In The News Today

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"The only victories which leave no regret are those which are gained over ignorance."
–Napoleon

Dear CIGAs,

There is nothing like a warm welcoming to please the heart!

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Jim Sinclair’s Commentary

They used to steal people to elicit secrets. Now all you need is a good hacker.

It couldn’t happen to nicer people.

A Goldman trading scandal?
Posted by: Matthew Goldstein
July 5th, 2009

Did someone try to steal Goldman Sachs’ secret sauce?

While most in the US were celebrating the 4th of July, a Russian immigrant living in New Jersey was being held on federal charges of stealing top-secret computer trading codes from a major New York-based financial institution—that sources say is none other than Goldman Sachs.

The allegations, if true, are big news because the codes the accused man, Sergey Aleynikov, tried to steal is the secret code to unlocking Goldman’s automated stocks and commodities trading businesses. Federal authorities allege the computer codes and related-trading files that Aleynikov uploaded to a German-based website help this major “financial institution” generate millions of dollars in profits each year.

The platform is one of the things that apparently gives Goldman a leg-up over the competition when it comes to rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and uses top secret mathematical formulas to allow the firm to make highly-profitable automated trades.

The criminal case has the potential to shed a light on the inner workings of an important profit center for Goldman and other Wall Street firms. The federal charges also raise serious questions about the safeguards Wall Street firms deploy to protect their proprietary trading systems.

The criminal case began to unfold on the evening of July 3 when Aleynikov was arrested by FBI agents at Newark Liberty Airport, after returning from Chicago. Aleynikov had just started a job with another firm in Chicago, after leaving the big firm in NY in early June. It appears the financial institution allegedly victimized by Aleynikov had alerted federal authorities that its former employee might be up to no good.

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Jim Sinclair’s Commentary

This title, free of MOPE and SPIN, should read "Federal Reserve under extreme administrative pressure to take QE (free and unfettered printing of electronic money) to infinity in order to peg rates and drive a golden/silver spike into the US dollar’s failing heart."

Fed pressured to peg interest rates

Top Federal Reserve officials are piling pressure on Ben Bernanke, the central bank’s chairman, to keep US interest rates pegged in the present range of zero to 0.25% indefinitely, even though futures markets are pointing to a rise in the cost of borrowing some time before year’s end.

They also say the world’s most powerful central bank should not rush to unwind its stimulus programme as the economy pulls itself out of the worse slump since the Great Depression.

In fact, given prospects for a very slow recovery marked by high unemployment, the Fed’s key interest rate could stay near zero for years, said Janet Yellen, president of the San Francisco Fed in a speech ahead of the US July 4 holiday.

"It’s not outside the realm of possibilities that the fed funds rate could stay at zero for the next couple of years," Yellen said in San Francisco.

The next Fed policy meeting will not be held until August 11-12 but some of the bank’s top officials are clearly laying down markers ahead of the deliberations.

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Jim Sinclair’s Commentary

The present Administration has invested a great deal of its political mojo into a successful rescue of GM.

Other than manipulation of sales (MOPE) in the first 90 days after bankruptcy, a failure in all sales can be anticipated. The Volt is a pure joke technically.

See the Tesla if you want to see a technically advanced but still dicey electric car.

How Bad Are Auto Sales? Ten Questions and Answers
By JOSEPH R. SZCZESNY / DETROIT Sunday, Jul. 05, 2009

How bad are sales, really?
After edging up in May, sales again in June dropped below the 10 million-unit annual sales pace again in June, which puts new vehicles sales at the slowest pace since the recession in 1958-a downturn that forced some carmakers, notably Packard, to shut their doors for good. Meanwhile each of the "Big Six," (the three domestic carmakers plus Toyota, Honda, Nissan, which together account for 75% of all vehicle sales in the United States) all reported double digit declines in sales. The declines ranged from 11% at Ford to nearly 42% at Chrysler. German automakers such as Volkswagen, BMW, Porsche and Mercedes-Benz also reported double digit declines.

How much will the new federal "Cash for Clunkers" program help stimulate sales?Carmakers are hoping the "cash for clunkers" program will add about 250,000 units to industry’s sales total in the next few months. However, the program, which offers rebates of between $3,500 and $4,500 to consumers trading in older vehicles for new, more efficient vehicles, won’t get rolling until July 24, and its $1 billion in funding expires Sept. 30. Automakers are already lobbying for more cash. Germany sank $6 billion into a similar scrappage program, China put $4 billion into its equivalent of cash for clunkers and Brazil put up $3 billion, notes Mark LaNeve, GM,s vice president of sales, service and marketing.

How long can Detroit sustain itself when monthly sales numbers are this bad?
The two bankrupt companies, Chrysler and General Motors, have closed assembly lines for much of May and June, which reduces their revenue substantially. Chrysler started up this week but will close again next week for summer changeovers. Both GM and Chrysler have built their recovery plans on very low sales estimates, which is the principal reason they have closed so many factories and discarded so many employees as they restructure. GM just announced plans to shed another 4,000 salaried employees by October, at which point it expects to have trimmed $12 billion in costs. GM also has cut its advertising spending in half this year, which doesn’t exactly stimulate sales. Bottom line: The next 12 to 18 months are perilous for both companies-and they need a modest improvement in sales just to survive. Ford, on the other hand, has played a difficult hand quite deftly. Despite a drop in sales volume, it has out=performed the market during the second quarter and has actually reclaimed second place in total sales from Toyota, and is closing in on GM.

Are rental-fleet sales down for good?
Jim Farley, Ford group executive for sales and marketing, says that rental fleets are starting to look for replacements for worn out vehicles. Rental fleets have kept cars in service longer than in the past but they’re going to have to pay more for replacements because automakers have slashed assembly capacity. One of the reasons Chrysler sales have dropped so dramatically this year is that it withdrew from the fleet business because it was unprofitable.

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Jim Sinclair’s Commentary

When do you think Economic Rescue and Stimulation Package #7 will come?

Biden: ‘We misread how bad the economy was’

(AP:WASHINGTON) Vice President Joe Biden says the Obama administration "misread how bad the economy was" but stands by its stimulus package and believes the plan will create more jobs as the pace of its spending picks up.

Biden, in an interview airing Sunday on ABC’s "This Week," says the nation’s 9.5 percent unemployment rate is too high. He says there will be more jobs created in coming months.

Biden noted that the $787 billion stimulus package was set up to spend the money over 18 months. Major programs will take effect in September, including $7.5 billion for broadband Internet service, along with new money for high-speed rail and the nation’s electrical grid.

Biden says it’s premature to say whether the country will need a second stimulus package.

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Jim Sinclair’s Commentary

Retaliation against the BRIC’s earlier than anticipated stand on the dollar.

DC could not give a flying f*** about clean air. These are dangerous games of Tariff War at the exactly wrong time.

China joins carbon tax protest
By Alan Beattie in London and Kathrin Hille in Beijing
Published: July 3 2009 19:20 | Last updated: July 3 2009 19:20

Beijing on Friday joined a growing clamour of complaint about US plans for a carbon tax on imports from countries without their own emission caps, warning it could set off a global trade war.

The warning follows the passage of a cap-and-trade bill in the US House of Representatives last weekend, which contained tough provisions to impose carbon tariffs to ensure that American companies would not lose competitive advantage. A recent report by the World Trade Organisation and the UN said such taxes could in theory be crafted to be compatible with WTO law, but it would be hard to prove they were not an illegal disguised restriction on international trade.

"It has always been China’s position that the international society should fight climate change together, but the proposal of some developed countries to slap a carbon tariff on some imported products violates the WTO’s basic principles and is trade protectionism in the disguise of environmental protection," said Yao Jian, spokesman for China’s ministry of commerce.

Earlier this week, Jairam Ramesh, the Indian environment minister, described carbon tariffs as "pernicious" and flatly rejected the idea of negotiating climate change at the WTO.

After the passage of the House bill by a narrow vote last week, President Barack Obama warned imposing carbon border taxes might send a protectionist signal. "I think there may be other ways of doing it than with a tariff approach," he said. The bill now moves to the Senate, where it is likely to receive an even rougher ride from moderate Democrats concerned about imposing more costs on US businesses.

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