July construction spending tumbles to 10-year low
Reuters
WASHINGTON (Reuters) – U.S. construction spending fell more than expected in July to its lowest rate in 10 years, according to a government report on Wednesday that added to fears economic growth was stagnating.
The Commerce Department said construction spending dropped 1.0 percent to an annual rate of $805.2 billion, the lowest since July 2000. June’s construction outlays were revised down to show a 0.8 percent fall, instead of the previously reported 0.1 percent gain.
Economists polled by Reuters forecast construction spending falling 0.5 percent in July.
US private sector cuts 10,000 jobs in Aug – report
Wed Sep 1, 2010 8:21am EDT
NEW YORK (Reuters) – U.S. private employers unexpectedly cut 10,000 jobs in August compared to a revised gain of 37,000 in July, a report by a payrolls processor showed on Wednesday.
The July figure was originally reported as a gain of 42,000.
The median of estimates from 34 economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for a rise of 19,000 private-sector jobs in August.
The ADP figures come ahead of the government’s much more comprehensive labor market report on Friday, which includes both public and private sector employment.
That report is expected to show a fall in overall nonfarm payrolls of 100,000 in August, based on a Reuters poll of analysts, but a rise in private payrolls of 41,000. [ECI/US]
Jim Sinclair’s Commentary
What is the probability that the last quarter will be the best quarter for GM until 2015?
That is a good setup for an IPO.
GM Sales Fall 25% as Unemployment Wards Off ConsumersBy Keith Naughton and Tim Higgins – Sep 1, 2010 8:49 AM MT
General Motors Co.’s sales fell 25 percent last month and trailed analysts’ estimates as the U.S. auto industry headed for its worst August in 28 years.
GM said deliveries fell to 185,176 from 246,479 last August, when the U.S. government’s “cash for clunkers” incentive program boosted sales. The largest U.S. automaker was expected to report a 19 percent decrease, including an adjustment for the number of selling days in August, the average estimate of four analysts surveyed by Bloomberg. On that basis, sales fell 22 percent, Detroit-based GM said in a statement.
U.S. auto sales last month probably were the slowest for August in 28 years as model-year closeout deals failed to entice consumers concerned about the economy and their jobs. Deliveries industrywide may have reached an annualized rate of 11.6 million vehicles last month, the average of eight analysts’ estimates compiled by Bloomberg. That would be 18 percent below last year’s 14.2 million pace and above July’s 11.5 million rate.
“The car market and the overall economy is pretty weak,” Joe Phillippi, principal of consulting firm AutoTrends in Short Hills, New Jersey, said today by telephone. “Showroom traffic is down. We still have issues on the margin with some people not being able to get credit and people are nervous.”
Jim Sinclair’s Commentary
Maybe they are going to price average it with their 2008 purchase on Bear Stearns common shares.
Fed lets China firm buy Morgan Stanley shares
WASHINGTON | Tue Aug 31, 2010 3:26pm EDT
WASHINGTON (Reuters) – The Federal Reserve on Tuesday approved a proposal by Chinese sovereign wealth fund China Investment Corp. to buy up to 10 percent of the voting shares of Morgan Stanley.
CIC has said that it does not intend to seek controlling interest of Morgan Stanley and the Fed said it did not see any adverse impact on competition or on the concentration of banking resources from allowing the deal to go ahead.
Jim Sinclair’s Commentary
The Soros bubble is comical when you look at all the circumstances over which it occurred.
$1500 seems a convenient number to the quoted parties but the real number is $1650 and higher.
Gold Rallying to $1,500 as Soros’s Bubble Inflates
By Nicholas Larkin – Aug 31, 2010 9:28 AM ET
Investors are accumulating enough bullion to fill Switzerland’s vaults twice over as gold’s most- accurate forecasters say the longest rally in at least nine decades has further to go no matter what the economy holds.
Analysts raised their 2011 forecasts more than for any other precious metal the past two months, predicting a 10th annual advance, data compiled by Bloomberg show. The most widely held option on gold futures traded in New York is for $1,500 an ounce by December, or 18 percent more than the record $1,266.50 reached June 21. Holdings through bullion-backed exchange-traded products are already at more than 2,075 metric tons, within 0.1 percent of the all-time high.
“Either a swift economic recovery or further dismal economic performance should bring new buyers into the market,” said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt who was the most accurate forecaster in the first quarter and expects the metal to rise as high as $1,400 next year. “A stronger economy would create more jewelry demand. If the economy stays weak or gets worse, then investors will be looking for a safe haven.”
Investors added to their gold holdings through ETPs for three consecutive weeks, reflecting demand for assets typically favored in times of financial stress. Two-year Treasury yields fell to a record low of 0.4542 percent on Aug. 24 and the yen reached a 15-year high against the dollar the same day. Pacific Investment Management Co., Deutsche Bank AG and Citigroup Inc. have announced or are offering funds or traded instruments designed to guard against sudden market declines.
Swiss Reserves
Buyers accumulated almost 278 tons of gold in 2010 across 10 ETPs tracked by Bloomberg, worth $10.4 billion at this year’s average price. Total holdings are almost twice Switzerland’s official reserves of 1,040 tons, data compiled by the World Gold Council show. ETP holdings reached a record 2,078 tons July 19, data compiled by Bloomberg show.
Jim Sinclair’s Commentary
This is a serious and revealing article, full of fact, that should be reviewed by all interested in gold.
Gold & Silver Market Suppression Failures Flash Buy Signal, Part 2
August 31, 2010
Robert Kientz
In Part 1 of this 5-part series, we discussed two agreements that Central Banks used to suppress the price of gold in the marketplace. Please read Part I before proceeding with this article.
So do the Central Banks still have gold?
A nice quote from the GATA article regarding availability of Canadian central bank gold:
When I published my essay “When Irish Eyes are Smiling: the story of Brian Mulroney and Canada’s gold,” the good folks at the Bank of Canada told me that there had been no physical gold in the bank vaults for years. To quote my essay directly:
“They advised me (early in 2002) that Canada does not really own this gold at all (at the time we were supposed to have about 40 tonnes). What was left of it had been leased out to various bullion banks years ago …and yes, it (was) being accounted for as requested by International Monetary Fund accounting rules regarding leased gold. Canada’s gold cupboard is bare … not a 400-oz. good-delivery bar in sight.”
What about the US gold stocks?
In a book written by Chris Weber and summarized on Lew Rockwell’s site, we noted that in the one audit of Fort Knox:
The shocking admission Ft Knox holds very little good delivery gold was made to Mr. Durell by the chief official of the General Accounting Office (GAO).
By February 1975 Saxbe was Ambassador to India, so Durell communicated his displeasure through his local Virginia congressman.
As a result of this, the GAO sent four men to Durell’s Virginia farm to try to convince him of the validity of their accounting practices. In charge was Hyman Krieger, the GAO’s Washington regional manager.
Jim Sinclair’s Commentary
Looks like a deal, but for what?
I’ll give you one guess only.
No Charges for Moody’s in Ratings Violation
By EDWARD WYATT
Published: August 31, 2010
WASHINGTON — The Securities and Exchange Commission said Tuesday that it had declined to charge Moody’s Investors Service for violating securities laws by failing to comply with its own procedures for rating complex derivative securities in 2007.
The decision followed an S.E.C. investigation, and the commission used the opportunity to warn all of the national credit rating agencies that it would use new powers under the Dodd-Frank banking law to take action against similar conduct, even if it occurred outside the United States, as the Moody’s case did.
The S.E.C. said it had declined to pursue a fraud enforcement action in the case because of jurisdictional issues. The securities in question originated in and were rated and sold in Europe, the S.E.C. said.
The action by the commission comes two years after the beginning of a financial crisis caused in part by widespread losses on mortgage-related derivative securities that had been rated highly by national credit ratings agencies, including Moody’s.
Though the credit rating agencies have come under criticism over their role in the financial crisis, they have not been the subject of major enforcement actions by securities regulators.
Moody’s disclosed the inquiry in May, saying that the S.E.C. had warned that it might sue the firm for making “false and misleading” statements as part of its application as a nationally recognized statistical rating organization, known in S.E.C. parlance by the initials N.R.S.R.O.
Jim Sinclair’s Commentary
The final Pillar of Gold at $1650 is US Government Long Bonds.
Titan Capital Joins Black Swan’s Taleb in Raising Bets on Crash
By Netty Ismail – Aug 30, 2010 4:29 PM PT
Titan Capital Group LLC, whose flagship volatility fund rose 21.6 percent as stocks tumbled in May, has raised bets on extreme market moves because investors’ views on the economic outlook have polarized.
The New York-based hedge fund, which manages about $400 million, has added “a lot more” cheap, out-of-the-money options, betting the market is underestimating the likelihood of a crash, founder Russell Abrams said in a phone interview. Treasuries, German government bonds and Japan’s yen are pricing in economic outcomes that are bleaker than the stock market expects, said the former co-head of U.S. equity derivative trading and convertible arbitrage at Merrill Lynch & Co.
“They are pointing to a much more dangerous environment than what equity investors believe,” he said in an interview Aug. 27. “Either you’re going to see the bond market make the the big move or the equity market make the big move; the current situation is not in equilibrium.”
Nassim Nicholas Taleb, whose book “The Black Swan” is about how unforeseen events can roil markets, said Aug. 11 he is “betting on the collapse of government bonds” and that investors should avoid stocks. Government bonds around the world have rallied on growing signs the global economic recovery is faltering, driving yields on two-year Treasury notes as well as German 30-year and 10-year bonds to record lows last week.
The yen reached a 15-year high of 83.60 per dollar Aug. 24. The Standard & Poor’s 500 Index gained 9.4 percent from July 1 until Aug. 10, when the Federal Reserve said that growth probably will be “more modest.”
Titan Capital Joins Black Swan’s Taleb in Raising Bets on Crash
CIGA Eric
The Final Pillar of the Gold price at $1650 is US government long bonds
Jim
Jim,
In US dollar terms, yes, the US government long bond market is the final pillar to fall.
Five Golden Pillars:
All charts have been updated through August 2010.
Long-Term U.S. Government Bonds Total Return Index (LTGBTRI):
In a multi-dimensional world, where capital flows recognize the effects of currency devaluation, the US long bond market has already generated a recognizable top in constant currency terms – gold. The long-term U.S. Government Bond Total Return Index to Gold ratio recognized a top in 2002.
Long-Term U.S. Government Bonds Total Return Index (LTGBTRI) to Gold Ratio:
Capital (flows), unlike headline analysis, is neither blind nor stupid. The higher order deceleration in the bond market’s secular trend is mirrored by higher order acceleration in the gold market’s secular trend. This is market by the red and blue parabolic curves above and below.
Gold, London P.M. Fixed:
The breakout in the gold stocks suggests that it is happening here and now.
S&P Gold (Formerly Precious Metals Mining)*
*S&P Gold from 1945, Barron’s Gold Stock Index from 1939-1945, 1922-1939 Homestake Mining:
Stick your head in the sand if you like. I only suggest that if you do, you might not like what you see when you pull it out.
Regards,
Eric
Nassim Nicholas Taleb, whose book “The Black Swan” is about how unforeseen events can roil markets, said Aug. 11 he is “betting on the collapse of government bonds” and that investors should avoid stocks. Government bonds around the world have rallied on growing signs the global economic recovery is faltering, driving yields on two-year Treasury notes as well as German 30-year and 10-year bonds to record lows last week.
Source: bloomberg.com
