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Has the Stock Market Finally Run out of Steam?

Stock-Markets / Financial Markets 2010 Dec 18, 2010 - 08:33 AM GMT

By: Anthony_Cherniawski

Stock-Markets

Best Financial Markets Analysis ArticleFalse Hope? U.S. Leading Indicators Index Increases by Most in 8 Months
(Bloomberg) The index of U.S. leading economic indicators increased in November by the most in eight months, a signal the recovery will strengthen early next year.

The Conference Board’s gauge of the outlook for the next three to six months rose 1.1 percent after a revised 0.4 percent gain in October, the New York-based group said today. The reading matched the median forecast of economists surveyed by Bloomberg News.


Cargo stagnation

(ZeroHedge) We have understood that Chinese cargo ships have been told to proceed at 'wind speed', because of a collapse in US import demand - this is partly visible in the activity amongst Long Beaches shoremen - hence, is this the final proof that the inventory rebuild that drove the recovery in the autumn is OVER? Figure 1 shows the average speed amongst bulk carriers! Bulls - Watch Out!

This Is The First Recession Since the End of the FIRST World War Where Government Help Isn't Trickling Down to the American People

(ZeroHedge) Banking expert Christopher Whalen (hailed by Nouriel Roubini as one of the leading independent analysts of the U.S. banking system) told the American Enterprise Institute that this is the first recession going back at least to the end of the first World War where government assistance has not trickled down to Main Street and ordinary Americans.

Why? Because the banks are keeping the money and not loaning it back out.

Have stocks finally run out of steam?

-- The Investment Company Institute reported the 32nd sequential weekly outflow from domestic equity mutual funds. This week both municipal and taxable bonds joined the exit parade. This debunks the myth that investors are rotating out of stocks and into bonds. Not only did investors pull out of $2.7 billion of stock funds, they also withdrew $1.3 billion in municipal bonds and $401 million in taxable bonds. Unlike stock funds, municipal bonds have been sinking since Labor Day.

The Long Bond Has Taken a Beating.

--Treasury 10-year notes were poised for their third weekly drop, the longest stretch of declines since September, as evidence the U.S. economy is recovering reduced demand for the safety of government debt. The yield touched a seven-month high this week on speculation an extension of U.S. tax cuts will stimulate the economy and widen the budget deficit and as the Fed said the recovery is continuing. German business confidence unexpectedly rose to a record in December, a report showed today.

Gold investors are “buying the dip.”

--Gold rose as the lowest price in two weeks attracted investors seeking a store of value. Silver also gained.

Analysts think that just because the Fed has kept open the door to more bond purchases, and the eurozone debt crisis is heating up again, that will keep a nice floor under gold prices. The fact is, there are a lot of profits that may be taken before year end.

Japan’s Stocks Hang on to a Gain This Week.

--Japanese stocks fell, sending the Topix index to its first drop in five days, as trading companies declined on lower oil and metal prices, and automakers retreated on concern a weaker dollar will dent export earnings. The Nikkei 225 Stock Average fell 0.1 percent to 10,303.83 at the 3 p.m. close in Tokyo. The Nikkei rose 0.9 percent this week, a seventh straight gain and the gauge’s longest winning streak since the eight weeks ended April 2.

The Shanghai Index is Still Above its Trendline.

-- China’s stocks fell for a third day, narrowing the benchmark index’s first weekly gain in a month, on concern that the government will further tighten monetary policy to tame inflation and curb speculative demand for property. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, slipped 4.4 points, or 0.2 percent, to 2,893.74 at the 3 p.m. close. Today’s losses narrowed the week’s gains to 1.9 percent, the first advance in six weeks. The CSI 300 Index declined 0.2 percent to 3,225.66 today.

The Dollar May be Done Correcting.

-- The dollar gained against the euro and British pound Friday, after European leaders agreed on a plan that was largely in line with traders’ lowest expectations.

The euro had stabilized earlier as a closely tracked gauge of German business sentiment reached a record high, hinting at fundamental strength in the region’s biggest economy.

How long can the European Central Bank kick the can down the road?

A ‘Shadow Inventory’ Dampens Winter Market

-- NEW statistics provide a glum holiday-time snapshot of the real estate market: shrunken sales pace, bloated inventory and a “shadow inventory” of foreclosed homes looming menacingly in the background. The foreclosure process is complete on these nearly 98,000 homes; a National Association of Realtors committee made the state-by-state count. But the banks or other lenders have not yet released them for sale.

Gasoline Prices Up Another Dime Last Week.

--The Energy Information Agency weekly report states, “The U.S. average retail price for a gallon of gasoline increased for the second straight week, up more than two cents from last week to $2.98 per gallon, and $0.38 per gallon higher than last year at this time. West Coast gasoline prices increased more than three cents, the largest gain versus last week. West Coast gasoline remains the most expensive in the country at $3.19 per gallon…the Midwest saw its average gasoline price increase a penny from last week.”

There are Plentiful Supplies of Natural Gas.

-- The U.S. Energy Information Administration reports, “Extremely cold weather conditions moving across the country boosted demand for space heating this report week (December 8-15). Spot prices nonetheless decreased in most markets (with the exception of several in the Northeast), likely influenced by storage for winter usage remaining near historical highs and very strong current supplies.”

Arizona Sues BofA For "Consistently Misleading Consumers" About Home Loan Mod Process

(ZeroHedge) At this point it appears Bank of America can't wait for the alleged Assange secret fraud trove to finally be released and put the bank out of its misery: not a week passes without someone suing the bank for gross mortgage fraud. One would almost think that if we had a functioning legal system in which perpetrators of crime, instead of those protesting it, were arrested that BofA may actually be a sell on the f#&^@!g dip. The latest reason why the best job in the world these days is to be BofA's outside counsel, is that as Reuters just reported, Arizona has sued the bank as a result of the latter "consistently misleading consumers about its home loan modification process." Perhaps a greater crime is BofA's consistently misleading the SEC into settling every single case of multi-billion bonus dispersal at or about the time the banks receives a $15 billion taxpayer funded TARP bailout. And while this latest case will also be settled promptly and quietly, to not give some other plaintiffs the idea that such a thing as equitable compensation exists, in the meantime the actual damages sought by Arizona AG Terry Goddard is $25,000 per violation. Ball park estimate of 500,000 of those countrywide (not just Arizona) , and there goes the firm's Christmas Bonus.

US To End 2010 With $13.9 Trillion In Debt, Total Debt Incurred Since Great Financial Crash: $4.4 Trillion

(ZeroHedge) Now that all recent bond auctions have settled, and with no further bond auctions scheduled until the rest of the year, we can look at the final tally of US total debt: the number - $13,879,785,000,000. This represents a $1.568 trillion increase in total US debt held by the public for 2010, and $4.388 trillion since the collapse of Lehman. This is in essence the cost to US taxpayers to keep the financial system solvent, as the US has become the biggest marginal leveraging actor in the world, with everyone else, notably US consumers, and Europe, doing all they can to strip as much debt as they possible can.Second QE2 POMO Schedule Released: Fed Will Buy Back $105 Billion In Bonds Through January 11

Foreclosure Fraud Arrest Tally: Arrested 22; Bankers Responsible

(ZeroHedge) For an amusing indication of just how effective the US justice system is, look no further than the JP Morgan offices in Los Angeles. A peaceful protest in front of the front doors of the megabank led to 22 arrests. Alas all of them were of those protesting: not a single banker was even touched in the making of this non-brush up with the law. From ABC News: "Police arrested 22 demonstrators who blocked entry to a downtown Chase bank branch Thursday to protest what they said were unfair home foreclosures. The demonstrators, which included homeowners facing foreclosure, community advocates and labor leaders, silently allowed officers to bind their wrists behind their backs with plastic restraints and guide them into a police van. Dozens more demonstrators chanted and marched on a nearby sidewalk holding sighs that said "Stop Bank Greed, Save Our Neighborhoods" as the 12 men and 10 women were taken into custody." So instead of the legal system finally finding at least one of the bankers who either led the country to the Great Financial Crisis even presumably guilty, the status quo marches on as those who dare to protest against what will sooner or later be disclosed as the biggest fraud in US financial history.

Simon Black's Advice To Young People: Grab Your Ankles

(ZeroHedge) If you’re reading this and under 30, let me be absolutely clear about one indubitable point: your government is going to sacrifice your future in order to pay for its own mistakes from the past.

To give you an example, students in London came out to the streets in droves last Friday to protest the British parliament’s most recent austerity measures which tripled the cap on their university tuition to $15,000. Sure, Britain is imposing all sorts of austerity measures on its citizens… and while I won’t get into a discussion about the absurdity of government controlled education, I will point out that students are having their benefits cut far more drastically than any other segment of the population.

« Ron Paul: "Bernanke Is The Greatest Counterfeiter In The History Of The World" »

(The Daily Bail)  Editor's Note - We are reprinting this story from last year as today marks the one year anniversary of this particular Bernanke abomination accomplishment.

Video - Ron Paul on Bernanke's dubious distinction

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As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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