Tuesday, February 1, 2011

Avoiding The Truth When It Hurts

Blue Chips Blow Past 12000 in Bullish February Debut
By Matt Egan
Wall Street flipped the calendar to February with bullish enthusiasm on Tuesday as the Dow surged beyond 12000 and the S&P 500 conquered 1300 for the first time in two-and-a-half years amid enthusiasm for impressive manufacturing and earnings reports from around the world.

The Dow Jones Industrial Average jumped 148.23 points, or 1.25%, to 12040.16, the Standard & Poor's 500 gained 21.47 points, or 1.67%, to 1307.59 and the Nasdaq Composite rose 51.11 points, or 1.89%, to 2751.19. The FOX 50 added 16.16 points, or 1.76%, to 932.50.

The burst of buying represented Wall Street strongest performance since December 1 and comes on the heels of the markets' hottest January since 1997.

Funny, no mention of the tanking US Dollar anywhere in this report. The markets are rising on a falling Dollar. Who said there is no inflation? There may be no "reported" inflation in America, but asset prices are inflating at an accelerating pace. The Fed is getting it's wish...a rising stock market to sustain the confidence of consumers in the hope that they will mistake inflating asset prices for economic strength, and go out and SPEND, SPEND, SPEND.

Good luck with that con Ben.

NEVER, EVER forget...the first three letters of "confidence" spell "con".

Overlooked by the frothing financial news media was this bold little tidbit of economic data in today's ISM manufacturing report:

In the U.S., the Institute for Supply Management said its manufacturing index soared to 60.8 in January -- the highest level since May 2004. Economists had called for a reading of just 58. However, the prices paid index leaped to 81.5, up from 72.5 in December, compared with estimates for just 73.5.

The manufacturing index soared? It rose from 57 to 60.8... O, momma! The prices paid index is a measure of inflation. The inflation that Bumbling Ben Bernanke assures us is no where to be found on the shores of the American continent.

Are We Seeing a Whiff of Inflation?
By: Patti Domm
Economists are pointing out that January's super strong ISM manufacturing report could be signaling early signs of inflationary pressure.

The prices paid index jumped to 81.5 from 72.5, the highest level since 2008, when oil was spiking in the mid-$140s per barrel. In November, prices paid was at 69.5.

Stephen Stanley, chief economist at Pierpont Securities, notes that the survey also indicated 30 commodities were up in price and none were lower.

"It's certainly pushing through the pipeline. The question is, as always, does it make it out the other end? The Fed has argued consistently that whatever input costs we get won't feed through to the consumer because of slack in the economy," he said.


I'm sorry, but I can't help but be amused at how events in Egypt, gripping the markets with "fear" just hours ago, are now being dismissed as trivial:

Fears about the turmoil in Egypt spilling out of control also continued to recede, helped by a lack of new violence there and a pullback in the previously red-hot price of crude oil.

“My sense is the risk trade is back on. Though Egypt will remain a concern, it appears to be peaceful, constructive and heading in a direction the markets really want,” said Peter Kenny, managing director at Knight Capital Group.

Are you kidding me? And again, not one word in this Fox Business News "report" on the markets today is a mention of the TANKING US Dollar. Americans are being led to the financial slaughter house, completely ignorant of the TRUTH.

After being pressured AGAIN this morning as the CRIMEX opened, Gold and Silver rose today.

Silver closed above it's key 20 day moving average, finishing the day at 28.49 and above resistance at 20840. Silver closed in the aftermarket at 28.60. The Silver bulls won the day. The next line of resistance is 28.80, the 50% retracement of the 15% January decline in the price of Silver. Look for Silver to possibly run up to the 61% retracement of this decline up near 29.50 ahead of this Friday's non-farm payrolls report. A retest of Silver's 20 day moving average would be very constructive to the next bull leg in Silver.

Gold mustered a close higher, but failed to break above it's January downtrend line. A developing Reverse Head and Shoulders pattern in Gold reveals a neckline near $1345. A break above this neckline should push momentum onto the bulls backs. Gold must close above $1352 to give the bulls an indication that an interim bottom in price has been reached at $1308. With Friday's payrolls report looming, it should be no surprise if every effort by the CRIMEX goons is made to keep Gold below $1350.

As it appears right now, Silver is once again going to lead Gold higher, much like it did in the recent late fall rally that culminated in new 30 year highs in price. The Gold/Silver ratio turned bullish this week. A move below 45.50 in this ratio could portend very big things for Silver as we head towards Spring.

As I speculated last week, I believe the lows for the year in both Gold and Silver will be in by the 4th of February. January payroll numbers come out Friday morning at 8AM, and the Chinese New Year begins. Expect all flavor of excuses for another "worse than expected" jobs report Friday, not the least of which ill be the weather. When the talking heads begin using the weather to excuse the poor jobs report, stop and ask yourself this: Did it snow in California, Florida, Arizona, Louisiana...the southern third of the country!?

If Jobs Report Is Bad, Everyone Will Blame the Weather
By: Patti Domm
If Friday's jobs report is especially weak, the government will probably blame the weather.

Economists are expecting that about 140,000 non farm payrolls were added in January, but they say the snow storms and bad weather that spanned the country last month makes that number even more unpredictable than usual. The Bureau of Labor Statistics should also note that in its report, they say.

Recent monthly jobs reports have fallen short of most economists' forecasts, and this one could do the same, but with the excuse that weather played a role. Non farm payrolls for December were reported at 103,000, well below economists' forecasts of 150,000 or more.

"The weather is a big wild card," said Stephen Stanley, chief economist at Pierpont Securities. "It could depress the numbers by 20,000 or 30,000 , or it could have a much bigger impact."

Stanley expects to see 150,000 non farm payrolls when the government employment report is released at 8:30 a.m. Friday. He expects to see 175,000 private sector payrolls, which excludes the impact of public sector job losses.

"It's quite normal for us to have lousy weather in January but this is beyond that," said Citigroup economist Steve Wieting. "We are expecting a negative effect on payrolls from the weather." Wieting expects to see 120,000 non farm payrolls in total, and a 130,000 for private sector payrolls.


If they are already using the weather as an excuse, this jobs number has the potential to be a dosey on the downside...how exciting!

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