About Those Strong November US Retail Sales Numbers

Gasoline Purchases.

Early deep discounts on electronics to spur Christmas buying and 'green rebates' on new appliances.

Higher prices. Subsidized purchases. Let's party!

The Correlation Between Gold and US Equities

The relationship between US equities and gold obviously changed around the middle of 2008.

But how has it changed? Has the correlation really reversed so dramatically?

Is this the result of the Fed's reflationary efforts? But has not the Fed does this many times in the past? What is the relationship with both of these markets with the US dollar, and that with the money supply?

Perhaps there is not a direct correlation but a relationship to other things that relate in common.

All good questions. Explanations will be coming, but we have not seen many that are any good. Most are simplistic and self-referential to the person's biases. So we will have to do it ourselves.

Obama's Big Sell Out

This is an effective articulation of why so many Americans who voted for Barack Obama and 'change' and reform feel betrayed, and rightfully so.

The funny thing is, the result would most likely have not been all that different if McCain had won, except the world might be worrying quite a bit about his health, given his utterly unqualified successor, the Decider in a skirt. American politics sometimes appear to be more like competing crime families and special interests than legitimate alternatives to national governance.

Well, at least an American President has not appointed his favorite horse to the Senate -- yet.


Obama's Big Sellout
By Matt Taibbi
Dec 09, 2009 2:35 PM

The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway

Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers "at the expense of hardworking Americans." Obama may not have run to the left of Samuel Gompers or Cesar Chavez, but it's not like you saw him on the campaign trail flanked by bankers from Citigroup and Goldman Sachs. What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.

Then he got elected.

What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.

How could Obama let this happen? Is he just a rookie in the political big leagues, hoodwinked by Beltway old-timers? Or is the vacillating, ineffectual servant of banking interests we've been seeing on TV this fall who Obama really is?...

Read the rest of the story at Rolling Stone online here -

Today's US Treasury 30 Year Auction

Well, it is year end.

But there is undeniably a strong move to the short end of the curve, especially by the big debt buyers like foreign central banks who prefer their maturities in the 3 to 5 year range or less, sans agences s'il vous plait. This was also seen in yesterday's Ten Year Auction.

As for domestic buyers, the yield curve preference is less an investment decision than an IQ test. Only Zimbabwe Ben and the Last Resort Boys, along with a few pension and insurance funds who are compelled by a government mandate to match duration of obligations, are buying the long end ten years and out.

There was nothing in Treasury Secretary Geithner's appearance before the cameras today to compel one to do anything but hide in short durations, preferably offshore. Mr. Secretary engaged in a battle of wits with Elizabeth Warren, with Le Crampe de Cervau coming out a bit on the short end himself as he attempted to justify the bailout of AIG at par.

As you may recall, Liz Warren is a prof at Harvard with a portfolio in the field of financial liquidations, and Tim's rhetorical wind was met with a blazing fire of informed incredulity. No Congressperson or money honey she.

When the time comes the longer duration will be an excellent buy again, but not until Fed Funds is around 20% or so. What is that, about 2,000 basis points to go? I'll make a note.

Maybe there will be a protracted monetary deflation and a stronger dollar to justify those four and a half percents of return over 30 years. And maybe Timmy will get a job NOT working for Wall Street or the Fed when he passes out of the Obamasphere next year, in favor of a seasoned financial consigliere more conversant with the management of a currency crisis. It is hard to just throw money at them.


Bonds down after poorly bid 30-year auction
By Burton Frierson

NEW YORK, Dec 10 (Reuters) - U.S. Treasury debt prices fell on Thursday, sending 30-year yields to four-month highs after a poorly bid long-bond auction rekindled worries over the huge federal budget deficit.

The government sold $13 billion of 30-year bonds in an auction that was weak on all measures and suffered from its year-end timing, when many financial market professionals are reluctant to commit funds for such long-term investments.

However, the gaping U.S. budget deficit will outlast the seasonal factors and some analysts worried that the sloppy long bond auction was a sign of tough times to come for a government that has tried to borrow its way out of a credit crisis.

"It was pretty ugly. The old lump of coal in the stocking," Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.

"It is just going to be a difficult year ahead fiscally and with respect to monetary policy and also the markets. I think Today's 30-year auction could just be the harbinger."

The 30-year long bond US30YT=RR fell rapidly after the auction, pushing yields up as far as 4.51 percent, their highest since August.

They were last down 30/32, yielding 4.48 percent versus Wednesday's close of 4.42 percent.

The benchmark 10-year note fell 8/32, yielding 3.47 percent, versus Wednesday's close of 3.44. During the selloff, benchmark yields rose to a four-week high of 3.52 percent.

However, the market recovered from its worst levels as both 4.50 percent 30-year yields and 3.50 percent 10-year rates have been seen as attractive levels by some investors to get into bonds.

The 30-year auction ended this week's three offerings totaling $74 billion. Though that's below the weekly record of $123 billion set in October, it is a lot of debt to sell in a traditionally quiet time of the year....