Saturday, July 4, 2009

Commentary: July 4.09

 
First of all, I would like to wish all our American friends a  happy 4th of July holiday greetings>
 
Gold closed down by Thursday to 930.70,  Silver retreated 29 cents to 13.39.  The gold comex OI fell marginally by 800 contracts on Wednesday despite
golds rise.  The silver Oi however fell sharply down by 3600 contracts to 100,000 as speculators flee the rigged market.
 
ON Thursday night, I sent down to you the Bloomberg story that 7 banks have been shut down by the FDIC. The total number of banks closed this year total 52.
I can also assure you that all of these closures are planned months in advance.  There are going to be many more on the horizon.
 
The big news of Thursday was of course the jobs report.  The official report showed a worse than expected loss of 467000 jobs.
First, I will give you the official news and then I will give commentary on it.
 

U.S. June payrolls fell 467,000, jobless rate rises

WASHINGTON, July 2 (Reuters) - U.S. employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5 percent, the government said on Thursday in a report that showed a labor market continuing to struggle with a deep recession.

The June job losses were more than 100,000 greater than the 363,000 consensus of Wall Street economists polled by Reuters and broke a four-month trend of moderation in job losses.

The Labor Department data showed that in April and May, 8,000 fewer jobs were lost than previously reported. The May job losses were revised downward to 322,000, while the April losses were revised upward to 519,000.

The jobless rate of 9.5 percent compares with 9.4 percent in May and was the highest since a matching unemployment rate in August 1983. Analysts had expected the rate to rise to 9.6 percent.

While job losses in June were spread across all sectors, the June figures showed the steepest declines in services, which fell 244,000 after a 107,000 drop in May. Professional and business services fell 118,000, while government employment fell 52,000. Manufacturing was one of the few sectors to show a smaller drop in June, falling 136,000 after a 156,000 fall in May.

-END-

The market was expecting a number closer to 350,000.  The Dow was sent to the dumper where it closed down by 220 points to 8280.
 
The famous Birth Death plug was in full force adding 185000 jobs.  The reason the Bureau of Labour use a Birth/Death plug is the understanding that when one loses his job, an entrepreneur is born.
I would like to ask who would want to be an entrepreneur in this environment?
 
Also it was announced that hourly earnings did not advance at all and that the weekly hours fell from 33.1 hrs to 33.0: The economy is not advancing at all!
 
08:30 June average hourly earnings 0.0% vs. consensus 0.1%; average weekly hours 33.0 vs. consensus 33.1
Prior average hourly earnings revised to 0.2% from 0.1%. 
 
end.
 
Here are some commentaries on the jobs front:
 
08:42 Payroll decline accelerates in June
After an upside surprise in May, which was revised even higher to a decline of (322K) with today's report, payrolls disappointed in June with a (467K) decline. Temp jobs and government were the key factors behind the June deterioration, with a (52K) government decline coming almost entirely (and surprisingly given state budget issues) in the federal government segment. Most other major segments of the labor market did not show any dramatic change in the pace of decline relative to May. Various employment indicators, including today's claims data, continue to suggest that the labor market is slowly turning, even though the pace may be disappointing to the market. During Q2, payrolls have averaged (436K) vs (691K) in Q1. Further, jobless claims continue a very slow downward trajectory, and the number of people receiving state benefits has stabilized over the past seven weeks. It has been widely noted that employment is often one of the last indicators to turn, and that is proving true in the current recession. 
 
 
end.
 
Please note: temp jobs and government were the key factors behind the June deterioration with some of the decline coming from the Fedeal government segment and not the states who are having massive budget problems.
 
The U6 number is the unemployment rate without seasonal adjustments and it adds some underemployment.  It also adds discouraged workers who are not in the official number. 
The number is now 16.8%.
 
Williams, in his shadow government statistics uses different  models to get at the true unemployment rate.  His data suggested 20.8% unemployment.
 
Either number the U6 or Williams number indicate the usa is in serious decline.
 
end.
 
In other news, May factory orders increased for the first time in quite a while:
 

U.S. May factory orders rise, beat expectations

WASHINGTON, July 2 (Reuters) - New orders for U.S. manufactured goods jumped 1.2 percent in May, their largest increase in nearly a year, the Commerce Department reported on Thursday, beating analysts' expectations.

Economists polled by Reuters had forecast that factory orders would only gain 0.8 percent. April's gain was revised downward to 0.5 percent from the originally reported 0.7 percent. Nondefense capital goods orders excluding aircraft, considered a measure of manufacturing activity, were up 4.7 percent in May, after falling 3.5 percent in April.

end.
 
The USA also released data on Commercial paper and it declined again last month.  If the economy was improving we would be witnessing an increase in the commercial paper:
 

US commercial paper outstanding falls in week-Fed

NEW YORK, July 2 (Reuters) - The U.S. commercial paper market contracted in the latest week to the lowest in at least 8-1/2 years as the painful economic downturn and aftermath of the credit crisis continued to erode it, Federal Reserve data showed on Thursday.

For the week ended July 1, the size of the U.S. commercial paper market, a vital source of short-term funding for daily operations at many companies, fell by $18.1 billion to total $1.136 trillion outstanding, down from $1.155 trillion the previous week. That's about half its size nearly two years ago, as the market peaked at about $2.2 trillion outstanding in August 2007 when the credit crisis broke out.

Asset-backed commercial paper outstanding fell by $13.6 billion after falling by $21.3 billion the previous week. Unsecured financial issuance outstanding fell by $3.2 billion after rising by $18.2 billion the previous week.

end.
 
This next news story is also very important as China is trying alternatives to the usa dollar as the reserve currency of the world:
 
07:18 China's central bank to allow companies to settle cross-border trade in the yuan -- wires
According to a statement on its website, The People's Bank of China will encourage banks to offer yuan settlement services, starting today. The statement says that companies in China are neighboring countries are facing relatively large risks due to forex fluctuations caused by the large swings in the US dollar, the euro and other major settlement currencies. The Bank also promised tax breaks for exports settled in yuan. Recall it was reported yesterday that China has asked for the G8 Italy summit to discuss issue of new global reserve currency and has recently been sabre-rattling to promote greater use of the yuan in int'l trade and finance. $/¥ quoted last 96.67. 
* * * * *
 
end.
 
The Austrian bank Erste has just published a 53 page report on gold and it includes a section on manipulation:
 
Here is the article:

Austrian bank's gold report cites market manipulation

Submitted by cpowell on 12:34PM ET Thursday, July 2, 2009. 
Section: Daily Dispatches 
3:30p ET Thursday, July 2, 2009

Dear Friend of GATA and Gold:

Erste Group Research, a division of Erste Group Bank AG in Vienna, Austria, has just published a 53-page special report on gold that includes a section on manipulation of the gold market. This section seems to have been heavily influenced by GATA's work.

Under the headline "Is the Gold Price Subject to Manipulation?," found on Page 39 of the report (and Page 40 of the Adobe Acrobat reader), the Erste Group report says:

"The intraday movements have been showing an unusual pattern for many years now. In the early hours of Asian trading, the gold price tends to go up. Conversely, the afternoon fixing in London tends to trigger a downhill ride, which finds itself offset only partially in the New York session.

"The extreme concentration of futures positions seems particular as well: Currently three U.S. banks are positioned net short to the tune of 12.3 million ounces. This is equal to more than 15 percent of global production.

"In a speech in July 1998 Alan Greenspan addressed this context, saying that 'central banks stand ready to lease gold in increasing quantities should the price rise.'

"The article 'Gibsons's Paradox and the Gold Standard' by Lawrence Summers, currently chairman of the economic advisory board of President Obama, is another example. In this article Summers explains the connection between low key lending rates and the gold price.

"Paul Volcker, former chairman of the Federal Reserve (1979 to 1983) and currently a member of the economic advisory staff of President Barack Obama, pointed out, 'Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.'

"And James Mofett, CEO of Freeport McMoRan, said, 'The central banks are the OPEC of gold. They will control the price of gold by selling until they change their minds.'"....

end.

As many of you are aware, California has started to issue IOU's to pay for services.  They intend to issue 3.2 billion dollars worth of these IOU's this month.

There is a statemate between the Democrats who want an increase in taxes and no cuts in services and the Republicans who want a deep cut in programs and more borrowings.

 

The deficit is now projected at 26 billion dollars.  Yesterday, all the major banks said that they would honour these IOU's but only until July 10.09   Upon hearing this, the California legislature is now holding emergency meetings in order to get a budget.  It will be difficult.

 

It seems foolhardy for Obama to issue a stimulus pkg on a national level to create new jobs, only to have the States cut jobs because of the deteriorating economy.  The two are at conflict with each other.

 

It looks like Obama will have to provide federal funding for most of the states.  The amount needed will be probably around 300 billion dollars per year to bail out the states.

The problem here is many:

 

1. the dollar will tank as China sees that the Obama administation now controls the auto industry, the insurance, industry, the banking industry and the housing mortgage industry.

  China would accelerate its selling of usa treasuries.

 

2. the bailout of the states would initiate credit default payments.

 

3. the fallout of the above will cause bond prices to fall and long term interest rates to rise. This would go counter to Obama who wishes to get the housing sector back on track.

 

4. if interest rates rise appreciably then interest rate swaps will be triggered pushing the major banks (JPMorgan, Citibank) into a severe credit crunch.

 

We are now entering a new earnings season.  We see no green shoots anywhere.  Also expect to see bank earnings continue to deteriorate as foreclosures continue , the adjustable rate mortgage folly is now in full bloom.  Also commercial properties are in the doldrums.

 

 The banks will not be able to use their one time gains  when they revalued their debt with a phony gain. During the middle of March 09, the banks got a relaxation of the rules of FASB and they used this to artificially raise earnings.

I would like to emphasize that all the banks still have their toxic junk on the balance sheet and the economy cannot resume growth until this junk is removed and the banks declared solvent once again.

 

speak to you on Monday

Harvey.

 

 

 
 

Thursday, July 2, 2009

Preliminary Commentary July 2.09

I am going to give a comprehensive review on Saturday July 4.09.
However this just came in and it is important that you read this:
 
Six Banks in Illinois, One in Texas Shuttered by Regulators 
Share | Email | Print | A A A

By Ari Levy and Margaret Chadbourn

July 2 (Bloomberg) -- Six banks in Illinois and one in Texas were seized by regulators as the deepening financial crisis pushed the toll of failed U.S. lenders this year to 52, the most since 1992.

For the year, 12 banks in Illinois have failed, the most of any state. The seven seized banks, with total assets of $1.49 billion and deposits of $1.34 billion, were closed by state or federal regulators and the Federal Deposit Insurance Corp. was named receiver, according to statements today from the FDIC. Buyers were named for each of the closed institutions.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship,” the FDIC said in the statements.

Illinois is one of seven states that began the fiscal year yesterday without a spending plan, after Democratic Governor Pat Quinn refused to sign a budget because lawmakers failed to approve raising the income tax. In his original $53 billion budget proposal in March, the governor sought personal and corporate tax increases to help eliminate an $11.6 billion deficit and maintain state services. The state’s unemployment rate was 10.1 percent in May, compared with 9.4 percent nationally.

“This is a mess,” said Jack Ablin, who oversees $60 billion as chief investment officer at Harris Private Bank in Chicago. “We’re a manufacturing state and in the Midwest, so we’re influenced by the autos.”

Chicago is 280 miles (450 kilometers) from Detroit, home to General Motors Corp. and Chrysler LLC, which were forced into bankruptcy. Lear Corp., the Southfield, Michigan-based maker of automotive seats, announced plans today to enter bankruptcy.

Regulators this year have closed the most banks since the savings-and-loan crisis of the early 1990s as lenders struggle with mounting losses on real estate-related loans. The total for 2009 is more than double the 25 banks shuttered in 2008, and surpasses the 50 that were closed in 1993. The prior year there were 181 failures or government-assisted transactions.

The FDIC estimates today’s seizures will cost its insurance fund $314.3 million. The regulator imposed an emergency fee in May to raise $5.6 billion to rebuild the fund, which has deteriorated in the past 18 months. More assessments are possible, the FDIC said.

To contact the reporters on this story: Ari Levy in San Francisco atalevy5@bloomberg.net; Margaret Chadbourn in Washington atmchadbourn@bloomberg.net.

Last Updated: July 2, 2009 20:08 EDT 
the budget crisis in many states will cause an avalanche of banking failures.
 
On Saturday, I will dwell on the jobs numbers.
 
Needless to say they were awful and as predicted the Birth Death plug added 166000 jobs
 
see you on Saturday.

Wednesday, July 1, 2009

July 1.09 commentary.

 
Good evening Ladies and Gentlemen:
 
Gold closed up by 14.10   to 940.60,  Silver rose by 15 cents to 13.68. The gold comex open interest rose marginally up by 632 contracts despite gold's massive
hit yesterday.  The commercials were supplying huge amts of paper and many speculators decided that it was the right time to buy gold.
 
In silver the OI rose by only 95 contracts.
 
In the silver comex delivery pits only 253 contracts were delivered upon or about 1.1 million oz.  The total standing if you include June's total is 28 million oz so this must
be viewed as extremely bullish.  Generally 2000 contracts are hit the first day.  It generally means that there is not enough silver around to satisfy the purchasers.
 
I will keep you informed on the silver front throughout the month.
 
OK lets go to the news of the day: Mortgage applications fell badly last month:
 

U.S. mortgage applications fall to 7-month low 

NEW YORK, July 1 (Reuters) - U.S. mortgage applications plunged to a seven-month low last week as demand for home refinancing loans tumbled 30 percent, data from an industry group showed on Wednesday. 

The drop does not bode well for the hard-hit U.S. housing market, which has been showing some signs of stabilization, with sales rising and home price declines moderating in many regions of the country. 

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications , which includes both purchase and refinance loans, for the week ended June 26 decreased 18.9 percent to 444.8, the lowest reading since the week ended Nov. 21, 2008. 

Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, said mortgage rates are just one factor driving potential borrowers. 

"Rising unemployment, concerns about job security, potential buyers' inability to sell their existing homes and problems with appraisals coming in too low are all weighing on demand," he said. 

"The government needs to take more aggressive action to bring mortgage rates back down to below 5 percent as that seems to be a key level for the market," he said…

-END-

Here are some economic numbers for the day:
 
 

The yield on the 10 yr T note is 3.55%.

The dollar is down .59 to 79.53.

The euro is up .0123 to 1.4162. The pound was a bit stronger and the yen a bit weaker.

Crude oil, after reaching $72 per barrel, reversed course and was last off 99 cents per barrel to $69.34.

The CRB was up .93 to 250.89.

 
end.
 
The ECB reported on the sale of 4.33 tonnes of gold last week: (two banks sold gold coins which was included in gold's sale)
 
 
The ECB weekly statement of condition indicated a decline of E96Mm (4.33 tonnes) in "gold and gold receivables" attributed to a sale by one captive CB and sales of gold coin by two others. Last week saw a sale of 0.9 tonnes reported.
 
The GLD after remaining comatose for over 60 days reported on a drop of 5 tonnes of gold from its inventory.  Many of you know that I believe that these guys have little gold or silver behind them:
 
MarketVane’s Bullish Consensus for gold shed a point to 77%. The GLD ETF reported a drop in alleged gold holdings of 5.19 tonnes to 1120.55 tonnes.
 
end.
 
 
The private firm ADP released news of employment in the private sector and their reading shows a further decline in employed:
 

U.S. private sector sheds 473,000 jobs in June: report 

NEW YORK (Reuters) - U.S. private employers cut 473,000 jobs in June, more than expected but down from the 485,000 jobs lost in May, a report by a private employment service said on Wednesday. 

The median of forecasts from 25 economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for 393,000 private-sector jobs lost in June. 

June's job loss was the smallest since October 2008. 

The May figure was revised from an originally reported loss of 532,000 jobs.

-END-

 
Challenger Gray reports a fall in planned layoffs:
 
 
U.S. planned layoffs fall to 15-month low in June 

NEW YORK, July 1 (Reuters) - Planned layoffs at U.S. firms fell for a fifth consecutive month in June, hitting the lowest since March 2008 and providing another hopeful sign as the U.S. economy struggles to end its worst recession in decades. 

Planned job cuts announced by U.S. employers totaled 74,393 in June, down 33 percent from 111,182 in May, according to a report released on Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc. 

The data is likely to fuel hopes among economic optimists that the worst is over for the recession-bound U.S. economy, though the apparent improvement may have benefited from some seasonal factors, Challenger said. 

"We typically see a decline in job cuts in the second quarter. In fact, it is the slowest job-cut quarter, historically," the report said. "However, this recent drop-off may be indicative of an overall downward trend in layoff activity." 

"We will probably see job-cut activity increase from current levels in the months ahead, but job cuts in the second half of the year are likely to be lower than the first-half and may even come in below the second quarter of 2008, when 748,045 cuts were announced." 

It was the first time since last September that the monthly total was less than 100,000 and it was the lowest job-cut count since 53,579 job cuts were announced in March 2008…
 
end.
 
USA manufacturing continues to shrink due to the outsourcing policy of the usa in previous years:
 
 
U.S. manufacturing sector slows in June-ISM 

NEW YORK, July 1 (Reuters) - The U.S. manufacturing sector shrank in June but at a slower pace than during the prior month, according to an industry report released on Wednesday. 

The Institute for Supply Management said its index of national factory activity edged up to 44.8 to in June from 42.8 in May. The median forecast of 73 economists surveyed by Reuters was for a reading of 44.5. 

A reading below 50 indicates contraction in the manufacturing sector.
 
end
 
USA pending home sales were non-existant last month  ( up a paltry.l):
 
 
U.S. pending home sales rise 0.1 pct in May 

WASHINGTON, July 1 (Reuters) - Pending sales of previously owned U.S. homes rose slightly in May, the fourth straight monthly gain, a real estate trade group said on Wednesday. 

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in May, was up 0.1 percent to 90.7 from a upwardly revised index of 90.6 in April. The index for April had previously been reported as 90.3. 

Economists polled by Reuters ahead of the report were expecting pending home sales to remain unchanged. The trade group said April's gain was revised upward to 7.1 percent from the 6.7 percent previously reported.
 
 
This next data surprised everyone.  With the stimulus in high gear everyone thought that public sector construction would be on the rise.  They are wrong:
 

U.S. May construction spending lowest in 5 years 

WASHINGTON, July 1 (Reuters) - U.S. construction spending fell 0.9 percent in May to the lowest rate in more than five years, with the economic stimulus plan passed in February providing little relief in public construction, according to Commerce Department data released on Wednesday. 

The drop was more than expected, with economists polled by Reuters forecasting a fall of only 0.5 percent. April's spending was revised downward to an increase of 0.6 percent from March, compared to the 0.8 percent increase originally reported. 

Total spending in May was at a seasonally adjusted annual rate of $964 billion, which was the lowest since March 2004. Construction spending fell for six consecutive months before April's increase. 

Private construction dropped 1 percent in May to a rate of $649 billion, the lowest in six years. Residential construction, which makes up more than a third of private building, slipped 3.4 percent to its lowest level since December 1995. 

The U.S. Congress passed the $787 billion stimulus package with billions for capital works projects in the hopes of employing the thousands of construction workers who lost their jobs when the housing bubble burst. 

But public construction dipped 0.6 percent in May, three months after the plan took effect. Highway and street construction fell 1.3 percent, and power plant construction was down 6.5 percent. Transportation spending rose 0.6 percent, and education was up 0.5 percent, Commerce said.

-END-

 
As everyone saw on TV today, California and other states did not pass new budgets.  California will start to issue IOU;s  tomorrow.   I urge you to read the following article by
 
Judy Lin on the state of affairs at many states that are in trouble because of declining revenue:
 

States work to stave off government shutdowns

By JUDY LIN, Associated Press Writer Judy Lin, Associated Press Writer – 1 hr 1 min ago

SACRAMENTO, Calif. – Legislators in more than a half-dozen states, their revenues evaporating in the recession, frantically worked to stave off government shutdowns and devastating service cuts. California failed to meet a midnight deadline and now may need to issue IOUs instead of paying bills.

Across the country, lawmakers are feeling the heat as their legislatures began the new fiscal year without a budget in place…

http://news.yahoo.com/s/ap/20090701/ap_on_re_us/us_state_budgets

 
click on the blue for the entire article.
 
One of the more vocal Fed governors and a voting member of the FOMC came out with this today:
 

Fed's Yellen: rates could be near zero for years

SAN FRANCISCO, June 30 (Reuters) - U.S. benchmark lending rates could stay near zero for a couple of years based on the amount of slack now in the economy, San Francisco Federal Reserve Bank President Janet Yellen said on Tuesday. 

"My staff has looked at 12 different ways to calculate the output gap," and every one points to a large gap between current and potential output, Yellen told reporters after a speech in San Francisco. 

Bets in futures markets on a rate increase as soon as late 2009 are "jumping the gun", she said. 

The jobless rate is likely to continue climbing this year, and the moment the recession ends is "not the right time to take away the punchbowl", said Yellen. 

She added that views circulating that the Fed risks triggering some kind of hyper-inflation by not rushing to raise interest rates are "misplaced". 

Yellen is a voting member of the Federal Open Market Committee in 2009.

-End-

and we are experiencing green shoots?
 
The following article is worth reading.  It is from the Lewis Rockwell website site and a follower of the Austrian Mises School of Economics:
 

On Giving Goldman a Chance

by Matt Taibbi

Recently by Matt Taibbi: The Great American Bubble Machine

http://www.lewrockwell.com/taibbi/taibbi8.1.1.html

-END-

Battle lines

by Mark van der Sluys

Next month will mark two years since the first shock waves of the financial crisis were felt in credit and stock markets around the world. Much speculation exists as to whether this was an orchestrated take down or simply market forces correcting years of excess and imbalance. I have an opinion as to why it occurred, but in reality "why" is a sunk cost. I would rather focus my attention on "how" things have changed and "what" this means going forward.

For me, three main changes stand out amongst the wreckage of the last two years:

1. A new government omnipresence and fascist agenda in US/UK/Australia

2. The absolute power and total integration of JPMorgan and Government Sachs with the US Treasury and Federal Reserve

3. China and Russia positioning for a change in world economic order

It is my contention that Warren Buffet was right when he referred to this crisis as an "economic war" and the above mentioned changes represent huge battle lines in that war.

On one side you have the US strategically fortifying systems, institutions and alliances vital to defend its position as monetary and economic leader of the world.

On the other side you have China and Russia building strategic assets, alliances and reserves in gold, oil, base metals and agriculture. Bi lateral arrangements that exclude the US and settled in Rouble or Yuan are now the norm. Internal reform and vocal support for an end to the exclusive right of the US dollar as the world reserve currency are clear signs China and Russia are preparing for big changes in coming years.

If these observations are true we can surmise the battle strategy for each side.

United States

The US as the defender of the status quo will seek to build on its existing strengths. It still controls the worlds monetary system and therefore financial markets. It has successfully fought a paper war since 1971. Now armed with new powers (through legislative changes passed under the "world will end" threats) the US Treasury, Federal Reserve and favoured institutions (ie JPM, GS & GE et al) are well positioned to create economic chaos through strategic market intervention. I've probably just lost half of the readers with this statement who have an unwaivering belief that markets are free and fair. I ask you to consider the QE strategies announced earlier this year - open declaration for market manipulation of interest rates in the bond market. I ask you to consider currency markets where it is stated policy to maintain currency stability. I ask you to consider that 97% of the short positions on COMEX gold and silver are held by just two investment banks (JPM & HSBC who are both owners of the Federal Reserve). Apparently it is OK to control 97% of a market on the short side but when the Hunt brothers owned just a fraction of this percentage on the long side in 1980 it is illegal cornering of the market. I ask you to consider how easy and profitable it is, with 100 times derivative leverage and advance notice of price movements, to move any market in any direction at any time. This is the US core capability and changes over the last two years only strengthen this position.

China/Russia

China and Russia seem to have a "build and exclude" strategy. The build component is focused on securing the infrastructure and resources. Whether its oil refineries in Africa, base metals from Australia, food supplies from Brazil or a bi lateral natural gas pipeline the core idea is to invest in things that facilitate future prosperity and security. In battle terms this approach can lock out or exclude the US from increasingly scarce resources. Coupled with the increased exclusion of the US dollar for international trade, the Chinese and Russians seem intent on gradually weakening the US. They are aware that major dislocations in markets would have much more severe implications for resource rich Russia and export driven manufacturing China than it would on the US.

Summary

The US has the capability and incentive to increase market volatility. China and Russia have the will and patience to slowly undermine the US allowing an orderly transition of power. It is unlikely that the US will allow the privilege of the post 1944 world political, economic and monetary order to lapse without a fight. It is also unlikely that China and Russia will continue to allow the US to abuse its privilege. Battle lines are drawn and unfortunately the consequences for you and I will be significantly higher prices, increased taxation, food scarcity, geopolitical tensions, extreme market volatility, social unrest and ultimately war.
Regards,
Mark
http://www.bullionmark.com

 
end.
 
Note: in the beginning of his passage he speculates that it is possible that  the free fall in the market over the last two years was orchestrated. He gives his reasons why.  Note the short positions held by JPM and HSBC in silver and gold.
 
Bill Holter's commentary today is on Ben Bernanke who publically stated that if the Fed would be audited the dollar will collapse.  Holters agrees.  Here is his commentary:
 
 

Audit the Fed

To all: Ben Bernanke stated last week before Congress that an audit of the Fed could destroy the Dollar. He is absolutely correct! If an audit were done we would find out that what little Gold that is supposedly in Ft. Knox is not. We would also find out that the supposed (not even reported any longer) money supply has exploded exponentially. We would also learn that the Fed has taken on "assets" as collateral that are worthless from financial institutions that are nothing more than "smoking black holes" that have humongous negative equity. We would learn the names of these institutions and inferences could be made as to who their trading partners are and thus also bankrupt.

But stop a minute to think about what was said, he really told the truth! If the Fed were to be audited, the "power money" that knows the real scoop on the present corruption and bankrupt status would exit in droves and automatically create a financial collapse. While Joe six-pack waited for the official audit results, the rats would jump ship and leave the honest yet naive people completely decimated and broke holding worthless paper. It is what it is, they know it, we know it, the general public suspects it but even if they could bring themselves to reality, what actions would or could they take?

So Bernanke basically admitted that the Fed is fraudulent and broke but PLEASE "for God's sake lets not do anything rash"! Rash my ass, broke is broke, worthless is worthless and who other than the current power structure benefits from continuing a system such as we have.. Why even go to work and try to save if what you are saving has less value than the air we breath? Why not work for potatoes or some other real asset (Gold)?

The rest of the world already knows the real deal while it is only Americans who have any wool left over their eyes. What he wants us to believe is "just trust us". In light of what has already happened to the financial system that was "strong, sound and on solid ground", WHY would or should we or anyone else "just trust them"? Ponzi schemes abound, the Treasury has been looted of Dollars that taxpayers are responsible for, the Gold is long gone but not to worry we can trust them. We have been lied to for years with bogus statistics, accounting fraud, currency fraud etc. but maybe they can squeeze the last remaining blood from a population that has been dumbed down and kept in the dark for years.

How sad this truly is! I grew up during the "superman" era where truth and justice meant something as did your word and a handshake. Back then Americans would have gone ballistic if the chairman told Congress "please, don't audit us for your own good", 40 years later the public just yawns because of the great "Orwellianization" that has taken place. The Fed is not "Federal" so they can't be audited? I don't know about this one, I'm not Federal and I have been audited as have many public and private companies. So why can't they be audited? As Jack Nicholson said in A Few Good Men, "you can't handle the truth"! Maybe we can, maybe we can't, but what gives "them" the right to decide when or whether we can handle the truth. The truth is the truth. Perceptions change over time, truths just like "weights" do not. An ounce 100 years ago is still an ounce today.

I must give credit where credit is due, the Fed has had a fabulous run of looting the United States on behalf of it's owners for 96 years. It is time to audit them, display their fraud and peel the leeches off our skin so no more hard earned "blood" can be sucked from our system. Regards, Bill H.

http://ipsnorthamerica.net/news.php?idnews=2379

 

 

 

 

end

 

 

 
 
Ron Paul has now got 245 sponsors for his audit the Fed bill. The bill can now easily pass the House.  It is sitting on Barney Frank's desk and this man is pro banker.
If they audit the Fed, they automatically audit Fort Knox:
 

RON PAUL NEEDS HELP

Barney Frank is sitting on his Bill, which can easily pass a House vote, if it ever gets to the floor:

http://www.foxnews.com/politics/2009/06/24/mr-popular-rep-paul-wins-supporters-fed-sunshine/

We need an aggressive email campaign to try and get Barney Frank off his sorry ass and bring this Bill to a hearing in the Financial Services Committee, where it will die if something isn't done to motivate Frank. Here's is what I would suggest:

People need to send an email to Frank's office, which I have linked here:

 
end.
 
There have been many discussions on various websites with respect to the video on Monday on alleged manipulation:
 
Here is a very good summary of the events :
 

Murph:
I am really impressed by the rapidity with which the world leapt upon the "Manipulation Clip" which was what I call a "watershed" and which occurred at 8:34 a.m. on Monday morning. What really astounded me was how rapidly my friends and clients were on the phones to me, having heard with absolute astonishment the comments made by the three non-Muppett guests against Liesman’s protests. How can a CNBC "reporter", Liesman, even begin to debate the remarks made by the other three, the most notable being Wilbur Ross, who absolutely SLAMS Liesman’s defense of the "manipulation theory" that "interest rates came down (on their own)" and insinuated that it was natural market forces that took yields down? Such naivete is hard to grasp.

It was for me, a 32-year veteran of the market wars, a moment which I will never forget. I have used CNBC as a "Divining Rod" of sorts since the bottom in 2003 because I love to try to gauge "investor sentiment" through CNBC ever since the AOL craze of the late 90’s. When Time Warner took out AOL in arguably the worst deal in U.S. corporate history, I wondered whether all of the AOL cheerleading on CNBC might not have influenced the decision to let a highly profitable media company to in effect SELL ITSELF to the tulip bulb that was AOL in the late 90’s. Well, I am cheering CNBC tonight because as much as I throw up in my waste-paper basket with the constant BS we are fed, CNBC is still a media company and they get paid by ratings. They KNOW that "content" is the driver of viewership and that viewership dictates revenue and that revenue dictates profits and since the entire spin machine is controlled by GE and since GE is run by Jeffery Immelt, comments by Immelt must be heeded. Immelt was quoted recently as saying that "America must get back to its "industrial roots". It is all a logistics exercise. Why would GE allow CNBC to ALLOW a discussion about "Government Manipulation" and "Washington is the New Wall Street" when GE is sitting on an ungodly amount of government loans through GE Capital? Think about it.

What Larry Levin said was this, and please forgive my biased analysis: "Forget fundamental analysis, just follow the money. The U.S. Government is rigging markets every second in every country 24/7 so how on earth can one take the OTHER SIDE of that trade?" Liesman tried a feeble defense (I wish it had been Kudlow) but had zero defense against the onslaught. But when the Guest Host, Wilbur Ross, made that final remark that "Washington is the New Wall Street", I KNEW in my heart-of-hearts that a watershed, a moment-of-moments, a Black Swan of sorts, had just occurred.

What does it mean for me in terms of investment strategy? It means this: The "order" that has governed me since 1977 has now changed. The First Rule of Investing is now one which Mexico Mike spoke of a few months ago. There are now "No Rules". It is a bar-room brawl with broken beer bottles. CP called it first when he spoke of "No more free markets – only intervention." I look at my portfolio and now think this: One can take Larry Levin’s opinion that you better just get on the right side of the "trade" and own JPM and GS – Lord knows that as an investor I’d have been way better off with THAT trade than owing my basket of gold and silver and junior mining issues – but Murph, in the final analysis, it is never who leads the game at half-time. It is who earns the right to tear down the goal posts with 100 screaming girls staring up at you. What happened on Monday was for me a "Call to Arms" in the sense that as my clients must be protected at all costs, they must ALL understand the importance of "the Clip". Mexico Mike was right. How can you make investment decisions based upon what the local trucking company tells you about "zero business until HOPEFULLY July 2010" when your government and financial media are telling you that green shoots are popping up everywhere? "Get long America" is a mantra that is being fed to us by the people that own the media and the government – Goldman Sachs – and it is my opinion that when the truth is revealed about the underwriting fees that Wall Street got for the deals that were financed by taxpayer money, the "machine" will come to a grinding, taxpayer-led revolt.

In the meantime, it bodes neither bullishly nor bearishly for the metals or associated share prices. If Goldman decides to "get behind" the sector or your favourite junior, you will make serious money. If they decide to ignore it, you are on "the WRONG side of the trade". This has been the drill for ages and simply shedding light upon it will not change the dynamic. When the final trading bell rings on any given trading day, all that matters is the settlement price because it is that settlement price that prompts the margin clerk to action. When the margin call hits my desk in the early morning, I can’t pick up the phone and tell the clerk that his margin call "doesn’t count" because the economic reports issued by Washington were "phony" and when the truth is known the position will right itself. The clerk will ignore my protest and liquidate the position(s) because, after all, settlement price is settlement price. The Administration, the Fed, the Treasury and most of all Goldman Sachs know this, and herein lies the universal dilemma for all of us lining up on the side of free markets and real capitalism at its unencumbered best. It is like going into that barroom brawl with The Golden Rule as your governing strategy. "Do unto others as they would have you do unto them" will only result in a shard of glass lodged between two of your ribs. That "markets can remain irrational longer than I can remain solvent" should be rewritten to read "markets can stay RIGGED, PROPPED UP, (as Larry Levin said on Monday) longer than we all can remain solvent". That is the new trading rule of the day.

The most recent example occurred again today, where the USDA crop report showed a massive increase in planted corn acreage, defying all of the estimates from the historically most reliable sources in the world. Even Gartman said that he was suspicious of the accuracy of the report but why should he be? There is a raging war between the inflationists and the deflationists but with trillions of dollars worth of new treasuries to be sold in the upcoming year(s), the last thing they want is a rapidly escalating cost of food because that IS where the inflationary rubber meets the road. Corn was locked limit down today so inflationary expectations come away subdued once again by way of "government reporting" so that yields will remain subdued and government bonds may be successfully sold without the attendant spike in yields that soaring food inflation might cause.

Every single word of "commentary" that I read on your site regarding the current state of the gold and silver markets is well-crafted and logically sound and is some of the best anywhere on the ‘net. However, to trade successfully in the new world order of rigged markets, you need to be a fly on the wall in the Goldman Boardroom with a copy of the playbook for the next intervention/manipulation. With the huge amount of government-driven underwriting fees in the last quarter, Goldman is going to report obscene numbers and the word is out that they are desperately trying to bury profits to avoid the headlines. Don’t we wish that the gold and silver bulls had that problem?

The only bright light on the horizon is that media outlets like GE-owned CNBC are at the least allowing free speech to remain but based upon how rapidly they cut away to the commercial break last Monday after Levin’s rant, I’d wager that free speech is definitely not "off the table".
MJB

end.
 
Tomorrow is the jobs report and generally the market goes all over the board with this number.  They always fudge the data with a phony Birth/Death plug.
 
Expect 350,000 jobs lost and an increase in the unemployment rate to 9.6%.  Expect gold to be hit as it has been the custom, every jobs reports.
 
I was about to leave you when this just came in:
 
Lear to File Bankruptcy After Lenders Agree to Terms (Update2) 
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By Alex Ortolani

July 1 (Bloomberg) -- Lear Corp., the world’s second- largest maker of automotive seats, is planning to file for Chapter 11 bankruptcy after reaching an agreement with representatives of secured lenders and bondholders.

Lear is seeking support from other bondholders and lenders and plans to “commence shortly” with a restructuring under court protection, the Southfield, Michigan-based supplier said in a statement today. The company said it has commitment for $500 million in financing for the bankruptcy and exit from a syndicate led by JPMorgan Chase & Co. and Citigroup Inc.

Lear will seek bankruptcy protection after low auto production globally by customers such as bankrupt General Motors Corp. cut into sales. More than 20 partsmakers have filed for bankruptcy this year, according to the Original Equipment Suppliers Association trade group.

“The dramatic fall-off in the market has impacted suppliers large and small,” said Mike Wall, supplier analyst at industry consultant at CSM Worldwide in Northville, Michigan.

Lear’s restructuring will protect customers and suppliers, and provide pay for the “vast majority of trade creditors in full,” the company said.

“We intend to complete the restructuring as quickly as possible, and emerge as an even stronger and more competitive partner to our customers,” Chief Executive Officer Bob Rossiter said in the statement.

Other Bankruptcies

Standard & Poor’s Ratings Services lowered its issue-level rating on Lear’s senior secured debt to ‘D’ from ‘CC,’ after the intended bankruptcy announcement, the New York-based ratings provider said in a statement today.

Lear, which said on May 14 it sought to restructure debt outside of Chapter 11, tried to renegotiate its borrowing after getting a waiver through June 30 on some conditions and a 30-day grace period for $38 million in interest payments. The supplier would join Visteon Corp. and Metaldyne Corp. as major suppliers to file for bankruptcy protection this year.

GM, based in Detroit, was Lear’s largest customer last year, accounting for 23 percent of the supplier’s $13.6 billion in sales, followed by Ford Motor Co. at 19 percent, according to an annual filing.

Low production by those companies contributed to a combined net loss of $1.05 billion in the past three quarters for Lear, which also makes electronic components.

The supplier’s ability to secure financing shows that lenders, who have been shunning auto-industry companies, may be easing credit in light of the U.S. government-backed bankruptcy restructurings of GM and Chrysler LLC, said analyst Wall.

“Some of the banks out there are starting to dip their toes in the financing waters,” Wall said.

To contact the reporter on this story: Alex Ortolani in Southfield, Michigan, ataortolani1@bloomberg.net

Last Updated: July 1, 2009 18:32 E
 
 
end.
 
Also the reported sales by Ford and GM and Chrysler were below expectations.  The market needs 10 million new cars sold and they are not getting it.
You will probably see the new Chrysler and New GM go back into bankruptcy.
 
Got to go now
 
see you on Saturday
Harvey.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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