Gold and Silver Charts

Gold Daily Chart



Gold Weekly Chart



Silver Daily Chart

SP 500 and NDX September Futures Daily Charts

Drifting up on low volumes in a gentle ongoing short squeeze.

These types of markets typically run into a hard event and crumple. The timing may be problematic for the punters, and so the gentle short squeeze is fed daily.

The equity market commentary on the US financial news networks would make Baghdad Bob blush. I think the wiseguys are getting a little nervous because mom and pop seem to be sitting this one out.

SP 500



NDX

Soaring Corporate Profits As US Worker Pay for Productivity Hits Record Lows

Two sets of charts tell the story.

The problem is that when workers are pressed to the wall on pay they lose the ability to consume without taking on debt. And at some point the debt leverage mechanism for consumption breaks down.

Perhaps the problem is related to the one Wall Street is now confronting. How do you continue on in business after having impoverished, alienated, or driven away most of your clientele in the heat of a short term greed enabled by a corrupted political and regulatory system?

Those who were around in the late 1970's will recall the absolute disrepute in which equities were held by the public after the grinding bear market of 1973-74. Pit traders spent the better part of the day practicing their origami skills, for lack of serious 'outside participation.' Skinning each other when you have run out of greater fools is truly a zero sum game.

Weather report: Cloudy, with a chance of whirlwinds.



Fat profits, slim wages: the fruits of monetary bubbles and trickle down economics.



Charts courtesy of ContraryInvestor.

US Ranks Fourth In Global Competitiveness

I think the biggest surprise for US readers might be how high the US ranks in global competitiveness, and the countries that rank the highest. And of course there is the absence of China in the top ten. Shocking when viewed through the lens of an artificially managed-to-the-dollar currency pair.

Obviously having low paid and poorly treated workers is not the primary qualification for global competitiveness, at least in this national scaling. But it does seem to be a preoccupation of a significant portion of the Anglo-american crony capitalist elements which have never quite reconciled themselves to the laws against indentured servitude.

GenevaLunch
World Economic Forum Competitiveness Report: US falls to 4th place
10 September 2010

Geneva, Switzerland - Switzerland leads the pack, with Sweden and Singapore in second and third places respectively, and the United States in fourth in the latest edition of the World Economic Forum (WEF) Competitiveness Report, published Thursday 9 September. The US has slipped two places, after being overtaken in 2009 by Switzerland. The WEF attributes the lower ranking to “In addition to the macroeconomic imbalances that have been building up over time, there has been a weakening of the United States’ public and private institutions, as well as lingering concerns about the state of its financial markets.”

The report uses two sources: publicly available data and a survey of business leaders, with 13,500 business people in 139 “economies” queried for this year’s report. It contains more than 100 indicators for each country, part of the detailed country reports. “The survey is designed to capture a broad range of factors affecting an economy’s business climate. The report also includes comprehensive listings of the main strengths and weaknesses of countries, making it possible to identify key priorities for policy reform,” notes the WEF press release on the new report.

Nordic countries remain strong, says the WEF, with four of them in the top 15: Sweden (2), Finland (7), Denmark (9) and norway (14). China “continues to lead the way among the top developing countries” according to the report: it improved two places and is now ranked 27.

North African countries are competing more strongly, with several of them in the top 50.

Switzerland ranked number one in several areas in the report:

institutions, infrastructure, health and primary education, and financial market development. It was in the top five for labour market efficiency, technological readiness and innovation, giving it one of the top five slots in seven of the 12 indicators.

The most problematic factors in doing business in Switzerland remain inefficient government bureaucracy, tax regulations, restrictive labor regulations and access to financing.

Read the full report here

Gold Daily Chart

Gold corrected, somewhat predictably today, after a significant run higher and having left a 'gravestone doji' candle in yesterday's action.

There is decent support at the 1240 level. Let's see if the yellow dog can find its footing there.

SP 500 and NDX September Futures Daily Charts

The US equity markets were in rally mode on light volumes until this afternoon when news that Deutsche Bank will be raising a substantial amount of capital (9 billion euros or roughly 11 billion US dollars) through a share sale took the wind out of the sails of the financials which had been leading the charge higher.

Deutsche Bank, aka Buba, is considered the 'gem' of German banks, and this dilution of almost 30 per cent came as a shock as it is almost three times as much as was expected if they were making a significant increase in their 30% ownership of Deutsche Postbank AG that has been discussed. It brings into question what is coming out of the Basel III discussions, as well as further speculation about what bad debts remain undiscounted on the banks' balance sheets.

SP 500



NDX

The Nasdaq 100 futures chart in particular shows the significance of the resistance trend that the NDX faces right now.

Gold Daily Chart

Goldman Faces "Near Record Fine" In London

Even this 'near record fine' is likely to be little more than a wrist slap, a manageable cost of doing business compared to the massive profits and bonuses obtained from such dealings.

It appears that financial regulations such as the Volcker rule are getting some traction with Goldman and their ilk, compelling them to spin off their proprietary trading desks to institutions that do not drink so directly from the subsidies of the Federal Reserve.

Still, regulation is not a set of rules, but a mindset to enforcement and investigation for the many, with no favoritism shown to the powerful few.

Financial fraud has been a major export from the US for the past ten years. As we have noted elsewhere, New York financial firms may find themselves persona non grata in many of the overseas markets, especially the sovereign financial asset markets, which they have abused repeatedly from their US and London centers.

Financial Times
Goldman now faces large fine in UK
By Megan Murphy and Brooke Masters in London
and Francesco Guerrera and Henny Sender in New York
September 8 2010 20:05

Goldman Sachs is facing a near-record fine from the UK’s financial regulator following a five-month investigation into the investment bank’s international business initiated in the wake of fraud charges against the company in the US.

The fine, which could be announced by the Financial Services Authority as early as Thursday morning, will deal a blow to Goldman’s efforts to put the high-profile fraud case behind it following the bank’s settlement with the US Securities and Exchange Commission probe in July for $550m.

The largest fine handed down by the UK regulator came three months ago, when JPMorgan paid a £33.3m for failing to keep client money in separate accounts.

Goldman, the world’s best-known investment bank, has seen its reputation tarnished in recent months as questions continue to swirl over whether it favoured the interests of some clients at the expense of others during the financial crisis.

The bank’s business model is also under pressure amid volatile markets and regulatory reforms that have forced it to shut some of its highly profitable “proprietary” trading operations.

On Wednesday it emerged that KKR, the private equity firm, is in early talks with individuals in Goldman Sachs’ proprietary trading group that could lead to the hiring of a number of Goldman’s key people.

In settling the Abacus case with the SEC, Goldman said it made a “mistake,” but it neither admitted nor denied the agency’s allegations. Fabrice Tourre, the Goldman trader whose boastful emails about the deal were at the centre of the complaint, is still fighting charges brought against him by the SEC.

People familiar with the fine that will be levied on the bank by the FSA say that it is not based specifically on the Abacus transaction, but is the result of its investigation into the bank’s business practices in London sparked by the SEC allegations.

The FSA’s decision to launch its own inquiry, announced four days after the SEC case, was questioned by some legal experts at the time given that the Abacus deal was structured in the US. However, the SEC alleged that one of the biggest losers was IKB, the German bank

Net Asset Values of Certain Precious Metal Funds and Trusts

Gold Daily Chart

Gold is jammed into tough overhead resistance.

As David Rosenberg observes:

Did you know … that the gold price has quietly turned in a 16% price advance so far this year and barring a major reversal, this will be the tenth year in a row that the yellow metal has generated a positive “return” for investors. That compares with nine winning years for Treasuries, seven winning years for the broad commodity complex in general, and coming in last, is six for the equity market. The trend is your friend and it is likely with this relative performance in mind that retail investors have yanked money out of U.S. equity mutual funds now for 17 weeks in a row!