| GP Update - August 8, 2009 |
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| Written by GP Admin | |||||||||
| Saturday, 08 August 2009 13:10 | |||||||||
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Friday’s relatively good employment numbers were also flattered by the withdrawal of 422,000 people from the labor force in the previous month. If the number of people in the labor force had remained unchanged from June, then unemployment would have risen to 9.7 percent.2 "While we have rescued our economy from catastrophe, we have also begun to build a new foundation for growth," Obama said, but he also warned that tough times lay ahead before the economy would be restored to full prosperity…we have a steep mountain to climb and we started in a very deep valley."3 The government reports that for the first time ever, more than 34-million Americans received food stamps to help buy groceries. During May, which is the latest month figures are available, enrollment surged by two-percent to 34-point-four-million people. That represents one in every nine Americans and marks the sixth straight month that enrollment set a new record. According to government figures, the average food stamp benefit was 133-dollars per person in May.4 I wonder how the American consumer is going to lead us out of this recession when 1 in 9 Americans is on food stamps! Almost half of U.S. homeowners with a mortgage are likely to owe more than their properties are worth before the housing recession ends, Deutsche Bank AG said. The percentage of “underwater” loans may rise to 48 percent, or 25 million homes, as prices drop through the first quarter of 2011, Karen Weaver and Ying Shen, analysts in New York at Deutsche Bank, wrote in a report today. As of March 31, the share of homes mortgaged for more than their value was 26 percent, or about 14 million properties, according to Deutsche Bank. Further deterioration will depress consumer spending and boost defaults by borrowers who face unemployment, divorce, disability or other financial challenges, the securitization analysts said.5
The bitter divisions over an overhaul of the health care system have exploded at town-hall-style meetings over the last few days as members of Congress have been shouted down, hanged in effigy and taunted by crowds. In several cities, noisy demonstrations have led to fistfights, arrests and hospitalizations.6 Perhaps the American people are beginning to wake up to the fact that the US Gov’t is out of control. They’ve taken over car companies, insurance companies, and now they want to control (under the guise of reform) healthcare. They are spending money like there is no tomorrow…mortgaging our children’s future to promote their purely social agendas. Government bailouts…stimulus…healthcare reform…cap and trade…cash for clunkers…where does it end? President Obama has appointed over a dozen czars since taking office. What exactly is an American czar? Who elects them? Who are they accountable to? I don’t remember studying the role of czars in American History class…but they are popping up all over the place in Washington these days. Its about time the American people wake up to what’s going on! Make your voice heard! Call your representatives and senators. Write letters. Send emails…but be careful…you might get turned in to the White House and “flagged” if you oppose the new healthcare reform… White House director of new media Macon Phillips wrote a blog post urging readers to flag questionable claims about health care proposals. In her blog she said… “There is a lot of disinformation about health insurance reform out there, spanning from control of personal finances to end of life care. These rumors often travel just below the surface via chain emails or through casual conversation. Since we can’t keep track of all of them here at the White House, we’re asking for your help. If you get an email or see something on the web about health insurance reform that seems fishy, send it to flag@whitehouse.gov.”7 Sen. John Cornyn, R-Texas, is sending a letter to the White House today asking the president to “cease this program immediately” -- or to explain how Americans’ privacy will be protected if e-mails are forwarded to the White House as requested. “I am not aware of any precedent for a President asking American citizens to report their fellow citizens to the White House for pure political speech that is deemed ‘fishy’ or otherwise inimical to the White House’s political interests,” Cornyn writes.8 "I can only imagine the level of justifiable outrage had your predecessor asked Americans to forward e-mails critical of his policies to the White House," Cornyn wrote.9 Peggy Noonan said it well in her op-ed piece in the Wall Street Journal this week, “What the town-hall meetings represent is a feeling of rebellion, an uprising against change they do not believe in.”10 The freedom of speech is one of the greatest freedoms we enjoy in America…do not let fear keep you from speaking your mind and don’t let apathy cause you to shrug your shoulders thinking, “What can I do?” You have a voice and you have a vote…make them count!
One has to question the motive behind patrolling nuclear powered submarines off the coast of the United States. At first I thought this was a power move…an attempt to demonstrate Russia’s military strength…kind of a reminder to the US that they are still a force to be reckoned with. But the more I thought about it, the more convinced I am that it is actually a psychological move. As tensions continue to rise between Israel and Iran, the US and Russia could once again be nose to nose in an ugly fight. Perhaps this is a reminder that Russia does have the power to strike us where it hurts…if they want to. Despite all diplomatic efforts the US has undertaken to dissuade Israel from striking Iranian nuclear facilities, the attack now seems virtually inevitable. In light of Israel’s recent military preparations, it can only be a matter of when. The recent visit of Defense Secretary Robert Gates to Jerusalem only proved Israel is determined to act, taking “no option” off the table regarding Iran’s nuclear program. As for Iran, it shows no sign of halting its nuclear ambitions. Rejecting calls to curb its uranium enrichment, it continues to insist the program is for legitimate energy needs. This makes Israel believe that, in just a few months, Tehran will produce enough uranium for a warhead. However, Western intelligence has put that capability several years away.12 Seven years of failed diplomacy regarding Iran’s nuclear ambitions has only put Tehran even further down the road towards nuclear development. John Bolton noted in an interview with RT that the international community is now facing two unappealing scenarios: either to use military force against Iran, or Israel faces the reality of Iran eventually possessing nuclear weapons – both of which are equally unattractive. “President Ahmadinejad has repeatedly called for Israel to be wiped off the map, and given that it will only take two or three nuclear weapons to do just that, I don’t think the Israelis are going to sit back. A nuclear Holocaust, a repeat of killing six million Jews is not something Israel will simply wait for,” Bolton said.13
The Dow spent much of the week chopping around but then surged Friday after the US economy lost only 249,000 jobs. The unemployment rate inexplicably dropped but I am sure there will be an upward revision soon as workers who no longer collect benefits "disappear" altogether (thus causing the headline number to drop). More “green shoots” is the spin. Lets look at 2 charts for a healthy dose of reality. The first chart is a comparison of the market rally from the March low 2009 and the 1929 into 1930 bear market rally. This chart is tracking at an amazing correlation. We all can look back and we know what happened after the rally ended. We crashed to new lows and the depression was on. Optimism ran very high back then even though they weren’t victims of the green shoot propaganda that we are today.
With all of this money printing, can we avoid a similar fate? Credit contraction is shrinking at a brisk rate and the government would have to print 10’s of trillions of dollars more to offset this, so I don’t think we can avoid another stock sell off to new lows. The consumer is 70% of the economy and he is tapped out and not spending like in previous “recoveries”. He will remain frugal for a long time. The ingredients are not in place for any sustained recovery. Chart #2 shows that we are experiencing falling prices and falling sales. If you follow the chart back nearly 40 years, you’ll notice that this is not a normal trend. The consumer is not leading us out of this recession…government spending is leading the way. What happens when the government is no longer able flood the market with dollars?
Stimulus packages are not the answer as they are simply a short-term sugar high that disappears. We need real job prospects in the manufacturing sector but in this global environment it is very difficult for U.S. workers to compete with the Asian workers who earn 20% of what our workers earn. Ah, the wonderful world of globalism. At this time, I simply will not be holding onto stocks but instead will be shorting the market sometime in late August. This, in my opinion, is a classic bear market rally that fools the masses again before plummeting. Bullish concensus on a daily basis hit 88% twice this past week! That is higher than the all time high peak of 2007! To recap: Mkt is up roughly 50% from the March lows. People are still being laid off. Real estate is still searching for a bottom. We have a government that is simply out of control and out of touch with reality wanting to tax and spend when the government itself is insolvent. Does that make any economic sense? Insiders are aggressively selling their shares. The ratio of insider buying to selling transactions is 5 to 145. Total transaction value: Buys: $13.4 million; Sells: $1,042 million. Green shoots or crystal clear reality? Treasuries sold off as risk appetitie for stocks was robust especially on Friday. Look for treasuries to remain an inverse trade to the stock market. The dollar made another new low for the year after getting hammered on Monday. It spent Tuesday through Thursday consolidating and then made a big move upward on Friday. The thought was that the Fed may have to tighten sooner than most observers guessed just 1 month ago. This isn’t a realistic outcome as the market is still dealing with Fannie Mae and Freddie Mac losing 10’s of billions of dollars and we haven’t even had to write down the commercial real estate yet. I continue to look at the dollar as a long term negative with a bottom not seen until 2013. Gold and silver hit new highs for the latest move this week and then settled back from profit taking. The big test will come this fall when stocks enter back into their bear market. The key is what happens to the dollar as stocks sell off. If it rallies like last year then gold will likely sell off. If the dollar declines with stocks then onward and upward at a fast clip. I remain long term bullish in gold and silver into 2013.
What could possible go wrong? We still face the threat of terrorism. Earthquakes have been shaking the west coast. Hurricane season is about to reach its peak. An Israeli strike on Iran could lead to another Middle East war. The economy is still on life-support. The continued hum of the US Treasury’s printing presses jeopardize the long-term strength of the dollar. Many economists believe that much higher inflation is just around the corner. I say all of that not to be downer…but rather as a reminder that preparation is not an event…it is a lifestyle. The Bible says in Proverbs 22:3 “A prudent man perceives the difficulties ahead and prepares for them. The simpleton goes blindly on and suffers the consequences.” Look ahead at the potential problems you may face and then prepare while you can. Do you have 30-90 days of food, water, medicine, and other essential supplies? If your bank were to close…if your power were to go out for a week or two…if your job were to be eliminated…would you have the means to provide for your family during that transitional time? Living prepared doesn’t mean that life will go on as normal. Being prepared means that you have allocated adequate resources in advance so that you have enough margin in a time of crisis to adjust to your new circumstances. Help us spread the message of preparation by forwarding the GPUpdate to your family and friends. Copy this link www.globalperspectives.info into your browser and send. Simply forwarding this email update often times affects formatting. Copying the link is much better. Thanks for helping us spread the word. We love to hear your comments! Send us a note by email at contact@globalperspectives.info.
Editor’s note: Check out the Global Perspectives web site and see the new features, polls, news links, and past issues of the GPUpdate. (www.globalperspectives.info) 1http://www.ft.com/cms/s/0/9b5ad536-834a-11de-a24e-00144feabdc0.html 2http://www.ft.com/cms/s/0/c5e9e35c-8370-11de-a24e-00144feabdc0.html 3http://www.breitbart.com/article.php?id=CNG.769c5f4707b42ff03724c7a6cba8639a.351&show_article=1 4http://arkansasmatters.com/content/news/fulltext?cid=244361 5http://www.bloomberg.com/apps/news?pid=20603037&sid=ac9y1xr7yNhQ 6http://www.nytimes.com/2009/08/08/us/politics/08townhall.html?_r=1&th&emc=th 7http://www.whitehouse.gov/blog/Facts-Are-Stubborn-Things/ 8http://blogs.abcnews.com/thenote/2009/08/gop-senator-white-house-encroaching-on-first-amendment.html 10http://online.wsj.com/article/SB10001424052970204908604574334623330098540.html 11http://www.nytimes.com/2009/08/05/world/05patrol.html 12http://www.russiatoday.com/Top_News/2009-08-06/israel-iran-nuclear-strike.html 13http://www.russiatoday.com/Top_News/2009-08-06/bolton-israel-attack-iran.html 14Market commentary is provided by Mr. Steve Meyers of Grainbelt Commodities, Marco Island, FL
Disclaimer The statements, opinions and analyses presented in the articles and newsletters on this website are provided as a general information and education service only. Opinions, estimates and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice. Nothing contained in this website is intended to be, not shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. Neither GrainBelt Commodities, LLC. nor Steven R. Meyers shall be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided.
Global Perspectives Update, edited by Pastor Timothy L. Neptune,
is a weekly commentary of "news you need to know" in order to be informed, equipped, and prepared. The material provided is for informational and education purposes only and should not be construed as investment advice. Always seek professional advice and counsel before making financial decisions. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is error free. Comments and questions can be emailed to: contact@globalperspectives.info If this message was forwarded to you, you can subscribe here: http://www.globalperspectives.info          
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| Last Updated on Saturday, 08 August 2009 14:10 |
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