Saturday, September 26, 2009
Thursday, September 24, 2009
What an outrage!
Let’s see, options of gold futures expire Thursday at 1:30 pm. It is Thursday at 8am and gold is trading well over $1,000 meaning the Cartel is under water on its written positions.
So…….time to have the government announce they are lightening up on the financial support programs and QE.
Flash breaking news all across CNBC that the FED is going to start withdrawing stimulus and bingo, presto gold trades below $1,000 again.
As a good friend emailed me, THIS IS A CRIME.
I want to see Goldman Sachs’ prop desk positions. I want to see the phone logs. Unless this nonsense stops Karl Denninger is right, the system is doomed.
Not a moment too soon in my opinion
Wednesday, September 23, 2009
By Craig Torres
Sept. 23 (Bloomberg) -- The Federal Reserve will slow its purchases of mortgage securities, seeking to avoid disrupting the housing market as an economic recovery takes hold.
“The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010,” the Federal Open Market Committee said in a statement today after meeting in Washington. The $1.45 trillion program was scheduled to cease by the end of this year.
Chairman Ben S. Bernanke and his fellow policy makers indicated for the first time since August 2008 that the economy is accelerating, even as they recommitted to keep their benchmark interest-rate “exceptionally low” for an “extended period.” Today’s statement signals the Fed will maintain its stimulus measures to secure a recovery and reduce unemployment.
“The mortgage market has gotten a reprieve, and mortgage rates may stay low going into the spring of next year,” said Christopher Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. The FOMC indicated it will exit its emergency programs “only when the economy’s troubles have passed,” he said.
Bernanke is trying to revive lending and cut the 9.7 percent unemploymentrate while preventing a surge in inflation from the $1 trillion expansion of the Fed’s balance sheet.
The central bank’s purchases and the Obama administration’s homebuyers’ tax credit helped stabilize housing and push the Standard and Poor’s Supercomposite Homebuilding Index up more than 30 percent this year.
Fed officials signaled a stronger commitment to support housing markets, saying they would buy “a total of” $1.25 trillion in mortgage-backed securities. Last month, they said they could buy “up to” that total.
Stocks retreated after initially extending gains. The Standard & Poor’s 500 Index was down 1 percent to 1,060.87 at 4:30 p.m. in New York following an increase of as much as 0.8 percent. Treasury notes gained.
Officials left the target rate for overnight loans between banks at a record low of between zero and 0.25 percent. Today’s decision was unanimous.
“Economic activity has picked up following its severe downturn,” the committee said today. “Conditions in financial markets have improved further, and activity in the housing sector has increased,” the Fed said.
“Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.”
The FOMC said monetary and fiscal stimulus combined with stabilizing financial conditions “will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.”
Policy makers gathered a week after Bernanke told a conference in Washington that the worst recession since the 1930s “is very likely over.” Forecasters anticipate the expansion will be “moderate” because of “ongoing headwinds,” including cuts in lending by banks, he said in response to questions at the Brookings Institution.
FedEx Corp., the second-largest U.S. package-shipping company, reported Sept. 17 the smallest drop in international shipments in a year. United Technologies Corp., the maker of Otis elevators and Carrier air conditioners, can return to profit growth next year as it benefits from cost cuts and a revival in some markets, Chief Financial Officer Greg Hayes told a JPMorgan Chase & Co. conference broadcast on the Internet.
“The key message here is we see tough markets; some signs of improvement on the short cycle; confident in 2009 and confident that we are going to resume earnings growth in 2010,” Hayes said. Hartford, Connecticut-based United Technologies, which also owns Pratt & Whitney jet engines, is eliminating at least 18,000 jobs to reduce costs and boost margins once the economy improves.
The Fed has bought about $862 billion of its $1.25 trillion agency mortgage-backed securities program, and $129.2 billion of a $200 billion program of U.S. agency bonds. Demand is returning to housing after the industry shaved an average of 1 percentage point from gross domestic product each quarter since the start of 2006.
Home prices rose 0.3 percent in July from the previous month, the third straight monthly gain, according to a Federal Housing Finance Agency index. Existing home sales rose 7.2 percent in July from the prior month to the highest level in almost two years, according to the National Association of Realtors.
The Fed’s “primary goal is to avoid a shock to the market by suddenly shutting the programs down all at once,” said Christopher Low, chief economist at FTN Financial in New York. As the Fed eases out of purchases, “they’re hoping other buyers will step in to avoid a sudden increase in mortgage rates,” he said.
Mortgage rates for 30-year fixed home loans averaged 5.04 percent in the week ended Sept. 17, down from 5.07 percent the previous week, according to McLean, Virginia-based Freddie Mac, a government-controlled mortgage-finance company.
A sudden end to the Fed’s purchases might push up mortgage rates by a half to one percentage point, according to Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York.
Tapering off -- by reducing weekly purchases and stretching them beyond the end of the year -- would have a more muted effect, pushing rates up by at least a quarter of a percentage point, Hooper said before the decision. Officials in August slowed the pace of their Treasury note-buying and considered doing the same with their mortgage-backed security and agency bond purchases, according to the minutes of the meeting.
Some economists said it will be hard for the Fed to withdraw its stimulus. Keeping it in place for too long, meanwhile, could lead to faster inflation. The U.S. monetary base, the stock of money in the banking system, doubled to $1.70 trillion in August from $842 billion a year earlier.
The FOMC’s statement said “substantial resource slack” and stable long-term inflation expectations mean that “the Committee expects that inflation will remain subdued for some time.”
Fed officials forecast in June that the personal consumption expenditures price index will rise 1.2 to 1.8 percent next year, within their long-term preference range of 1.7 to 2 percent. Economists say the inflation concerns are more about the risks that the Fed doesn’t shrink the balance sheet in time, or can’t do so because of further job losses.
“Inflation is going to stay low for a while; the real concern about inflation is a long-run issue” Mickey Levy, chief economist at Bank of America Corp. in New York, said before the announcement. “The issue is will the Fed be able to drain and offset the huge increase in the monetary base before it reignites excess demand or inflationary expectations.”
Economists project an annualized growth rate of 2.9 percent in the third quarter, followed by an expansion of 2.2 percent in the final three months of the year, according to the median estimate in a Bloomberg News survey.
Manufacturing is expanding, and rising stock prices and real-estate values boosted household wealth by $2 trillion in the second quarter, the Fed said last week. Gains in household wealth helped support a 2.7 increase in retail sales last month, the most in three years.
“It’s one thing to have a resumption of growth, but it’s another thing to get back all the lost opportunities and all the jobs that have been lost,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey. “That’s going to take a long time.”
Many ask me is I am seeing "green" shoots indicating a recovery . I politely say that I see no confimation of a recovery.
Yes, I see commercial paper rise, but then I look at the Baltic Dry Index and it is falling which means the ships are empty devoid of goods.
Yes, I see the leading indicators rise, but then I see credit card delinquencies rise to record levels. I then see house mortgage delinquencies
at record levels and it is these that are collateral to our banks. I then see the Fed with record levels of reserves as banks still fail to lend.
This is confirmed by Libor which is now down to .285%. The dollar has low demand because nobody is lending to anybody. There is no economic
burst to allow funding. It is for this reason that I cannot say that the recession is anywhere close to ending.
Now if the economy was improving, we would be seeing an improved labour market. Get a load of this:
In other words, the bigger employers are laying off people at greater rates. I sorry to say that the economy is just not improving.
The last important news event is the release of a letter finally admitting that the Fed has done gold swaps with a foreign nation:
I will explain:
Basically the Fed on a Freedom of Information has told Chris Powell that they have done a gold swap. We already know that the usa has done a swap with Germany in the year 2000, as 1700 tonnes of West Point gold was swapped with 1700 tonnes of Bundesbank gold. The usa sold/leased all of the Bundesbank gold and the Bundesbank took ownership of the gold on usa soil.
We now are aware that the Germans wish their gold back and their request is falling on deaf ears. We are also aware that the Swiss are asking for their gold back and again that request is denied.
The German gold is at West Point and the Swiss gold is at the Federal Bank of NY.
The Swiss have kept a considerable hoard of gold on USA soil since World War I for safe keeping.
China is also aware that sovereign nations are not getting their gold. You can just imagine the turmoil if China does not get the IMF gold that they request.
In summary, today we saw the Fed announce continued QE. This means that mortgage rates will continue to fall as the Fed buys every bond is sight. However, the dollar is sacrified
as the Chinese are horrified as they see massive printing of paper dollars diluting their hoard.
You will see gold rise but only in the physical market phase ie. from 11 pm tonight to 3: pm and from 8: 30 to 10 pm. This is when London fixes its two gold prices for physical gold.
My bet will be massive demand in London for whatever little physical gold is offered. Gold should be up dramatically tomorrow. The cartel then does their dirty deeds in the non physical time period.
My commentary tomorrow will be late but I will do a commentary.
I will do a commentary on the weekend but not on Monday..I will be fasting all day and I will not have enough time to do my homework. Besides, my wife will kill me if I turned on a computer during Yom Kippur. I do not want to get her angry with me.
see you tomorrow