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CARTEL CAPITULATION WATCH
The State Department ordered non-essential personnel out of Saudi Arabia. Not for nothing, crude oil closed at $37.57, up 85 cents, and is close to challenging its highs again.
The DOW sold off on the Saudi news, going down 50 on the day, but as usual it came right back, closing at 10,398, up 19. The DOG did not fare as well, falling 23 to 2002. The S&P sure looks like it has put in a massive top:
http://futures.tradingcharts.com/chart/SW/X
The CRB fell a little more than 2 points with soybeans leading the way down. They were bombed, with May going down the 50-cent limit to $9.63 per bushel.
The dollar fell a bit to 90.36, down .20, while the euro rose .19 to 119.58.
Bad news came early:
April 15 (Bloomberg) -- The number of Americans filing initial claims for jobless benefits rose to 360,000 last week, a 30,000 increase that was the biggest in more than a year, the Labor Department reported in Washington.
Claims had fallen to a three-year low of 330,000 the previous week, and claims have averaged 351,000 this year, down from 402,100 for all of 2003. The department said claims tend to be unusually volatile during the first week of a quarter and the Easter holidays, which coincided. The number of people continuing to draw benefits fell for a second week.
Good news came later:
April 15 (Bloomberg) -- Manufacturing in the Philadelphia region expanded at a faster pace this month as new orders and shipments improved, a Federal Reserve report showed.
The Fed Bank of Philadelphia's April general economic index rose to 32.5 from 24.2 in March. A number greater than zero means a higher percentage of manufacturers surveyed reported that business improved rather than deteriorated. The index reached a 10- year high of 38.8 in January and has been above zero since June.
GATA’s Mike Bolser:
Repo Update: Fed gets serious, adds $17.25 Billion, pool rises to $40.53 Billion
Hi Bill:
The Federal Reserve added $17.25 Billion in repos against an expiration of $15 Billion, an action that moved the repo pool up to $40.53 Billion. After Monday's DOW dip I had been expecting something of this magnitude. It's not a Fed panic but it IS a firm up move in the pool designed no doubt to off-set recent DOW weakness. There isn't any question in my mind that the Fed will succeed in levitating the DOW to any point it chooses.
That isn't true for the Fed's attempt to depress the price of precious metals. The crucial difference between the two is that the Fed can't print precious metal. That metal must be extracted, at great cost, from the ground.
The Fed has admitted (by the rising 200-day DIVG moving average) that it can no longer hold the line on precious metals. That admission was made in the first part of January 2004 when it moved up past its previous high in a pure, linear retreat pattern. They also are forced to admit that inflation is no longer under control as evidenced by rising long-term interest rates (although the ten-year treasury needs to pierce 4.67% to be sure). While the Fed still may attempt to cap the DIVG 200-day ma (and this week's down move is a strong one) this Spring has the earmarks of a full retreat by the Fed.
My DIVG prediction of 353 won't hold in absolute terms but we must wait to better examine the dwell points and where they cluster-that will take another five days.
Rothschild's retreat
They were an icon at the LBMA, providing the chairmanship that set the daily price of gold, the PM Fix and now they are withdrawing from the metals trade. There are many interpretations for this oddly timed action and I am not the best prepared person to analyze the development however, if we judges the timing alone, less than three months after the Fed's gold retreat commenced, then this departure portends very big gold events in the future. Those events may contain anything from draconian US/UK market closures coupled with prohibitions against gold ownership to a laissez-faire era of un manipulated gold prices. Whatever sequel comes, it will be big.
Mike
What else would you expect?
Treasury Chief Unworried by Inflation
4/15 WASHINGTON (Reuters) - U.S. Treasury Secretary John Snow said on Thursday he was not particularly worried about inflation pressures in the United States.
Inflation is still modest, as reflected in (Wednesday's Labor Department report, and we have the lowest inflation in, what, 40, 45 years. So I'm not particularly concerned about it at this point," Snow said in an interview on CNBC Television.
"I think there's still a lot of running room in this economy," he said, referring to excess capacity in U.S. factories and still-intense competition among businesses that kept companies from big price rises.
The Labor Department said on Wednesday that its consumer price index, the most widely used gauge of U.S. inflation, rose a surprisingly large 0.5 percent in March, outstripping the 0.3 percent gain Wall Street expected. The closely watched core CPI, which strips out often-volatile food and energy costs, rose 0.4 percent, the biggest increase since November 2001.
-END-
What planet do the Bush Administration people live on?
This is more like it:
Bill;
Little wonder economic reports of late are showing a "hot economy". IMHO this all stems from under reporting inflation in the US economy. The Feds have categorically admitted that PPI has no relevance and month to month comparisons are meaningless in their own recently published literature. CPI has for a long time simply measured the prices of things that do not change in price. We all need to remember that viewed in isolation inflation is by definition growth (the bad kind) -but only if you so choose to count it that way. By under reporting inflation (lying), retail sales are necessarily 'inflated' and GDP appears stronger since an inappropriate lower deflator is used. As such, 'bad growth' (inflation) is made to look like 'good growth' (productivity).
This is why the price of precious metals must be kept under wraps by the central planners. When mainstream media sees a falling gold price they automatically report that "the market" does not view inflation as a problem and mitigates the need for higher interest rates in the near term. I have empirically witnessed this very type of reporting over the past few days with the assassination of the gold and silver prices.
The 'chink' in the armor of this deception is that the central planners no longer have physical silver to allow them to force its price down. They only have fiat paper silver in reserve and this explains the disconnect between the fiat COMMEX price of metals and the physical world in places like India where Mr. Brimelow so apply reports that very significant premiums are being paid by people who wish to hold physical metal. The central planner's cover is being exposed and they know it - this is why they are 'throwing tantrums' trying to hammer the price of metals so harshly over the past few days. I reckon the jig is almost up!
best
Rob
This too:
The King Report
M. Ramsey King Securities, Inc.
Thursday April 15, 2004 – Issue 2897 "Independent View of the News"
Higher-than-expected CPI shocked the markets. But again the reported CPI greatly understates inflation. BLS has energy up 1.9% in March, with gasoline up 5.5%. BLS has natural gas falling; the futures rose 6% in March. BLS want us to believe that food & beverage prices rose only 0.2% in March and only 1.5% over the past three months, with the CRB at 14-year highs. BLS has beef and veal down 2.5%, when cattle futures rose 7%! Housing costs increased 0.3% due to a 3.8% hike in hotel and lodging rates, the biggest increase since BLS began tracking them in 1997. BLS has used car & truck prices down 0.1% m/m and down 11.6% y/y. However, Manheim Auctions, the largest auto reseller in the world with millions of transaction/year states on their web site, "Used vehicle prices (on a mix, mileage, and seasonally-adjusted basis) moved sharply higher in March. The Manheim Used Vehicle Value Index stood at 106.6 for March, up 1.7% from February’s reading of 104.8. The Index is up 4% over the past year."
http://manheimvalueindex.com/c…s/apr2004php-k3k5jk109ff/ http://www.bls.gov/news.release/cpi.nr0.htm
Manheim offers a devastating critique of BLS methodology in determining used vehicle prices. 1) BLS uses a limited sample; price is based on guidebook. Manheim uses all vehicle transactions, over 5m/year. BLS adjusts for ‘expected depreciation’. (Are you kidding? How many Street denizens know this?) BLS of course hedonically adjusts prices and uses a three-month moving average. Manheim refrains from adjusting real transactions.
http://manheimvalueindex.com/c…jk109ff/comparisonCPI.php
How many other items are inaccurately calculated by BLS? Probably most.
Apparel prices increased 0.9%, but not seasonally adjusted it soared 4.1%. BLS cites the introduction of the spring-summer line. Yes, but what do consumers actually pay? Not seasonally adjusted CPI rose 0.6%. Where can we get a seasonally adjusted checkbook? Does your business have a seasonally adjusted cash register?
BLS has ‘tenants’ & household insurance’ down 1.4% for the past 6 months and ‘water, sewer & trash collection’ prices down 1.1%. BLS believes food at home costs fell 0.2% over the past 3 months while all those commodities soared. Even more incredulously, BLS has dairy prices down 3.7% over the past 3 months; milk, cheese & butter are at or near record prices.
http://www.bls.gov/news.release/cpi.t02.htm
Economic columnist Louis Uchitelle wrote in a December 1, 2003 article titled "Why Americans Must Keep Spending" that, "The Federal Reserve's "financial obligations ratio," which includes debt service as well as rent, auto leases, property taxes and homeowner insurance, comes in at 18 percent of disposable income. Both measures are at near-record levels, but not so high as to inhibit spending, thanks mainly to low interest rates." BLS has housing costs including rent at >32% of CPI. Who is wrong, the Fed or the BLS? Mr. Uchitelle also notes, "Personal consumption expenditures, adjusted for inflation, have risen since 1973 at a faster average annual rate than median household income, similarly adjusted for inflation: spending is up at a 3.2 percent annual rate versus a 0.5 percent increase in income, according to recent government data. As a result, a typical two-earner household with a $68,000 annual income today is earmarking 75 percent of it for such fixed costs as mortgage payments, child care, health insurance, cars and taxes. In the early 70's, only 54 percent of a typical household's $39,000 income went for the same expenses, the two authors maintain." As we keep averring, the megatrend is the continual diminution of US living standards and the middle class. And it’s reflected in the dollar.
http://www.homeboundmortgage.c…ortgage2_Refinancing1.htm
BLS allocates medical care at 6.074% of CPI, yet healthcare spending is 15%+ of GDP. Does BLS believe government and insurance companies pay the balance, so it’s ‘free’ to consumers?
PG announced a 6% hike on coffee; Kimberley Clark raised Kleenex and Scott towels an avg. 6%. Guess they have a different view of the inflation rate.
China faces a rice shortage as Asian rice prices have soared 25% to 33% since November.
When inflation flared in the late ‘70s, Jimmy Carter’s economic chief, Alfred Kahn, instituted the ‘core’ concept to obfuscate inflation. Of course Wall St shills and Pols embraced this deceit. It helps sell paper. And pols can demogogue the elderly and swindle them at the same time…Ex-food and energy, you’re dead. Wall Street, the Fed and politicians what the public to ignore the costs of the essentials of life and focus on the core or the frivolties. Humankind from creation has needed food and energy but has survived without DRAMs and PCs for most of its history. PS – Kahn also garnered notoriety when he uttered the word ‘recession’ and took heat from Carter’s minions. Kahn then faceitously said he could no longer say ‘recession’, so he would instead use the word ‘banana’ to describe US economic conditions.
Wall St tabletalk has the Fed raising rates in September and possibly in December. That will be too late. Many people assume the Fed won’t raise rate before the election. If the Fed does not raise rates in May, gold, silver, oil & gasoline could soar. Oil is the key. It could jump far north of $40 as the ‘drive season’ nears; Memorial Weekend being the start. Any Fed delay could ignite oil & gasoline. Then Bush could become Jimmy Carter. However Kerry is no Reagan and there is no Volcker in sight.
-END-
Yep, no inflation:
Bill,
In late 2001, I was involved in the acquisition of (and am a director of) a wood pallet manufacturing company headquartered in the US. It is, in fact, with fifteen manufacturing sites the largest of its kind (by about 2 and one-half times) in the country.
I just received our March financial report. The good news is that March revenues were 15% above an aggressive budget. It was a record revenue month in the history of the company. (As a lot of 'mom and pop' organizations have struggled in the tough economy we have picked up market share.)
The 'rub' is that even though revenues were up significantly, our operating cash flow was 8.5% below budget. Why? We're not 'buying market share' our average selling price per pallet was 6.8% above budget. What has happened (surprise, surprise!) is that our raw material costs have skyrocketed. Our primary raw materials are lumber and nails (steel). Get this. Our raw materials costs were up 6.1% since the prior month (Feb.), and...drumroll please...57.7% higher than the same month a year ago!
But, of course, there is no inflation.
Best,
Joe Longino
London’s Michael Coulson is one of the few in the establishment world who has been open to GATA. A few years ago he invited Reg Howe and I to London to speak at his Mining Analysts seminar. He has a new book coming out, ‘'An Insider's Guide to the Mining Sector'. You can learn more about it by going to:
http://www.harriman-house.com/mining
The odds favor today was a selling climax for both gold and silver. Silver closed higher after making a double bottom at $6.80 and the shares moved up for a change, ignoring the bullion price drop. The HUI held its 200-day moving average support and closed at 211.88, up a modest 2.68. The XAU gained 1.16 to 95.08.
The Comex disconnect with the gold/silver physical market around the world should over be and done with. Thus, the gold/silver shares ought to wake up and accelerate to the upside!
GATA BE IN IT TO WIN IT!
