Bernanke Tells Nation This Sunday: More QE Coming

 

Market Celebrates Just Announced Record Foodstamp Usage By Closing At 2010 Highs

 

Spanish Skies Shut Down After 90% Of Air Traffic Controllers "Call In Sick" In Protest Over Austerity

 

Rosie's Must Read On A Hope-Based Rally Now, Followed By Shock Therapy Later

In the News Today

Posted: Dec 03 2010     By: Jim Sinclair      Post Edited: December 3, 2010 at 4:29 pm
Filed under: In The News

Jim Sinclair’s Commentary
A “Great Day” in gold at $1,400 plus, third tap success, and a really "Bad Day" for the long bond!
Does this look like the final Pillar of Gold at and above $1,650 has fallen in? I think it has so get ready for a $75 up day in gold and 200 points down on the long bond.
When I think of the gold and gold share shorts, I also remember the expression: "Those that the gods wish to destroy they make mad first."
The short of juniors and long of majors OTC derivative will be fried.

Jim Sinclair’s Commentary
Afternoon thought:
Karzai’s clear snubbing of the President today is an insult to the office of the President more than to any single person. This reflects the lack of respect a country gets as it destroys its currency, its seniors, eliminates ethical practices and ignores the history of other such events. No damage control MOPE can erase what has taken place.

Dear Jim,
Yes, quite unfortunate indeed.
Reputation is a function of present and current actions.  Both are equally important.  If our current actions ignore that which built our reputation, confidence will erode.  The loss of confidence in a monetary system without a gold conversion is an end game scenario.
CIGA Eric De Groot

Jim Sinclair’s Commentary:
$1650 is on its way via a New Year rally in all things gold, according to CIGA Luis Sequeira

New High for Gold in Euros as Debt Fears Cause Safe Haven Flight
By: Peter Cooper, Arabian Money
Europeans worried about the collapsing value of the euro are buying gold as well as switching into dollars. This is keeping both the yellow metal and greenback rising in value although normally they move in opposite directions.
Gold hit a new all-time high when priced in euros yesterday as the European currency took a battering again in foreign exchange markets. The Irish bailout deal last weekend failed to calm forex markets, partly because the deal may still be rejected by the parliament on December 7th and partly because the buck now passes to Portugal as the next target for bond vigilantes.
Growing eurozone crisis
The eurozone is still in crisis. And problems at the periphery threaten to move closer towards the core. Yesterday even French bond yields ticked up as the crisis deepened for Portugal and Spain, although next in the firing line are Belgium and Italy.
Gold is a logical choice for Europeans still anxious about the dollar and its debt mountain. The yellow metal is priced in dollars and so has the benefit of hedging the declining euro while not actually being linked to the Fed’s monetary policy. It also serves the same function for the UK pound sterling.
More…

Employment Report – Disinformation at its Finest

Posted: Dec 03 2010     By: Eric De Groot      Post Edited: December 3, 2010 at 3:57 pm
Filed under: General Editorial
I found myself characterizing the employment report as disinformation at its finest. It’s not so much that spinsters were pressing hard to massage today’s headline number into something it’s not but rather how data has been progressively “managed” to convey the right message. Anyone that crunches government data knows what I mean.
John Williams, the man behind shadowstats.com – and what Jim calls a must have service – reveals the wise use of techniques such as ignoring discouraged workers and the use of the birth/death model to selectively ‘nudge’ the employment series over time. Part two of a five part commentary series discusses the implication of some of these techniques.
Today’s employment data boils down into two important observations.
First, the job creation during the economic expansion has been unable to match the labor force demand on an annual basis. That is, the jobs creation has lagged the labor force expansion. This in part explains why the unemployment rate, significantly understated due statistical techniques, continues to rise despite the positive headline number. The under performance of job creation relative to labor is revealed by the subzero reading in the job creation histogram below.
Job Creation Histogram (JCH): Net Nonfarm Payrolls Added/(Lost) less Civilian Labor Force Added/(Lost), 12 Month Average:

Second, the birth/model, which calculation frequency will be modified starting January 2011*, continues to dominate job creation in 2010. Like 2004, 2010 represents another liquidity injection phase – quantitative easing part 2. Over 1.9 million jobs were created from January to November 2004. The birth/death model (estimating algorithm) accounted for nearly 40% of these jobs. By comparison only 950,000 jobs have been created over the same period in 2010. Here’s the disturbing part: over 50% of those jobs were estimated by the birth/death model. Not only is job creation weaker but also more heavily dependent on statistical techniques to create them. This is not a good sign.
Birth/Death Model (BDM) Contribution to Nonfarm Net Payrolls (NFP) Added/(Lost):

* Upcoming Changes to Establishment Survey Data
Effective with the release of January 2011 data on February 4, 2011, the
establishment survey will begin estimating net business birth/death ad-
justment factors on a quarterly basis, replacing the current practice of
estimating the factors annually. This will allow the establishment survey
to incorporate information from the Quarterly Census of Employment
and Wages into the birth/death adjustment factors as soon as it becomes


U.S. Payroll Gains Trail Forecasts; Unemployment Rises
By Timothy R. Homan – Dec 3, 2010 9:15 AM PT
Employers added fewer jobs than forecast in November and the unemployment rate rose to 9.8 percent, pointing to economic weakness that’s likely to keep the Federal Reserve pumping money into the financial system.
Payrolls increased 39,000, less than the most pessimistic projection of economists surveyed by Bloomberg News, after a revised 172,000 increase the prior month, Labor Department figures showed today in Washington. The jobless rate rose to a seven-month high, while hours worked and earnings stagnated.
Treasury securities jumped and the dollar weakened as the data contradicted recent reports showing manufacturing growth and stronger holiday sales. The unexpected gain in unemployment is likely to intensify political debate over extending Bush-era tax cuts, as well as the Fed’s $600 billion program of asset purchases intended to spur growth.
More…

Hourly Action In Gold From Trader Dan

Posted: Dec 03 2010     By: Dan Norcini      Post Edited: December 3, 2010 at 2:15 pm
Filed under: Trader Dan Norcini
The payrolls number that was released this morning served as the initial catalyst that sent the US Dollar sharply lower and generated a wave of fund-related buying into the commodity complex once again.
It would appear that the market focus of today shifted off of the woes in Europe with its sovereign debt crisis and back onto the abysmal state of the US economy. Same story – no jobs. The market is sending a signal to the clueless Administration and current Congressional makeup (which will be changing next month) that its policies are utterly wrongheaded. They are too wedded to ideology however to take the steps necessary to bring about an improvement. Combine that with what seems an almost hopeless paralysis to deal with the worsening US fiscal condition and the Dollar was taken out to the woodshed where it had the stuffing beaten out of it. Please see the price chart I sent up earlier to detail the breakdown from a technical perspective.
The fact that the US Dollar was knocked lower only after just seeing the Euro getting slammed earlier this week, is underscoring just how awful the health of both fiat currencies has become. Traders were running into the Dollar early this week out of fears concerning the Euro and its long term stability. Today they are running back into the Euro mainly because they are running back out of the Dollar. What a terrible, horrific mess. The monetary authorities have disgraced themselves but that assumes that such people have a functioning conscience. Their problem is that they have the interests of the big banks at heart first and foremost and the long term interests of the nation second if at all. It also does not help matters any that the political leadership refuses to stop spending money that they do not have.
The results are predictable – gold is seeing a huge influx of money from those looking to protect themselves from the monetary authorities of the West. Early this week it made a new all time high in both terms of the Euro and the British Pound and today it came within $15 or so of taking out its lifetime high in US Dollar terms.
I should also note here that crude oil is threatening to breakout to the upside on its daily chart as it set a new yearly high in today’s trading session. If its strength continues and it clears the $90 level, gold is going to take out its all time high in US Dollar terms very easily. I have written about this many times here on the site and remarked about it during radio interviews, but it is a sad fact that if the energy markets break out to the upside, the already hard-pressed middle class is going to get slammed with the double whammy of both rising food prices and rising energy prices. The boys who concoct their doctored CPI  numbers will try their magic on convincing us that inflation is tame and that price pressures are subdued but the charts do not lie and they are telling us that disposable income is going to go more and more to securing the essentials of life. Translation – watch for consumer discretionary spending to nosedive as more of the family budget goes to food and energy and wages remain flat or stagnant.
Back to gold – the fact that it was able to push through round number psychological resistance at $1400 on its third try this week is friendly to the bullish cause as it sets up a test above the $1420 level of the all time high. If that gives way, gold then targets $1440.
Silver is in its own world right now and is very strong on the charts but I want to see a good, solid close above $29.50 to set it up for a push towards $30.
The HUI is within striking distance of its recent high near 588. Technically it looks strong on the charts although bulls will need to push it past 590 to negate any bearish divergence signals that are appearing.
Keep an eye on wheat prices as it has been on an upward tear this week and is working on targeting $7.50. It is moving higher on fears concerning the Australian crop now. Wheat is an essential food and its price action dictates to a large extent the price direction in the rest of the grain complex. It has been dragging corn prices higher. Unless we get a huge bumper crop next year of both wheat and corn, I am afraid that the days of relatively cheap grains are behind us and that the world has entered an era in which the grains, and the soybeans for that matter, have now achieved permanently higher near plateau levels. The implications are higher meat and poultry costs for us all.
What a terror these monetary authorities have unleashed upon us all. Keep in mind this all started when they began to bail out their pals at the damn big banks who created the derivative monster to enrich themselves. History will look back at this era and will spare it no amount of harsh criticism for what began the downfall of the global monetary system.
Bonds are experiencing some pre-weekend short covering as bears ring the cash register for what has been a good week for them. Even at that, they are basically flat and not getting much in the way of upside traction. The technical damage to the charts has been extensive with this week’s breakdown so unless bond bulls can take prices back up beyond 129, the path of least resistance looks lower.