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CARTEL CAPITULATION WATCH
The DOW (10,457, down 72) and DOG (1995, down 14) had bad days. However, as been the case for over a year now, the Plunge Protection team showed up to prevent any serious downside momentum from taking hold. As Sarge notes:
3:20 an angel from heaven appears
and puts in a buy order for 325,000 DIAmonds. This reversed the market (the DIAs were breaking onto new lows and were 29 points from taking out 104) and we are now rallying back to 105 (which happens to be the delta neutral landing zone that expires the majority of DIA options as worthless. Sheesh. Free markets my butt.
both the DOW and the DOG had lost ALL of their gains for the year and had gone negative for 2004.
But in 120 seconds all of that was washed away.
-END-
Good to see gold move without any help from a weak dollar. This is what Mahendra and I have been looking for. The dollar closed up .20 to 88.24 and the euro was tagged for .87 to 123.02.
Not good:
Households rack up debt at fastest pace since 1987
New York Times
Mar. 8, 2004 12:00 AM
Americans, it seems, are feeling optimistic, or maybe fatalistic, about their financial future. The Federal Reserve's latest reading of the nation's debt, including both household and government borrowing, grew last year at a pace not seen since the late 1980s.
According to the quarterly federal funds report, the total national debt, excluding the obligations of banks and other financial institutions, grew by 8.1 percent last year, its fastest pace since 1988.
Households threw caution to the wind, mortgaging and remortgaging their homes and expanding their debt by 10.4 percent, the biggest percentage gain since 1987. Federal government borrowing expanded by 10.9 percent, the fastest rate since 1992. Only businesses pulled back. Still hobbled by credit overhangs from the late 1990s, corporate borrowing inched ahead by 3 percent.
Overall, the nation's debt grew by about $1.7 trillion last year, to $22.4 trillion, the Fed said. The federal government accounted for about 18 percent of the total, local governments for roughly 7 percent, households for 42 percent and businesses for 33 percent.
A deep recession put a sour end to the 1980s credit bender. But economists are not willing to predict how the current borrowing binge will play out.
"There's a time-bomb issue," said Allen Sinai, head of Precision Economics, a consulting firm. "There are potential adverse consequences, but we don't know when."
-END-
GATA’s Mike Bolser:
Hi Bill:
The Federal Reserve added a paltry $3.5 Billion in repurchase agreements today continuing the sluggish bottoming pattern in the repo 30-day moving average (red trace). The pool total now reads $25.78 Billion as the Fed keeps the downward pressure on the DOW. As predicted, the DOW is moving sideways, struggling to stay at 10,600 at this hour.
There was yet another permanent open market operation today for delivery tomorrow. The amount has not been announced yet. Perhaps the Fed's primary dealers are running a bit low on limousine money.
The currency $USD market pattern is also interesting in so far as the sudden steep falls followed by rapid rises seem to be engineered to catch speculators off side. It is not the kind of action one would expect if the Fed were in solid control of these markets. The hallmark of a fully controlled market is low volatility with tiny intra-day moves...as we see in the interest rate market these days where the long bond trades at 4.7% and has for weeks.
I continue to be very encouraged, on the other hand, by the DIVG 200-Day moving average and its smooth, linear up slope, headed for higher territory. I imagine that the G-7 group have pegged the DIVG's 200-Day ma as their gold value meter and when the loss rate (due to required selling) gets too high, they retreat to higher ground.
This important metric will be updated this evening as the Fed's H10 data for Monday and Tuesday are released.
The repo chart is current (March 9th 2004) at:
http://www.pbase.com/gmbolser/interventional_analysis
Mike
Chuck checks in twice:
Bill:
It appears that the stock market is giving up its resistance here. If so, the drop over the next few weeks could be dramatic. What we need is for gold to pop up through the $410 level as this occurs. The Rydex liquidation continues. I believe that the hot commodity play could be reversing, so we want to see gold decouple from it as its perception as just another commodity changes into a currency. We could have some buffering as a result, if the stock market falls. Talk to you later.
Chuck
The market is breaking a lot of important technical levels. It's important to see if silver and gold especially the shares hold against the liquidation that is on the immediate horizon. So much smugness everywhere. Let's see what the Plunge Protection Mafia has here.
Chuck
From The King Report last evening:
PPI Held Hostage, Day 19
The BLS announced that not only is the January PPI not ready for release, but the February PPI will also be delayed. BLS spokesman Irwin Gerduk says old BLS computers are not capable of handling the reclassified data. (How is it that the widely-heralded productivity miracle evaded the BLS?) Gerduk states, "It wasn’t a single problem, it was a multitude of problems. It was the complexity of the conversion itself, tied to the fact we had 30-year-old systems that were never designed to handle a widespread classification conversion. So you’re basically doing everything at the last minute."
For years we’ve ridiculed BLS and Commerce as being similar to entities and characters from Orwell’s "1984". Winston Smith adjusted current and past economic data at the Records Division of The Ministry of Truth so it conformed to party wishes. The BLS just doesn’t report the data. And that’s some coincidence given the biggest increase in industrial commodities since the ‘80s…Hapless Treasury Sec Snow said the Fed can keep rates low because core inflation is low. It’s been officially omitted.
Most people believe the DJIA declined 66.07 yesterday. But using BLS methodology, the decline becomes much worse. As we keep relating, Mondays over the past few years tend to have triple-digit DJIA rallies. So seasonally adjusted the DJIA fell 175 points yesterday. And of course investors had less pleasure than a normal Monday, so we must hedonically adjust the DJIA 50 more points lower, making it -225. And the quality of the day was diminished because there was no excitement and few opportunities to trade. Ergo we must adjust for lower quality; let’s say another 50 points for -275.
Technically stocks and major indices continue to deteriorate as the bull case loses credibility each passing day. On Monday, Nasdaq declined 1.9% on word that the Deutsche Bank IT Hardware Conference wasn’t as jiggy as expected. The index is about to breech a long trend line and is below a downward-sloping 20-day moving average. More importantly the OTC Index has formed a ‘W’ pattern. "W’ formations are reversal patterns, and the action can be quite dramatic. ‘W’ bottoms tend to reverse more quickly than tops. Most tops generally take more time to form…Other major indices are resting on flattening 20-day moving averages. A dramatic breech of those averages will turn the moving averages lower and imply a short-term at the least trend change.
Bonds are moving higher as econobulls are getting squeezed out…The BoJ disappeared so the yen strengthened….Citibank versus the Bank of Japan – Yesterday Citibank issued a report that stated the dollar-yen would be between 106 and 107 by week’s end. Not bloody likely!
We mentioned some time ago that auto finance companies were offering 6-year loans. Morgan Stanley reports the average car loan is now 52 months and 20% of car buyers opt for 6-year loans. Grant’s Interest Rate Observer cites Edmunds.com research that shows the average car buyer rolls over (adds) $3700 of past auto debt to new car purchases. In the aggregate, car buyers now finance 100.9% of sticker prices! And that’s what happens in bubbles, especially reflated ones. The cure for too much debt and consumer gluttony cannot be even more debt and debt-based consumer gluttony.
Back in November we stated that the US economy would show weakness in November and December because a respite was due after Q3’s orgy and seasonal adjustments would hurt due to 9/11. We said that January and February would be crucial for the 2004 economy and the bull case would evaporate without job growth in Q1. We guessed that stocks should make some type of top in January, pullback in February and then try to make a new top in March. We also stated that March has been an important month due to Japanese machination for its FY end on March 31. That’s why a few weeks ago we forecast a dollar rally into March – because the BoJ usually forces a dollar rally to aid repatriation of earnings for FY end.
The odds are increasing that an important top has occurred in the stock market. Valuations are still at historically high levels and sentiment is at or beyond historic extremes.
The widely-heralded economic and employment boom looks more and more like a non-reoccurring temporary blip. We are 28 months past the recession trough of 11/01, yet income and employment are far below historic cyclical norms even after unprecedented fiscal and monetary stimulus. The bull case for 2004 rests on job creation and economic zest from the ‘momentum’ of Q3. That is not transpiring, and the end of Bush’s tax rebates and accelerated depreciation for replacement equipment will end in Q2. The fiscal deficit will be $750B to $1 trillion. Outsourcing of jobs continues unabated. That leaves only the Fed. Its 1% funds rate has done what to date? Each day the bull case grows shakier. The market readjustment can occur at anytime and history suggests it will be dramatic. "Be prepared, troopers!"
-END-
From Dave Lewis:
Bill,
How depressing to return back home to snow on the ground after a few days in sunny climes. It's almost as depressing as watching the markets which seem to me more and more like a caricature of the economic process rather than one key feature of what once was a virtuous cycle of action-reaction.
My mind keeps recalling the last time the US tried to obfuscate economic reality in a significant way, when Nixon imposed wage and price controls. Shortages and a lack of pricing pressure for labor were the initial result but when the controls were rolled back, the bill came due. You readers might find it useful to check out what happened to prices when the controls were rolled back in 1973. If you think gas prices are rising fast now, consider a trebling of prices, such as was the case during that period.
One other point to pass on, I've been interested in recent bond market action as it pulls the last rug out from under Greenspan's expressed faith in market solutions in the context of fiat money. Without the limiting factor inherent to a commodity based monetary system, any silliness is possible, if a critical mass think it plausible. With the bond market not doing any of easy Al's work for him, it should be apparent to the Fed, as Doug Noland so ably notes each week in his Credit Bubble Bulletin, that this game is out of control. As I wrote last week, when the powers that be finally pull the plug and try to tighten, those playing the game of fiat money musical chairs will find that all seats are taken. Get physical if you already haven't.
regards
Dave Lewis
http://www.chaos-onomics.com
The Chicago Natural Resource/ Technology Conference will be held at the Holiday Inn Rolling Meadows April 3rd, 2004. There will be a special session for newsletter clients and David A. Noyes & Co. clients at 6:30pm on Friday April 2nd . The first half hour will consist of a presentation highlighting the Radez trip to South Africa. The following two hours will be a question and answer forum featuring Jay Taylor, Dave Skarica, Bill Powers, Bill Murphy, and Clyde Harrison.
Saturday’s Conference will begin at 7am. Sponsoring Companies include:
Excellon Resources, Candente Resource Corp., Fischer-Watt Gold, Falcon Ventures, Tumi Resources, Platinum Group Metals, Ltd., MAG Silver, Bright Star Ventures, Expatriate Resources, Tone Resources, Jaguar Mining, IBI Corporation, Queenstake Resources, St. Andrew Goldfields, Chariot Resources, Admiral Bay Resources, Savoy Resources, Clifton Mining, International Wayside Gold Mines, Ltd., Cusac Gold, Royale Energy, Starfield Resources, True North Gems, Kimberly Gold Mines, Northern Star Mining, and "The Resource Stock Watch". The following speakers will be featured throughout the day: Clyde Harrison, "Rogers Raw Materials Fund", Jay Taylor, editor "Gold/ Technology Stocks", Dave Skarica, editor "Addicted To Profits", Bill Powers, editor "Canadian Energy Viewpoint", Bill Murphy, Chairman Gold Anti-Trust Action Committee (GATA), Wistar Holt, Holt/ Shapard Money Group, and Steve Carr, "Honest Money Group".
There will be a free continental breakfast served, hot picnic lunch buffet, and a cocktail reception at the conclusion. For reservations call Eric Radez at 317-633-1738, eradez@danoyes.com, or contact Barb Allen at 317-633-1744, ballen@danoyes.com.
In the Australian:
Mining WARREN Buffet believes in it, as do George Soros, Bill Gates and Bob McNeil. Bob McNeil? He's the chairman of Gold Coast-based Macmin Silver, which, after 12 years of work, has decided to take the plunge and develop what will be Australia's only pure silver play…
-END-
Another GATA coincidence. Silver has gone almost straight up since the GATA ARMY began bombing Eliot Spitzer, the CFTC, NYMEX and Comex with letters and emails!!!
The HUI only gained .31 to 229.31, while the XAU dropped .23 to 100.64.
Once again owners of the gold shares couldn’t wait to bail out of their positions on the gold rally. You got me what investors are thinking out there. What a wonderful opportunity and time to be buying these shares, not dumping them. Oh well!
GATA BE IN IT TO WIN IT!
