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Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Gold Fever Boils Over and the Master Forecasters of 2009

Stock-Markets / Financial Markets 2009 Dec 06, 2009 - 06:06 AM GMT

By: Nadeem_Walayat

Stock-Markets

Best Financial Markets Analysis ArticleThe big news story of the week was the improving Jobs picture in the U.S. which saw the unemployment rate dip back to 10% from 10.2%, triggering a surge in the stock indices early Friday. Last weeks news of Dubai World's debt default hit Emirate stock markets hard this week with the UAE's main exchange in Abu Dhabi down more than 20%.


In Britain RBS Bank announced that it would award £1.5 billion of bonuses on the basis of £6 billion of profits, whilst conveniently ignoring the fact that these profits are wholly as a consequence of unprecedented bank bailouts and easy money terms engineered for the purpose of the bankrupt bailed out banks to rebuild their balance sheets, instead of which those in charge of RBS threatened to resign if the bonuses were not paid out. If the Labour government has any credibility left it should call the bankster's bluff, as I suspect the RBS board would not honour the threat as there exists a wide gap between the word honour and banking these days. With the pre-budget report due on Wednesday, this may be an opportunity for the Government to introduce a Bankster's Bonus Tax and win votes in the run up to the general election.

I also hear that Goldman Sachs executive officers in New York are arming themselves on fears of a potential popular uprising against bankster bonuses.

In my opinion bonuses paid out by bailed out banks is tantamount to legalised theft from the tax payers who are destined to foot the bill in terms of much higher taxes to come after the next election as this Labour Government looks set to repeat the same outcome of all past Labour governments i.e. to leave a virtually bankrupt economy behind.

Additionally the National Audit Office revealed what we already know that the bank bailouts have saddled tax payers with liabilities of more than £850 billion, or more than 100% of National debt. Whilst a truly shocking admission, it is however pretty much inline of where we should be by now from my projection of 12 months ago with more bank bad debt losses to come. The Labour government estimates the ultimate losses of between £20 to £50 billion, which is a ridiculous figure as the Government has already lost an estimated £15 billion on Northern Rock Bank alone, I estimate the actual real losses to run as high as £500 billion.

Financial Markets Quick Update

Stock market - Stocks reversed the Unemployment report bounce by closing at Dow 10,388. As mentioned in Thursdays quick analysis, the stock market appears to be resolving towards an expanding triangle which is bearish for stocks, the measuring move for which confirms the normal correction objective of several weeks ago i.e. Dow 9950 to 9900.

U.S. Dollar - The Dollar surged higher Friday to 76, though it remains in the weak overall downtrend with the initial buy trigger remaining at 77.00

Gold - Corrected sharply from an extremely overbought state to $1160, and should continue to target a move to below $1,100 though short-term volatility remains high.

The Market Oracle Master Forecaster Awards of 2009

The Market Oracle has for another year endeavoured to provide our readership with the highest quality of analysis. Now our readers have the opportunity to help us award authors who's market and economic judgment calls for 2009 hit the nail on the head. Our aim is to present Master Forecaster Awards to the Top 20 authors voted as the most accurate forecasters of 2009. Voting remains open until the end of of December.

How to Vote

The process of voting is to simply add ?vote2009 AFTER .html in your browser address bar and press enter which will record your vote for that article on our server. The aim is to vote on articles published between late 2008 and early 2009 thus enabling outcomes to be compared against forecasts.

Example Vote For Article9999.html

Click Here for the Voting Guide and for popular and quarterly lists of articles from late 2008 in to mid 2009.

Fibonacci Trading - Ebook worth $79 for Free!

The FREE Fibonacci Trading ebook mentioned last weekend is still available to download, though you only have approx 48 hours to do so until midnight on 7th December 2009. The ebook is a concise resource at just 42 pages and FREE to download, Grab it while you can!

Source: http://www.marketoracle.co.uk/Article15596.html

Your analyst.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Featured Analysis of the Week

Most Popular Financial Markets Analysis of the Week :

1. Britain's Inflationary Debt Spiral as Bank of England Keeps Expanding Quantitative Easing

By: Nadeem_Walayat

Over the coming years we will witness the systematic destruction of the British currency as witnessed through the inflation and commodity / asset price data as the Inflation Mega-trend starts to unfold following the asset price destruction induced Deflation of 2008 into early 2009.

Read Article

2. Run on the U.S. Dollar ....Soon

By: Porter Stansberry

It's one of those numbers that's so unbelievable you have to actually think about it for a while...

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

Read Article

3. Federal Reserve Allowing Bailed Out TARP Banks To Restrict Commercial Lending

By: Bob_Chapman

The following information may be the most important we have ever published. One of our Intel sources, highly placed in banking circles, tells us that on 1/1/10 all banks that have received TARP funds have been informed by the Federal Reserve that they must further restrict any commercial lending. Loans have to be 75% collateralized, 50% of which has to be in cash, which is a compensating balance.

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4. Gold Nexus for Powerful Struggle Underway for New Global Financial World Order

By: Jim_Willie_CB

Gold Desafio: Global Struggle - The gold market has become, despite little recognition by the financial press, the battlefield for global control of the financial world. To the winner go the spoils and access to the helm. To the winner goes control of global banking, dominance in commerce, and the advantage in some degree of printing money on a credit card that all nations must finance indirectly. Nevermind the military aspect. In the Untied States, the custodial control of the USDollar as global reserve currency enabled it to spawn numerous syndicates with criminal impunity, since under the USGovt aegis (if not management).

Read Article

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5. Dubai Property Crash Delivers Debt Black Swan to Deflationists

By: Nadeem_Walayat

This weeks major market event came late in the week whilst American's took the day off on Thursday for Thanksgiving, Dubai declared that it will be freezing repayments for at least 6 months on part of its approx $90 billion or so of visible debt at the state run Dubai World company ($20 billion). The ratings agencies responded by cutting the ratings on Dubai bonds to junk status.

Read Article

6. Devastating Oil Crisis Ahead?

By: Joseph_Dancy

John Hess, the Chairman of the US independent producer Hess Corporation, issued a warning last month to global governments claiming a “devastating oil crisis” looms large on the horizon if global action is not instituted. In a speech delivered at the Money & Oil conference, Hess said that once economic growth recovers, it is likely the world will return to the market conditions of one year ago:

Read Article

7. At Financial Markets and Economic Crossroads

By: John_Mauldin

This week he touches on several topics, all of which I find interesting. As he notes: "We face two possible states of the world. One is a world in which our economic problems are largely solved, profits are on the mend, and things will soon be back to normal, except for a lot of unemployed people whose fate is, let's face it, of no concern to Wall Street. The other is a world that has enjoyed a brief intermission prior to a terrific second act in which an even larger share of credit losses will be taken, and in which the range of policy choices will be more restricted because we've already issued more government liabilities than a banana republic, and will steeply debase our currency if we do it again. It is not at all clear that the recent data have removed any uncertainty as to which world we are in."

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8. Gold $1,200 Means Defacto Resurrection of the Gold Standard

By: Gary_Dorsch

One-way bets against the US-dollar have been building-up over the past eight-months, and are now estimated to total about $550-billion, in what’s popularly dubbed the US-dollar “carry trade.” Its predecessor, the infamous “yen carry” trade, also gained a lot of notoriety, when the Bank of Japan pegged its interest rates far below those of any other economy on the planet. At its peak in the summer of 2007, the “yen carry” trade grew in size to $1.2-trillion, providing the high-powered octane that pumped-up commodity and stock markets worldwide. 

Read Article

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