SP 500 and NDX Futures Daily Charts

Nothing is quite broken yet.

JPM's numbers did not thrill the markets this morning.

Gold Daily and Silver Weekly Charts

Both gold and silver tested the expected support levels of 1450 and 40 today and held those levels successfully.

Let's see what new variations on a theme that the TBTF banks will have for us, even as they start trotting out their earnings tomorrow.

SP 500 and NDX Futures Daily Charts

The US equity market is working on a little downtrend here, with discouragement coming on the Alcoa earnings announcement, in which the top line of revenues was missed.

The banks start reporting tomorrow, and if even the financial sector disappoints we may see some additional action to the downside. We have not even yet hit the first big 38.2% retracement for this rally yet.

Benny won't be stopping at QE2, although he might throw a little interest rate razzle dazzle our way, raising while maintaining the flow of easy liquidity to the financial sector.

Gangsters of New York: The Real Housewives of Wall Street and Welfare for the Richest

This is tip of the iceberg stuff that might be defended by some as just the sort of thing that happens incidentally when one manages a large program under duress. So sorry. Nothing to see here, so move along.

That is like the defense being offered in the Raj Rajaratnam insider trading trial today that the defendant, Mr. Rajaratnam, is SO smart that he really didn't need all that insider information that people like Rajat Gupta had been giving him. I doubt they will get an acquittal giving all the tape recordings that they have, but they seem to be playing for a settlement, a wristslap and a fine and disgorgement of profits. That is the traditional outcome when some medium sized macher falls into the occasional government investigation of financial corruption.

The point of showing this here is to highlight the need for financial reform, transparency in government and especially at the Fed which handles huge sums of money and disburses them without effective oversight.

What is especially repugnant is not so much the epidemic of graft and corruption that has crippled the country and infested the regulators and the government. What is especially repugnant is the well financed campaign to go after the victims, the taxpayers and defrauded investors, and to force them to bear the brunt of the pain caused by that graft and corruption, by playing on the meanest and lowest impulses in the people.

And this after providing even more tax cuts and subsidies so these looters and white collar criminals could keep even more of their ill gotten gains. Now that takes some arrogant nerve, and some certainty in the service of your bought and paid for servants in the government, and the stupidity of the average person.

Iceland's voters have had the courage to say 'no.' It remains to be be seen what Ireland will do.

But one has to wonder how far this all goes, and why there was such a knee jerk impulse in so many places to bail out the banks and the insiders, and take the broader public to its knees through a calculated campaign of 'austerity' that plays on the impulse to make someone pay, preferably someone who is weak, and unable to effectively fight back, some outsider or scapegoat, some other.

And why do these disclosures keep showing up on the blogosphere and in relatively marginal publications while the mainstream media maintains its silence? I have been waiting for this story to surface, but I did not expect it to come from the sportswriter at Rolling Stone.

There will be some solemn mumblings on the network news, and then some Wall Street nightcrawler will be brought on the Sunday morning discussion programs to explain why these things are an anomaly, an unfortunate isolated incident, and how we have to stay on the bigger picture, handing out pain for everyone but those who caused the problem, and continue to cripple the real economy by distorting it through graft and corruption and the subornation of perjury and abuses of power.

And Dodd-Frank made the Fed the major regulatory body for the financial sector, and the bought and paid servants of big business continue to try and strangle all other competing regulators like Elizabeth Warren and the Consumer Protection Agency in the cradle.

Perhaps reform is too difficult, and the issues too complex, for anything to be done but surrender the Constitution to the monied interests and the oligarchs. They seem so powerful, and so clever, and after all, they hold your credit cards, and iPods, and favorite television shows hostage.

I would like to believe, even now, that all the people throughout history, ordinary men and women, who have stood for liberty, sometimes against fearsome odds, and given their pain and even their lives, the last full measure of their devotion, for the idea of a free America, shall not have done so in vain, with their memory shamefully dishonored by their children.  That at some point the people will rouse themselves from their slumber, slow to act, but deliberate and unstoppable once they are stirred.  And then the real work of reform and rebuilding can begin.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.

Rolling Stone
The Real Housewives of Wall Street
By Matt Taibbi
April 12, 2011 9:55 AM ET

America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we're broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year's retirees from the IRS, the SEC and the Department of Energy.

Why Isn't Wall Street in Jail?

Most Americans know about that budget. What they don't know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the "official" budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology...

Read the rest of this story here.

Related story Paul Ryan Has Balls by Matt Taibbi

Recently related blog Of the 1% By the 1% and For the 1%

Gold Daily and Silver Weekly Charts - Correction Underway, How Low Will They Go?

Today we had an expected pullback after an amazing advance last week. A correction and consolidation is a necessary and natural element in any bull market.

As you may recall I mentioned last week that I had expected at least one retest of the neckline after the breakout. That expectation remains valid. This sets a near term target for gold in the 1450-55 range. I could even imagine a deeper dip intraday to shake out the weak hands.

If today caused you some anxiety you are probably either holding too much leverage or an overly large position. You may wish to scale back to something you can hold more comfortably.

Silver dropped on a big bearish bet according to some reports.

If you want to see an analog of what this pullback in the 4-5 area *might* look like, please review the correction that silver had in the 2-3 leg of its rally. I am thinking 37ish as a worst case downside estimate unless the equity market liquidates, but given the volatile nature of the squeeze silver may not provide such an obvious buying opportunity.

So a more modest target of 40 may be more consistent with the expected pullback in gold, but I try not underestimate the power of paper in the short term. I am sitting largely in cash for the trading account and would not mind a chance to take on positions at the right support prices.

I added these details on targets by popular request (nagging) from 'The Coupon Guy.'

SP 500 and NDX Futures Daily Charts - Bully Is Wobbly, But Still Standing

A bit of a tough day for the bulls because they expected a rally given the budget agreement from Friday late.

This was not to be as the IMF came out early with discouraging words about the US GDP forecast.

After the bell Alcoa disappointed a bit by 'beating earnings by a penny' but missing sales revenue.

I came into the day net short and went out flattishly neutral. I was expected a further pullback for a number of reasons, but I have shifted to neutral and taken those gains off because I had expected the rally to fail at a little higher point, so I'm not quite ready to pull the trigger on a more determined short position and decline.

So let's see what happens.

Stiglitz: Of the 1%, By the 1%, and for the 1% and the Downward Spiral Into the Abyss

As we can see, the 'crisis' of the US budget impasse was averted, and the theater came to an end. Now the real work of creating a sustainable budget can begin.

The bankers are going to be unrelenting in their attacks on the middle class and the poor. The attacks will be threefold:

1. resisting financial and political reform which caused the crisis in the first place.  Three years after the crisis and no major player has even been indicted, the bonus system is flourishing again, and politicians are taking many millions in funds from the bankers and wealthy elite to promote their agendas.

2. blaming the victims, and compelling them to take the greatest pain of the bailouts, and continuing bailouts and subsidies to the financial class through spending reallocations. The bailouts and spending on the military industrial complex are crowding out the fundamental public functions of government.

3. shifting the impulse to reform from financial reform to 'tax reform' that further supports the monied interests. Cut taxes for the wealthiest as your primary agenda using a variety of deceptive means like promoting a consumption tax, or a flat income tax but with offshore havens and loopholes, so the burden falls most heavily on those who spend the greatest percentage of their labor on subsistence, their basic needs.

Listen to what Stiglitz has to say, and think about it. He is not perfect, the documentary Inside Job was not perfect, but start thinking for yourselves, and stop taking the easy route of allowing others to think for you, and mouth their slogans. They are only too willing to tell you what to think, what is real even if your eyes say no, if you let them.

Get back to the basic idea of reform, of at least bringing the banks back under control, of restoring them to some useful function that does not involve easy money and wealth without risk or production.

Try not to allow the pigmen and their piglets, who are being paid by the system in one way or the other, either directly or indirectly, and start thinking hard about what went wrong, what changed in the 1980's that took the country into such a state that it is in today, and then go from there.

Start thinking for yourself, and stop allowing crafty wordsmiths to play on your emotions, persuading you to drink their poisons with a happy smile. What they say sounds good, but their cup is full of misery for you and your children.

They are using the money system to control you. The stronger and more pervasive it gets, the more it dominates all human transactions, the more they can charge fees and rents on everything you do, in addition to the more esoteric methods of simply creating money and giving it to their friends using accounting rules and credit.

These fellows like to fool you, to say you can't do this or this will not work.  You can't reform Wall Street because they will just find ways around it, so you may as well give up and let them rob you blind. In what other area of human endeavor do people fall for such nonsense? If there was some bully who made you pay them ten dollars every time you left the store would you just accept that?

If you pass a law he would just move down the block? No, you would find those among you with the means and the will to stop them no matter where they went, and to give them the kind of thrashing that might discourage them or anyone else from even thinking about doing it again. That is what has gone wrong.

When a system richly rewards bad behaviour and does not punish it, even when the perpetrators finally make a mistake and lose billions, what do you think will happen the next time?

Time for a change, time for a real reform. Time for people to stop this 'every man for himself' mentality and start thinking about the country again. But therein lies a trap, so devious it makes me shudder, because when people start talking about the national good to you, they often are a wolf in sheep's clothing.

Despair is a trap. Things are broken, and beyond repair, so we must tear down the law and be hard on the people, these sheep, so they will learn by fear and hardship. Leiden macht frei.

What they will learn is lawlessness, to lose their humanity, and to kill you. And then in your fear you will reach for the big man with the iron rod and the will to use it, and there are many distorted, willful creatures who are eager to be that forceful ruler for you, to take up that rod in their pride and lust for power, and use it to knock everything down so that it is just as broken and desolate as they are.

And whoever he may be, he will put 'them' down forcefully, in a widening circle of 'them,' and lead you and yours on a downward spiral into the abyss. This is the lesson of the last century in Russia, China, Germany and Italy.

"What is good? All that increases the feeling of power, the will to power, power itself. What is bad? All that is weakness. What is happiness? The feeling that power is growing, that resistance is overcome. Not contentment, but more power; not peace at all, but war; not virtue, but efficiency. 'The weak and the flawed shall perish' is the first principle of our charity. And one should help them to perish. What is more harmful than any vice? Christian love." Nietzsche, The Antichrist

One way or the other this situation will be resolved. I am very concerned about the outcome and the way in which the US will get there, and the collateral damage that may be inflicted on the rest of the world.

Gold Daily and Silver Weekly Charts - Gold Breakout Targets 1510, Silver 45

Intraday comments on the markets can be seen here.

Gold and silver both broke out cleanly today and nailed the bullion bears' hides to the shed.

I have an open mind about a retest of the breakout for gold, but the short term target has been set at 1500-1510 with the inverse head and shoulder pattern that forms the right shoulder of the big inverse bull pattern that set up this breakout.

Big things are happening behind the scenes if you have eyes to see and ears to hear, and most of all a willingness to consider that all may not be as it appears on the surface. People are making decisions now, by doing nothing and going with the flow, that will effect them for the rest of their lives.

The discussion and threats of a US government shutdown are primarily political theater which does not mean all that much, but it does demonstrate foreign creditors that the politicians are not men and women of serious business, but merely bought things, purchased souls, playing to their various constituencies, fiddling around while the empire burns.

SP 500 and NDX Futures Daily Charts

US equities are a bit on edge ahead of earnings season which starts next week with Alcoa after the close on Monday.

Net Asset Values of Certain Precious Metal Trusts and Funds

This version includes the recent expansion of Sprott Gold and the latest update on the Central Trust.

The premiums to net asset value are interesting.

Notice that the Canadian dollar continues to strengthen against the US dollar, and the gold/silver ratio has dropped to the 36 range.

If the premium on PSLV is rational, then one has to wonder about the premium being applied to CEF. Does the auditing and redemption policy on PSLV make that much of a difference? Something for those who manage these funds to think about as they seek to differentiate themselves from the lesser regarded gold and silver ETFs, SLV and GLD, at least from the perspective of confidence in insurance as well as in gain.

I watched Inside Job last night and I strongly recommend that you see it, and show it to others. It is a very well done, concise, and understandable depiction of the US financial crisis, and how the failure to reform continues to cripple the real economy and the currency, to the detriment of the great majority of the people for the benefit of a relative few who have bent the government, the financial sector, and even the universities to their will.

As an aside, I finally watched No End In Sight, which is another documentary by Charles Ferguson and his team on the Iraq War, concentrating on the blundered occupation and the roots of the insurgency. It is also well worth watching.  

These documentaries are a little painful, because they strip away the illusion that these fellows who run things know what they are doing and are competent. This is why I have been saving them up for the right moment where I thought I could bear it. The recent rise in silver and gold gave me the heart to finally watch them, comforted by a feeling that I was not without alternatives.

I have seen whole companies lose the sense of meritocracy, and become like an oligarchy run by a few strong personalities, and their inner clique, stooges and girlfriends, and effectively destroy themselves while those running it line their pockets.  There is an elite that is wreaking havoc on the US national level, and it is affecting the global economy.

And to cap the evening, I finally watched Bush Family Fortunes by Greg Palast, which was not nearly so well done as Ferguson's two documentaries, but certainly capped off a discouraging evening's viewing.

What struck me the most is the sheer banality and lack of honorable character, much less virtue, in these financial men and politicians. The financial sorts such as Blankfein and Fuld are like caricatures of human beings. And the politicians are obviously phony and beneath contempt, without honor, lacking even the common virtues underneath a cultivated facade, 'whited sepulchres, which appear beautiful outward, but are within full of dead men's bones and all uncleanness.'

“False greatness is unsociable and remote: conscious of its own frailty, it hides, or at least averts its face, and reveals itself only enough to create an illusion and not be recognized as the meanness that it really is. True greatness is free, kind, familiar and popular; it lets itself be touched and handled, it loses nothing by being seen at close quarters; the better one knows it, the more one admires it.”

Jean de la Bruyere

When justice finally comes, hell is coming with it.

SP 500 and NDX Futures Daily Charts

Looked a little wobbly in a relatively wide ranging, low volume day.

The wiseguys are the primarily the ones trading in this market, selling shares back and forth to one another in a Ponzi like manner, and using positioning advantage to skin any specs brave enough to venture in for a trade.

That is why it has a bias to drift higher when nothing happens, but is still a tough market for a non-professional without insider knowledge and tools.

At the first serious whiff of smoke, they will hit the exits and these markets will break hard and fast to the downside. But that's just my opinion and I could be wrong.

There is no sustainable economic recovery. This is opera buffa, a stage managed farce run by the one percent, and for the one percent.