Imminent Global Stock Market Crash to Support U.S. Dollar
Stock-Markets / Financial Crash May 09, 2009 - 02:59 PM GMTBy: Global_Research
Continued from Page1 .... Employers are letting up a bit on the mass layoffs they resorted to earlier this year to cope with the recession, but the unemployment rate is climbing because many businesses remain wary of hiring given all the economic and financial uncertainties.
The Labor Department on Friday is slated to release a report expected to show that a net total of 620,000 jobs were lost in April. If analysts are correct, the figure — while still big — would be an improvement from March's 663,000 job losses and mark the fewest reductions since November.
The deepest job cuts of the recession, which started in December 2007 and is now the longest since World War II, came in January: 741,000 jobs vanished then, the most since the fall of 1949.
"I think the worst has passed in terms of losses," said John Silvia, economist at Wachovia. "But the jobs situation will remain tough."
With few places for the out-of-work to land, the unemployment rate is expected to jump to 8.9 percent, from 8.5 percent in March. If that happens, it would mark the highest jobless rate since the fall of 1983, when the country was recovering from a severe recession that drove unemployment past 10 percent.
The American economy lost another 539,000 jobs in April and the unemployment rate leapt to 8.9 percent, the government reported Friday, yet the deterioration was slightly milder than expected, buoying hopes that better days are approaching.
Fannie Mae, operating under a federal conservatorship since September, asked the U.S. Treasury for a $19 billion capital investment as a seventh straight quarterly loss drove the mortgage-finance company’s net worth below zero.
A wider first-quarter net loss of $23.2 billion, or $4.09 a share, pushed the company to request its second draw from a $200 billion funding commitment from the government, Washington- based Fannie Mae said in a filing today with the Securities and Exchange Commission. The company took $15.2 billion March 31.
In the midst of the worst economic contraction in decades, some small business owners are experiencing an additional—and brutal—cash squeeze, this time at the hands of their credit-card processors. The recession and rising business bankruptcies have prompted giant credit-card companies such as Denver (Colo)-based First Data and Atlanta-based Elavon to demand that some business owners maintain a cash reserve with the processors in order to protect against the possibility that customers may require refunds after the merchants have gone belly-up. Most processing agreements give the transaction giants the right to accumulate those reserves simply by holding back money the merchant is supposed to be paid after a credit-card transaction has cleared, often with little or no warning.
Dan Price, chief executive officer and co-founder of Gravity Payments, a card processor in Seattle, says he has seen "dramatically more" cases of reserves being created for small accounts in the past year. He says he has not asked any of his clients for reserves but has requested regular financial statements from customers that might pose a risk. Price says the size of reserves varies greatly, but it is common to require an amount equal to one or two months' worth of transactions.
The ramifications on even a well-established company can be dramatic. "In two weeks we would have been in bankruptcy," says Angie's List CEO Bill Oesterle, whose processor, Elavon, tried to withhold a reserve of $2.5 million from his $35 million company. Oesterle was instead able to change processors quickly, and with help from his lawyers, got his money back in about three weeks.
When a processor agrees to clear a company's credit-card transactions, the processor then becomes responsible for providing customer refunds. When an unhappy consumer asks their credit-card company for a refund, the credit-card issuer gets that money from the processor. The processor, in turn, pulls the money from the merchant's account. If the merchant has gone under, the processor has to eat the loss. With business bankruptcies on the rise, processors fear dishonest merchants might close up shop and skip town, leaving the processor on the hook for any refunds. "Before bankruptcy, some [unscrupulous] merchants will create lots of transactions," says Richard Speer, CEO of financial consultancy Speer & Associates, based in Alpharetta, Ga. Common triggers for the establishment of a reserve include a sudden surge in activity and individual transactions that have large dollar amounts.
U.S. Treasury Secretary Timothy Geithner said on Friday the Obama administration will provide substantial support to troubled lender GMAC, a vital provider of financing for buyers of U.S.-made cars.
"It's likely, again, that GMAC will need to take additional capital from the government and we'll be prepared to provide that," Geithner said in an interview with Reuters Television.
The Treasury and U.S. banking regulators said on Thursday that GMAC needs to raise $11.5 billion to fill a capital hole it could face if the economy were to deteriorate further.
Some Republicans still don't understand why mainstream America is soup set with their Party.
Now that Sen. Arlen Specter has defected to the Democrat Party, many prominent Republicans are openly recruiting liberal Republicans to run against Specter.
And at the top of their list is Tom Ridge.
Ridge is the turncoat Republican whose vote was crucial in passing the semi-auto ban in 1994.
After having opposed a similar ban in 1991, then-Rep. Tom Ridge flip-flopped and teamed up with Charles Schumer (D-NY) to pass the semi-auto gun and magazine ban. The gun ban passed narrowly, 216 to 214,thanks to Tom Ridge.
Later, as Governor of Pennsylvania, Ridge signed one of the most restrictive gun control laws in the State's history -- the infamous Act 17, which registered and taxed long gun buyers and placed other restrictions on Keystone State gun owners.
As the head of the Department of Homeland Security, Tom Ridge opposed arming pilots. He asked, sarcastically, if pilots carry guns, then should we also arm railroad engineers and bus drivers? As DHS Director, Ridge should have led the charge to arm pilots and people in other positions that fell under the agency's purview.
Instead, he just repeated the same tired old anti-gun line that we hear every time a state passes a concealed carry handgun law.
Guess who else opposed the armed pilots program? Pennsylvania's "Benedict" Arlen Specter, who was one of only two Republican Senators to vote against the bill.
The last thing we need is another elitist in Congress who does not trust law-abiding citizens with firearms. And yet, wishy-washy Republican
Senators like Utah's Orrin Hatch and South Carolina's Lindsey Graham are touting Ridge over Specter. In other words, let's replace one turncoat with another.
There is a better option. His name is Pat Toomey, a Gun Owners of America "A" rated pro-gunner who served in the U.S. House of Representatives for three terms, before honoring a self-imposed term limit and retiring in 2004.
Those who are pushing anti-gunner Tom Ridge claim that Pat Toomey is unelectable because he's "too conservative" for Pennsylvania.
But that's what self-appointed experts said before Toomey got elected term after term in a largely Democrat district in the eastern part of Pennsylvania. And that's what they said before he accrued a gigantic lead in the polls over a sitting Senator this year, forcing Specter to jump parties.
It was Pat Toomey who forced Specter to jump to the Democrat Party. Toomey -- who was backed by Gun Owners of America Political Victory Fund -- was leading Specter in polls by an overwhelming margin.
That's also what they said about Ronald Reagan -- who was supposedly too conservative to win a national election. (By the way, Reagan also won Pennsylvania.)
Bottom line: We need to put these squishy politicians on alert. Their internal party politics is their business. But when party leaders start pushing noted gun banners -- using the money contributed by millions of gun owners around the country -- we're not going to remain silent.
Texas Senator John Cornyn is the head of the National Republican Senatorial Committee. Michael Steele heads the Republican National Committee. The decision to support an anti-gunner over a defender of the Second Amendment rests largely in their hands.
ACTION: Please urge Senator John Cornyn and Chairman Michael Steele not to interfere in Pennsylvania's primary. There is already a pro-gun, electable conservative running in the primary who deserves their support.
You can contact NRSC's Sen. Cornyn at info@nrsc.org or by phone at (202) 675-6000.
You can contact RNC Chairman Michael Steele at chairman@gop.com or by phone at (202) 863-8700.
COMMODITIES
The DOE reports crude oil inventories rose 167,000 barrels, gas fell 167,000 barrels and distillates rose 2.43 m/b.
GOLD, SILVER, PLATINUM AND PALLADIUM
The Royal Mint, established in the 13th century, used 75 percent more gold in the first quarter amid a surge in demand for bullion to diversify investments.
The U.K. mint made 28,496 ounces of gold coins in the quarter, compared with 16,317 ounces a year earlier, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production last year rose 30 percent to 53,089 ounces, the data show.
Demand for gold and exchange-traded funds linked to the metal accelerated as equities collapsed and governments spent trillions of dollars to combat recessions. The Austrian mint, Muenze Oesterreich AG, sold a record 1.5 million ounces of gold last year, while the U.S. Mint’s sales of 1-ounce American Eagle gold coins more than quadrupled in January to 92,000.
“People are worried about their savings and banks, and a lot of people realize it’s a safe-haven asset,” said Mark O’Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin. “Very few people are selling.”
Investment in the SPDR Gold Trust, the biggest ETF backed by bullion, has expanded to 1,104.45 metric tons, overtaking Switzerland as the world’s sixth-largest gold holding. Gold has advanced for eight consecutive years, the longest winning streak since at least 1948, according to data compiled by Bloomberg.
The Royal Mint is now based in Llantrisant, Wales. Its 2009 Gold Proof Sovereign coin, made from 22-carat gold and weighing 7.99 grams (0.26 ounce) sells for 299 pounds ($450), according to the government agency’s Web site. Gold for immediate delivery averaged $904.18 an ounce this year, compared with $872.25 an ounce last year.
The Mint’s use of silver declined 10 percent to 74,793 ounces in the first quarter, the data show. Production last year fell 14 percent to 240,759 ounces. The metal fell 23 percent last year in London.
Wednesday saw June gold rise $8.80 to $911.00 as silver rose $0.29 to $13.71. Outside contracts were similar. Open interest in gold rose 2,520 contracts to 334,360, as silver OI rose 604 to 81,050. The ETF-GLD tells us their inventory has been unchanged for eight business days. If you believe that we have a tooth fairy we’d like to introduce you too. The ECB says, gold and gold receivables last week fell 12 million euros, or 0.54 tons. One bank sold and another bought. The Tocom is closed for the week. The HUI rose 15.68 to 335.62.
Richard Russell has discovered, as we did a few months ago, that gold is in a giant long-term reverse head and shoulders bottom pattern. The right shoulder is being completed and gold could catapult upward at any time, solidly breaking through $1,025. This will have huge implications for the world monetary situation. It is tragic for most Americans, including most of our Congress.
The market climbed again with the Dow up 101 to 8512; S&P rose 141 and Nasdaq 30 Dow points. We detect some weakness. The 2-year was 0.96%; the 10’s 3.16%; the 1-month Libor 0.40% and the 3-month 0.99%.
The yen rose .0070 to $.9832; the euro rose .0039 to $1.1349; the pound rose .0061 to $1.5129; the Swiss franc was up .0027 to $1.3307; the Canadian dollar rose .0063 to $.8568 and the dollar index, USDX, fell .18 to 83.97.
Oil rose $2.15 to $56.34; gas rose $0.02 to $1.63 and natural gas rose $0.16 to $3.98. Copper rose $0.29 to $2.19; platinum rose $3.10 to $1,141 and palladium rose $5.85 to $228.05. The CRB index rose 5.64 to 237.48.
Early Thursday markets were slightly stronger. The Dow rose 63 to 8534; S&P was up 52; Nasdaq gained 14 and the FTSE gained 166 Dow points. The Nikkei rose 408; the CAC gained 61 and the DAX rose 80. The yen fell .0064; the euro rose .0011 and the pound rose .0023. The 2-year was 0.99% and the 10’s were 3.24%, a gaping breakdown. 1-month Libor was 0.40% and the 3-month was 0.97%. Oil rose $1.53 to $57.87 as the result of profit taking in the market and rotation into commodities, the next day. It certainly won’t be the long side of the long bond market or long interest rates. Gas rose $0.04 to $1.67 and natural gas rose $0.02 to $3.91. Gold rose $4.60 to $915.60; silver gained $0.25 to $13.96 and copper was up $0.02 to $2.20. Can it break out?
On Thursday June gold fell $0.50 to $911.30, as July silver rose $0.13 to $13.84. The cartel sat on gold all day long. Mr. Bernanke spoke again and the market fell again. Mr. Geithner spoke after the close when it was safer. Gold open interest rose 7,101 contracts to 341,461, as silver OI gained 427 contracts to 89,447. The HUI fell 3.50 to 332.12, as those in the index fell fractions.
For the 4th day in a row the Nasdaq 100, which has led the current rally seemed to be faltering. The Dow fell 102 to 8409; the S&P fell 83 and the Nasdaq fell 254. The interest rates are headed relentlessly higher. The 2-year yielded 0.99% and the 10’s 3.32%.
The yen fell .0069 to $.9899; the euro rose .0022 to $1.3371; the pound fell .0137 to $1.4992; the Swiss franc fell .0002 to $1.1309; the Canadian dollar fell .0049 to $.8519 and the USDX rose 2 to 83.83.
Oil rose $0.03 to $56.37; gas rose $0.01 to $1.67 and natural gas rose $0.28 to $4.15. Copper rose $0.05 to $2.14; platinum rose $9.90 to $1,153 and palladium rose $11.05 to $239.10. The CRB rose 2.05 to 239.53.
Early Friday was up again as the “Working Group on Financial Markets” manipulates the market and specifically financial stocks. These banks are coming to market with stock for sale to fund their insolvent companies. Now you can understand why they doubled in price over the past two months. The buyers are headed to severe losses.
The Dow rose 86 to 8471; S&P rose 83, Nasdaq gained 53 and the FTSE gained 96 Dow points. The Nikkei rose 47 to 9433; the CAC rose 64 and the DAX 118. The 2-year T-bill broke down to yield 1.01%; the 10’s were 3.35%; 1-month Libor 0.38% and 3-month 0.96%.
Oil rose $0.97 to $57.68; gas rose $0.02 to $1.69 and natural gas rose $0.09 to $4.17. Gold rose $1.20 to $916.70; silver fell $0.10 to $13.94 and copper rose $0.02 to $2.18.
On Friday the gold and silver market dueled with the forces of evil again and came out decently. Spot gold rose $5.00 to $916.00. The June contract was $917.00, up $1.50. Spot silver rose $0.18 to $14.01 and July was off $0.04 to $13.99. The shares were strong again. The XAU rose 4.61 to 138.29 and the HUI rose 11.23 to 343.34Gold and silver were helped by a lower dollar. The yen rose .0063, or to $.9837; the euro rose .0250 to $1.3621; the pound rose .0234 to $1.5216; the Swiss franc rose .0200 to $1.1059; the Canadian dollar rose .0168 to $.8687 and the USDX, dollar index, fell 1.51 to 82.43.
Oil also aided gold and silver rising $2.06 to $58.77, gas rose $0.03 to $1.70 and natural gas rose $0.27 to $4.35.
Copper fell $0.01 to $2.15; platinum fell $3.80 to $1,153.00 and palladium rose $2.00 to $243.70. The CRB rose 3.70 to 243.23.
The market and the financials rose again; the Dow rose 165 to 8575; S&P rose 197 and Nasdaq 137 Dow points. This week the former leader Nasdaq showed weak gains and that could be a precursor to a downward break in the market. The 2-year Treasury yielded 0.97 after hitting a recent high this morning and the 10’s were 3.29% after hitting 3.35 at 4:00 a.m. this morning. That will help gold and silver as well.
US wholesale inventories fell for a seventh straight month in March as sales returned to negative territory after posting a small gain in February, a government report released Friday showed.
Wholesale inventories fell 1.6% in March to a seasonally adjusted $411.7 billion, after falling a revised 1.7% during February, the Commerce Department's report said. The Department in a report released last month had estimated February inventories fell 1.5%. The February drop in inventories is the largest on record. The March drop in inventories is more than the 1.2% decline analysts had expected and indicates wholesalers are drawing down inventories as shipments to retailers remain weak.
Sales of U.S. wholesalers dropped 2.4% in March to a seasonally adjusted $310.9 billion after a downwardly revised 0.2% increase in February, the data showed. Originally, February sales were estimated to have gained 0.6%.
The inventory-to-sales ratio, a measure of the number of months it would take a business to deplete its current inventory, increased slightly to 1.32 from 1.31 in February. The March 2009 figure is above the March 2008 ratio of 1.12.
On a year-over-year basis, sales were down 18.1% in March, while inventories were down 3.5%.
Wholesalers' inventories of durable goods - a category that includes cars, appliances and furniture - fell 2.4% in March, after falling a revised 2.6% in February. Sales of durable good fell 3.3% in March, on the heels of a revised 1.7% increase in February.
Auto stocks fell 5.0%, while auto sales declined 0.6%. That compares with a 7.9% drop in auto stocks in February amid a downwardly revised 3.5% increase in sales. Lumber sales in March fell 3.1%, while furniture sales fell 2.5%. Non-durable goods inventories fell 0.3% in March, following a 0.2% drop the month before. March non-durable goods sales fell 1.6%, after dropping a revised 0.9% in February.
Petroleum stocks rose 7.9% amid a 5.1% decrease in sales. Farm product inventories rose 4.7%, while sales fell 3.9%
The economy has continued destroying employment in April although at a somewhat slower pace than in previous months; Non farm Payrolls declined by 539,000 last month, according to data released by the U.S. Department of Labor
April’s decline, despite being a large one, is the lowest of the last four months, as payrolls fell bu 699 K in March and by 651K in February. The Unemployment rate, however, has increased to 8.9% in April, from 8.5% in March
Euro and Pound have rocketed on Payrolls data. EUR/USD has jumped from around 1.3440 to levels right above 1.3500 inutes after NFP datas was released.
Employers are letting up a bit on the mass layoffs they resorted to earlier this year to cope with the recession, but the unemployment rate is climbing because many businesses remain wary of hiring given all the economic and financial uncertainties.
The Labor Department on Friday is slated to release a report expected to show that a net total of 620,000 jobs were lost in April. If analysts are correct, the figure — while still big — would be an improvement from March's 663,000 job losses and mark the fewest reductions since November.
The deepest job cuts of the recession, which started in December 2007 and is now the longest since World War II, came in January: 741,000 jobs vanished then, the most since the fall of 1949.
"I think the worst has passed in terms of losses," said John Silvia, economist at Wachovia. "But the jobs situation will remain tough."
With few places for the out-of-work to land, the unemployment rate is expected to jump to 8.9 percent, from 8.5 percent in March. If that happens, it would mark the highest jobless rate since the fall of 1983, when the country was recovering from a severe recession that drove unemployment past 10 percent.
The American economy lost another 539,000 jobs in April and the unemployment rate leapt to 8.9 percent, the government reported Friday, yet the deterioration was slightly milder than expected, buoying hopes that better days are approaching.
Fannie Mae, operating under a federal conservatorship since September, asked the U.S. Treasury for a $19 billion capital investment as a seventh straight quarterly loss drove the mortgage-finance company’s net worth below zero.
A wider first-quarter net loss of $23.2 billion, or $4.09 a share, pushed the company to request its second draw from a $200 billion funding commitment from the government, Washington- based Fannie Mae said in a filing today with the Securities and Exchange Commission. The company took $15.2 billion March 31.
Global Research Articles by Bob Chapman
© Copyright Bob Chapman , Global Research, 2009
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