Posted on 12/06/2002 4:52:30 PM PST by rohry
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Unemployment Report Overshadowed by New Economic TeamTodays big news came as a surprise with the resignations of Treasury Secretary Paul ONeill and White House economic adviser Lawrence Lindsey. According to a Bloomberg article, an administration official said that President Bush asked for both of the men to resign. It appears that Mr. Bush is determined to get his way as he realigns his economic team to provide a stimulus package to get the US economy rolling again. For now, it looks like the short-term focus will be some kind of stimulus package that includes tax cuts and increased government spending. I would sure like to hear the candid comments from both Mr. Lindsey and Mr. ONeill. Also in the news today was a weak employment report that showed the jobless rate increasing more than expected from 5.7% in October to 6% for November. This is the highest rate of unemployed workers since 1994. The unemployment report has further weakened confidence for a US turnaround and has put additional pressure on the dollar. This morning the dollar weakened to $1.0076 per euro and 123.82 yen per dollar. I will be watching to see what kind of impact the new stimulus package will have on the strength of the US currency. With Mr. Lindsey and Mr. ONeill out of the way, it will be interesting to watch the developments. Lets see if President Bush will push through a tax cut to relieve the double taxation of dividends. If he is successful, tax-free dividends could really boost stock prices. For now, the stock market is responding well to the news of the changing of the guard on Capitol Hill. Im not going to take the time to go through the rest of the news for the week as it would be redundant. If you would like to get a good overview for the week, just go to the Market WrapUp that Jim Puplava wrote on Wednesday. He extracted thirty-six headlines and bullet-pointed them under the four categories of Earnings Warnings/Economy, Scandals, Investment Market Analysts, and Geopolitical Risks. If you have the time, print out the news headlines and read them in the context of the ten graphs below. See for yourself if the headlines match the trends in the graphs. Patience, Patience, Patience ... ... ... Up With Things, Down With Paper If you are like me, you can take many hours to play the what if game. You can read lots of things into the data contained in these relative charts. You can see where most of these relationships made their initial shift at some point in 2001. To make a turn in these relationships is no small matter. These are huge forces at work. To turn these graphs is like trying to make a u-turn in an aircraft carrier doing forty knots. It is a process, not an eventand it takes time! We have now made the initial shift, had a few months of balancing with the consolidations, and shortly should begin the next leg in the continuation of the new trends. You can dissect these graphs in many different ways, but no matter how you slice it or dice it, they are all painting the same picture. All of the graphs show a major trend change that favors tangible assets over paper assets. The sharpest contrast can be seen in the comparison of the CRB Index to the S&P 500 Index. On that chart I intentionally only drew the midline of the trend to highlight the charting principle that once resistance is broken, it typically becomes support. I also look at this graph as being non-political relative to the others. The CRB and SP500 are less political than gold, the US dollar, Treasury Bonds, etc. In my mind, that relationship has not been restricted or held in check like the US dollar, gold and bonds. A Few More Observations Heres another thought. Look at the CRB in the first set of graphs and compare it to the CRB relative to the US dollar. The CRB alone looks rather flat for the last three months, but relative to a declining dollar its screaming a signal of future inflation. The chart that fascinates me the most is gold relative to thirty-year Treasury Bonds ($GOLD:$USB). Im captivated with the support on the graph at the low end of the trend channel. Next year when gold goes to $400 per ounce and bonds fall with rising interest rates, I see this chart going absolutely vertical!! Inter-market relationships tell a big story. Play with the relationships on a What if basis to see where these charts will be heading. By summertime next year, I expect we will look at these same charts to see the completion of phase two in the transition of market leadership. If you dont have any portfolio insurance in the form of exposure to precious metals, it might be a good idea. Got Gold? Even better, got Silver? In my mind we are about one-third of the way through the correction process brought about by the excesses that were created during the expansion of the last two decades. Stocks for the Week Overseas Markets Japanese stocks fell, dragging the benchmarks to their first weekly drop in three. Ito-Yokado Co. and other retailers that depend on domestic sales slid after a government report pointed to a shrinking economy in six months. The Nikkei 225 Stock Average fell 0.6% to 8863. The Topix index slid 0.7% to 860.65, with retail, telecommunications and bank shares accounting for a fifth of its drop. For the week, the Nikkei lost 0.6%, its biggest weekly drop since the five days ended Oct. 25. |
Copyright © 2002 Michael Hartman
mhartman@puplava.com
December 6, 2002
They claimed that the "criminal" Bush clan announced the resignations to cover up the unemployment reports.
I do find it interesting that just as the wheels were about to come off the bus, on a Friday where big news is coming on the geopolitical front, suddenly two Administration money guys get sacked.
I'm sure there is more to it, but the timing is very Clintonesque.
Right out of the Clinton playbook. They sure as heck didn't want the unemployment numbers to be the topic of conversation over the week-end and they sure didn't want the stock market tanking as it was about to do. By next month, we'll probably be marching on Baghdad so they won't have to worry about pushing the employment numbers off the headlines.
Richard W.
Well I read it twice and found it to be way to complex for me to fully appreciate. I take it that the CB's have leased out their national treasures (gold reserves) and it can't be replaced without driving the price of gold through the roof -- is that about it? What if they simply "nationalize" the bullion banks? Is that possible?
Richard W.
Do you want to give us your condensed, not too many details, of the important points and conclusions of the article and how that is going to affect us in the future? Any idea of the CB's game plan if you eliminate the "stupid decisions" aspect?
Richard W.
I too dislike bankruptcy, but this new bill is nothing but a save the credit card companies butt. I have been burned by bankruptcys and learned to be tighter in my credit policies, but the cc just keep expanding their lending to more and less credit worthy people. The new law appears to me to be a way of having the courts collect for them, by forcing people into chapter 13.
Hard landing?
Richard W.
Richard W.
I'd say that the little city state in Rome could be a hundred years ahead of the Rothschilds. Just think of the history there.
Richard W.
Make that about 1800 years. Love to have a peek inside those vaults.
Richard W.
Right out of the Clinton playbook. They sure as heck didn't want the unemployment numbers to be the topic of conversation over the week-end and they sure didn't want the stock market tanking as it was about to do.
The scary thing is if Bush has learned this from Clinton, what else has he learned? What are his priorities? Clinton never had the Everlasting War on Terrorism, the Patriot Act, Campaign Finance Reform, and the Dept. of Homeland Security.
When the economy gets fugly, what can we expect? I suspect we will get lots of dead Arabs, the printing presses running day/night, lots of Americans in prison without access to lawyers or trials, and a total information system that will be used to supress dissent.
Richard W.
Topics discussed:10-Sigma; Dollar Devaluation; Technical Positions of the Market; Brace Yourself For the First Quarter
Richard W.
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