FDIC announces bank failures in Florida, Georgia
U.S. economic news:
08:30 Q4 GDP 5.7% vs. consensus 4.7%; Personal Consumption 2.0% vs. consensus 1.8%
•GDP Price Index 0.6% vs. consensus 1.3%
•Core PCE 1.4% vs. consensus 1.3%
The 5.7% increase is the largest since 2003.
* * * * *
US economy up 5.7 pct in Q4, fastest in 6 years
WASHINGTON, Jan 29 (Reuters) - The U.S. economy grew at a faster-than-expected 5.7 percent pace in the fourth quarter, the quickest pace in more than six years, as businesses reduced inventories less aggressively, the Commerce Department said on Friday.
The first estimate put fourth-quarter gross domestic product growth at its fastest pace since the third quarter of 2003. The economy expanded at a 2.2 percent annual rate in the third quarter.
Analysts polled by Reuters had forecast GDP, which measures total goods and services output within U.S. borders, growing at a 4.6 percent rate in October-December period.
Growth was boosted a sharp slowdown in the pace of inventory liquidation, a factor that could mask the strength of the economic recovery from the longest and deepest downturn since the Great Depression.
But even stripping out inventories, the economy expanded at an annual rate of 2.2 percent, accelerating from the 1.5 percent increase in the third quarter, reflecting relatively strong performance from other segments of the economy.
Business inventories fell only $33.5 billion in fourth quarter after dropping $139.2 billion in the July-September period. The change in inventories alone added 3.39 percentage points to GDP in the last quarter. This was the biggest percentage contribution since the fourth quarter of 1987.
For the whole of 2009, the economy contracted 2.4 percent, the biggest decline since 1946, the first year after the end of World War II, the department said.
In the last three months of 2009, consumer spending increased at a 2 percent annual rate, below the 2.8 percent annual pace in the prior quarter when consumption got a boost from the government's "cash for clunkers" program.
In the forth quarter, consumer spending contributed 1.44 percentage points to GDP. Consumer spending, which normally accounts for about 70 percent of U.S. economic activity, has been held back by the worst labor market in a quarter century.
Business investment in the fourth quarter grew for the first time since the second quarter of 2008 as the drag from the troubled commercial real estate was offset by robust spending on equipment and software. Business investment rose at a 2.9 percent rate after falling 5.9 percent over the previous three-month period.
The growth of spending on new home construction braked sharply in the fourth quarter to an annual rate of 5.7 percent from an 18.9 percent pace in the third quarter. Home building has received a lift from a popular tax credit for first-time buyers, but recent data have hinted at some weakness starting to creep in.
Export growth outpaced imports, leaving a trade gap that contributed half a percentage point to GDP growth in the last quarter.
-END-
4th-Quarter GDP "Boom" Sets Stage for Double-Dip
- 2009 Downturn Worst Since Great Depression
- Watch-Out for 2010 Federal Deficit!
- Durable Goods Orders Keep Bottom-Bouncing
Mr. Williams from www.shadowstats.com discusses his views of the upcoming economic conditions today after the release of the fortuitous and miraculous report of a booming GDP. His service is by subscription and highly recommended by me to you as another source for getting the real facts. The following is from his website:
The State of the Real World: No Economic Boom in the United States; No Happy Deficit Outlook.
As discussed in recent writings, the U.S. economy is headed into an intensified downturn/double-dip depression (see Commentary No. 268), with significant risk this year for a massive sell-off in the U.S. dollar and the onset/early stages of a hyperinflation (see Hyperinflation, Commentary No. 263).
*The large specs reduced longs by 15,053 and decreased shorts by 5,508 contracts.
*The commercials reduced longs by 2295 contracts and decreased shorts by 22,734. Those changes make sense, as gold had fallen some $140 off its highs, but was before the liquidation of the last two days. Here's the run:
*The small specs supposedly reduced longs by 1859 contracts, BUT INCREASED SHORTS BY 13,625, which is ridiculously high. Either someone is playing games somehow, or gold is going to soar very soon. The small specs just don't that newly short so quickly and win.
We have made mention over the past month about the lack of liquidation in the gold market, which has been unlike what we have seen in the past. No more. The liquidation is finally kicking in. Yesterday the gold open interest dropped a STEEP 19,109 contracts to 478,361. For gold to come back like it did, with that kind of selling, is a real plus for us in the weeks ahead.
Silver bounced off $15.99 for the second day in a row, but still can’t get out of its own way … not with JP Morgan all over it. The silver open interest is liquidating too. It fell 2438 contracts to 122,144.
There were 1,040 delivery notices issued in the FEB gold contract. The FEB gold contract total for the month is 1,040 notices or 104,000 ozs. When things change in the gold market one has to pay attention; there were plenty of changes today. First of all, there are usually only 6-10 traders issuing or stopping delivery notices. Today there were 23 entities doing the stopping and 5 doing the issuing. However, 940 of the notices issued were issued by HSBC. If you look back at my daily COMEX Warehouse reports I haven’t mentioned HSBC at all at being prominent in the delivery process. So HSBC suddenly shows up and issues 90% of the delivery notices today. HSBC and JPM are likely the biggest gold shorts on the COMEX as evidenced by the fact that these two banks together own 90% of all the OTC gold derivatives held by US banks. So clearly the big shorts are having to deliver because there are a large amount of contracts standing for delivery in the FEB contract (see below). It should be noted that HSBC is the custodian of the gold that GLD supposedly holds for investors in its ETF. I have not seen anywhere in the GLD prospectus that the custodian of GLD gold is one of the biggest short sellers of gold futures and gold derivatives in the world. This is a material omission which is in contravention of SEC Rule 10b-5:
"Rule 10b-5: Employment of Manipulative and Deceptive Practices":
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security."
I would say that anyone who sells gold that they don’t own (short selling) on a massive scale must be obliged to declare this material fact when they are in charge of storing other people’s gold!
JPM issued 17 notices and stopped 323 while BNS issued none and stopped 154. Another Cartel honcho also appeared on the radar today…Deutche Bank issued no notices and stopped 144.
There were 119 delivery notice issued in the FEB silver contract. The total delivery notices for the month in silver stand at 119 or 0.6 Mozs. Bank of Nova Scotia issued 118 notices and stopped none.
There is 0.7 cent of contango in silver FEB/MAR contracts and 2.8 cents contango FEB/MAY contracts. The contango in gold fell dramatically which for FEB/MAR is $0.3 and $0.8 for FEB/APR. This shrinking of contango is signaling stress in the physical market.
The Open Interest in FEB gold reduced from 47,946 contracts to 10,489. What happened to the 37, 457 contract difference? On first notice day those contracts should have been fully paid for i.e. “standing for delivery”. Were there some cash settlements offered? The delivery notices issued together with the Open Interest represents a potential delivery obligation of 1.15 Million ounces. The dealers have only 1.8 Million ounces. There are more and more rumors circulating about difficulties meeting deliveries of gold at the LBMA in London. George Soros who is not known for gold trading expertise suddenly is of the opinion that gold is in a bubble. George Soros has seen enough charts in his life to know that is not true. Soros has the same ethics as an alley cat. Soros is like all the other so called investing gurus who seem to have not noticed the only asset that has appreciated every year for the last 9 years and outperformed every other asset in the process. Are we to believe that having not mentioned it for 9 years that he secretly owned gold and is now selling his proclaimed “bubble top”? Yes, and pigs might fly. I think he has heard rumors about shortages and he would like investors to dump some so he can accumulate before it’s too late. I am sure he would prefer to suffer the minor consequences of admitting he was wrong later than suffer the financial consequences of not being along for the ride in gold.
Cheers
Adrian
Bill:
When the Central Banks announced these swap arrangements, they claimed that there was tremendous demand for the dollar. Since when has a central bank ever told the truth? Does anybody believe that the agreement was concluded/agreed to on the date on which they made this information public? These bankers never tell the truth and have never told the truth.
More likely than not, the agreement was made back when the dollar was falling apart. It was not made because foreigners has such great demand for our worthless dollars. It was made because the value of the dollar was plumenting and the Europeans did not like the Euro skyrocketing against the dollar thereby destroying their exports.
The FED gave the foreign central banks dollars, which they themselves could use to invest in US treasury securites or they could give to other entities/hedge funds/banks/central bank controled corporations to invest in treasuries. At the same time the FED received massive quantities of Euros which it could sell and receive dollars for. This accomplished two goals, there was a big seller of Euros and a big buyer of dollars. This caused the dollar to spike upwards in value and caused greater demand for treasury securities. As the dollar spiked up, it caused a short squeeze in the dollar as all the hedge funds and major corporations that were short dollars had to cover their positions.
If this trade now has to be unwound then Harvey is right. This is potentially catastrophic for the demand for dollars and US Treasury bonds. Perhaps that is why Congress voted to expand the debt limit by 1.9 trillion dollars. today.
If they simply are going to stop doing this and maintain the existing positions, then there will still be a lack of demand for dollars and treasuries on a on-going basis as our government spews out more bonds and prints more dollars.
If this is the case, then the cartel needs to panic people out of their international stock and bond investments and their domestic stock investments creating demand for dollars and treasury bonds. Additionally, despite all the rhetoric on CNBC about the FED draining liquidity and protecting the value of the dollar now that Bernanke has been reappointed today, you can rest assured that they will be in the markets printing more dollars to buy all types of bonds to prevent interest rates from skyrocketing.
jeff
Last night, I forgot to mention to you that congress passed the increase in the debt ceiling to 14.3 trillion dollars. Strange events indeed.
To all of us who like a mental economic challenge, I bring you Adrian Douglas' piece on the increase in the debt ceiling and on the total usa money supply:
The debt level in the US is not yet unsustainable??
Here is some food for thought for everyone: The USD Money Supply M3 is 14.2 T$. When the US Government spends up to its new debt ceiling (I don’t suppose that will take more than 10 months) the US government debt will be 14.3 T$. So the US government will then owe every single dollar in existence to someone! The interest payment is currently about 600 B$ per year. So with interest obligations thrown in the US government owes more money than is in existence. The US government has declared its annual deficit for 2010 will be 1.35 T$ , a number carefully chosen because last year’s deficit was 1.4 T$ so there is an illusion of the deficit going down but don’t fall for that cheap trick! The current rate of deficit increase is more than 10% per annum. By the end of 2010 if this rate of increase is maintained the Federal debt will outstrip the available money to pay it off also at a 10% annual clip. This doesn’t take into account State, municipal or private debt. I don’t know what economists define as "unsustainable" but owing more money than exists would be good enough for me!
Here is something to ponder. To resolve this problem will the US Government
a) Become fiscally responsible and slash spending such that it is less than tax receipts?
b) Pass a bill demanding all money in existence be handed over to the government?
c) Print a mountain more dollars?
If you are not sure of the answer take a look at what Hank Paulson says was the solution when they didn’t have any money for an AIG bailout:
http://www.youtube.com/watch?v=yfQ8-oWShX0
Have a good weekend,
Cheers
Adrian
end.
what is Adrian stating? Simply at the end of Dec 2010, the new debt ceiling will be reached. The total money supply of M3 has calculated by J Williams of Shadowstats.com and others is around 14.3 trillion
dollars. Yes, it does mean that the usa government owes every usa dollar in existence to someone. And on top of that the future interest payments on the government at 600 billion dollars creates a situation
where the total federal debt outstrips all available money created into existence whether it is paper dollar bills or electronic digits. This is what is unsustainable!!!
And yes..this does not include private debt, state debt, municipality debts etc.
This is your food for thought for today.
In international circles, the Davos forum concentrated on the huge debt problems of Greece. Noriel Roubini piped in that it is Spain that is in deep trouble, far worse than Greece.
Both of these countries, I have detailed to you their troubles in previous commentaries. Here is the story from Europe (Davos)
Debt crisis fears overblown, economists say
Bill,
The chatter from economists at Davos is that "deficits don’t matter"…didn’t we hear that from Dick Cheney BEFORE the debt crisis?
QUOTE
In Dubai and Greece, mounting debt levels were indeed likely out of line and unsustainable, said Gerard Lyons, chief economist at Standard Chartered Bank, in a brief interview Friday.
But such situations should be viewed on more of a case-by-case basis, he said. Markets look at mounting debt problems and see the possibility of default, Lyons said. He argues that the more likely consequence is a squeeze on public spending and investment.
The potential for fiscal crises has been identified as a top fear by participants in this year's annual meeting of the World Economic Forum. An ongoing rout of Greek government bond prices as Athens struggles to put its financial house in order remains in the spotlight, highlighting fears that troubles could spread to other nations on the periphery of the euro zone as well as in some struggling emerging economies in Eastern Europe.
Meanwhile, debt levels in the United Kingdom and the United States, while on the rise, aren't yet unsustainable, Lyons argued. While the United Kingdom, which moved back into growth in final quarter of last year, likely won't need a further fiscal boost, the jury is out in the United States, he said.
END
Here are some figures which show expansion of the economy. There is no doubt that the stimulus money is showing up in various places:
US consumer sentiment at 2-year high-report
NEW YORK, Jan 29 (Reuters) - U.S. consumer confidence rose to a two-year high this month as the economic outlook improved, though most had a grim view of their own personal financial and employment prospects, a private report showed on Friday.
The Reuters/University of Michigan Surveys of Consumers said its final index of sentiment for January was 74.4, up from December's 72.5 and higher than analysts' expectations for 73.0.
That was the highest since January 2008 -- a month after the recent recession started -- and it also beat the preliminary reading for this month of 72.8.
The report follows government data showing the U.S. economy grew 5.7 percent in the fourth quarter, which was the fastest in six years but still failed to dispel concerns about sustainability of recovery amid a 10 percent jobless rate.
"Consumers are overwhelmingly convinced that the worst is over but nonetheless expect stagnating income and job prospects rather than solid growth during the year ahead," the University of Michigan report said.
The report's gauge of current economic conditions rose to 81.1 in January from 78.0 in December, hitting its highest since March 2008…
-END-
10:00 Jan NAPM-Milwaukee 56.0 vs. Dec 52.0
and this:
US Midwest business expands more than expected in Dec
CHICAGO, Jan 29 (Reuters) - Business activity in the U.S. Midwest expanded much more than expected in December, a report showed on Friday.
The Institute for Supply Management-Chicago business barometer rose to 61.5 from 58.7 in November.
Economists forecast the index at 57.4. A reading above 50 indicates expansion in the regional economy.
The employment component of the index rose to 59.8 from 47.6 in November. New orders rose to 66.4 from 63.5.
end.
Here are stories showing huge demand for gold coming from India and China:
Premiums for gold bars hit 13-mth high on China
*Premiums at 13-month high in Singapore, Hong Kong
* Cash gold 11 pct below all-time high
SINGAPORE/TOKYO, Jan 29 (Reuters) - Premiums for gold bars jumped to their strongest since December 2008 as weaker bullion prices ignited buying from investors and Chinese consumers ahead of the Lunar New Year holidays, dealers said on Friday.
Gold bars were offered at premiums of $1.10 an ounce to the spot London prices in Singapore, up from 70 cents two weeks ago. Cash gold
"Concerns about waning risk appetite and the euro's slide are playing against gold," said Koichiro Kamei, managing director at research firm Market Strategy Institute in Tokyo.
"But at the same time lower prices are attracting physical buyers widely from Asia, particularly China," he added. Jewellery makers in China, the world's second-largest gold consumer after India, stepped up purchases ahead of the Lunar New Year in February, while a drop in bullion prices attracted buying from investors across Asia, said dealers.
Gold bars were also offered at premiums around $1 in Hong Kong from 80 cents two weeks ago. output jumped 11.34 percent to a record of 313.98 tonnes in 2009, the China Gold Association said on Thursday, securing the country's position as the world's largest producer of the yellow metal.
Metals consultancy GFMS said last month that China, the world's most populous nation, would overtake India, the second most populous nation, as the world's largest gold consumer in 2009, with total demand forecast at 432 tonnes.
-END-
India gold buying continues as rupee rebounds
- Spot gold down at $1,084.95 an ounce
* London Brent crude up at $72.45 a barrel
* Rupee strong at 46.4200 per dollar
MUMBAI, Jan 29 (Reuters) - India gold traders continued their purchases on Friday afternoon to replenish stocks for wedding demand, which will start in April, as rupee recovered from its early losses, making the dollar-quoted asset cheaper.
"The rupee is the main driver (for gold sales)... anything below 46.30 is good enough for them to buy, a lot of orders were triggered in late trade yesterday at $1,075 (an ounce)," said a dealer with a state-run bullion dealing bank in Mumbai.
At 2:36 p.m., the partially convertible rupee
It had fallen to 46.44 after the central bank raised the CRR by a more-than-expected 75 bps at its monetary policy review on Friday. It had closed at 46.35/36 on Thursday.
International spot gold
"There are a lot of orders below $1,075," said another dealer with a private bank said.
"There is wholesale demand at $1,080, infact most of the investors are active rather than jewellery buyers," said Lokesh kumar Agarwal, chairman of Lucknow-based Brijwasi Bullions and jewellers Pvt. Ltd.
-END-
As promised, here is the closing figures on the gold comex.
I hope that everyone has a great weekend and I will speak to you on Monday.
Expect violent activity on markets from now on. Do not pay much attention to CNBC as they are paid shills.
I will try and give a balanced picture as to what is happening in the financial world.
Bye
Harvey.
the gold comex:
| Trade Date |
| Daily Settlements for Gold Futures (FINAL)Trade Date: 01/29/2010 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Month | Open | High | Low | Last | Change | Settle | Estimated Volume | Prior Day Open Interest | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FEB 10 | 1085.0 | 1090.8 | 1074.5 | 1081.8 | -.6 | 1083.0 | 11,456 | 10,489 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MAR 10 | 1085.2 | 1090.9 | 1074.9 | 1081.4 | -1.0 | 1083.3 | 1,469 | 1,672 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| APR 10 | 1087.0 | 1091.4 | 1075.0 | 1083.2 | -1.0 | 1083.8 | 181,874 | 298,010 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| JUN 10 | 1086.0 | 1091.0 | 1076.8 | 1082.6 | -1.0 | 1084.8 | 1,524 | 53,703 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AUG 10 | 1086.2 | 1088.4 | 1077.7 | 1084.0 | -1.0 | 1085.6 | 173 | 22,262 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OCT 10 | 1093.2 | 1093.2 | 1079.4 | 1079.4 | -1.0 | 1086.4 | 1,365 | 7,930 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEC 10 | 1086.4 | 1092.0B | 1079.0 | 1085.5 | -1.0 | 1087.4 | 3,440 | 32,745 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FEB 11 | 1089.0 | 1089.0 | 1084.6 | 1084.6 | -1.1 | 1088.9 | 1,236 | 7,570 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| APR 11 | - | - | - | - | -1.2 | 1090.8 | 232 | 3,793 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| JUN 11 | 1086.4 | 1093.0 | 1086.4 | 1088.8 | -1.4 | 1093.3 | 711 | 6,347 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AUG 11 | - | - | - | - | -1.4 | 1096.3 | 4 | 1,486 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OCT 11 | - | - | - | - | -1.3 | 1099.7 | - | 1,360 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEC 11 | 1097.0 | 1097.8 | 1097.0 | 1097.8 | -1.3 | 1103.4 | 233 | 11,259 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| JUN 12 | - | - | - | - | -1.3 | 1116.7 | 200 | 6,212 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEC 12 | - | - | - | - | -1.3 | 1133.4 | 334 | 8,364 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| JUN 13 | - | - | - | - | -1.3 | 1152.7 | - | 927 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEC 13 | 1183.0 | 1183.0 | 1183.0 | 1183.0 | -1.3 | 1174.0 | 3 | 3,005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| JUN 14 | - | - | - | - | -1.3 | 1198.1 | - | 1,175 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEC 14 | - | - | - | - | -1.3 | 1225.5 | - | 52 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 204,254 | 478,361 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Last Updated 01/29/2010 06:00 PM
| xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx end of commentary Jan 30.2010 |
