Supply Side Economics :Be Ready For Farming?

Will Higher Education Be the Next Bubble to Burst?
By JOSEPH MARR CRONIN and HOWARD E. HORTON

The public has become all too aware of the term "bubble" to describe an asset that is irrationally and artificially overvalued and cannot be sustained. The dot-com bubble burst by 2000. More recently the overextended housing market collapsed, helping to trigger a credit meltdown. The stock market has declined more than 30 percent in the past year, as companies once considered flagship investments have withered in value.

Is it possible that higher education might be the next bubble to burst? Some early warnings suggest that it could be.

With tuitions, fees, and room and board at dozens of colleges now reaching $50,000 a year, the ability to sustain private higher education for all but the very well-heeled is questionable. According to the National Center for Public Policy and Higher Education, over the past 25 years, average college tuition and fees have risen by 440 percent — more than four times the rate of inflation and almost twice the rate of medical care. Patrick M. Callan, the center's president, has warned that low-income students will find college unaffordable. Full Story

US debt rising astronomical !!!

By Dennis Cauchon, USA TODAY
Taxpayers are on the hook for an extra $55,000 a household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises, a USA TODAY analysis shows.

The 12% rise in red ink in 2008 stems from an explosion of federal borrowing during the recession, plus an aging population driving up the costs of Medicare and Social Security.That's the biggest leap in the long-term burden on taxpayers since a Medicare prescription drug benefit was added in 2003.

The latest increase raises federal obligations to a record $546,668 per household in 2008, according to the USA TODAY analysis. That's quadruple what the average U.S. household owes for all mortgages, car loans, credit cards and other debt combined."We have a huge implicit mortgage on every household in America — except, unlike a real mortgage, it's not backed up by a house," says David Walker, former U.S. comptroller general, the government's top auditor.USA TODAY used federal data to compute all government liabilities, from Treasury bonds to Medicare to military pensions.Bottom line: The government took on $6.8 trillion in new obligations in 2008, pushing the total owed to a record $63.8 trillion.Full Story

Dollar Hits on Deficit Fears

Dollar Hits 5-Month Low on Risk Appetite, Deficit Fears

The dollar hit a five-month low against a basket of major currencies Friday and the euro rose above $1.41 for the first time this year as investors bought higher-yielding currencies and assets on hopes of a global economic recovery.

Sterling approached $1.62, almost an eight-month high, and capped its best month since 1985, while data showing the U.S. economy shrank less than expected in the first quarter lifted global stocks and dulled the dollar's safe-haven allure.

Concern about the expanding amount of debt needed to fund a record $1.8 trillion U.S. budget deficit added to dollar woes this week and put the benchmark 10-year Treasury yield en route to its biggest two-month spike since 2004.

Those worries amplified a report that South Korea's National Pension Service intends to reduce exposure to U.S. government bonds and equities in its five-year portfolio.

"There's a visceral concern about the debasement of the U.S. currency because the United States has a lot of debt to finance" and may have to print more money to do it, said Alan Ruskin, chief international strategist at RBS Greenwich Capital in Greenwich, Conn.Full Story

Foreclosures Virus Is Spreading

Commercial foreclosures start to spread across Northern Va.

As commercial property owners across the country brace for an anticipated storm of foreclosures, even the relatively sturdy Washington market is starting to feel the increasing pressure from high vacancies, plummeting values and lenders who are done waiting for tenants to materialize.

Anyone who follows the commercial real estate market knows there are buildings in trouble throughout Washington, but as one drives along the Dulles Toll Road or Route 28, it’s hard to miss the signs of distress. “See-through buildings” dot the corridor, bereft of the interior office walls that don’t show up until a tenant does.

In recent weeks, at least two lenders have given up the waiting game and taken the keys and the title back from the owners: Lincoln Park III and Monument III.Full Story

Credit Crisis II

We covered this before by taking 10 years notes to yields as an example, And there is warning from main line media about this Previous post

NEW YORK (Reuters) - The global financial crisis may morph into a second, equally virulent phase where borrowing costs rise again, hobbling an embryonic economic recovery, debilitating cash-strapped banks, and punishing investors all over again.

Early warnings signs of this scenario include surging government bond yields, a slumping U.S. dollar, and the fading of the bear market rally in U.S. stocks.

Optimists hope that a fragile two-month rally in world stock markets, a rise in U.S. Treasury yields from record lows during the depths of the crisis in late 2008, and some less scary economic data all signal that a recovery is around the corner.

But gloomy analysts insist that thinking is delusional.Full Story

Yellow Pages Bankruptcy

R.H. Donnelley files Ch. 11

The Associated Press
8:21 AM CDT, May 29, 2009

Yellow pages publisher R.H. Donnelley Corp., which has been struggling to service its debt as the recession slashes its revenue, said Friday it voluntarily filed to reorganize under Chapter 11 bankruptcy law.

Donnelley, which was formed in 1916 as an offshoot of Chicago?s R.R. Donnelley, is now a completely separate company based in Cary, N.C. But it has operations in the Loop, Arlington Heights, Tinley Park and six other Illinois locations. R.R. Donnelley, the world?s largest printing company, still publishes many of R.H. Donnelley?s directories.

As of Dec. 31, 2008, the company had $11.88 billion in assets and $12.37 billion in liabilities, spokesman Tom Becker said.

The company missed a $55 million payment on April 15 and a $78 million payment due May 15. But creditors extended R.H. Donnelley's payment deadline to Thursday.Full story

Commercial Property Debt Fears

New debt fears over commercial property

By Aline van Duyn in New York

Published: May 28 2009 23:39 | Last updated: May 28 2009 23:39

Fears among credit investors have risen that threatened ratings downgrades of commercial property debt might thwart US government efforts to revive the markets that help fund office blocks, shopping centres and other commercial real estate.

Standard & Poor’s warned this week that it was likely to downgrade tens of billions of dollars in triple A securities backed by recent real estate loans – with 90 per cent of the securities backed by 2007 mortgages likely to face rating cuts.

The move took the market by surprise and triggered a sharp fall in the value of triple A rated commercial mortgage-backed securities. The ratings are important because the Federal Reserve said last week that its $1,000bn term asset-backed securities loan facility (Talf) could only be used in the CMBS market for securities that are rated triple A.

Talf represents a crucial policy response to the collapse of markets for securities backed by commercial mortgages and other loans. Borrowing costs for commercial properties had come down in recent weeks on hopes Talf would help revive the market, which tends to determine the interest rates available on new commercial mortgages. Full Story

GM : Government Motors or General Motors

We should be proud owning automobile sector now with our tax dollars.....and may be many more to come with help of the Fed's printing press.

As General Motors careers towards the biggest bankruptcy collapse in American corporate history, we look back at the long and sometimes glorious history of the classic US carmaker.

1900s

William "Billy" Durant founded General Motors in 1908 in Flint, Michigan, at the dawn of the US car industry. Durant had previously manufactured horse-drawn vehicles, before acquiring a stake in the Buick Motor Company and turning the struggling carmaker into a major player. Durant's vision was to assemble a series of carmakers under a single company, with each one targeting a particular part of the market, rather than competing directly with each other. Durant doubled GM's stable of companies to two in November of 1908 by acquiring Oldsmobile, before buying Cadillac, Cartercar, Elmore, Ewing, and Oakland in 1909. Full Story

Is this the start for Gold Standard ?

German firm plans gold ATMs to meet growing demand

By Peter Starck FRANKFURT, May 19 (Reuters) - Private investors should hold up to 15 percent of their wealth in physical gold, according to a German asset management company which plans to set up 500 'Gold-To-Go' ATMs in Germany, Switzerland and Austria this year.
A gold-dispensing automatic teller machine (ATM) was on display at Frankfurt's main railway station for a one-day marketing test on Tuesday.

A one-gram (0.0353 ounce) piece of gold, the size of a child's little fingernail and about as thin, cost 31 euros ($42.25) -- a 30 percent premium to the spot market price .

The flat rectangular piece, bearing the imprint of Belgian metals and speciality materials firm Umicore (Brussels: UMI.BR - news) , came out of the cash-only ATM in a tin box, including a certificate of authenticity.

'This is more than a marketing gimmick,' said Thomas Geissler, chief executive of TG-Gold-Super-Markt.de, the company planning to set up the 500 gold ATMs at a cost of 20,000 euros apiece.

'It is an appetizer for a strategic investment in precious metals. Gold is an asset everyone should have, between 5 and 15 percent of your liquid assets in physical gold,' he told Reuters in an interview. Full Story

Dollar Dilemma

US dollar Index is on the edge of the mountain and it's really is a ticking time bomb. Dollar has to hold the psychological level 80 on the US dollar index and it may oscillate between 80-82 for shorter time frame. If that looses the ground to the down side then we might see distress in bond market US treasuries as dollar save haven is gone for good as US dollar has no fundamentals to drive other than printing money for debt. Money is flowing into different other currencies (mentioned in my previous post espl Asia and Canada) and precious metals is best place to be especially silver (will outperform gold) and gold.

What will be the US dollar to INR down the road?

My view on INR is that it will pop temporarily around 48-50 range at most for brief period and will fall to 45 before next summer for sure as FII money is flowing into India, Making rupee strong. 5-6 years from now we might see dollar at 30 INR or lower and stabilizing at those levels.

We might see currency crisis and at the same time commodity crisis espl food as we go coz the central bankers around the globe flooded with fiat paper currency during thier G-20 meets aprox 2-3 % of GDP this will make things lot worse than people imagine.



Most of you asked me (Uday) about the Indian markets will also post before this weekend as I'm unable to keep up with my routine. If you have any question please leave me message at the bottom of this web page under chat window that way I can be in touch with you people when I go to India.

Caffine Rush

Whats up with the caffine play they are looking good to me. Is this inflationary commodity play ? I've seen Green Mountain (GMCR) and Diedrich Coffee (DDRX) back in April and now they are almost more than 100%

Bailout Nation wants Municipalities to Bail Them Out

Localities Want U.S. to Support Muni Bonds

State and local governments are asking Washington to give them something that banks are trying to get rid of: federal bailout money.

California is asking that money from the Treasury’s TARP, the Troubled Asset Relief Program, be used to help back more than $13 billion in short-term borrowings. Members of Congress and several municipalities want bailout money to be used to cover more than $1 billion in losses from investments by municipalities in debt issued by Lehman Brothers, the investment bank that went bust.

And Representative Barney Frank, chairman of the House Financial Services Committee, is drafting legislation that would have the Federal Reserve, and potentially the Treasury’s bailout money as well, stand behind floating-rate municipal bonds — a $400 billion market that provides short-term financing to municipalities, but which has been largely frozen in the current credit crisis. Full Story

Captain Says : We Are Out of Money Now

Manhattan Is Awash in Sublet Office Space

Few office towers have been left untouched by the flood of sublet space that has recently inundated the New York office market. In Midtown Manhattan — where many of the world’s largest financial companies are headquartered — three out of every four office towers now have sublet space available.

Brokers say that many sublandlords will probably need to bend over backward to sublease their space, given the sharp rise in vacancies.

In Midtown Manhattan, for example, 13 percent of prime, modern, well-located offices — which brokers often refer to as Class A space — was available in April, up from 6.5 percent a year earlier, according to Colliers ABR, a commercial real estate services company. And sublets now account for some 40 percent of the space available in Midtown, compared with 30 percent of the much smaller total that was available a year ago, the company said. Full Story

Long Weekend Economic and Market News

I will be traveling during the break to Niagara Falls so I won't be able to post much on market updates and here are few which I scheduled before my travel plan

Peter Schiff's Financial Predictions (Link)
Commodities: Best inflation hedges (Link)
U.S. to Steer GM Toward Bankruptcy (Link)
Bay State's recession may outlast the nation's (Link)
Florida's BankUnited fails, will cost FDIC $4.9B (Link)
San Francisco Home Prices Fall 41% on Foreclosures (Link)
More travelers pitch tents cut costs on holiday(Link)
Shelters face tough dilemma(Link)

Have a Good Long Weekend and if you guys on road. Safe Trip.

Federal Reserve On His Toes

Federal Reserve will not be a happy guy looking at the yields lately after the big overnight dump on US treasury notes. Most of his team talking about the green shoots recovery blah blah and those shoots came by printing money.Okay now lets looks at US treasury and Yields:

US Treasury and yields are inversely proportion to each other. Let me take an example of 10 Year US treasury and corresponding yields chart here. Click imagine for sharper view (Yields @ 3.5% odd)



Fed can buy US Treasury to bring the yields down which he did but when the bond guru like pimpco CEO says that US treasury is not a safe bet in longer run then people has to think about it and we had the overnight dump.Now what happens when people get out of the treasuries, Yields goes up and what does that imply, interest rates going up which intern suggests that inflation is around the horizon but where is fed interest @ now 0% which will scream to death if he does not have total control on yields.Right now yields are around 3.5% odd and fed quantitative easing is around 0% to make banks profitable again which will not only make things worse but also abolish fed in near future as it not a good sign for Federal Reserve. Click imagine for sharper view ( Safe Heaven getting dumped and Fed Reserve's snow ball)



I think Fed is already stress out having pain mediation overnight after looking at the yields, And may be he is out of the silver bullets if he does not do anything in coming months as US will also lose the AAA rating which looks more likely in near term, And looks more like twin to UK to me which lost its AAA rating (ha ha its too big to fail myth). Anyway, Gold is reacting strongly and markets on thier toes if people started dumping dollars to get out of US.

California, Whose Next ?

Deep cuts in California services inevitable, state leaders say

Gov. Arnold Schwarzenegger and legislative leaders vowed deep cuts to public services Wednesday in response to voters' rejection of ballot measures to ease the state's gaping budget hole.

The Republican governor vowed to "go all out" in slashing government spending after voters killed a slate of proposals that would have lessened, but not ended, the fiscal hemorrhaging.

"We tried not to make those kind of cuts, but now we have to," the Republican governor told reporters in Washington.

"There's no other choice," he said. "I think the message was clear from the people: Go all out and make those cuts and live within your means." Full Story

Barter System Booming

Barter system booms in Colorado

Unemployed since November, Eugene Sobczak wanted nothing more than to aid another cash-strapped soul, gratis, when he read the online ad asking for help attaching a car bumper.

Instead, he got an unexpected lesson in barter, that most basic form of exchange that has gained renewed popularity in a down economy — and forged friendships along the way.

Ryan Lee, who was laid off late last year, had bought his new bumper online after an accident and was grateful for Sobczak's help. But he wasn't looking to get something for nothing.

The two men got to chatting.

"That's when I found out he was an artist," said Sobczak, 41, a former telecommunications worker from Broomfield. "I had need of a good painting or two." Full Story

Pensions Funds Going Bust

U.S. Insurer of Pensions Sees Flood of Red Ink

WASHINGTON — The deficit at the federal agency that guarantees pensions for 44 million Americans tripled in the last six months to a record high, reaching $33.5 billion, largely as a result of surging bankruptcies among companies whose pensions it expects it will soon need to take over.

The agency, the Pension Benefit Guaranty Corporation, faced a shortfall of just $11 billion as of October. The combined effect of lower interest rates, losses on its investment portfolio and rising numbers of companies filing for bankruptcy produced the jump in its projected deficit, officials said Wednesday.

Because the agency has $56 billion in assets — most of which is invested in Treasury bonds — it is not facing any prospect of default in the short term, officials said.

“The P.B.G.C. has sufficient funds to meet its benefit obligations for many years because benefits are paid monthly over the lifetimes of beneficiaries, not as lump sums,” the agency’s acting director, Vince Snowbarger, testified Wednesday at a Senate hearing. “Nevertheless, over the long term, the deficit must be addressed.” Full Story

Dollar Free Fall

LONDON -- The U.S. dollar could be on the brink of a major drop in value as investors and central bank reserve managers start to question their appetite for Treasurys and the greenback's safe-haven status wears off, prominent currency watchers warn.

The euro and even embattled sterling have shot higher against the U.S. currency in recent days despite a lack of meaningfully positive economic news.

Now some heavyweight strategists think the euro could sweep up to 9% higher against the dollar in a matter of weeks, in a move that could prompt a new era of official intervention in the Full Story

WoW World Economies Plummet

By BOB DAVIS

Steep declines in the economies of three of the U.S.'s biggest trading partners -- Mexico, Japan and Germany -- underscored the severity of the global recession and put pressure on major industrialized nations to revive moribund global trade talks.

On Wednesday, Mexico became the latest country to report a plunge in output. The country's gross domestic product fell at an annualized rate of 21.5% in the first quarter, the worst performance since the 1995 peso crisis led to an International Monetary Fund and U.S. Treasury financial rescue. This time, Mexico has insulated itself somewhat by arranging a $47 billion IMF credit line in advance.

Mexico's decline followed by a day Japan's report that its economy contracted in the first quarter at a 15.2% clip, its worst performance since 1955. Last week, Germany said its first quarter decline in GDP, an annualized 14.4%, was the worst since 1970.Full Story

IMF: Banks nationalization

More banks may have to be nationalised, says IMF

Alistair Darling must stand ready to pump more capital into Britain's beleaguered banks, perhaps
nationalising other high street names, the International Monetary Fund has warned.The Fund believes that although the drastic measures to prop up Royal Bank of Scotland, Lloyds Banking Group and other major lenders had prevented them from collapse, more public money needs to be poured in if the economy is to get back to full strength. The alternative is a "zombie" recovery as banks continue to withhold lending for years, the IMF has told the Treasury.

The warning formed part of a stark assessment of the UK economy. In a double-pronged assault on the Budget, the Fund praised some of the rescue plans but dismissed the Chancellor's claim that the recession will be over by Christmas. It said he must start paying back debt significantly earlier than he projected last month. Full Story

S&P downgrades UK outlook

S&P downgrades UK outlook

By David Oakley, George Parker and Daniel Pimlott
Published: May 21 2009 10:10 | Last updated: May 21 2009 12:14

Sterling was hit on Thursday after the outlook for the UK economy was thrown into doubt when the country’s sovereign debt ratings were revised from stable to negative by Standard & Poor’s.S&P’s move is highly embarrassing for the Treasury and will give ammunition to the opposition Conservative party, which argues that the government is presiding over a growing and unstable mountain of debt.

Sterling fell 1.2 per cent against the dollar and 1.4 per cent against the euro at one point before recovering. UK shares and bonds also recovered after falling sharply on the S&P announcement.The downgrade of the UK’s outlook came as figures showed that public spending rose and tax revenues fell in April, keeping public sector borrowing on course to reach the dire levels forecast by the government forecast in the Budget. Full Story

Yes, Don't Mess with VIX

Markets might see a sharp turn around here as VIX closed just below the collapse of Lehman back in sept when it broke for the upside otherwise this indicator is trash to me and time to throw in the bin. If it works as it is, So we are here for sure a sharp sell off this week for the markets and it is same with the international markets as they are in line with US equities.



Most of the traders they gauge 200ma as the longer term base and if you see s&p's is right around that area and this week will a blow off tops in every aspect, And looking at the precious metals they are showing more signs for the save heaven.

Incredible Shrinking Economy

Japan Economy Shrinks Record 15.2% as Exports, Spending Plunge

May 20 (Bloomberg) -- Japan’s economy shrank by a record last quarter as exports collapsed and consumers and businesses slashed spending, a decline that probably marked the low point in the country’s worst recession since World War II.

Gross domestic product fell an annualized 15.2 percent in the three months ended March 31, following a revised fourth- quarter drop of 14.4 percent, the Cabinet Office said today in Tokyo. The economy contracted 3.5 percent in the year ended March 31, the most since records began in 1955. Full Story

Obama Nation Heading for Socialism or Facism

U.S. Considers Stripping SEC of Powers in Regulatory Overhaul

May 20 (Bloomberg) -- The Obama administration may call for stripping the Securities and Exchange Commission of some of its powers under a regulatory reorganization that could be unveiled as soon as next week, people familiar with the matter said.

The proposal, still being drafted, is likely to give the Federal Reserve more authority to supervise financial firms deemed too big to fail. The Fed may inherit some SEC functions, with others going to other agencies, the people said. On the table: giving oversight of mutual funds to a bank regulator or a new agency to police consumer-finance products, two people said.Full Story

Banking Index and Related PR

Banking Index has shown some remarkable bounce lately from the march lows and doubled its value. Index has reached to significant point where it is due for the correction or making new lows on the index if it does not hold the 30's region.



Recently we have seen so many bottom callers and bullish case on the economy and banking industry about their stress test been passed but I really doubt on the stress test results as many banks lately have diluted their shares to attract more investors which will bring down the price of banking shares down.

I have put together the FDIC opening new offices in Florida area, What does that tell us ? My comments more banks are due to fail. Look for the list of banks failed and also more and more regional bank losses due to commercial real estate in their regions.


FDIC to Open a Temporary East Coast Satellite Office

FOR IMMEDIATE RELEASE
May 8, 2009
Media Contact:
David Barr (202) 898-6992
dbarr@fdic.gov

The Federal Deposit Insurance Corporation (FDIC) today announced it will open a temporary satellite office in Jacksonville, Florida, to manage receiverships and to liquidate assets from failed financial institutions primarily located in the eastern states.

After conducting a competitive leasing acquisition process, the FDIC entered into a short-term agreement to lease space at 7777 Baymeadows Way in Jacksonville. The decision was based on mission needs and workload.

The new office will provide facilities for up to 500 nonpermanent staff and contractors. Staffing will be based on the workload needs of this office, based on the number of closings in the eastern states, the resulting number of receiverships, and the post-closing workload.

Throughout its history, the FDIC has used these offices to keep temporary asset resolution staff closer to the concentration of failed bank assets they oversee. As the work diminishes, the temporary satellite offices are closed. Full Story

Failed Bank List

Local Banks Face Big Losses
Journal Study of 940 Lenders Shows Potential for Deep Hit on Commercial Property

Commercial real-estate loans could generate losses of $100 billion by the end of next year at more than 900 small and midsize U.S. banks if the economy's woes deepen, according to an analysis by The Wall Street Journal.

Such loans, which fund the construction of shopping malls, office buildings, apartment complexes and hotels, could account for nearly half the losses at the banks analyzed by the Journal, consuming capital that is an essential cushion against bad loans. Full Story

Senate approves credit card crackdown bill

WASHINGTON, May 19 (Reuters) - The U.S. Senate on Tuesday approved a bill to curb sudden credit card interest rate increases and hidden fees, with President Barack Obama expected to sign the measure into law by the end of the month.

The first of several financial regulation reforms expected during the Obama administration, the bill must go to the House of Representatives again before reaching the president. The House approved it in similar form last month by a 357-70 vote.

Analysts said the bill would hurt the profits of major card issuers such as Citigroup (C.N: Quote, Profile, Research), Bank of America (BAC.N: Quote, Profile, Research), JPMorgan Chase (JPM.N: Quote, Profile, Research) and Capital One (COF.N: Quote, Profile, Research), but that its impact was already largely factored into their share prices. (Reporting by Kevin Drawbaugh) Full Story

More Housing Pain

U.S. Banks 1Q Charge-Off and Delinquency Rates

==============================================================================
               1Q     4Q     3Q     2Q     1Q     4Q     3Q     2Q     1Q
              2009   2008   2008   2008   2008   2007   2007   2007   2007
==============================================================================
              ------------------------Charge-Off Rates----------------------
Total           2.04%  1.90%  1.51%  1.29%  1.00%  0.73%  0.62%  0.55%  0.52%
------------------------------------------------------------------------------
Real estate     1.57%  1.74%  1.29%  1.09%  0.69%  0.36%  0.22%  0.20%  0.13%
Residential    1.80%  1.58%  1.49%  1.19%  0.85%  0.44%  0.26%  0.20%  0.15%
==============================================================================
               1Q     4Q     3Q     2Q     1Q     4Q     3Q     2Q     1Q
              2009   2008   2008   2008   2008   2007   2007   2007   2007
==============================================================================
Commercial     1.33%  2.19%  1.11%  0.99%  0.48%  0.40%  0.16%  0.14%  0.08%
Consumer loans  4.75%  4.11%  3.63%  3.35%  2.94%  2.66%  2.57%  2.37%  2.34%
Credit cards   7.49%  6.33%  5.70%  5.46%  4.59%  4.18%  4.14%  3.83%  3.86%
Other          2.93%  2.71%  2.42%  2.18%  1.95%  1.74%  1.59%  1.50%  1.41%
Leases          0.83%  0.65%  0.57%  0.55%  0.36%  0.24%  0.31%  0.20%  0.21%
C&I loans       1.77%  1.40%  1.03%  0.85%  0.68%  0.64%  0.51%  0.44%  0.38%
Agriculture     0.42%  0.28%  0.18%  0.16%  0.08%  0.12%  0.10%  0.11%  0.08%
              ----------------------Delinquency Rates-----------------------
Total           5.60%  4.64%  3.74%  3.36%  2.86%  2.45%  2.15%  1.88%  1.73%
------------------------------------------------------------------------------
Real estate     7.13%  5.87%  4.91%  4.23%  3.55%  2.88%  2.41%  2.01%  1.77%
Residential    7.91%  6.34%  5.25%  4.42%  3.73%  3.02%  2.78%  2.31%  2.05%
Commercial     6.40%  5.43%  4.75%  4.20%  3.44%  2.74%  2.00%  1.64%  1.41%
Consumer loans  4.70%  4.22%  3.71%  3.58%  3.51%  3.38%  3.19%  3.01%  2.94%
Credit cards   6.50%  5.66%  4.80%  4.89%  4.76%  4.61%  4.41%  4.01%  3.97%
Other          3.53%  3.33%  3.06%  2.82%  2.77%  2.64%  2.49%  2.38%  2.29%
Leases          2.09%  1.82%  1.64%  1.53%  1.37%  1.33%  1.19%  1.04%  1.21%
==============================================================================
               1Q     4Q     3Q     2Q     1Q     4Q     3Q     2Q     1Q
              2009   2008   2008   2008   2008   2007   2007   2007   2007
==============================================================================
C&I loans       3.13%  2.58%  1.77%  1.75%  1.44%  1.31%  1.21%  1.18%  1.19%
Agriculture     1.71%  1.43%  1.23%  1.10%  1.06%  1.14%  1.17%  1.35%  1.17%
=========================================================================

Dollar Dumping !!!!!

Brazil and China eye plan to axe dollar

Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.

Mr Lula da Silva, who is visiting Beijing this week, and Hu Jintao, China’s president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month. Full Story

Vixing: Now What?

I still do not trust vix at these levels and it has to close below the support around 30.Volume on most of the indicies are relative low and does not support the price range.Watch out below for these support levels

Support 1:
S&P 880
Dow 8250
Nasdaq 1700

Support 2:
S&P 830
Dow 7900
Nasdaq 1560

WOW:S&P Earning decline by 90%

This one is a hack of a chart to watch the meltdown happened during last quater of 08.So why are we rallying here ? Why did sentiments leen towards the growth ? why did confident index rose ? I personally feel we are coming to a dead end to this rally with no fundamentals in sight, And you decide for yourself about markets going forward.



Source: chartoftheday

What One Of The Retail Guru Has To Say ?

"The Worst Is Yet to Come": If You're Not Petrified, You're Not Paying Attention

Posted May 15, 2009 09:31am EDT by Aaron Task in Investing, Recession, Banking, Autos, Housing

The green shoots story took a bit of hit this week between data on April retail sales, weekly jobless claims and foreclosures. But the whole concept of the economy finding its footing was "preposterous" to begin with, says Howard Davidowitz, chairman of Davidowitz & Associates.

"We're in a complete mess and the consumer is smart enough to know it," says Davidowitz, whose firm does consulting for the retail industry. "If the consumer isn't petrified, he or she is a damn fool."

Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: "The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same." Full Story

Green Shoots or Weeds or Green Turning Brown Again !!!!

Fed, Congress as a whole Govt, Talking about the green shoots, Do they mean weeds instead of mustard seeds as they call?... May be they are not watering the shoots properly, So are they already turning brown. And at the same time most of the CEO's espl housing, financial, auto sectors they were talking about the light at the end of the tunnel, Do they mean the light is few light years away from the source or Just a final flicker before dying ?

Now I hope everyone believes this is end to another bear market rally if the current rally does not hold. Previous president have given few warnings about the markets before, And we might seen our current president doing similar kinda of speech any time soon before market breaks down.He spoke similar words to buy this market on March 6th and market bounced on 9th.



Here's the story of the insiders if they are so much positive about the economy and we outsiders does not know fundamentals of the company as much as insiders.

Bloomberg -- Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market.

Gap Inc.’s founding family sold $45 million of shares in the largest U.S. clothing retailer this month, according to Securities and Exchange Commission filings compiled by Bloomberg. Daniel Warmenhoven, the chief executive officer at NetApp Inc., liquidated the most stock of the storage-computer maker in more than six years. Sales by the co-founders of Bed Bath & Beyond Inc. were the highest since at least 2001. Full Story

Track India Elections

Track Latest on Indian Elections, National and Local by clicking the image below.


Note: If it does not open install flash on your browser.

Walmart : A Dollar Store Now ?

SAN FRANCISCO (Reuters) - WalMart Stores Inc is offering aisles filled with merchandise priced at $1 and taking other steps to boost sales in its second quarter, an executive said in an interview on Thursday.

Earlier in the day, the world's largest retailer reported a flat first-quarter profit. In its current second quarter, it now faces tough comparisons with a year ago, when its results were boosted by customers spending tax rebate cash in its stores. Full Story

Awwwww Dire Warning from BIG BEAR

NEW YORK (Reuters) - Longtime technical analyst Robert Prechter, who forecast the 1987 stock market crash, predicted this week that U.S. equities may plunge to half their lows hit in March as a deflationary depression bites.

Oil and U.S. Treasury bonds are also locked in long term bear markets, while corporate bond prices will plunge precipitously by next year as broad economy, banking system and company earnings sustain more damage from a financial crisis that's akin to the Great Depression, he said. Full Story

Market Upates : DOW S&P and Nasdaq Composite

Markets are shaping to be repeat of 2008 for me in over all markets in every aspects. I hope its not sequel and the market carnage does not continues, At the same time I don't expect V shape recovery as market does not like it. The normal trends for longer term can not be surpassed the short one so we might have deeper correction coming this summer which is inevitable and we are doomed to fail. My ultimate target on DOW is around or below 5500-5800 before we end this entire bear market and this may be a month or year or 2 or 3 years from now, And same is with S&P 450-500 and NASDAQ we might entire into depressed state where in we can not have future for years before we see consolidation in tech sector. Looking at the current state of the economy its deteriorating but at slower pace when compared to last quarter of 2008.

With the govt massive intervention this is not going to heal the problem but its creating so much of huddles to real economy as might see currency crisis coming. We know now dollar is dead and its like dead man walking. Look for the previous post as money pouring out of US 30 years treasuries, And may be they need to go US 50 years or 100 years to invest before they can turn around this economy but that not going to for this life span if they introduce :). Anyway back to indicies now,

NASDAQ composite has been the leader for the enter bear market rally when compared to s&p weighted and Dow composite. It really has shown some significant moves lately and this time for the index its either now or never, its like do or die situation for the entire technology. Okay now lets watch closely

(a) breaking above may highs at these current levels is not sustainable
(b) holding the support around 1550 is good sign and consolidation for longer term until proven for future move up .
(c) breaking below march lows is carnage for the tech industry as we might mass layoffs in every corner.



on dow its same (a) & (C) as of NASDAQ but look for the next support around 7800.



on s&p's look for the support around 825



Bullish case for me are Precious metals, Energy, Commodities,Health care (longer term consolidation in this sector and obama play would ignite), Mining. Will post these sectors in coming days. Good luck and happy trading.

Baltic Dry Index

The Baltic Dry Index is to track the shipping cost based on the dry shipping bulk products like coal oil manufacturing goods etc., So this give us a gauge to find out more about the demand and supply of raw materials and goods as more and more ships are engaged in import/exports. Here is whole story to track More Info

from the data below it shows it took a nose dive right before the market crash and now its showing some signs of life for the sea transportation. Breaking above 2300 by end of this week on the index is good sign for dry shipper and also watch out for the false move.Anyway here are the stocks related to the index DSX DRYS TBSI.

3,000 Dealers Shutdown:More Unemployement Coming

DETROIT/WASHINGTON (Reuters) - General Motors Corp and Chrysler aim to drop as many as 3,000 U.S. dealers and are expected to begin sending notifications as early as Thursday, three people briefed on the still developing plans said.GM, facing a U.S. government-imposed deadline of June 1 to restructure or file for bankruptcy, is expected to send termination notices to up to 2,000 dealers -- a third of its roughly 6,000 U.S. dealers, the sources told Reuters. More

Great Obama Autonation coming soon....

Silver to Gold Ratio

In my previous post I've been pressing about the silver to gold ratio in which silver can outperform on percentage wise than gold and it can clearly seen on chart below. Silver looks more strong than gold for sure and here's link to my Previous post

Stock of the Week: Golden Star Resource

Golden Star Resources Ltd is mining stock and potential move of more than 50%

Details of the company:
Golden Star Resources Ltd. (Golden Star) is an international gold mining and exploration company that produces gold in Ghana, West Africa. Through its subsidiaries, it owns a controlling interest in four significant gold properties in southern Ghana: The Bogoso/Prestea property, Wassa property, Prestea Underground property and Hwini-Butre and Benso concessions (HBB Properties). At December 31, 2008, Bogoso/Prestea and Wassa produced and sold 126,026 and 125,427 ounces of gold, respectively. Bogoso/Prestea had proved and probable mineral reserves of 23.8 million tons containing approximately 2.4 million ounces of gold. Wassa, including the HBB properties, had proved and probable mineral reserves of 11.7 million tons containing approximately 0.9 million ounces of gold.

SNL : Funny Clip on Stress Test By Geithner

Fear Factor

VIX is sure thing beaten hard by the bulls lately in this rally and its stretched south, But I would not trust VIX above 30, And it may quickly back fire any movement. VIX being the fear factor in the markets show no sign for run from the markets. Looks like think tanks are placing bets (look for the image below), So watch closely when it creeps back up in coming weeks and months.Will see who wins the bet.

Currency: Canadian Australian Dollars And US Bonds

Y'day during the 30 year bond auction we could clearly see there is more pressure on the longer term bonds as no one willing to get into safe bet, And at the same time they don't like to invest into the US dollars any more.



In the below chart it clearly gives the Canadian to US dollar ratio, If you see back in sept-Oct during the crisis, dollar and equivalent assest got appreciated vastly due to bet on American economy, And now advanced along with soverign countries are backing off bit if you the bond auction. Here it what i noticed that money is going out of the US to Canadian dollars, is that interesting........



Same is with Aussie dollar, money is getting out the US dollar and piling back into Australia.What does this tells us that US dollar is not the safe place to be when compared to the other less risky debt free economies.

Housing Pain Continues......

what RBS has to say that we are not out of woods yet and more pain down the road with final sell wave this summer when option ARM's reset: Housing ARMS, So why is market discounting

Royal Bank of Scotland, the biggest British banking casualty of the financial crisis, warned on Friday it expects bad loans to mount during the rest of the year as the global economy remains mired in recession.The warning came as RBS revealed that it had a pre-tax loss of £44m for the first three months of the year as its bad loans and credit writedowns hit £4.9bn.Chief executive Stephen Hester, who was parachuted in as chief executive atthe peak of the banking crisis in the autumn, said: "We remain cautious and continue to plan and manage our businesses in the full expectation that both 2009 and 2010 will be very tough years for RBS."

More

IMF : Indian companies world’s most vulnerable.

Sumit Sapra is a member of that ambitious, impatient generation of young Indians who rode the crest of the global economy. In five years, he changed jobs three times, quadrupling his salary along the way. Even when satisfied with his position, he kept his résumé posted on job sites, in case better offers came along. And he splurged. In three years, he bought three cars, moving up a notch in luxury each time. For weekend jaunts, he bought a motorcycle. More

Depression or a prolonged stagnation?

Annual Elite Conclave, 58th Bilderberg Meeting to be held in Greece, May 14-17

The 2009 Bilderberg Group Conference will be held at the five-star Nafsika Astir Palace Hotel in Vouliagmeni, Greece, May 14-17, according to author Daniel Estulin. Insiders have told Estulin that rooms have been booked and flight plans made. He has also confirmed the location and dates with sources in Greece. Estulin is the world’s foremost investigative authority on this annual secretive and exclusive assembly, having investigated and infiltrated their meetings for over ten years. More

Bank Stress Test Results

The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were released on Thursday.

The exercise--conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation--was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending--even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs.

The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future। Together, these programs play a critical role in ensuring that the U.S. banking sector will be in a position of strength.

The following institutions were directed to raise capital:
Bank of America Corp. (BAC) $34 billion
Wells Fargo & Co. (WFC) $13 billion to 15 billion
GMAC LLC $11.5 billion
Citigroup Inc. (C) $5 billion
Morgan Stanley (MS) $1.5 billion
Regions Financial Corp. (RF) Amount unknown

These institutions were deemed not to need new capital:
JPMorgan Chase & Co. (JPM)
American Express Co. (AXP)
Goldman Sachs Group Inc. (GS)
Bank of New York Mellon Corp. (BK)
MetLife Inc. (MET)
Capital One Financial Corp. (COF)
State Street Corp. (STT)

Results for these institutions weren't known:
Fifth Third Bancorp (FITB)
KeyCorp (KEY)
PNC Financial Services (PNC)
SunTrust Banks Inc.(STI)

Fedspeak

Results Overview

America On Sale !!!

The Chinese are about to embark on a shopping trip of epic proportions.

Hoping to take advantage of cheap prices on struggling American businesses, a group of 400 executives from state-owned and private Chinese companies will be visiting the US next month on the hunt for distressed assets.

China's Ministry of Commerce is behind the tour, and is planning visits to New York, Washington, Chicago and Salt Lake City. The trip also includes stops in Toronto, Vancouver and Montreal. More

Credit Crisis Easing

Libor 3 month chart saying:

1.clogged credit markets are back again.
2.we are temporarily out of woods after Lehman bankruptcy back in Sept after the derivative markets.

Here's the concerns again:
1.with low interest rates will the bubbles pop up once again ?
2.Is inflation around us with 0% lending ? or still the deflation dominating, I think we are going through the 2nd one but once this cycle completes then the inflation will on rampage.

and what fed has to say about the economy outlook link

Dollar and Oil Index

Dollar to me is cliff diving which could not only inflate the commodities but also devaluing overall US economy during this downward spiral. Initial run during last summer is purely on de-leveraging of commodities basket in different foreign indcies and converting them from different currencies back to US dollar coz banks have to cover up their losses on their balance sheets which not only created artificial demand but also stampede during this process.

The banks are currently undergoing various forms of stress testing, which, good, bad or indifferent are having the effect of reassuring the investment community that all is well as evidenced by the improvement in the stock prices of the banking sector, however, the decline of the US Dollar appears to be accelerating and there is no fundamentals to drive US dollar.

Most of Commodity related ET F's and stock are coiled up big rebound in 2010 and beyond with the government intervention. Watch out: DBA DBC MOO GLD SLV.


Oil is going to benefit from the weaker dollar and look at data it's struck between $48-$56 for almost 2 months now.But breaking peak will easily take us to $70 in heart beat. So watch out closely for the oil related stocks for this summer as people will flock around during this part of the year.

GM Shareholders Wipeout (few cents on dollar)

With recent chrysler chapter 11 and now GM Shareholders Wipe out (few cents on the dollar) with GM 1-for-100 reverse stock split. So what Obama team is telling to financial institution is we don't care of your business model so you have to take the risk, So here is the whole story:

General Motors Corp. notified shareholders Tuesday it is planning a reverse stock split that would give them one share of new stock for every 100 shares they currently own.

The automaker said in a filing with the Securities and Exchange Commission that the deal would be part of an agreement with the Treasury Department in which the government would assume at least half of GM's debt in exchange for company shares. GM will send the information to shareholders currently holding a total of 610.5 million outstanding shares.

More here

More Banks Will Need Capital : WSJ

WSJ reporting 10 of the 19 banks are under water and needs more help. Now what ? does the market ever care about the current on going events. This stress test is really straining the market conditions and its getting fragile day by day and looks like a total economic collapse as we might see big players de-leveraging thier positions on low volume rally. It really amazes me how the main stream talking about the chasing the current markets and train has already left the station which not recomm garbage but also influence ppl to buy higher so that big players can wind thier portfolios. Remember any V shape recovery is not sustainable and eventually collapse @ the rate the economy is deteriorating.

Any way here's the whole story

The U.S. is expected to direct about 10 of the 19 banks undergoing government stress tests to boost their capital, according to several people familiar with the matter, a move that officials hope will quell fears about the solvency of the financial sector.

The exact number of banks affected remains under discussion. It could include Wells Fargo & Co., Bank of America, Citigroup Inc. and several regional banks. At one point, officials believed as many as 14 banks would need to raise more funds to create a stronger buffer against future losses, these people said, but that number has fallen in recent days.

More here http://online.wsj.com/article/SB124148189109785317.html

Gold Silver and Treasury Bonds

Is it time to buy Precious Metals and Short the broader Markets in near term ?

Here's ratio chart of the gold price versus the S&P 500 Index not weighted index just representing the top 500 companies on the index. Most equity markets worldwide also fall or rise roughly in line with the S&P 500 index. The higher the ratio, the more gold is worth compared to the equity market. The ratio appears to be in a very strong, long-term bull market.

The most anticipated correction in the ratio of gold to s&p 500 back to 1.00 has taken its position before moving higher.This signal is tells us either we are close to buy on gold or exit the broader markets and there is even a more correction back to 0.8 levels possible case to support the bull case for future run. So target on
S&p: 930-945 mostly likely possible with gold between $855-$823




Is Gold moving in parabolic path for the rest of the year ?

Gold is consolidating at these levels and its almost in final phase before moving up.A little push over $920 would drive to $1000 again and breaking those levels will be a clear sign its heading for all time highs in coming weeks and months and my initial target would be around $1200/ounce.




Will Silver outperform Gold ?

Yea I believe we might see a strong % gain in near term when compared to gold to silver ratio.Gold has be a precious metal all these years but where as silver been used for industrial use this never got that recognition as precious metal when compared to gold palladium platinum etc.My target on this one would be $50 before we end this in another 24 months or so.



Finally, treasuries might be bursting the bubble after having to accept as safe haven after market crash or is testing the support for the next bear market.Falling below 112 will give more clues after US long term economy outcome.

Banking Index and JP Morgan Chase

Markets are waiting for the stress test on banks which are due on Thursday i.e May 5th. According to the one of the leaked report from tuner radio network (http://turnerradionetwork.blogspot.com/2009/04/leaked-bank-stress-test-reults.html), which shows that technically 3 are solvent out 19 what does that suggests us more down side in the recent rally in the financial as they are leaders for the broader markets.But what does the banking index gives us the clues as we are technically at the resistance level and due for correction for another consolidation or further down the toilets. Definitely banks are caught with the swine flu and Dr. Barnanke had to quarantine before they can function properly. Its wait and watch game going on for the last couple of weeks and they don't know how to release this mess.



Another major down side move would be in banks and on housing cycles when the ARM's reset which are due this summer would fail around 8 millions homes according to the credit suisse. Here's is the chart which not only shows that subprime is small part when compared to option ARM's.

Click for larger pic.


Source: Credit Suisse.


Watching closely JPM which is one of the respected banks on wall street with least exposure to sub prime but does have 2nd order derviates on thier sheets which will bring down this giant bank, but at wat levels ? I feel that breaking below the 2009 lows will definitely have the domino effect on the banking index as well as the entire markets. So watch closely JPm, If this crashes then entire markets are due for crash.