Dear Jim,
Your formula looks spot on as always. I am of the opinion that the "recovery talk" was all hot air!
Best,
CIGA BT
Dear BT,
QE to Infinity is certain. Gold at and above $1650 is certain.
Management of Perspective Economic (MOPE) is running out of steam.
Regards,
Jim
“Throughout the summer, data signals have become more alarming,” wrote El-Erian, who is based in Newport Beach, California. “Current policy approaches here and abroad are unlikely to deliver a durable and robust U.S. recovery.”
El-Erian Says `Alarming’ Data Show U.S. Economy Slowing
By Wes Goodman – Aug 27, 2010 3:03 AM MT
PIMCO CEO Mohamed A. El-Erian, seen here, wrote, “Current policy approaches here and abroad are unlikely to deliver a durable and robust U.S. recovery.” U.S. economic data are “alarming,” signaling the recovery is losing momentum, Mohamed A. El-Erian, Pacific Investment Management Co.’s chief executive officer, wrote in an opinion piece in the Washington Post.
Unemployment is high, consumer credit is shrinking and small companies are having trouble obtaining bank lines of credit, wrote El-Erian, who is also co-chief investment officer at Pimco, which runs the world’s largest bond fund. Increased government spending and additional debt purchases from the Federal Reserve are unlikely to spur a rebound, he wrote.
Dear Eric,
I am most interested in Shadow Stat’s take on the real number.
Regards,
Jim
GDP seen revised down on imports and inventories
CIGA Eric
U.S. economic growth likely was much weaker than initially thought between April and June, hurt by surging imports and as rebuilding of business inventories softened, a government report is expected to show on Friday.
Gross domestic product now is estimated to have grown at a 1.4 percent annual rate during the second quarter, rather than the 2.4 percent estimated in the government’s first reading last month, according to a Reuters survey.
While cracks in the façade of big consumption and government are beginning to show, the economic and financial structures that maintain it are still in place. As long as Americans consume more than they produce, they must issue debt (paper claims against future production) to balance the shortfall.
BIG CONSUMPTION -
Personal Consumption Expenditures (PCE) As A %GDP and Personal Consumption Expenditures As A %GDP Average from 1947: 
BIG (GROWING) PUBLIC SECTOR -
Government Consumption Expenditures and Gross Investment (GCEI) As A %GDP Average from 1947: 
The more debt America issues, the more devaluation of the U.S. dollar will be consequence of most, if not all, policy responses.
Source: finance.yahoo.com
Jim Sinclair’s Commentary
Here is a report from a real business man, CIGA Marc, not some dumbass Wall Street cheerleader.
Dear Jim,
Traditionally, summer is a slow time of the year at the hardware store with August being the slowest of the summer months. Preliminary numbers thru yesterday show sales off slightly less than 8% year over year. Were it not for the paint category which we have aggressively marketed this year I feel sales would be off nearly double the 8%. Generally lumber, building materials and mason supplies see some movement during the summer months and this year those sales are off upwards of 30% as large renovation projects and new construction stagnate.
A recent hardware show in Chicago for a large independent wholesaler of hardware experienced good sales but very light attendance. There are those in the industry who have the capability to take advantage of the deals and those who don’t. Similar to other trends within our nation the "middle class" is harder and harder to find.
Recently I was alerted to the fact that drywall products (compounds, sheet rock) will again experience a price increase next month. I can assure you this is not demand related!
Paint manufacturers have increased prices over the summer months and we have also noticed increased prices of paint accessories such as roller handles, roller covers, drop cloths and related items. Many of these items are imported and have in some cases jumped dramatically in price over the past few months.
In general prices are definitely rising at the wholesale level. However the manufacturers and vendors are willing to offer deals to undercut each other which is allowing some flexibility at the retail level. With limited sales nobody wants to lose the sale. How long this can last before they are forced to charge the increased prices remains to be seen but with lackluster business it’s certainly not a sustainable strategy.
One of my favorite salesmen has a good answer when I ask him how business is. His response for nearly 2 years has been "spotty". I can’t argue with his assessment one bit.
Best Regards,
CIGA Marc
Dear Eric,
Double dip, like hell! The bottom is going to fall out.
The smoke and mirrors modest upturn in economic statistics primarily due to the FASB capitulation in April of 2009 comes to an end as the Ski Jumper gets airtime.
Regards,
Jim
Housing is Dragging the Economy to Hell
CIGA Eric
A little more than two months ago, banking analyst Meredith Whitney said on CNBC, “Unequivocally, I see a double-dip in housing. There’s no doubt about it . . . prices are going down again.”
Housing, an asset that depreciates over time, is a function of demographics, leverage, and access to credit (emphasis on access to credit in recent years). Once the credit machine shutdown in late 2008, housing began to revert to its unleveraged, supply and demand driven mean price. The virtuous cycle, positive reinforcing credit on the upside, had turned vicious by negatively reinforcing credit and home prices on the downside. I suggest that once currency devaluation is removed, no discernable “bounce” can be recognized from which a dip could materialize. The steep and largely uninterrupted down trend in the U.S. median home price (MHP) to gold since 2005 illustrates this point.
Source: usawatchdog.com
Jim Sinclair’s Commentary
Non-recourse loans? So without ethics, why not screw the lender?
Commercial Property Owners Choose to Default
CIGA Eric
The banking system pressed hard for the new bankruptcy laws in 2005. Now those laws are biting them in the arse as more investors default and walk away. The commercial property investors are more professional, so they won’t waste time in doing so. For them it’s a good business decision. Rather than throw good money at a bad situation, they simply choose to walk away.
Like homeowners walking away from mortgaged houses that plummeted in value, some of the largest commercial-property owners are defaulting on debts and surrendering buildings worth less than their loans.
Source: online.wsj.com
Dear Eric,
This thing is going to unwind so fast that other than us here at JSMineset, no one will believe it.
Jim
Bullish Sentiment Plummets to Credit Crisis Low
CIGA Eric
Following the herd is rarely profitable. The herd is bearish. Such readings tend to be associated with capitulation rather than an initiation of a trend.
The number of individual investors who have a bullish outlook on the stock market for the next six months plunged to 21 percent, from 30 percent last week, according to a widely followed sentiment survey.
What’s more, this is the lowest weekly reading from the American Association of Individual Investors since a March 2009 level of 19 percent, which occurred just before the S&P 500 collapsed to a 12-year low of 676.
American Association of Individual Investors Sentiment Survey: 
