Stock Preacher

Former Federal Reserve Chairman Alan Greenspan said yesterday in NYC that he is more worried about the increasing US debt than the weakening US$. In a speech to the Council on Foreign Relations in New York, Mr. Greenspan said he is “not overly concerned” about the most recent decline in the dollar, which has hit a 14-month low against the Euro and other major currencies. “Remember, the dollar surged when the crisis began as we still conceive dollar as safe heaven. We are now back to the levels just prior to the crisis,” he said. Also, Mr. Greenspan expressed concern about the long-term costs to the United States from the increasing national debt, which according to him is the “most worrisome aspect of the economic agenda in the United States.” Read more

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Gold futures on the COMEX Division of the New York Mercantile Exchange rocketed to a 3 month high on Wednesday as the US$ weakened on disappointing jobless data. Silver and Platinum followed Gold North. Gold price for December delivery gained US$22, or 2.2%, to finish at US$978.50 oz, touching as high as US$981.40, the best level since June 4. The US Dollar fell against most rival currencies as a private sector report on unemployment disappointed investors who had anticipated the economy to recover as a faster pace. The ADP National Employment Report said that employment in the private sector fell by 298,000 in August following a revised loss of 360,000 jobs in July. The dollar index, a gauge measuring the greenback’s value against six other currencies, declined 0.385, or 0.5%, to 78.376 by the end of the Gold floor trading session. A weak US$ usually strengthens Gold’s appeal as investors purchase the precious metal as an alternative asset of hedge. December Silver finished at US$15.365 oz, up 30.5 cents. October Platinum gained US$3.30 to US$1,230.10 oz.

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In China the Government owns the Banks; the bankers do not own the Government. China’s stimulus plan is working better than in the US and the UK because the government is using the banks for public ends, rather than allowing the banks to use the government for private ends. In the USA, the banks are the most powerful lobby on Capitol Hill; they own the Government.

The USA is spending trillions of greenbacks to bail out its banking system, leaving its economy to languish, as China, now called a “miracle economy,” decoupled from the rest of the world, is maintaining a phenomenal 8% annual growth rate. That, by the way, is being questioned by lots of Pols, commentators, economists and other talking heads, as they ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Read more

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Gold futures on the COMEX Division of the New York Mercantile Exchange closed higher on Wednesday as crude oil jumped sharply upon unexpectedly plunging oil inventory. Silver finished lower, but platinum rose. Gold price for December delivery climbed US$5.60, or 0.6%, to finish at US$944.80 oz. The Energy Information Association reported on Wednesday that US Crude Oil in storage for the week ended Aug. 14 fell by 8.4M bbls. This is much lower than economists’ expectations of a 1.3M bbl increase. Sparked by the tightened oil stockpile, benchmark Crude Oil for September delivery soared US$2.47, or 3.6%, to US$71.66 bbl by the end of Gold floor trading time. Worries on inflation helped the yellow metal metal regain strength and close the session higher. In the currency markets, the Dollar index, a gauge measuring the greenback’s value against six major currencies, stood at 78.438, down from the intra-day high of 79.225 in the morning session. A weaker US$ is considered to boost Gold’s demand as the dollar-denominated yellow metal becomes cheaper. December silver finished at US$13.909 oz, down 8.6 pennies. October Platinum rose US$9.30 to US$1,241.40 oz.

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The US$ hit a 5 month low against a basket of major currencies on Friday and the euro rose above US$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 US$1.62, almost an 8 month high, and capped its best month since 1985, while data showing the US 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 US$1.8T US budget deficit added to dollar woes this week and put the benchmark 10-year Treasury yield en route to its biggest 2 month spike since 2004. Those worries amplified a report that South Korea’s National Pension Service intends to reduce exposure to US government bonds and equities in its 5 year portfolio. “There’s a visceral concern about the debasement of the US 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, Connecticut

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This is what happened last week…

Last Tuesday began what the world community views as a major event in US history, the inauguration of Barack H. Obama as its 44th President and its 1st Black American President.
Some of President Obama’s executive orders on his 1st day in office:

1. A freeze on salaries for White House staff earning $100,000 or more, about 100 people in all.

2. New Freedom of Information Act rules, making it harder to keep the workings of government secret.

3. Tighter ethics rules governing when administration officials can work on issues on which they previously lobbied governmental agencies, and banning them from lobbying the Obama administration after leaving government service.

The week in the markets, however, continued to be bathed in the glow of uncertainty within the financial sector and coupled with Qs about the timing of the economic recovery.
Couple that with headlines announcing that China’s Y 2008 Q 4 GDP contracted from 9% to 6.8%, the UK reporting a GDP decline of 1.5%, the largest since 1980, US housing starts fell to their lowest level on record, and initial jobless claims returned to Christmas levels, matching the 26 yr. high of 589,000 set in December 2008.
Though Microsoft disappointed, IBM and AAPL rang the bell with GOOG beating too, and coming in better than expected.
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