aspen Forum last week. The Forum is a magnet for other technology firms and assorted hangers on. This last category includes administration officials and their aides. After all, what better place to go than Aspen in August? Mr. Otellini spoke to the gathering at dinner on Monday night.   He probably caused a few gasps in the audience. He told them the truth...Read More about the Aspen Forum

Rare Earth Elements  Rare Earth elements are an area of investment you need to be aware of. “Rare Earths” are a collection of seventeen chemical elements. They are scandium, yttrium and the fifteen lanthanoids. Bet you never heard of them. That needs to change and I will tell you why...Read more about Rare Earth Metals

New Human Rights  You may have heard that the U.S. State Department submitted a report to the U.N. Commission Human Rights Council last week. This was the first time the U.S. had presented a report on the status of human rights. The previous administration had refused to submit a report to this arm of the U.N. as it is used to criticize the state of Israel. The Council includes representatives from Cuba, Russia, Saudi Arabia, Nigeria, Mexico and Russia...Read More about Human Rights

Resetting Social Security  The provision to reset Social Security was written into the law for people that may have started collecting benefits, but had to go back to work. When they decided to retire again, they could reset their benefits and collect the higher benefits based on their current age. All they had to do was pay back all the payments they had received...Read More about the Minimum Wage

Hello...I'd like to Sell a Bridge  Hewlett Packard (HPQ) must have fired all the brains in the company when Mark Hurd left as CEO under suspicion of sexual harassment of a contractor and expense padding. They topped Dell’s (DELL) bid for 3Par (PAR) of $27 per share this morning with a $30 bid. That makes an unprofitable company (PAR) now worth $2 billion. Does anyone have HPQ’s mergers and acquisitions department phone number? I have a bridge in the desert….Read More about the Clean Air Act

Jimmy's Excellent Adventure  N. Korea’s Dear Leader, Kim Jong-il, arrived in China overnight. The Dear Leader will not fly, and was reported to be accompanied by his son, Kim Jong-un on a presidential train. Authorities in China will not confirm the trip but police are guarding a hotel in Jilin, a city straight north of Korea in the Northeast corner of China...Read More about Kim Jong-il

Tulip Mania  One of the most well known and first recorded market bubbles was in Tulip Bulbs from 1736 thru 1737 in the Netherlands. People paid more than ten year’s wages for one tulip bulb, until the prices crashed. Since Tulips must be planted in the early fall and bloom in the spring, a futures market developed for...Read More about Bubbles

Bubblicious Treasuries  According to the Investment Company Institute (ICI), investors have withdrawn $33.12 billion from domestic stock mutual funds in the first seven months of 2010. The ICI further tells us the money is flowing…Read More about Musical Chairs

Corporate Responsibility  What is the primary purpose of a “for profit” corporation? Why do you buy stock in a company? Do you decide to own a piece of a company because they constantly increase profits and grow, or because they are ecologically friendly and sponsor philanthropic events in the city or state...Read More about Corporate Waste

Merger Mania  Mergers and Acquisitions make investors and trader’s hearts beat a little faster. There have been two big ones that have shook the market in the last two days. BHP Billiton (BHP) offered $39 billion or $130 per share for Potash Corp (POT) and Intel (INTC) bought McAfee (MFE) for $7.68 billion or $48 per share...Read More about Unsolicited Offers

Are You Smarter than a Fifth Grader?  Zogby International surveyed 4835 American adults on basic economic questions, and then asked the respondent’s political leanings. The results are not surprising to you, if a political discussion ever ended with puzzled looks after a moronic statement by a “feeler”...Read More and Take our Test

Is the Uptrend Over?  We have been warning our premium subscribers of our fear the market will experience a hard sell off in August or September, retesting the low of 1010 set on July 1. In our letter to Buy, Sell, Hold subscribers last night, we said we are not as convinced lately this must occur although we still believe it is possible...Read More with our Point & Finger Chart

Foreclosure Woes  The Associated Press reported yesterday that home mortgage payments that were 60-days late stood at 6.67% in the second quarter. This was up from 5.8% a year ago and well above the historical norm of 1.55 to 2.0%. Record delinquencies were reached in the fourth...Read More about Mortgage Foreclosures

TLT Bellwhether? The market is hesitating today. We are at a crossroads and must choose a direction. Will traders and investors push the market higher and enjoy the party, or get a scowl on their face and watch but not buy? Do we wait for confirmation of some bit of news that tells us the economy is improving?   While we wait, do we dabble in an oversold market trying to find...Read More about Fed Actions

Eurozone GDP Grows  They may have budget problems, but the eurozone is growing their GDP. Eurostat, the EU statistics agency, reports that the 16-member eurozone grew by 1% in the second quarter. Germany led as they reported a higher than expected growth rate of 2.2% in the second quarter. Germany was set to capitalize on the euro currency drop since they are Europe’s...Read More about Eurozone Economies

Slowdown or Deflation?   The market responded to the Fed’s slowing economic forecast yesterday by falling out of bed. We couldn’t think of why the market would go higher. When kids are balanced on a teeter totter, eventually one side will hit the ground. We didn’t know where the bad news would come from to drive a stake in the shoulder of the bulls, but knew it had to be out there somewhere...Read More about Euro Trouble 

Fed Fumbles  For the last year, banks could borrow money from the Fed at 0.00% to 0.25% and buy 10-year treasuries receiving 3.5% to 4% interest. The Federal Open Market Committee (FOMC) sent a signal yesterday that the economy is weaker than previously thought. Rather than raise short term rates, they announced they would use up to $1.3 trillion from maturing mortgage backed securities (MBS) to buy treasuries.  Investors have taken the Fed's advice and are running scared from the market at open this morning.  The Fed's statement has raised fear about the U.S. economy...Read More about the FOMC statement.

Money Flows Part 2 Only the velocity of the money produces inflation.  Additional money sitting on bank balance sheets being used to buy treasuries does not produce inflation.  That is why two Fed governors want to raise the short term rate on loans to banks, to squeeze the interest rate spread, so they will make loans into the economy. The Fed takes back the money and reduces money supply (to control inflation) by not renewing or rolling over the short term loans to the banks...Read More about Fed Action

Money Flows Part 1 Like me, you no doubt have read reports that money has moved out of the stock market and money invested in the bond market has increased. If money on net is moving out of stocks, how can the major averages increase? If there are more sellers than buyers…then it seems that the law of supply and demand dictates that the prices must drop. What is your understanding?...Read More about Money Supply

Happy Face Romer Out  Romer was rumored to be at odds with Larry Summers. She was an odd choice for an administration that wanted to follow Keynesian principals of spending money by the government. She had written that a “tax increase of one percent of GDP lowers real GDP by roughly three percent.” Her research came to the conclusion there was "no support for the hypothesis that tax cuts restrain government spending; indeed ... tax cuts may increase spending.”...Read More about Fin Reg Politics

Oil Trade Time?  U.S. crude oil inventory was down 2.8 million barrels yesterday according to the Energy Information Agency (EIA). Gasoline stocks were up 800,000 barrels and distillate stocks (diesel) were up 2.2 million barrels. These numbers look like they nearly balance out leaving total U.S. inventories roughly the same as the previous week...Read More about factors in the Crude Oil Market

Unemployment Uptrend?   The market looks good today on a stronger than expected ADP Nonfarm Employment Report.ADP showed 42,000 jobs added last month.The market expected 25,000.Amazing to see so much made over so little.These numbers are for the United States, not one city!...Read More about our Growing Economy?

Car Sales Melt Up  Automakers reported July sales today, GM sales were up 5.4% over July last year. Ford reported a 3.1% sales increase and Chrysler’s sales were up 5%.   Foreign manufactures were up varying amounts except for Honda (down 2%) and Toyota fell 3.2%...Read More about Chinese Imports from U.S.

Print More Money!  The market is up this morning acting like we might push through resistance this week. We haven’t seen 1148 since 5/18. Retail investors and traders are ignoring any bad news and jumping on the band wagon. Smart money seems to be setting on the side, watching. Shorts are taking it in the...Read More about the FOMC.

Earnings Jump 91% = Sell Off?  Our favorite company reported earnings Thursday morning. Exxon’s (XOM) second quarter earnings jumped 91%. XOM is the world’s largest oil company not under state control. They reported $7.65 billion in profits, or $1.60 per share, almost double last year’s second quarter $0.81 per share. Revenue was up 24% to $92.48 billion...Read More about Exxon Mobil

Environmental Disaster?  Time Magazine has an article that will make the White House squirm as they continue to enforce the deep-water drilling ban. Time’s The BP Spill: Has the Damage Been Exaggerated? tells us the spill is the biggest ever but may not be that bad concerning the environment. Jacqueline Michel, a federal contractor and geochemist says the “Impacts have been much, much less.”..Read more about Oil Spill Impact

We Bring Bad Things To Life  I gave Steve my standard answer, “Buy Exxon, the best company in America.” Then I hurt his feelings, “Sell GE, worst company in America.” He was surprised and told me how he had bought it over a year ago at a low price and made a lot of money. He doesn’t understand the stock market, “I own a company and next month it is worth less or more, but they are still the same company and have not done anything different.”..Read More about GE, the Worst Company in America

Belgium Baloney  We are all familiar with the problems that the eurozone sovereign debt crisis caused in the spring for world stock markets. Where will the next problem develop? By now we know the PIIGS by heart; Portugal, Ireland, Italy, Greece and Spain. What if the next problem comes from left field, from a completely unexpected development...Read More about the next Credit Crisis 

(Un) Precious Metals   Gold is trading even with a bias down and silver is even with a bias trending up. Together precious metals are treading water. What does this mean? We think investors and traders are trying to assess the likelihood of deflation in the near term. This is opposed to the popular view for the last year that the U.S. would enter an inflationary period and blow the top off...Read More about Precious Metals Trends

Crony Capitalists/Politicians   From the "Can't we all just get along" department.   CNBC reported Wednesday that Lloyd Blankfein of Goldman Sachs (GS) and Jamie Dimon CEO of J.P. Morgan Chase (JPM) were not invited to the Financial Regulation signing ceremony. Executives from Citigroup (C), Bank of America (BAC), Barclays (BCS) and Morgan Stanley (MS) were all invited...Read More about Goldman Sachs

Deflation Knocking  Deflation is defined as a decrease in the general price level of goods and services. Paper currencies that are not backed by any store of value as a reference point (fiat money) can be inflated or deflated by monetary supply and economic decisions made by market participants...Read More about Deflation Causes

Financial Regulation, Law  President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Financial Regulation or Fin Reg) this morning. It took us two hours to find a copy of the bill online in its final form...Read More on Fin Reg

Coal, Cheap Clean & Plentiful I came across some interesting information this week about coal. In the last thirty years, the U.S. has tripled consumption of coal. More than 50% of our electricity is currently generated using coal. During the time that our use has increased, coal emissions have been reduced by 40%. Last year our consumption decreased by 10.7% because of the credit crisis...Read More about King Coal

Handwriting on the Wall  “Fin Reg” was passed last week and President Obama will sign the massive financial regulation bill this week. The head of the SEC, Mary Shapiro, will announce the agency’s intention to hire about 800 new bureaucrats tomorrow. She is scheduled to testify before congress...Read More about Market Optimism

Houston, We Have a Problem  BP has the gulf well capped for now. They are running an “integrity test” to see if the well can hold the pressure, estimated at 9,000 psi, and perhaps much more. This makes no sense. BP has a stack on the riser, why aren’t they letting the oil flow to the tankers waiting...Read More about the Gulf Oil Spill

Watch This Index  One index to check the world’s economic pulse is the Baltic Dry Index (BDI). The BDI tracks the cost of transportation for bulk commodities on ocean going vessels. The shipping cost of items such as coal, iron ore, copper and grains are calculated in the BDI. The heavier the demand for shipping these commodities, the higher the BDI goes. When demand for shipping is lower...Read More about BDI Index

Best Quarter Ever  Intel Corp. (INTC) reported after the market close yesterday.  INTC CEO Paul Otellini called it their "best quarter ever."  The company earned $2.9 billion, or $0.51 per share. Revenue rose 34% to 10.8 billion. Retail sales data this morning showed slower consumer spending...Read More about Market Mood

New Moratorium, Old Song?  Diamond Offshore Drilling (DO) was the first company to move a rig out of the Gulf of Mexico last Friday. Yesterday, they announced a second deepwater rig was moving to waters off the Republic of Congo due to the U.S. drilling moratorium. The rig was under contract to Murphy Oil through March 2012. The contract was renegotiated to a one year commitment for operations in the Gulf when Murphy can get permits...Read More about the new Deepwater Drilling Moratorium

All Eyes Watch for Earnings  The market is wandering what to do. Are we on the verge of a bull market taking us to new highs, or is the Bear going to plunge us to new lows? Low volume tips buyers hands; animal spirits have not been present for some time. Volume seems to dry up as stocks move higher...Read More about Earnings Season

Bank Secrecy, Asset Security  The U.S. government makes you report money held in overseas accounts. Last year Switzerland’s UBS bank paid a fine of $780 million dollars and disclosed the names of 4,450 U.S. citizens with...Read More about Asset Secrecy

Tax Tsunami   A Tsunami of tax hikes are around the corner, what can you do? In six months, the largest tax hikes in the history of the U.S. will take effect.  These tax hikes will hit your family and small businesses like a tsunami...Read More about Tax Hikes

Fog of War  Trying to buy into a market on such a steep decline as the last ten weeks is tough, as every new position seems to immediately go into the red. Traders look for a support level before opening new positions, then sell when their limit is hit. How many positions can you open, only to watch every one of them stop out? It causes a trader to lose confidence and his bearings due to the Fog of War!...Read More about Trading Stocks

Tip: Return of Your Money  After the market volatility of the last two months you may have some cash sitting on the sidelines. A safe place to park money looks better and better to many investors as evidenced by the recent dip below 4% on 10-year treasuries. Interest rates can only drop this low when fear helps investors remember the most important question is “Return of my money…then return on my money.”->Read More about Treasury Inflation Protected Securities (TIPS).

It Can't be that Bad  How bad can it be? This question allows humans to minimize the impact of bad news or actions. Except for the occasional pessimist, most of us try to ignore the negative and “accentuate the positive,” to borrow a phrase from an old song. The longer a bad situation goes on, the more we minimize it, thinking it will go away and not bother us again. This tendency is probably hard wired into our Rat Brain...Read more about How Bad the Oil Spill can be.

Sell in May and Go Away  Sell in May and go away sounds like good advice as we sit today. The market has been punishing investors for the last two months, and it doesn’t look like it is over. We crashed through the 1040 support line on the S&P 500 yesterday. This morning touched 1010 before bouncing...Read More about Death Cross

Sacred Cows and Rat Brains Today we are going to shoot some sacred cows, so to speak. Popular herd mentality is the enemy of society, and most investors. We are all guilty at one time or another of accepting popular opinion as “truth” as opposed to being a bit of a contrarian. How many times have you served on a board and made a decision, only to later try to understand how such a stupid decision could have been made? We also are mindful of every investor’s “rat brain.” That little gray area we all carry, that causes us to act when confronted by danger...Read More about Popular Opinion

Tesla IPO  With the sour mood of the market today, why not write about something positive? Tesla Motors (TSLA) went public at $17.00 per share. TSLA raised approx. $202 million from the sale of 11.88 million shares. Elon Musk, the founder, and other insiders sold an additional 1.4 million shares. They (insiders) have also granted underwriters an option on an additional 1.995 million shares to cover overallotments...Read More about Tesla's Initial Public Offering

G-20 Hangover  The G20 summit in Toronto came to a close with no agreement on the financial tax we discussed in G-20 Summit Goals last Thursday. Press reports are covering the news as a tax on banks, but it was much more than that. The “big picture” goal was to tax every financial transaction down to, and including, individual investor's stock or bond purchases. Individual investors should give thanks to Canada, Australia, Japan and Brazil for standing in the way of this freight train. Where was the U.S.? Shoveling coal...Read More about Financial Regulation

Big Boys, Little Guys  What do we do when only the big boys are left? This question cuts to the unintended consequence of the current attitude in Washington. Whether health care, financial regulation or off-shore drilling, more regulation means less competition and higher prices for consumers...Read More about Compliance Cost

G-20 Summit Goals  The G-20 meeting starts Saturday in Toronto, Canada. The tug-of-war between the U.S. and Europe couldn’t be starker. Traditionalists would think the U.S. would be trying to pull Europe back from the brink of socialist spending plans, and Europe would be encouraging the U.S. to “prime the pump” with more government spending to goose the world economy. Traditionalists would be wrong, 100% wrong...Read More about the G-20 Agenda

Moratorium Manipulation  After a federal judge overturned the existing six month moratorium on deep water drilling, the administration announced an appeal. This was surprising in that they had not taken the time to read the judge’s opinion first.  U.S. Interior Secretary Ken Salazar is also preparing a new revised deep water drilling moratorium.  He will announce this "new" moratorium while appealing the previous six month moratorium...Read More about the Administration's Manipulating the Gulf Spill

Gulf Coast Workers 1, Obama 0  A New Orleans Federal Court blocked Obama’s six month moratorium of deep water drilling. This decision was made quickly so either party could appeal before the appeals court goes on summer recess. Reuters has a quick story on the appeal with some background information. The administration has said they will appeal the ruling, and the Interior Department announced they would not issue any new permits without lengthy review...Read More about General McChrystal

Be Careful What You Wish For  On Saturday, China announced they would let their currency the Renminbi Yuan appreciate against the dollar. This ends two-years of currency policy that kept the Yuan tied to the value of the dollar. The U.S. Congress called on the Treasury Department to label China a currency manipulator in March. To this we say, “Be careful what you...Read More about the United Reserve Currency.

Deserves got nothing to do with it” according to Clint Eastwood in The Unforgiven. Gene Hackman had just exclaimed that he was building a house, and he didn’t deserve to be killed. The house was made available for a new owner, courtesy of Eastwood’s character, William Munny...Read More about the Real Estate Double Dip

White House Shake Down   I popped some popcorn to get ready for today’s appearance of BP CEO Tony Hayward before the House Oversight Subcommittee. Of course we were going to have to suffer the pontifications of many members that don’t know blow-out from flatulence, but that is beside the point...Read More about BP Blunders

Drill Baby Drill  is now repeated derisively, targeting those who believe a country should exploit our own natural resources as opposed to paying other countries to sell their natural resources.   We had a chance to watch the “Wizard of Washington” last night. I came away with that feeling I might be coming down with the stomach flu.  It was a similar feeling to when Jimmy Carter won the presidency.  I almost died of alcohol poisoning...Read More about BP Cutting Corners

Print Baby P rint is the call from politicians and central banks to supply the one unnatural resource we don’t need any more of. We have not written about monetizing the debt in some time. It hasn’t been on the front burner of late. We have other issues that have pushed it aside. Don’t believe it is gone. Just like an athlete that trains under the lights long hard hours for his moment in competition, bureaucrats are working overtime in darkened offices undermining the value of....Read More about Debt Monetization

A Billable Catastrophe  American greed and creative accounting are on full display in the gulf region. Commercial clam fishermen have been hit hard with lost fields. The toe bones connected to the foot bone, with hotels and restaurants claiming lost bookings and meals served...Read More about BP Liability

Jackboot Obama   Good news everybody, James Cameron and Kevin Costner have weighed in on the oil spill and may have the answer to stop the ecological damage along the coast...Read More about the Wizard of Odd

Turn out the Lights  My wife and I disagree about shutting off lights when we leave a room. Luckily we have been married for 23 years and have left this disagreement in the past. I foolishly thought I won the argument years ago with the simple question, “If it is cheaper to leave them on, why ever shut them off?”...Read More about the National Debt

A Break in the Clouds  Federal Reserve Chairman Ben Bernanke testified before the U.S. House Budget Committee this morning. He warned the committee of the importance of a budget plan that brought the deficit down.  He instilled confidence in the markets that the economy was recovering, as market rallied while...Read More about China & Europe

Should I Buy the Dips?  Is it time to “Buy on the Dips?” The question begs an answer, as many have done well over the last year buying on market pullbacks. But the answer may depend on your time frame. Are you a trader or an investor? How much tolerance for pain do you have? If you have practiced this technique for the last month and a half, you have been punished for your efforts...Read More about Market Channels

Does Oh! Bama Know What He is Doing?  President Obama’s administration touted the jobs report last week. Rule #1, don’t talk about what you don’t know. Surly, even those that like the current occupant of the White House realize he doesn’t know what he is doing. Or does he?...Read More about the Economic Slide

Euro: Panic or Premonition  With one of the oldest democracies in the world teetering on a cliff of massive debt, and Asia recovering from the global recession faster than anyone expected, the big global economic question of the day is: Do I short the Euro and go long on the Dollar, or short the Euro and go long...Read More about FOREX Trading

Four Star Bubble  In the hearing, Buffett defended the ratings agencies as participants in the “greatest bubble” he had ever seen. He also referred to the housing bubble as a “four-star bubble” and “the granddaddy of all bubbles.”...Read More about Warren Buffett

Back in The Saddle  The markets are all over the map today as investors and traders try to understand the information filtering in through sunburned eyes from the long weekend. It is time to get back in the saddle...Read More about Market Worries

Can You Spare A Yuan?  Honda has suspended production at two plants in China after 1,000 workers went on strike May 17. They want higher pay.  Honda has offered a $52 dollar monthly raise for full time workers...Read More about Chinese Manufacturing Pay

All Aboard!  I about spit out my coffee this morning when I saw the overseas markets, and our futures market numbers. This was not what I expected. Well expect no more, reality check. It took the Asian markets to tip their hand. What happened?...Read More about the Next Bull Run.

The Bunds Have It  Germany sold seven billion euro in five year bunds (bonds) Wednesday. They had a coverage ratio of 1.1 That is terrible, Germany had to retain 22% of the issue. If not for the Bundesbank, it would have been a failed auction. As the credit crisis in the eruozone built we discussed the problem for Germany. By rescuing Greece (and any other country that cannot control spending) they have to guarantee their debt. When Germany did this the interest rates for sovereign debt from Greece went down...Read More about Germany's Almost Failed Auction

Wall Street, We Have a Problem!   You can imagine Tom Hanks speaking those lines about the market for the last four weeks.If you fancy yourself a trader (or a traitor to some congressmen) you should be watching this...Read More about Market Anomoly

Proxy Wars  Treasury Secretary Tim Geithner, Secretary of State Hillary Clinton and Fed Chairman Ben Bernanke are leading a 200 person delegation to China. Items on the agenda are N. Korea’s sinking of a S. Korean ship, Iran’s nuclear weapons, the Yuan valuation and government procurement rules...Read More about China Trade 

Extreme Moves  The market has been down for six days in a row. Thomas Paine said, “These are the times that try men’s souls” when speaking of greater calamities. We must keep the day-to-day mechanizations of the market in perspective. Watch your trailing stop losses. We have a couple of higher volatility stocks in our long-term portfolio that are in trouble...Read More about Actions To Take

Oils Slippery Slope  Crude oil, as represented by the USO etf, has been on a slide since hitting a high of $42.19 on April 6th. USO is trading at $32 and change today. This is a 23% decline in the last six weeks. What has happened in the oil patch to cause the decline? We have had increasing inventories, but is the build in inventory responsible for the price decline?...Read More about Crude Oil Price

Too Many Moving Parts We have a lot of moving parts coming together in a perfect storm to cause traders and investors great concern. If you are not watching the market closely we closed Tuesday at 1120 on the S&P. This is the level of resistance the market encountered in February when we were...Read More about the Market Correction

Nothing but Air   Crude oil is trading lower on a strong dollar and four weeks of building inventory. The U.S. dollar has been on a tear against the euro for the last two weeks.  The euro has been in a free fall against other currencies.  Which European government provides support for the value of the euro, or is it standing on Nothing but Air?

Macro Trends Redo  Nervous investors around the world are watching red paint their computer screens today. Relax. The jostling to buy and sell and find the silver in the storm clouds is simply giving you more grey..Read More about Market Adjustments

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