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The divergence between gold and the broad stock indices is highly encouraging that the precious metals have put in at least a short term bottom, and may threaten to break out over the next couple of weeks.
This is still a very slow time of the year, and seasonally weak for precious metal investments. But favorable winds are just around the corner.
On a breakout, the intermediate target for gold will be around $1755, with some pauses and at least one larger pullback along the way.
Fairly disappointing Jobs Report, but Wall Street has its eye on earnings season and the puffed up corporate numbers that will start rolling out next week.
Watch out for the short term noise, and keep your attention focused on guidance, rather than current numbers which are two parts accounting fluff and three parts Fed subsidies.
If the consumer is not healthy, American business will not be healthy. The effects may just show up with a lag.
Additionally, I have included the daily cash charts of the SP 500 and the NDX with some indicators that seem to suggest that the markets are overextended for the short term, and are ready for some consolidation and perhaps a pullback after this amazing run higher. It can of course become even more overbought in the short term.
A weak report, but not as tragically dramatic as the silly revisions higher that preceded it based on the ephemeral ADP report.
Traders and politicians like the volatility that emotions bring to the decision making process. Jolting the herd from here to there serves to distract them while moving them along in the desired direction.
The recovery is weak, returning to the weak job growth that was evident prior to the crash of 2008, within the bounds of 2005-2006 for those wearing their Bush goggles. The economy is sick, and could possibly take a turn for the worse. It badly needs a structural reworking, and unfortunately that discussion is not even on the table. The monied interests are setting the agendas and shaping the news.
Simple short term stimulus will not 'fix it,' and fiscal austerity is snake oil from the same con men and grifters that brought you the financial crisis with a sick, unbalanced economy on its way to third world status. What is the 'industrial policy' of the US. I would submit that it is still deregulation, the deification of ideal markets that do not exist, and the shifting of more capital to the few in hopes of a trickle down effect that never really occurs. The funds are used to further bind the real economy with artificial impediments and rents.
From budget surplus to death spiral in a little more than a decade. Gee, where did we go wrong?
You all know what needs to be done. But there is not nearly enough to slake the greed of the powerful. So down this road we must go.
Here's one for those who favor giving tax breaks on offshore funds for multinationals who use accounting gimmicks and loopholes to realize their income in tax haven countries. The program allows corporations like GE to repatriate their stashed cash on the cheap, and pay it out in tax free dividends to wealthy shareholders and bonuses for their executives.
It is a powerful incentive to send even more employment and economic activity offshore, and for countries to engage in state directed mercantilism. There are no Porterian 'natural competitive advantages' involved, but there is a strong artificial disincentive to allow domestic consumption and advancement of the mercantilist's own middle class. There is, at the end of the day, the least common denominator of the health and freedom of the many as the unifying corporate objective, and the principle of one world government.
Trickle down is a canard. Globalization and 'free trade' is a means of beating down all independent public policy and local sovereignty. There is no purely objective macroeconomics without major policy assumptions as to the public 'good.' Naturally efficient and rational markets are the economic equivalent of Piltdown Man.
And there is no such thing as sustainable 'free trade' between independent political entities under fiat currency regimes, without assuming a perfectly rational system run by angels. The game is rigged and the regulators and politicians are bought, always and everywhere, under this type of artificial construct, with a nationless oligarchy as its ultimate objective.
In case you were wondering what the Congress and the Administration were doing with all those faxes, cards, phone calls, and letters you were sending in about the need for financial reform and tougher law enforcement, they decided to make it official policy not to aggressively prosecute the laws against white collar crime in 2008. Another innovation in outsourcing justice through extended self-regulation.
Apparently they told this privately to the Wall Street banks and their lawyers in 2008, but neglected to copy the American public on the memo.
Some have noticed the lack of reform, but the monied interests have done quite a successful PR job in refocusing the national discussion on priorities involving social issues, and the reform of the support systems for the weak, the unfortunate, and the elderly. Turning one group against another, and objectifying your intended victims through slogans and stereotypes, has always been an effective method of bending the herd to your will. Score one for Edward Bernays.
As W.C. Fields said, 'Never give a sucker an even break.'
How about it, feeling more confident yet? We know some people who are.
At least they have not overtly played the disability or the race card - yet. But things are relatively calm, and why be glum, the night is still young.
New York Times
Behind the Gentler Approach to Banks by U.S.
By GRETCHEN MORGENSON and LOUISE STORY
July 7, 2011
As the financial storm brewed in the summer of 2008 and institutions feared for their survival, a bit of good news bubbled through large banks and the law firms that defend them.
Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.
Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled “an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September.
The guidelines left open a possibility other than guilty or not guilty, giving leniency often if companies investigated and reported their own wrongdoing. In return, the government could enter into agreements to delay or cancel the prosecution if the companies promised to change their behavior.
But this approach, critics maintain, runs the risk of letting companies off too easily.
“If you do not punish crimes, there’s really no reason they won’t happen again,” said Mary Ramirez, a professor at Washburn University School of Law and a former assistant United States attorney. “I worry and so do a lot of economists that we have created no disincentives for committing fraud or white-collar crime, in particular in the financial space."
While “deferred prosecution agreements” were used before the financial crisis, the Justice Department made them an official alternative in 2008, according to the Sullivan & Cromwell note.
It is among a number of signs, white-collar crime experts say, that the government seems to be taking a gentler approach.
The Securities and Exchange Commission also added deferred prosecution as a tool last year and has embraced another alternative to litigation — reports that chronicle wrongdoing at institutions like Moody’s Investors Service, often without punishing anyone. The financial crisis cases brought by the S.E.C. — like a recent settlement with JPMorgan Chase for selling a mortgage security that soured — have rarely named executives as defendants..."
Read the rest of the story here.
