Saturday, June 6, 2009

June 6.09...Anniversary of D Day

Good morning Ladies and Gentlemen:
Gold closed down by 19.80 to 961.80.  Silver closed down by 41 cents to 15.40.
The open interest on gold comex rose by a hefty 6000 to 401,000.  Silver's OI continues to rise by a further 3100 contracts to 109000.  The speculators are taking on cartel members in a final showdown of strength.
Yesterday was the release of the jobs number and as always we see fireworks.  And yesterday was no exception.
Here is the official release:

08:30 May nonfarm payrolls reported (345K) vs. consensus (520K); unemployment rate 9.4% vs. consensus 9.2%
Apr nonfarm payrolls revised to (504K) from (539K). 
* * * * *

US May payrolls fall 345,000, jobless rate 9.4 pct 

WASHINGTON, June 5 (Reuters) - U.S. employers cut 345,000 jobs last month, the fewest since September and far less than forecast, according to a government report on Friday that was more evidence the economy's severe weakness was diminishing. 

However, the Labor Department said the unemployment rate raced to 9.4 percent, the highest since a matching rate in July 1983, from 8.9 percent in April. 

March and April's job losses were revised down to show a smaller declines of 652,000 and 504,000, respectively. 

Analysts polled by Reuters had forecast non-farm payrolls dropping 520,000 in May. The unemployment rate had been forecast to rise to 9.2 percent. 

While the job losses in May were spread across almost all sectors, the pace of layoffs was slower than in prior months. 

Payrolls in construction industries fell 59,000 after dropping 108,000 in April, likely as a result of the government's historic $787 billion stimulus package. 

The service-providing industry shed 120,000 positions after eliminating 230,000 in April. The manufacturing sector purged 156,000 jobs in May, likely reflecting auto plant shutdowns in the wake of Chrysler's bankruptcy filing. The sector shed 154,000 in April. 

Education and health services sector payrolls expanded by 44,000 after increasing 13,000 the prior month. Government, which in April added 92,000 jobs, mostly related to preparations for the 2010 census, cut 7,000 positions in May. 

Since the start of the recession in December 2007, the economy has lost 6.0 million jobs, the department said.



On closer examination of the figures, the famous B/D  (Birth Death) plug added a huge 220000 jobs mainly in the leisure industry and in the construction field.  The figure of course is nothing but a phony!

This is what some commentators wrote yesterday on the release of these total bogus numbers:

from Dave (Denver):


Dave from Denver…

The jobs number joke

I suggested to some colleagues yesterday that the employment number released today would be "fixed" to be a lot better than expectation in order to squeeze the market higher. Doesn't take a genius to figure that one out. As we see, the headline jobs loss number was about 180k less than expected and the SPX futures spike up 12 points on the release.

Probing beneath the headline number, we find that the Govt's "alternative measures of labor utilization" number - the number which more closely tracks an actual bona fide count of jobs lost - shows the real unemployment rate for May is now 16.4%. Here's the link:


and then this:

The birth/death model - that nefarious "plug" estimate to Government uses to "fix" the headline reported jobs loss number, added 220,000 jobs to private sector payrolls. If you really want to laugh, you can comb thru the data here:

You'll be amused to see the Govt "estimated" that 77,000 jobs were created by new leisure and hospitality enterprises and 43,000 jobs were added by new construction firms. Those estimates, of course, are completely contrary with the actual economic realities being reported by the very firms who are slashing jobs in those sectors.

They have not factored in any job losses from the Chrsyler and General Motors bankruptcy.  There will be much collateral damage from firms servicing these two giants. Here are more comments on "seasonal adjustments" that did not enter into the equation yesterday:

One more point to keep in mind on the jobs number today

This number does not include any estimates or "seasonal adjustments" which would take into the account the massive job losses we will see over the summer resulting from the GM/Chrysler bankruptcy and dealer closings. And the media will just be looking at the number of jobs cut nominally by those 2 companies. You also have to consider all the "satellite" business which will drastically scale back or shut down (auto parts manufacturers, distribution chains, etc) AND you have to consider all of the business activity which feeds off of that economic activity - parasite businesses, if you will, which serve all the people going to work at factories and supply chain stores, etc. The GM and Chrysler situation will add millions to the jobs loss numbers, even if the Government manipulates the number to minimize the headline reports.


And this article from Toby Hanson of

Here's some analysis I did on the latest jobs report.

The headline number was -345,000 jobs (lost) for May. Market reaction to those numbers had the Dow and the US Dollar soaring, while gold was crushed $25. On the surface the number was quite good, however the Birth/Death model grossly distorted the actual result; again. Despite job losses being most felt by smaller firms, the B/D model shows Joe entrepreneur is still cranking them out. May's Birth-Death adjustment added 220,000 to the total, otherwise the headline number would have been - 565,000. This number would have been slightly worse than the consensus of -520,000.

From a Reuters article this morning, underlines my emphasis:

"Payrolls in construction industries fell 59,000 after dropping 108,000 in April, likely as a result of the government's historic $787 billion stimulus package.

The service-providing industry shed 120,000 positions after eliminating 230,000 in April. The manufacturing sector purged 156,000 jobs in May, likely reflecting auto plant shutdowns in the wake of Chrysler's bankruptcy filing. The sector shed 154,000 in April.

Education and health services sector payrolls expanded by 44,000 after increasing 13,000 the prior month. The leisure and hospitality industry added 3,000 jobs after consistently shrinking payrolls."


In May, -59,000 Construction payroll jobs were lost but the BLS (Bureau of Labor Statistics) says Joe entrepreneur added +43,000 the same month. We look at the Service Industry shedding -120,000 jobs yet the BLS has +28,000 created in May in the Professional Business Services category and another +77,000 in the Leisure & Hospitality sector.

BLS Birth-Death Model Link:

What we have here is a continued, concerted effort to distort data to support the notion "green shoots" are sprouting all over. Unfortunately all it is doing is lulling the public into the notion everything is getting better, paralyzing them from making the decision to protect their wealth.
Best Regards,
Toby Hansen

I highlighted the importance to you yesterday on the Latvian bond auction failure and what it will do to the Swedish banks.
Lo and behold, Ambrose Pritchard Evans wrote on this subject last night:

European banks in spotlight as Baltic crisis hits Sweden

Sweden is preparing to part-nationalise banks exposed to the economic collapse in Baltic states, raising fears that a string of Western European countries could face similar fallout from rising defaults in the former Communist bloc

European banks in spotlight as Baltic crisis hits Sweden
Swedish banks have lent more than $75bn (£46bn) to Latvia, Lithuania and Estonia, led by Swedbank and SEB. Photo: REUTERS

Finance Minister Anders Borg said the Swedish state will buy stakes in distressed banks if they fall deeper into trouble but will impose draconian terms.

"We want to be very clear so that people know what could happen," he said. "If the banks come to us with big credit losses, where they have previously earned big money on lending, then shareholders will take the consequences. We're going to be clear that insolvent banks that don't meet legal requirements will see an injection of funds, primarily through government ownership."

Swedish banks have lent more than $75bn (£46bn) to Latvia, Lithuania and Estonia, led by Swedbank and SEB.

Hakan Berg, Swedbank's head of operations in the Baltics, said his bank can cope with the shock losses from devaluations across the region. "We have tested the worst-case scenarios. We have adequate capital. It would not bring the bank down," he said.

The dramatic situation in Latvia went from bad to worse on Thursday as overnight rates reached 140pc, a sign that the country's currency peg in Europe's Exchange Mechanism is close to snapping. Credit default swaps measuring risk on Latvian debt rocketed above 750 after Latvia's treasury failed to sell a single note at a $100bn debt auction on Wednesday.

Latvian premier Valdis Dombrovskis said the country needs help "fast" from the European commission and International Monetary Fund, which has withheld the latest tranche of its €7.5bn (£6.6bn) bail-out because of the surging budget deficit. "Fears of a domino effect in the region are to a certain extent justified," he said.

The Baltic trio are all defending currency pegs at overvalued rates in a region where every other country (except Finland) has devalued by a third or so. They are each caught in a trap after allowing mortgage lending in euros and Swiss francs to mushroom out of control. However, there are ways of dealing with this as Argentina proved by passing a law that switched all dollar mortgages into pesos in 2001 – entailing a 70pc "haircut" for foreign creditors.

It is understood that Latvia is quietly exploring options to shield its homeowners from the exchange risk. This risks a bitter clash with Brussels, which has been insisting on peg discipline for ideological reasons – against the advice of the IMF. But the current course amounts to a slow crucifixion of the Baltic economies. Latvia's GDP is expected to contract by 18pc this year, and Lithuania's by 15pc.

Samir Patel from BH2 Research said the pegs are causing "monetary asphyxiation" and cannot be endured for long by any democracy. The inevitable devaluations may reach 50pc or more given the experiences of Thailand (52pc) and Indonesia (81pc) in the East Asia crisis. "Of course devaluations will unleash nasty economic and financial demons, but so will stubbornly holding currencies aloft. The demons are simply different," he said.

It is unclear whether Sweden's bank troubles are the first sign of broader strains for West European banks, which have lent $1.6 trillion to the former Communist bloc. Sweden's exposure to the region at 22pc of GDP is not the highest. Austria's exposure is 70pc of GDP, with $246bn outstanding in Central Europe, Ukraine and the Balkans.

The situation varies from country to country, with the lowest risk in Poland and the Czech Republic. Even so, Danske Bank warns that Austria could face losses reaching 11pc of GDP in an "ugly scenario". Sweden's losses would be 6pc, and Belgium's 3.6pc, the Netherlands' 2.3pc, and Italy's 1.5pc.

"The risk of contagion is serious, Nobody thought Iceland would set off a crisis in Hungary last year, but it did, and the same could happen again," said Lars Christensen, East Europe expert at Danske Bank.

    Postcards from the Edge: Our correspondents around the world report on the effects of the recession
Jeff Randall
Garic writes that the balance sheet of the Fed has rapidly deteriorated:

Could Ben Bernanke be the worst bond trader in the history of the world?

Before the Credit Crisis started on June 3, 2007 the Federal Reserve's balance sheet included Security's Held Outright of $790B of which $277B were T-Bills and $474B were T-Notes. Over the past 2 years The Federal Reserve has admitted to buying outright and additional $394B of securities. At the same time they have extended their maturities significantly. Yesterday, the Fed reported holding $1,114B in Security's Held Outright of which only $18B were T-Bills, $540B were T-Notes, $80B were Agency Securities and $427B were mortgage backed bonds. As anyone in the bond market understands mortgage backed securities durations extend in bond bear markets as refinancing slows down. The bottom line is the worse the Treasury market performs the longer the Federal Reserve becomes. The U.S. Treasury Chart is looking more and more like a bubble top. During this topping process the Federal Reserve has gone from 35% of their holdings in short term T-Bills to almost 0%. They have gone from 0% in mortgage backs to 38% of their portfolio, which should prove to be the worst performing security's in a bear market. In a transaction which is starting to look remarkably similar to Wachovia buying Golden West at the top of the real estate market, Ben Bernanke and Timothy Geithner have taken over the largest issuer of mortgage debt in the world at the top of the market: Fannie Mae and Freddie Mac. I can only imagine the losses accumulating on Frannie's books over the past month as their durations extend. Don't worry about those losses though Ben and Tim can just print more $'s to cover their poor timing.


This next commentary is extremely important.  It explains why the USA needed to rescue AIG as these guys were the guarantors of the ETF's.  Please read this next section and understand its significance:

In case you haven't seen this yet......

"I would remind people about an event which went practically unreported last year in North America: at the time of AIG's near-bankruptcy, the European bullion-ETFs "guaranteed" by AIG briefly plunged in value – to a price MUCH lower than the nominal price of the bullion they (supposedly) held. The reason? Investors were "betting" in a clearly visible manner that if AIG was forced into bankruptcy it would not be able to honour its "custodian agreements" with these bullion-ETFs – leaving the investors in these funds holding paper and not bullion.

Thus, the outrageously expensive bail-out of AIG (over $180 BILLION, and counting)was not undertaken solely in order to secretly funnel roughly $10 billion into the vaults of Goldman Sachs. It was also bailed-out to prevent a domino-like chain of events. All it will take is for one "bullion-ETF" to default, and then the entire scheme/scam of the Manipulators would inevitably collapse."


It looks like the usa may not get enough votes to "sell" IMF gold:
Well, the latest on the IMF gold sales front is a delay in the vote becasue they don't have the votes to pass it.

We've all heard that the gold sales have been "priced into the market" from all those great gold analysts... 

So what happens if it fails to pass? 

Does that mean the IMF Gold Sales are about to "PRICED OUT OF THE MARKET" and send gold skyward?! 

Interesting times. 
Sheila Bair wants to put Citibank on its bad bank list:

It really seems like there is something VERY BIG coming down the pike in June. All the "perfect storms" are converging right now and their slaming the gold price to prepare for the onslaught.

Sheila Bair of the FDIC wants to put Citi on the "Bad Bank" watchlist. Last I heard Citibank had around $250B in FDIC insured deposits and $500B in foreign deposits.

And that doesn't count all the government loans, guarantees, TALF, TARP.... TICK, TACK, TOE..... etc.

And the kicker of all kickers is their off balance sheet "Special Purpose Entities" where all the dirty stuff takes place.

Somehting wicked this way comes! 

I keep telling you that there are no green shoots,  Maybe this will convince you:

As for stock valuations....insiders continue to dump stock heavily

A report is out this morning which shows that corporate insiders continued to sell stock during the last 2 weeks at a staggering rate. The ratio of dollar value of sells to buys was 27:1 - which may be an all time record high for the ratio. The outright amounts were $335 million in sells vs. just $12 million in buys. The report is here:

This came from Janet Yellen, San Francisco Bank Governor (not a voting member of the FOMC)










Obviously, she is getting a little nervous about the high yields at the 10 yr treasury and 30 yr bond.
Yesterday, the 10 yr treasury yielded 3.82% and the long bond saw its price plummet all the way down to 113.9.

Please remember that JPMorgan has in excess of 400 trillion of interest rate swaps and they are long, the long bond and short the near term treasury bills.
They are now totally melting!
The federal debt climbed from 11.374 trillion to 11.389 trillion for a gain of 15 billion dollars ina day.
The COT report was released after the market closed and it definitely indicated the huge battle btw. commercials and speculators:

The Gold Commitment of Traders Report was revealing…

*The large specs increased longs by 6,235 contracts and reducing shorts by 3,797.

*The commercials decreased longs by 1,994 contracts and increased shorts by a significant 15,391 contracts. The Gold Cartel is going ALL OUT.

*The small specs lived up to their reputation by decreasing longs by 5,427 contracts, but decreasing shorts by 13,780.

and finally:
If the German government becomes the "speculator" and takes on the comex to get its gold back from West Point, you will finally see the final battle being waged.Obama was in Germany to persuade the Germans to give them more time.  It looks like the German patience has run out!
We will have front row seats;
Have a great weekend


Thursday, June 4, 2009

Jne 4.09 commentary.

Good evening Ladies and Gentlemen:
Early this morning we were greated with news that Latvia had their bond auction fail for the first time.  It got zero bids for its bonds.  Immediately the Swedish banks sold off as they have the highest exposure to the Baltic states.
The news sent gold and silver rising throughout Europe.  When trading commenced on the comex, the cartel tried to get silver and gold down but to no avail.
By the close today, gold rose by 16.30 to 980.80 and silver rose 55 cents to 15.95
What is more telling was the release of the open interest on both silver and gold.  The comex gold OI rose a stunning 4800 contracts to 396000 despite gold's drubbing yesterday.  Clearly the cartel boys were trying to engineer a triple top and cause speculator selling as gold failed to break through the 1000.00 dollar mark again.
The silver  OI rose another 1200 contracts to 106000.  The cartel members were supplying the paper but this time speculators/and or sovereign authorities were purchasing contracts with the unlimited budget they seem to have in their possession.
Word came to me today that Germany is not only in the Comex gold, buying up all  it can, but it is also buying massive quanties of silver.They are furious that they cannot get their gold back which is stored at West Point.
The total volume yesterday was over 200,000 contracts in gold and today it seems that they will match this with ease.
Cartel members may have been spooked with this announcement:

20:45 CFTC head Gary Gensler to propose new derivatives rules on Thursday - NY Times
The Times reports that Gary Gensler, the new chairman of the Commodity Futures Trading Commission, will ask Congress on Thursday to impose new restrictions on financial firms that deal in derivatives. According to the article, lawmakers said that Gensler is expected to propose two sets of regulations - one set for the individual dealers of derivatives and another for the marketplaces where the instruments are traded. The two sets of rules are designed to eliminate the loopholes that some have argued would have weakened the plan announced three weeks ago by Treasury Secretary Geithner. Dealers would face requirements for capital reserves and collateral, imposing significant new expenses that could reduce their profitability. The proposal would also include antifraud and antimanipulation provisions, as well as potential limits on market positions and holdings. The new measures would apply no matter whether a dealer issued standard derivatives or custom-written contracts tailored to meet the needs of specific companies.Reference Link 
* * * * *

-CFTC chief offers new rules on OTC market, dealers 

* CFTC chief proposes comprehensive OTC regulation 
* Two sets of rules, one for dealers, one for markets 
* CFTC asks power to set OTC position limits 

WASHINGTON, June 4 (Reuters) - The U.S. regulator of the futures industry outlined reforms on Thursday for the first comprehensive regulation of over-the-counter derivatives and the dealers who handle the exotic instruments. 

Derivatives such as credit default swaps were blamed for amplifying last fall's economic contraction. 

"We must urgently enact broad reforms to regulate over-the-counter (OTC) derivatives," said Gary Gensler, chairman of the Commodity Futures Trading Commission, in testimony prepared for a Senate hearing. 

"Such reforms must comprehensively regulate both derivative dealers and the markets in which derivatives trade. This is vitally important for the future of our economy and the welfare of the American people." 

Gensler said the federal regulation must apply to all dealers and all types of derivatives. He suggested two sets of rules, one covering markets, including regulated exchanges, electronic trading and clearinghouses, and the other governing dealers. The plan includes position limits on holdings. 

"These two regimes should apply no matter which type of firm, method of trading or type of derivative swap is involved," said Gensler. 

Dealers should be subject to capital requirements, initial margining requirements, business conduct rules, and reporting and recordkeeping rules. The CFTC would have power to set position limits on OTC derivatives that affect prices on futures exchanges. 

"We should require that all derivatives that can be moved into central clearing be required to be cleared through central clearing houses and brought on to regulated exchanges or regulated electronic trading systems," said the CFTC chairman. 

The CFTC and the Securities and Exchange Commission would share regulatory duties for the OTC system, Gensler said.

"Position limits should be applied consistently across all trading platforms and exemptions should be limited and well-defined," said Gensler. He said the CFTC should be given the power to impose position limits, including aggregate limits, on traders involved in OTC derivatives that affect futures prices. 

While standardized derivatives should be moved onto exchanges, Gensler said customized derivatives would be subject to transparency and reporting rules to assure disclosure. Regulators would monitor trading to prevent dealers from wrongly declaring a transaction to be customized because they changed minor details from a standardized derivative. 

"The term OTC derivative should be defined and CFTC should be given clear authority over all such instruments," said Gensler in discussing changes in law.


Cartel members will need to have  security and posted against short positions.  It is possible that their gig is up. Gensler wishes more transparency.  He may get a complete financial failure as the banks could not possibly come up with the security.

In economic news, the jobless claims remain high but improved a bit last week.  Tomorrow comes the big jobs report and it is estimated that the unemployment rate will be over 9%.  Here is the jobless figures:

08:30 Jobless claims for week ended 30-May 621K vs. consensus 620K
Prior week revised to 625K from 623K. Continuing claims for w/e 23-May 6.735M vs. consensus 6.855M. Prior week revised to 6.750M from 6.788M. 
* * * * *

U.S. jobless claims fell last week 

WASHINGTON, June 4 (Reuters) - The number of U.S. workers filing new claims for jobless benefits fell for a third straight week last week, government data showed on Thursday, indicating some loss of force in the pace of the labor market's deterioration. 

Initial claims for state unemployment insurance benefits fell 4,000 to a seasonally adjusted 621,000 in the week ended May 30, the Labor Department said. The week covered the Memorial Day holiday, which could have had an impact on the data. 

Analysts polled by Reuters had forecast new claims slipping to 620,000 from a previously reported count of 623,000. 

The number of people staying on the benefit rolls after collecting an initial week of aid fell 15,000 to 6.74 million in the week ended May 23, the latest week for which the data is available. 

This was the first time that so-called continued claims have declined since the week of January 3 and was also the first time in 17 weeks that they did not set a record. That held the insured unemployment rate at 5.0 percent. 

However, the four-week moving average for new claims, considered to be a better gauge of underlying trends as it smoothes out week-to-week volatility, rose 4,000 to 631,250 in the week ending May 30.


In order to see green shoots, we must see commercial paper rising in quantity.  It is is falling:

US commercial paper outstanding falls in week-Fed 

NEW YORK, June 4 (Reuters) - The U.S. commercial paper market contracted in the week ended Wednesday, hurt by the effects of a protracted economic downturn and financial crisis, Federal Reserve data showed on Thursday. 

The size of the U.S. commercial paper market, a vital source of short-term funding for daily operations at many companies, fell by $3.6 billion to $1.245 trillion, from $1.248 trillion the previous week. 

Asset-backed commercial paper outstanding fell $8.3 billion to $557.4 billion after falling $8.7 billion the previous week. 

Unsecured financial issuance outstanding fell $3.3 billion after falling $17.5 billion the previous week. 

The overall U.S. commercial paper market peaked at about $2.2 trillion outstanding in August 2007 when the credit crisis broke out.


Obama does not want to see this:

US mortgage rates surge to highest since Dec-Freddie Mac 

NEW YORK, June 4 (Reuters) - Interest rates on U.S. 30-year fixed-rate mortgages surged 0.38 percentage point in the latest week, reaching its highest level since the week ending Dec. 11, 2008, according to a survey released on Thursday by home funding company Freddie Mac . 

Interest rates on the 30-year fixed-rate mortgage averaged 5.29 percent, with an average 0.7 point, for the week ending June 4, up from the previous week's 4.91 percent, according to Freddie Mac. 

Five weeks earlier, the 30-year fixed-rate mortgage equaled the record low of 4.78 percent that was set the week ending April 2, which was the lowest since Freddie Mac started the Primary Mortgage Market Survey in 1971. 

"30-year fixed-rate mortgage rates caught up to the recent rise in long-term bond yields this week to reach a 25-week high, " Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.



Today we saw the 10 year treasury rate rise to 3.72% and the 30 yr bond price fell badly to 115.06.

All the printed money today went to prop up the Dow (it rose by 74 points).  Thus gold and silver rose, bond yields rose and the dollar which was up early in the morning retreated to 79.2 from 79.8.

The following story certainly does not conjure up images of green shoots...I can only see yellow weeds:

Bankruptcy filings rise to 6,000 a day as job losses take toll 

By Christine Dugas, USA TODAY

Consumer and commercial bankruptcy filings are on pace to reach a stunning 1.5 million this year, according to a report from Automated Access to Court Electronic Records. While well below the record 2 million filings in 2005, the number of filings is up sharply from last year's 1.1 million, says Robert Lawless, professor of law at the University of Illinois.

Bankruptcy filings took a dramatic nose dive after a 2005 bankruptcy reform measure was signed into law to curb bankruptcy abuse and make it harder to erase debts.

But filings are surging back in part because of rising job losses. The unemployment rate could hit 10% this year. And tighter credit, dwindling 401(k) accounts, smaller paychecks and less savings have left unemployed workers and those who are working but struggling with fewer financial resources to keep creditors at bay.

Over the past decades, consumers who were hurting financially could rely on credit cards to help them tread water. "The fact that consumer credit has tightened and shrunk explains why bankruptcy filings have now gone up so dramatically," Lawless says.

In May, the number of bankruptcy filings reached 6,020 a day, up from 5,854 in April, AACER says…-END-


I thought that the following got us into this mess..look what the usa government is now offering:


Feds Bringing Back No Money Down Mortgages



Sales for May have been reported as being flat.  This goes along with the commercial paper decline to indicate that the economy is certainly not sprouting green shoots:

Most U.S. retailers' May sales miss expectations 

CHICAGO (Reuters) - Most retailers posted disappointing May sales as recession-weary shoppers cut spending at stores ranging from high-end chains to discounters like Target Corp , pushing down retail shares. 

While there have been early signs of stabilization such as improving consumer confidence, issues such as unemployment and the troubled housing market have led many Americans to take on a thriftier attitude, spending on food and other everyday essentials and not much else. 

Sales were weaker than expected at 63 percent of the 30 retailers tracked by Thomson Reuters. Upscale chains posted some of the worst May sales at stores open at least a year, or same-store sales.

"The high end continues to struggle, those in the discretionary spend segment are really continuing to get clocked," said Ken Perkins, president of Retail Metrics. 

Wal-Mart Stores Inc , the biggest retailer and one of the best performers in the recession, no longer issues monthly sales. The spotlight now shines on smaller competitors such as Costco and Target, which both missed expectations. 

"We felt that the May results would signal that we're not yet out of this consumer doldrum that we've been in and it's going to take some wind out of the sails" of retail stocks, said Susquehanna Financial senior consumer analyst Thomas Filandro. 

Shares of most retailers fell. The S&P Retail Index <.RLX> was down 2.5 percent after rising in recent days. 

According to data from Thomson Reuters, May same-store sales fell 4.8 percent compared with May 2008. That was worse than the 4.5 percent decline seen earlier in the year, and analysts had expected that May sales would fall only 4.1 percent. 

Looking ahead, the International Council of Shopping Centers forecast a 3 to 4 percent drop in June same-store sales, less than the 4.6 percent decline it saw in May. June's sales face a tougher comparison to last year as consumers then were spending the bulk of government stimulus checks, analysts said…


I will give a comprehensive review on Saturday.


see you then





Wednesday, June 3, 2009

June 3.09 commentary.

Good evening Ladies and Gentlemen:
Bix Weir wrote this early this morning.  If you recall yesterday, I commented that Angela Merkel was angry at usa monetary policy.  The real story is that she cannot get her gold back.The usa is holding 1700 tonnes of gold at West Point for the Germans.  The swap occurred in the year 2000.
Please read the following story:

Road to Roota XIV

By Bix Weir

I was watching the NBC special called "Inside the White House" last night and was struck by a meeting with Larry Summers and the President.

It was touted as an "all access" day in the life of the President but at 7:15 minutes into Part 1 Larry Summers and a man who I believe is Austan Goolsbee come into the Oval Office for a call with "the Germans".  Summers is obviously on edge and shuts down the cameras when he begins to discuss the problem.

Summers: "Life has changed..ahh..since the briefing…ahh”

Obama: "For the better or for the worse?"

Goolsbee: "Net-net for the better…wouldn’t you say Larry?" (Goolsbee speaks loudly and unconvincingly for the cameras.)
Summers: “(nervous laugh)..there’s elements of both. The Germans...actually we should stop (the cameras) here."

The cameras and staff are quickly “ushered out” of the Oval Office.

For those who don’t know,
Austan Goolsbee is on the Presidents Council of Economic Advisers and is touted as Larry Summers’ “Economic Internet Guru”. In that capacity there is no doubt in my mind that he monitors all the gold internet sites as well as being in charge of coordinating all the “gold disinformation” articles. Like Summers, Goolsbee believes in a kind of “Psychological Tendencies Economic Model” touting that it is perception that steers the worlds economic markets not necessarily fact. Having fought the gold manipulation battles for so long we all know perception can be managed and manipulated as I discussed in my articles “Operation Confidence Con” and “Geithner Plan=Sustained Manipulation”.

On May 28th, the night before the White House taping, Jim Willie of posted an article called
“The Hitman Cometh” where he claimed the Germans are trying to withdraw all their physical gold from US control and several “hit men” have been hired to take down the COMEX and the LME:

"The Germans have demanded that gold bullion held in US custodial accounts be returned to their owners, with physical gold shipped back to Germany ."

I'll bet my last gold Kruggie that the Oval Office phone call was a desperate plea to buy more time before the Germans destroy the physical gold manipulation scheme.

This together with rumblings of China, Russia, Saudi Arabia and Dubai scrambling to get their hands on physical gold has put the Obama Manipulation Team in major gold panic mode.

It's amazing to see these few people in the White House scrambling to prolong a failed policy of trying to manipulate the gold markets of the world.

What a sad state we find ourselves in.

-- Posted Wednesday, 3 June 2009 | Digg This Article | Source:

Gold closed today down by 18.70 to 963.00.  Silver was belted for a loss of 64 cents to 15.30.
Silver had traded at around 16.20 at 3 am when the cartel bombed silver and gold.  Gold was trading at 990.00
The cartel did not like to see gold approaching 1000 and silver breaking 16.00.
The open interest on gold comex rose by only 2000 contracts despite gold's rise yesterday.  The silver Oi also rose by 1500 contracts to 104000
Today, all the printed money went to support the dollar which rose by .90  Bonds were up marginally, the Dow fell by 66 points and gold and silver were pelted.  That is basically what happened today in our free markets.
The ECB announced a net sell of 0.27 tonnes of gold.  They are not interested in selling any gold.
Our good friend Dennis Gartman could not stand the heat and covered his short on gold last night.  Again he got it wrong and did not participate in todays raid.
I forgot to mention yesterday, that students laughed at Tim Geithner when he said that China's holding of usa treasuries are safe.  Here is the story on that subject:



earlier this week when he was in China to "explain" the Obama Administration’s position on the US long term debt position; on the Administration’s current position thereafter the audience laughed.

The difficult notion for those of us in the US to understand is that the American press did not cover the laughter. Other than for a very cursory, one sentence, statement by The NY Times, that Mr. Geithner’s comments "elicit[ed] some laughter," little was made of the inordinately poor reception Mr. Geithner received there in Beijing. However, the international media was and is having a field day with the response he was given. The Financial Times earlier this week said that

In response to a question after his speech, Mr. Geithner told the student audience that ‘Chinese assets are very safe,’ drawing loud laughter from his student audience—a reflection of skepticism among many Chinese about the wisdom of building up large foreign reserves.

The Telegraph in London was even more severe when it said, tersely, that "US Treasury Secretary Tim Geithner was laughed at by an audience of Chinese students after insisting that China’s US assets are safe…. The comment provoked loud laughter from the audience…"

But the US media avoided any reporting of the laughter that greeted Mr. Geithner’s speech. None of the US television stories reported laughter; none of the US newspapers reported the laughter; none of the US magazines covering the trip reported the laughter… but the laughter was loud; it was palpable and it was very, very real. Simply put, the US fiscal circumstance has become a laughingstock, and we do not say that lightly. It is, however, true.

The utter and harsh reality of the US present fiscal circumstance is that the world is laughing at the Obama Administration’s handling of it. Mr. Geithner is the global vicar of the US fiscal policy, and never, ever in our lifetime have we seen or heard of a US Treasury Secretary being laughed at… until now. It is one thing to be derided; it is entirely another to be laughed at, and the US is now being laughed at.

The laughter, we are certain, did not come easily, for the world wanted the Obama Administration to succeed. After eight years of the Bush Administration which the world, for any number of reasons… few of which we agree with… took issue with the US, the world wanted Obama’s government to succeed and take the lead on global economic and political issues. It was prepared to give this Administration the benefit of the doubt on almost any issue; indeed, it was prepared to give this Administration the benefit of many doubts before losing its faith. That faith is now gone.

Audiences do not laugh at Treasury Secretaries readily nor easily. They are laughing readily and uneasily at the Obama Administration now, and we cannot imagine anything sadder and more disconcerting than this.


The usa is still losing jobs.  Another 532,000 lost their jobs in May according to the ADP figures:

U.S. private sector axes 532,000 jobs in May-report

NEW YORK, June 3 (Reuters) - U.S. private employers shed 532,000 jobs in May, fewer than the revised 545,000 jobs lost in April, a report by a private employment service said on Wednesday.

The April figure was originally reported as a decline of 491,000.

The median forecast of economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for 520,000 private-sector jobs lost in December.

The ADP job reading is seen as a predictor of the government's monthly payroll figure. The Labor Department will release its May employment report at 8:30 a.m. (1230 GMT) on Friday.


The usa service sector continues to shrink.  And the service sector is the backbone of the usa economy?

U.S. service sector shrank again in May - ISM

NEW YORK, June 3 (Reuters) - The U.S. services sector shrank again in May, according to a report released on Wednesday.

The Institute for Supply Management's nonmanufacturing index edged up to 44.0 in May from 43.7 in April.

Economists' median forecast in a Reuters poll called for a reading of 45.0, below the 50 mark which divides expansion from contraction.

The services sector represents about 80 percent of U.S. economic activity, including businesses such as banks, airlines, hotels and restaurants.


Ben Bernanke warned Congress on continued deficits:

Bernanke warns on deficits as Treasury rates rise

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke warned on
Wednesday that rising U.S. debt was contributing to a spike in longer-term interest rates, and said now was the time to start working on reining in deficits.

He gave no clue as to whether the U.S. central bank would step up its purchases of government debt or mortgage-backed securities to offset the rising borrowing rates, something investors have been watching for.

"Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance," Bernanke said in testimony prepared for delivery to the House of Representatives' Budget Committee.

"Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth," he said.

Bernanke gave a relatively upbeat assessment of the economy, saying he still expected the recession to bottom out and growth to resume later this year.

He said financial markets had improved, thanks in part to the Fed's efforts to restore lending, but he noted the recent spike in yields on longer-term Treasury debt and fixed-rate mortgages.

"These increases appear to reflect concerns about large federal deficits but also other causes, including greater optimism about the economic outlook, a reversal of flight-to-quality flows, and technical factors related to the hedging of mortgage holdings," Bernanke said.


Late in the day, this came from Fed officials:
05:24 Fed officials have surprised banks saying that specific amounts of new capital must be raised before repaying TARP -- Bloomberg
Fed offficials have told banks that they needed to raise specific amounts of new capital prior to repaying taxpayer funds, with more stringent assessments applied compared to the results of the stress tests in May. JPMorgan (JPM) and American Express (AXP) were told they needed to increase common equity, after having been told they had enough capital in case of a further economic downturn. Morgan Stanley (MS) was also told to raise more funds (note that all 3 companies announced capital raises this week). Goldman Sachs (GS) hasn't been required to seek any more funds since its $5.75B capital raise in Apr. The article notes the caution from the Fed stems from a concern of the Fed that the banks repay TARP funds and then claim they have no capital to make loans.
Paul Volker stated this after the market closed:
16:00 Paul Volcker says full recovery "will be a matter of years" - Bloomberg
Headlines only. He also comments that the Federal aide poses a degree of political risk for years. Volcker, Chairman of the President's Economic Recovery Advisory Board, is giving the commencement address to the Brooklyn Law School.
* * * * *
Bill Gross of PIMCO stated that investors should diversify from usa dollar assets:

Gross Says Diversify From Dollar as Deficits Surge

June 3 (Bloomberg) -- Bill Gross, founder of Pacific Investment Management Co., advised holders of U.S. dollars to diversify before central banks and sovereign wealth funds ultimately do the same amid concern about surging deficits.

The U.S.’s "fortune-producing capabilities seem to be declining, which might suggest that its relative standard of living is doing so as well," Gross wrote in his June investment outlook posted today on the Newport Beach, California-based firm’s Web site. "If so, the implications are serious."

Bill Holter comments on the huge USA deficits:

Bill H:

To all; this article
was posted earlier today on Jim Sinclair's . As time has gone by, more and more investors are coming to the same conclusions we came to last year and earlier. Markets are bigger than governments just as Dr. Frankenstein lost control of his monster. So the bottom line question investors want the answer to is whether or not the Fed can control long term rates? How stupid! Treasury needs to borrow another $900 billion by September, FROM WHO? Does anyone really believe the Chinese are so stupid as to lend us more capital that was created from manufacturing real goods so the U.S. can turn around and pay it back in the form of an interest payment?

I wrote last week that Kudlow, Cramer and the rest of that illiterate bunch would have you believe rates were going up because investors saw green shoots and a recovery just out ahead of us. This is totally nonsensical. First of all, even if they were correct, higher rates along with the massive upcoming "rate resets" will be enough to kill any green shoot including tough to kill weeds. The whole problem in a nutshell is what caused the problem in the first place, TOO MUCH DEBT. Too much debt weighed on the system until it broke, now the government wants to reflate the system by using their "pristine" balance sheet. This is like a doctor operating on a gunshot victim with a .44 Magnum!

Even if the global capital were available for the Treasury to borrow (it is not for much more than 6 more months), how exactly do they plan on paying back the interest, let alone principal? Rates are going higher because of the simple concept of supply and demand. The demand for Treasuries are waning because the world sees a debtor that is on the ropes financially while requested supply is exploding. The Treasury cannot survive until tomorrow morning if the world doesn't lend them the money, PERIOD. We are now at the point in time where "sovereign decisions" must, and will be made. We are at the point where it has become every nation for themselves in a fight for survival. I equate today's situation as an "all in bet" in the global game of "Chicken". He who blinks first will unfortunately be the winner or at least not lose everything.

And finally this from my native Canada.  I guess this is why we need audits:

Mint Can't Account for Missing Gold

By Ian Macleod
Ottawa (Ontario, Canada) Citizen
Tuesday, June , 2009

OTTAWA -- A significant quantity of gold, silver, and other precious metals is unaccounted for at the Royal Canadian Mint.

External auditors are investigating a discrepancy between the mint's 2008 financial accounting of its precious metals holdings and the physical stockpile at the plant on Sussex Drive in Ottawa.

The mystery raises possibilities from sloppy bookkeeping to a gold heist.

Officials with the commercial Crown corporation are saying little and refuse to confirm the amount and value of the unaccounted for gold, silver, and palladium.

"An unprecedented demand in gold in 2008 has led to an unreconciled difference between the mint's financial statements and the physical count of precious metals. There's a difference there that we're looking into," Christine Aquino, mint spokeswoman, said in a prepared statement Tuesday in response to questions from the Ottawa Citizen.

"We're taking this very seriously. We're conducting a thorough review and we're expected to have that completed within the month. (It) includes the analysis of precious metal by-products and financial data. We've allocated all necessary resources to this review."

She stressed police have not been called into what mint officials consider an internal matter. She would not say whether the gold and other metals in question were part of the refinery and bullion operation or one of the mint's three other business lines: producing Canadian circulating coins, designing and producing coinage for foreign countries, and numismatics.

"We're looking at many different angles right now," she said.

The mint's Ottawa headquarters houses one of the world's leading gold and silver refineries, turning out almost 2.8 million troy ounces of refined gold in 2007.

Another 369,000 ounces of refined silver were produced as a byproduct of refining the gold from a number of sources, including gold ore, scrap recyclers, financial institutions and industry. (A troy ounce is the traditional unit of weight for precious metals and equals 1.097 ounces.)


I wish you all a pleasant evening:





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