Fixing flows polishing off a memorable decade for FX

Currency market trying to set off a few fireworks to end the decade as JPY tanks and GBP rallies.

Will the roll-over to a new calendar year prove an important pivot point?

The USD found a bit of fundamental resistance to its strengthening move as the large 5-year treasury auction on Tuesday and 7-year auction on Wednesday went very smoothly, while foreign demand was noted as weaker than average. This development finally managed to stabilize US bond yields, which led to a reasonable consolidation in the recent USD strength. German yields have continued to rise over the last couple of days, thus helping the EURUSD to find an area of consolidation for now.

The sharp moves of yesterday and today in the JPY and GBP crosses are to be taken with a grain of salt, as some of the strength of the action may be end-of-month/end of year fixing effects . Let's wait to see whether the roll-over to a new calendar year will provide a pivot in the action. In the JPY's case, it may seem a bit surprising that the strong US bond auctions haven't provided more relief for the JPY. But if we look at the front end of the yield curve spread, we actually see further fuel for the USDJPY rally. The relatively strong US data of late, including last week's strong weekly claims, the November durable goods order report, and the strong December Chicago PMI and another positive weekly claims report out today continue to push US . The US/Japanese two-year spread is now at a chunky 96+ bps, a huge difference from the sub-45 bp region this spread has rallied from since the beginning of December. This spread only reached above 100 bps on two trading days in 2009, and USDJPY was trading closer to 96 at the time, relative the current 92.50.

It's more difficult to find a source of the GBP rally, but it is certainly worth noting that EURGBP is again trading down close to the 200-day moving average, which has held it twice over he last couple of months. A break and close below this average in the New Year could send the pair much further south toward the 0.8400-area lows of 2009.

Chart: EURGBP
EURGBP again approaching the key flatline support area and 200-day moving average, which has twice held it in recent months.

Looking ahead
Beware the roll-over to the new calendar year! The late USD rally has many new converts as we enter the New Year, and it will be interesting to see if the greenback can continue its winning ways. Much of the short USD positioning was wiped out by December's moves, so we will be starting the year on a more neutral footing. It appears that the focus will continue to rest on rate differentials for the USD and the new JPY carry trade as we test the waters of a new decade.

And the first week of the New Year will provide plenty of event risks, with all of the usual big numbers to start the month, like the US ISMs and employment report. Also up next week, we have the BoE out with its latest rate and QE-target setting meeting.

All the best wishes to you and yours for 2010!

Economic Data Highlights

• UK Dec. Nationwide House Prices rose +0.4% MoM and +5.9% YoY vs. +0.3/+5.6% expected, respectively
• US Weekly Initial Jobless Claims out at 432k vs. 460k expected and 454k last week
• US Weekly Continuing Claims out at 4981k vs. 5100k expected and 5038k last week

Upcoming Economic Calendar Highlights

• US Dec. NAPM-Milwaukee (1500)
• China Dec. Manufacturing PMI (0100)

What Government Really Means

What Government Really Means

“The most dangerous man, to any government, is the man who is able to think things out for himself without regard to the prevailing superstitions and taboos. Almost inevitable he comes to the conclusion that the government he lives under is dishonest, insane and intolerable, and so, if he is romantic, he tries to change it. And even if he is not romantic personally he is apt to spread discontent among those who are.”

~ H.L. Mencken

I give a good number of speeches each year. For some time I’ve asked audiences a question: “What useful purpose does the US government serve?” I do that not to be challenging or provocative, but to actually find out if anyone else can think of a useful purpose the government serves. The question at first shocks, then amuses and then perplexes almost everyone because it is both so obvious and outrageous that no one ever thinks of asking it. Most people accept the institution of government because it has always been there; they have always assumed it was essential. People do not question its existence, much less its right to exist. 

Government sponsors untold waste, criminality and inequality in every sphere of life it touches, giving little or nothing in return. Its contributions to the commonweal are wars, pogroms, confiscations, persecutions, taxation, regulation and inflation. And it’s not just some governments of which that’s true, although some are clearly much worse than others. It’s an inherent characteristic of all government.

The essence of something is what makes the thing what it is. But surprisingly little study of government has been done by ontologists (who study the first principles of things) or epistemologists (who study the nature of human knowledge). The study of government almost never concerns itself with whether government should be, but only with how and what it should be. The existence of government is accepted without question.

What is the essence of government? After you cut through all the rhetoric, the doublethink and the smokescreen of altruism that surround the subject, you find that the essence of government is force. And the belief it has the right to initiate the use of force whenever expedient. Government is an organization with a monopoly, albeit with some fringe competition, on the use of force within a given territory. As Mao Zedong said, “The power of government comes out of the barrel of a gun.” There is no voluntarism about obeying laws. The consent of a majority of the governed may help a government put a nice face on things, but it is not essential and is, in fact, given with any enthusiasm.

A person’s attitude about government offers an excellent insight into their character. Political beliefs reflect how a person thinks men should relate to one another; they offer a practical insight into how he views humanity at large and himself in particular.

There are only two ways people can relate in any given situation: voluntarily or coercively. Almost everyone, except overt sociopaths, pays at least lip service to the idea of voluntarism, but government is viewed as somehow exempt. It’s widely believed that a group has prerogatives and rights unavailable to individuals. But if that is true, then the Ku Klux Klan, the Irish Republican Army, the PLO — or, for that matter, any group from a lynch mob to a government — all have rights that individuals do not. In fact, all these groups believe they have a right to initiate the use of force when they find it expedient. To the extent that they can get away with it, they all act like governments.

Terrorists, Mobs and Governments

You might object that the important difference between the KKK, IRA, PLO or a simple mob and a government is that they aren’t “official” or “legal.” Apart from common law concepts, legality is arbitrary. Once you leave the ken of common law, the only distinction between the “laws” of governments and the ad hoc proceedings of an informal assemblage such as a mob, or of a more formal group like the KKK, boils down to the force the group can muster to impose its will on others. The laws of Nazi Germany and the USSR are now widely recognized as criminal fantasies that gained reality on a grand scale. But at the time those regimes had power, they were treated with the respect granted to any legal system. Governments become legal or official by gaining power. The fact that every government was founded on gross illegalities — war or revolt — against its predecessor is rarely an issue.

Force is the essence of government. But the possession of a monopoly on force almost inevitably requires a territory, and maintaining control of territory is considered the test of a “successful” government. Would any “terrorist” organization be more “legitimate” if it had its own country? Absolutely. Would it be any less vicious or predatory by that fact? No, just as most governments today (the ex-Communist countries and the kleptocracies of the Third World being the best examples), demonstrate. Governments can be much more dangerous than the mobs that give them birth. The Jacobin regime of the French Revolution is a prime example. 

Is the State Necessary?

The violent and corrupt nature of government is widely acknowledged by almost everyone. That’s been true since time immemorial, as have political satire and grousing about politicians. Yet almost everyone turns a blind eye; most not only put up with it, but actively support the charade. That’s because although many may believe government to be an evil, they believe it is a necessary evil. (The larger question of whether anything that is evil is necessary, or whether anything that is necessary can be evil, is worth discussing — perhaps in another forum.)

What, arguably, makes government necessary is the need for protection from other, even more dangerous, governments. I believe a case can be made that modern technology obviates this function.

One of the most perversely misleading myths about government is that it promotes order within its own bailiwick, keeps groups from constantly warring with each other and somehow creates togetherness and harmony. In fact, that’s the exact opposite of the truth. There’s no cosmic imperative for different people to rise up against one another — unless they’re organized into political groups. The Middle East, now the world’s most fertile breeding ground for hatred, provides an excellent example.

Muslims, Christians and Jews lived together peaceably in Palestine, Lebanon and North Africa for centuries, until the situation became politicized after WWI. Until then an individual’s background and beliefs were just personal attributes, not a casus belli. Government was at its most benign, an ineffectual nuisance that concerned itself mostly with extorting taxes. People were busy with that most harmless of activities, making money.

But politics does not deal with people as individuals. It scoops them up into parties and nations. And some group inevitably winds up using the power of the state (however innocently or “justly” at first) to impose its values and wishes on others, with predictably destructive results. What would otherwise be an interesting kaleidoscope of humanity then sorts itself out according to the lowest common denominator peculiar to the time and place.

Sometimes that means along religious lines, as with the Muslims and Hindus in India, or the Catholics and Protestants in Ireland; or ethnic lines, like the Kurds and Iraqis in the Middle East or the Tamils and Sinhalese in Sri Lanka; sometimes its mostly racial, as whites and East Indians found out throughout Africa in the 70s, or Argentines, Guatemalans, Salvadorans, and other Latins discovered more recently. Sometimes it amounts to no more than personal beliefs, as the McCarthy era in the 1950s and the Salem trials in the 1690s proved.

Throughout history government has served as a vehicle for the organization of hatred and oppression, benefiting no one except those who are ambitious and ruthless enough to gain control of it.

Regards,
Doug Casey

What the Government Should Do to Save America

By Dr. Steve Sjuggerud

"Steve, I'm borderline homeless now," my friend Lee told me a few days ago.

"I haven't paid my rent in months. My business has dried up completely. I've tried to get a real job – any job – but I don't even get callbacks.

"I have my son. The feeling is just awful. Going to bed... waking up... The nightmare doesn't end. And I don't know what to do.

"Steve, I hate to come to you like this. But I will do any work. Any pay above zero is good right now." 

Put yourself in Lee's shoes for a minute... Think about how demoralizing it must feel to lay out your situation like that to a friend.

What would you do for Lee? We put Lee to work right away...

I called a few friends, and we all managed to find him something to do to earn some money right now. Nothing glamorous... quite the opposite.

Today, Lee is pulling weeds and mulching at DailyWealth writer Tom Dyson's house. Before that, he pressure-washed the gook off my driveway. Even better, thanks to another friend, it looks like Lee might have a more permanent job...

A local roofer needs a "gofer with a truck." Fortunately, Lee drives a truck. And if that's not full-time enough, other friends can keep him earning money cleaning up jobsites and doing handyman-type jobs. So it looks like he can stay busy earning money.

This work is a long way from Lee's dream. But Lee's been forced to recalibrate... to hit "reset." I'm sure he's not the only one.

Officially, the nationwide unemployment rate is 10%. The number jumps to 17.2% when you consider "people employed part time for economic reasons" and "marginally attached workers."

(Does Lee count as unemployed? Does temp work count? This little cartoon tries to make sense of it for you.)

There are thousands of guys like Lee out there right now. What's the right way to get him back to work? What's the right way to lower the unemployment rate?

In the long run, the economy – business – is the best creator of jobs. So the simple answer is, don't make it harder on businesses to create jobs.

Yet government is doing the opposite...

Businesses are now uncertain about their future... What will happen with taxes? Is my tax rate going up? What about my health care costs? It looks like they're going up. Am I going to face more and more regulations? What's it going to cost me to stay in compliance? Will I have to pay more for energy thanks to new energy laws?

No wonder businesses aren't hiring!

There's too much uncertainty... They won't hire if they're facing that kind of uncertainty and risk.

I believe the right thing is for the government to stay out of the way... If the government wants to foster more jobs, putting more costs and burdens (and worst of all, more uncertainty) on the ones hiring, well, that's the wrong way to go.

Wouldn't it be great if the government just said "Look, we want you to get back on your feet and hire more people. So we have a simple plan: We'll stay out of your way and cut taxes for all businesses down to 20% for three years. And your investors will pay no capital-gains taxes for three years. Yes, we want to tackle health care, environmental issues, and such. But we are intelligent enough to recognize now is a difficult time... and the best thing government can do is give you the certainty of no new health costs or environmental costs or taxes. Let's get back on our feet over three years, and then we'll look at some changes."
  

Look, the government didn't put Lee to work. Lee put himself to work. Yes, he had to recalibrate dramatically. But he asked for work. And he found it with individuals and local small businesses. If the government gets out of the way, thousands of Lees will find work with thousands of small businesses.

Government doesn't create jobs. People create jobs. The less the government interferes, the more the economy can grow... And the more people like Lee can get back to living their dreams.

Good investing, 

Steve 

6 Simple Steps To $1 Million - 2010: Best Year Ever ?

Let's face it; we all don't make millions of dollars a year, and the odds are that most of us won't receive a large windfall inheritance either. However, that doesn't mean that we can't build sizeable wealth - it'll just take some time. If you're young, time is on your side and retiring a millionaire is achievable. Read on for some tips on how to increase your savings and work toward this goal.

Step 1: Stop Senseless Spending

Unfortunately, people have a habit of spending their hard-earned cash on goods and services that they don't need. Even relatively small expenses can really add up. Usually, in order to become wealthy one must adopt a disciplined lifestyle and budget. This doesn't mean that you shouldn't go out and have fun, but you should try to do things in moderation - and set a budget if you hope to save money.

 

Step 2: Fund Retirement Plans ASAP

Unfortunately, retirement planning is an afterthought for many young people. Here's why it shouldn't be: funding a tax deferred plan early on in life means you can contribute less money overall and actually end up with significantly more in the end than someone who put in much more money but started later. If you deposit $3,000 per year from the age of 23 to 65 at 8% interest you will have $985,749. But if you wait 10 years and contribute $5,000 per year, this number will be reduced to $724,749. Even higher contributions can't make up for the lost time.

 

Step 3: Improve Tax Awareness

Sometimes, individuals think that doing their own taxes will save them money. In some cases, they might be right. However, in other cases it may actually end up costing them money because they fail to take advantage of the many deductions available to them. Try to become more educated as far as what types of items are deductible. You should also understand when it makes sense to move away from the standard deduction and start itemizing your return.

 

Step 4: Own Your Home

At some point in our lives, many of us rent a home or an apartment because we cannot afford to purchase a home, or because we aren't sure where we want to live for the longer term. And that's fine. However, renting is often not a good long-term investment because buying a home is a good way to build equity. Unless you intend to move in a short period of time, it generally makes sense to consider putting a down payment on a home. (At least you would likely build up some equity over time and the foundation for a nest egg.) (

Step 5: Avoid New Luxury Wheels

Individuals who buy new vehicles are doing themselves a disservice - especially since this asset depreciates in value so rapidly. Obviously, this depends on the make, model, year and demand for the vehicle, but a general rule is that a new car loses 15-20% of its value per year. So, a two-year-old car will be worth around 70% of its purchase price. Consider buying something practical and dependable that has low monthly payments - or that you can pay for in cash. In the long run, this will mean you'll have more money to put toward your savings - an asset that will appreciate, rather than depreciate like your car.

 

Step 6: Don't Sell Yourself Short

Some individuals are extremely loyal to their employers and will stay with them for years without seeing their incomes take a jump. This can be a mistake, as increasing your income is an excellent way to boost your rate of saving. Always keep your eye out for other opportunities and try not to sell yourself short. Work hard and find an employer who will compensate you for your work ethic, skills and experience.

 

Conclusion: Don't Rely On Luck

You don't have to win the lottery to see seven figures in your bank account. For most people, the only way to achieve this is to save it. You don't have to live like a pauper to build an adequate nest egg and retire comfortably. If you start early, spend wisely and save diligently, your million-dollar dreams are well within reach.

source

How to Trade Precious Metal Stocks Right Now

By Matt Badiali

When you're sending out your Christmas cards this month, gold and silver stock investors should send one to Beijing.

The people of China have helped gold and silver stock investors (and readers of my S&A Resource Report) make a lot of money this year. And they've helped make several of my predictions turn out right on the money.

Back in June, I wrote a special report, Government-Backed Gold and Silver: How to Make 10-Times Your Money in China. The report focused on how China has gone gold crazy.  

Chinese Premier Wen Jiabao started out as a geologist. He knows the value of a domestic gold mining industry and he needs to dump all those dollars. The Chinese government made huge commodity news this fall when reports leaked it was encouraging its citizens to buy gold and silver for a store of wealth. And in just the past few years, China has become the largest gold-producing country on Earth. The Middle Kingdom likes its gold.

One of my recommendations to profit on China's gold rush, China-focused producer Jinshan Gold Mines, is up 143% in less than five months. My June recommendation of a major Chinese silver producer is up over 100% in around the same time.

China also helped fulfill my prediction of a September gold breakout. In my issue that month, I detailed the past three big breakouts in the gold price since the bull market began in 2001. I said the next leg up in gold was coming soon... and it would hold above the $1,000 level. We nailed it almost to the day.

Gold staged an explosive breakout to more than $975 in the first week of September. It's enjoyed a monster $200-an-ounce move up since then. This jump has propelled most of our gold stocks to gains of more than 25% in just three months.

Of course, we can't give 100% credit to China for the big breakout in gold and silver. The rising price of gold involves a lot of moving parts. Developing nations like India are buying "real wealth" in the form of gold to escape the crumbling dollar. Giant investors – like billionaire money manager John Paulson – are buying gold, too.

But I believe the rise of China – and its citizens' knowledge of the safety of gold – is responsible (and will continue to be responsible) for a good portion of gold's rise.

Despite the big rise in gold, I don't think the metal is in a bubble like some analysts believe. My colleague Brian Hunt reminded attendees of our Alliance Conference last month to ask 100 people on the street if they own gold. Some will say they've heard something about gold in the news, but they have no idea what's driving gold higher... and almost none will tell you they actually own bullion.

That's why the latest advice I'm giving S&A Resource Report readers might sound contradictory to some. I have most of my recommended list of gold stocks as holds... and not "best buys." No, I don't think gold or silver is in a bubble. No, gold is not going to crash. I just don't think most gold and silver stocks are great buys right now.

Gold and silver stocks enjoyed a huge run recently. The Gold Miners Fund is up 36% since July. The benchmark for small resource and mining companies – the Canadian Venture Index – has gained 30% since July. I'm not finding incredible values like I did earlier this year.

Gold miners are selling for an average of 35 times future earnings right now. That's too high. I won't pay more than 20 times future earnings, even when the price of gold is on the rise (and it's much better and safer to buy gold miners for five or 10 times earnings).

For example, giant gold miner Goldcorp is a buy below $41 per share – that's about 20 times its 2009 estimated earnings. At around $40 today, it's not super expensive, but it's not a fantastic deal.

Another one to watch is gold royalty company Royal Gold. This is one of my favorite ways to invest in the yellow metal. At today's gold price ($1,125 per ounce), I wouldn't pay more than $49 per share. It's currently up around $51.

Bottom line for gold stock investors: It's been a great year. But all bull markets pull back and return some of their gains. That's what I expect to happen soon... and you'll get another opportunity to set up your portfolio for the next leg up in gold. Be ready. China needs to dump more dollars... and it's going to put many of them in gold.

Good investing, 

Matt Badiali

Increased Correlation between Oil and Equities Signaled a Large Part of Crude Rally was due to Investment Flow

Commodity prices stay strong in European session as USD retreats against major currencies. The benchmark contract for gold climbs to 1113 and is likely to record a third day of increases. On weekly basis, the yellow metal is anticipated to gain for the first time in 5 weeks.

Base metals stay strong after rallying for 2 weeks. While the LME is still closed, copper futures in Comex and Shanghai Futures Exchange (SFE) advance. Strong industrial production in Japan and labor action in copper mine suggest supply/demand condition to tighten further.

Copper price April delivery on the SFE surged to a 16-month high at RMB 59180 (+2.3%) after Japan's IP report, the contract closed at RMB 5830, up +1.1%, for the day. In Chile, workers at Codelco's Chuquicamata mine decided to go on strike next month as they are discontent with the company's wage offer. The company offered a +3.8% wage increase and benefits worth 14.5 peso to sign a new 3-year contract but this has been rejected by the workers already.

Read the rest here ......

SILVER STOCKS: ONE OF 2009'S BIGGEST WINNERS

Time to check back in on silver stocks.

To recap, silver is among the most volatile assets in the world. It's half precious metal like gold, half industrial metal like copper... so its price fluctuates wildly along with currency fears, factory production, and interest rates.

As we like to say around the office: If all assets were patients in a mental ward, bonds would be the guy who sits silently in the corner and stares out the window. Stocks would be the guy who wanders the hall and mumbles to himself. Silver would be the guy they keep in the padded room all day. The companies who mine the stuff soar when folks smell inflation and currency mismanagement.

Today's chart shows this idea at work. It displays the 2009 price action of one of our favorite silver stocks, Silver Wheaton (SLW). In response to rising silver prices, SLW has gained 162% this year. If the government's funny-money scheme turns out badly, the gains made this year in SLW are only the beginning. 

Why RIGHT NOW Is Deal Time in Real Estate

By Dr. Steve Sjuggerud

U.S. home prices are down 70% in terms of gold.

Everything else on the planet is up: gold, stocks, bonds, emerging markets, commodities – you name it. But home prices are down... And I'm buying. Here's why:

• U.S. homes are more affordable than ever. Right here, right now.
• You can get truly "stupid" deals right now. I'm not sure how long they'll last.

I'll show you affordability first. Then we'll quickly get to the "stupid" deals... 

People buy homes based on their mortgage payments. They ask, "How much can I afford per month?" So housing "affordability" is a matter of three things: 1) home price, 2) mortgage rate, and 3) family income.

Home prices have crashed, and mortgage rates are at record lows. But family incomes have held up... So falling home prices plus ultra-low mortgage rates mean homes are more affordable than ever. Take a look...  

The last time home prices were even close to this affordable was the early 1970s. And you can see, home prices nationwide soared from those cheap levels. But affordability has NEVER been as great as it is right this minute!

Sure it feels bad out there in real estate. But that's the feeling you need to get some truly "stupid" deals...

Let's use the last big bubble as our guide... the dot-com bubble of 2000. Take a look at the chart. The story is simple... 

After the Nasdaq Bust, the biggest gains were made in the Bounce... from October 2002 to January 2004. In just 15 months, the Nasdaq nearly doubled.

Much bigger gains are possible in real estate.

You can make bigger gains because, unlike the stock market, you CAN find absolutely stupid deals in real estate. All real estate is local... and each piece of property is unique. That's not true for, say, shares of Apple. And you would never have the chance to buy shares of Apple way below the market price. But the seller of a unique property may be desperate and ready to sell at a huge discount.

Right now, the same sequence is happening in real estate as in the dot-com days: Bubble, Bust, Bounce, and then the Grind. 

I believe we're in the end of the Bust and the beginning of the Bounce. This is where the deals will happen. Finding a deal now will be your only legitimate shot at making triple-digit gains in residential real estate over the next few years.

But you have to do it right. You're not going to make triple-digit profits buying at market price and selling at market price. You must buy WAY BELOW market price.

I expect the real estate Bounce will be meek. So you CANNOT count on price appreciation to make you your money. Instead, you have to buy at the first red star – cheap, cheap, cheap – and sell at the next red star – which is STILL below market price.

Personally, I have made lots of offers... I was on the courthouse steps just yesterday to bid on a property. I've bought some property at ridiculous prices, so I can personally attest that there are extraordinary opportunities out there. 

What I'm talking about takes a lot of work. And I've done a bunch of homework and still not gotten a property. That's OK. Be stingy... only be willing to pay less than 50% of market price. (You can use your county property appraiser's website to see the tax-assessed value of a property.)

Look, homes are more affordable than ever. But it feels bad out there. This creates your opportunity. It's deal time in real estate. Get started!

Good investing, 

Steve

A New Record

Dear Subscriber,

Gold hit a new record as I'm writing this... nearly $1,200 an ounce.

Still, most investors have no idea about how a "glitch" in the U.S. government's gold currency system could pay you a fortune over the next few years.

Dr. Steve Sjuggerud explains below...

Good Investing,

Brian Hunt

Editor in Chief.

---------------------------------------------------------------------

U.S. Treasury Dept.
Gold "glitch" allows you
to make up to 665% ...
after  gold prices rise

FORGET collapsing stocks, bonds, real estate, and mutual funds.
Now that gold prices are up, there's an opportunity for you to safely triple your money or more, thanks to a glitch in the U.S. Treasury Department...

Dear Reader,
Sometimes the government can make your life miserable.

But other times, they can literally hand you money on a giant silver platter.

And that's the case right now...
Everybody knows that gold is a safe investment in times of economic chaos--that's why the U.S. mint recently ran out of gold bullion coins to sell to investors (source: The Los Angeles Times).
But few Americans realize what happens after gold demand jumps and prices rise...
In short: There's a U.S. Treasury Dept-created "glitch" in the gold markets, which could give you gains of 665% or more after gold prices rise. You could see these gains no matter what happens to stocks or the overall economy... and with almost zero risk.

I can practically guarantee you will not see this opportunity discussed in any newspaper or on any television program. And I'm sure you won't hear about it from any broker or advisor.
But right now, because gold demand has increased, and prices have risen, you can safely make a fortune... even if you've never bought a currency, stock, or gold investment before.
In fact, you need only about $200 to get started. But you don't need a brokerage account or even a bank account.

China Govt's Secret New  Gold investment could pay 500% over next 2 Years  

The Year of the Market Breakouts

Andrew Gordon Reporting: Delray Beach, FL.                           

"Breakout Markets" give you a great chance to make a bundle. And they’re coming your way.

These are markets that surge hard and fast. They go up a lot more than anybody expects. Along the way, many investors get out with modest gains of 20%, 30%, even 50%.

Making 50% in a matter of months is pretty good. But waiting a little longer and making 100% is much better. If there’s an easier way of doubling your money, I don’t know what it is. And today, I’m going to show you just how easy it is.

Many people are afraid of "Breakout Markets" because they eventually peter out and go down. They shouldn’t be.

In a report I’ve just written, I’ve dispelled the following myths...

• It’s impossible to identify these markets early enough to make serious money.
• Only “insiders” or professional investors with "connections" know where to look for them.
• Timing when to get in and when to get out is just too difficult to pull off.

None of these things are true.

As a matter of fact, it’s easy to recognize "Breakout Markets" in plenty of time to jump on board and made HUGE GAINS.

And I’m going to show you exactly how to know when to get out. Not only that, you can exit these investments in such a way as to virtually guarantee that you won’t have a loss. 

So where’s the risk?

The risk is not knowing what to do... getting in too late... and getting out too late. But, as I’ve said, all those things are avoidable.

Breakout Mania

Breakout Markets begin under the radar. And prices start to go up for sound supply-and-demand reasons. Then people begin getting enthusiastic – and before long, "Breakout Mania" sets in.

You’ve heard of the tulip mania in the 1600s. That’s one of the oldest examples of a rising market gone berserk. But have you heard of the nutmeg mania?

Back in the 1600s, nutmeg was the miracle drug. It could cure anything from tuberculosis to insomnia. Or so it was thought. Nutmeg came from the "Spice Islands," now part of Indonesia. More than half the ships that took the treacherous journey to the Spice Islands – halfway around the world from England and the Netherlands (the two countries that traded the spice) – never made it back. Yet sailors begged and clawed to join those expeditions. Just half a pound of nutmeg could buy them an expensive house in the city or a hundred acres of farmland.

But here’s what history has taught us about manias: They come and they go. And you can get rich in the coming. But in the going, you can lose everything. However, as I’ve said before, that’s only if you don’t know what you’re doing.

That’s not going to be the case here. I’m going to show you how to make a great deal of money without risking a loss.

But before I do, I want to show you how easy it was to make money in the last three "Breakout Markets."

This is the oil market. The blue stripes represent getting in at 20% and exiting with a 100% gain.

Here’s another breakout market. This one is China...

 Again, the blue stripes represent getting in at 20% and exiting with a 100% gain.

Now I’m going to show you one more example...

 his shows the U.S. real estate market with the same entry and exit points: getting in at 20% and getting out when the market has doubled.

The Year of the “Market Breakouts”

"Market Breakouts" will begin in Asia where economies are recovering much faster than anywhere else. And Asian central bankers already see them coming.

Hong Kong’s central banker, Norman Chan, gave the San Francisco Fed’s President Janet Yellen an earful last month during her visit there... "We have seen a very massive inflow of funds that is explainable by the very low global interest rates and coupled with this huge amount of quantitative easing," Chan said.

"This question of... asset bubbles forming is a big challenge for us," he said to Yellen.

And Former U.S. Treasury Undersecretary Timothy Adams said that his biggest concern is that "we are simply creating new bubbles... as capital sloshes around the global markets."

In a 2002 report on these markets, the authors (six of them) said that "breakout markets" start with "a decision of a central bank to increase lending or some other similar event. The expansion of credit comes along with an increase in prices...."

The Fed is guilty on both counts: expanding credit and lending more. And so are the central banks in China and most of Europe.

We’re in classic “Market Breakout” territory. 

How to Invest

In the next week issue , I’ll show you three ways to take advantage of these runaway markets with very little risk. And, apart from Asia, I’ll let you in on the most likely places where “Market Breakouts” will take place in 2010 – giving you multiple chances to double your profits.

Invest Safely,

Andrew Gordon

HERE'S A CURRENCY TRADE YOU CAN MAKE IMMEDIATELY - Brian Hunt Market Notes

HERE'S A CURRENCY TRADE YOU CAN MAKE IMMEDIATELY

For all the currency traders out there: The euro just fell victim to a textbook "1-2-3 trend change."

In his classic trading book, Trader Vic, the great trader Vic Sperandeo laid down the best way to spot a major trend change. Vic's system is as simple as 1-2-3, and it can make you a fortune if you use it properly. Here it is...

First, a trending asset has to break its old trend line. The euro did this at point (1). Then, after declining a bit, the asset tries to match or exceed its old high, but fails. The euro did this at point (2). Finally, the asset breaks below its previous low point. The euro just did this at point (3). When this 1-2-3 process takes place, a trend reversal has occurred.

The euro soared in 2009 in kind of a mirror image to the falling dollar. Most currency advisors now consider the euro overvalued. So... you have a currency union suffering big debt problems from Greece and Ireland, you have overvaluation, and you have a textbook trend change. The path of least resistance is now DOWN.

 

Moving to Haiti... Because It's Better Than the States

Moving to Haiti... Because It's Better Than the States
By Dr. Steve Sjuggerud

"The U.S. is terrible now... I have more opportunity in Haiti."

Now that's a sentence I never thought I'd hear. But the guy who said it backed it up. He was my cabdriver in Miami over the weekend.

"I started a grocery store back home in Haiti a couple years ago. My wife already moved back to Haiti to run it."

"But what about the crime and the government there?" I asked. "Aren't you worried?"

"Where I grew up... it's quiet," he told me. "It is NOT safe in the capital city. But I live a long way from there. I have to take a flight from the capital to get to my hometown. To answer your question... Put it this way, Haiti can only get better from where it is now. But the U.S. seems to get worse every day."

Then he went on a Rush Limbaugh-style tirade about undeliverable government promises on health care and the environment and out-of-control government spending. He finished with: "At least the Haitian government knows it is out of money."

Ouch.

He's right... Technically, a U.S. government default on its obligations is way closer than you think. Check out this Reuters news headline and story from yesterday (emphasis mine):

US House to vote on short-term debt limit hike
WASHINGTON, Dec 15 (Reuters) – The U.S. House of
Representatives will vote on a short-term boost to the debt
limit this week to avoid a government default, House
Democratic leader Steny Hoyer said on Tuesday.

US Leaders are considering a hike of roughly $200 billion to
$300 billion. "Essentially that will get us an additional two
months of fiscal ability," Hoyer told his weekly news
conference.

Yes, the Haitian cabdriver was right... At least the Haitian people know their government is broke. Americans have no idea. It's not a crisis until... well... it is one.

"So where do you get merchandise for your store?" I wanted to change the subject a bit. This guy was getting a little too intense for comfort.

"From here in the States," he said. "Say a 50-pound bag of rice costs $30 here. By the time it gets to the grocery store in Haiti, I've spent a total of $60. But I still make a little money on it. And it's a better living than here in the States."

"You mean you can make more money with a grocery store in Haiti," I asked him, "than you can by driving a taxi in Miami?"

"Not really. What I mean is, my money goes much farther in Haiti, so my quality of life is much higher there."

Gee. The guy made sense. All around.

What has America come to when a cabdriver wants to leave "America, the land of opportunity" to become an entrepreneur in Haiti?

Guys like this cabdriver – young entrepreneurs starting with nothing – are what has made America great for generations. But now, instead of staying here, they are going back to their home countries to get rich.

America was made great because you've had the freedom to become whatever it is you could become... not because the government spends trillions more in taxpayer dollars than it takes in through taxes. 

So if you don't want to move to Haiti, what can you do? Right now, you can let your politicians know that if they're voting in favor of expanded government programs, then come reelection time, they will not have your vote.

When there's more opportunity in Haiti than at home for a young entrepreneur, then America has seriously made a wrong turn.

Good investing,

Steve  

Hostage Situation

Gary’s Note: James Howard Kunstler searches for a better American Dream. We’ll need a better identity than “consumer” when we are forced to live among the debris of the crumbling consumer economy.

By James Howard Kunstler
December 16, 2009
Saratoga Springs, New York, U.S.A.

Hostage Situation

Okay, so President Obama didn’t run for office to help out a bunch of fat cat bankers on Wall Street — or so he said on CBS’s “60 Minutes” show Sunday night. But maybe it didn’t seem like such a bad idea once the election was over. Anyway, the net effect of his administration’s actions since then — all nicely documented in the latest Rolling Stone dispatch from the choleric Matt Taibbi — was an immense helping out of fat cat bankers on Wall Street at the expense of a lot of American citizens who work elsewhere, if they are lucky enough to have income-producing work.

Mr. Obama has really offered no satisfactory explanation for why he larded his department of the US government from the get-go with so many agents and recent graduates of Wall Street’s biggest firms.  Nor has any clear reason emerged for the absence of criminal prosecution — or even investigation — by the Attorney General in such obvious cases of criminal fraud and insider trading as Goldman Sachs’s double-window technique for hedging its own issues of mortgage-backed securities. By comparison, the Savings-and-Loan scandal of a decade ago led to thousands of criminal convictions.

Last week, the Right Reverend Lloyd Blankfein, still “doing God’s work,” announced in a “cash-for-pitchforks” deal that the top thirty executives of his company, Goldman Sachs, would not receive dollar bonuses this Christmas but instead will get stock that ostensibly can’t be sold for five years. Those of us in the USA who enjoy a good mystery are wondering exactly what fine language in this memorandum drawn up by a team of thousand-dollar-an-hour lawyers contains the magic catch that frees up the GS execs to convert this stock into money, say, on February 2, 2010 — because you know it’s got to be in there somewhere.

Anyway, insofar as the top 30 GS employees is made up strictly of people who are already multi-deca-millionaires, notice that the other 31,670 employees of GS, including not a few hundred in the upper income tranches, will be receiving cash bonuses as usual this year from a bonus pool that amounts to about $16 billion (sixteen thousand million dollars). Of course, being a publicly-held company, GS will have to announce soon what those cash bonuses are. Perhaps this is why the news also got out about GS employees seeking handgun permits in bunches. Exactly how they get around New York City’s special “Sullivan Law,” which supercedes the New York State permitting rules, has not been explained.
 

Meanwhile, all the stops are being pulled out to produce a mighty wall-of-sound in dubiously-reported statistics pertaining to national unemployment and retail sales — the first way down and the latter up, supposedly — in an attempt to squeeze one last giant potlatch Christmas out of the dying “consumer” economy. Jew though I may be, I confess that Christmas is for me. I’m sorry, fellow Chosen People, but Hanukkah is just plain boring — the equivalent of Danish Modern furniture for the spirit. Give me Christmas, with its pagan yule logs, feasts, and revels! One can enjoy the holiday doings and trappings without subscribing to either the divinity of Santa Claus or the Babe of Nazareth. But Christmas does invite us to indulge in all kinds of “hopes” and delusions, and the main one crackling through the American zeitgeist this year is the wish that our national life will resume the yeasty expansion of goodies that most living citizens regard as baseline normality — namely, a never-ending orgy of credit card spending and real estate flipping.

This wish is doomed to disappointment. The cold boney finger of reality, like Dickens’s spectral Ghost of Christmas yet-to-come, points to many a tableau of desolation in the decade ahead... of a lost “normality,” of evictions, foreclosures, tragedies, ruinations and most of all dashed expectations — assuming that the vast public clings to habits and behaviors no longer suited to the mandates of new circumstances in our world.  And it is the greatest disservice of all at this holiday time for respected authorities to pimp that wish.  What a shabby thing it has become anyway — a sordid spectacle of multitudes moiling in chain store checkout lines en route to the certain anguish of buyer’s remorse in the parking lot.

Can’t we come up with a better American Dream, even one that includes Christmas?  I think we can.  It would require the liberation of American citizen’s minds from their thralldom to bigness in every realm from work to worship to recreation.  If you think Barack Obama is a hostage to Wall Street, reflect for a while on the people’s self-surrender to the tyranny of everything that diminishes us to mere “consumers.”  We’re on a journey — and we don’t know it — back to a nation of communities where your character really matters, and where character rests on whether your deeds comport with truthfulness. Many will be dragged kicking and screaming upon that journey, and many a dark night will be passed in the cold and damp on the way. But it will take us to a place where the hearths are burning brightly and the estranged spirits of our national character await a reunion with us: fortitude, patience, generosity, humor. That will be a Christmas to live for and remember!

Regards,
James Howard Kunstler 

The Skyscraper Curse

 
The "skyscraper curse" has struck again...

Every time a country builds the world's tallest building, it seems their stock market crashes soon afterward.

It happened in America before the Great Depression. Architects unveiled two awesome new skyscrapers – the Chrysler Building and the Empire State Building – just as the worst bear market in America's history was getting started.

There was another bear market in the 1970s. The stock market lost 75% of its purchasing power in a decade. The completion of the Sears Tower in 1973 marked a two-year, 45% decline in the Dow.

In 1997, Malaysia's Petronas Towers took the title of the world's tallest building from the Sears Tower. The same year, the Malaysian stock market fell 50%.

Most recently, the curse struck Dubai. The Burj Dubai became the world's largest building last year. Now Dubai is close to bankruptcy, and its stock market has crashed.

Famous speculator Victor Niederhoffer says mankind has a tendency to build high before a fall. He devotes a chapter to this tendency in his second book, Practical Speculation.

One example Niederhoffer cites is the Nasdaq's MarketSite tower, which featured the world's largest video display on its facade. The building was completed in December 1999, three months before the Nasdaq composite crashed 70%.

Enron is another example he uses. Enron was halfway into construction on a $200 million, 40-story skyscraper, with an eight-story trading floor when the company collapsed into bankruptcy in 2002.

The book's advice is, don't just look at "tallest in the world" when trying to guess where the skyscraper curse could strike next. You should also pay attention whenever you see the tallest in the nation, the state, or the city. These buildings could attract the curse.

Also, skyscrapers make a lot more sense in Hong Kong than they do in Omaha. So watch out for "conspicuously tall buildings" where population density or land values don't justify them.

So where will the curse strike next?

Dubai is still in play. The Burj Dubai isn't yet complete. The official completion day is sometime in 2010. So there could be more trouble to come for Dubai...

There's a gargantuan skyscraper going up in Shanghai right now. The Shanghai Tower will be the world's second-largest building when it's complete in 2014.

South Korea's stock market could be in danger. The Koreans are building the world's tallest twin skyscrapers, the Incheon Towers, scheduled for completion in 2012. And the country will also get a building that's going to be taller than the Shanghai Tower. It's scheduled for 2015.

But my favorite candidate for an attack of the Skyscraper Curse is Saudi Arabia...  

The Saudis are building a complex called the Abraj Al-Bait Towers in Mecca. It'll be the largest building in the world in terms of floor space and the tallest building in Saudi Arabia. The complex will include a prayer room with capacity for 10,000 people and a seven-star hotel.

The project is scheduled for completion in 2010. If the curse strikes, you should expect a stock market collapse in Saudi Arabia to follow shortly thereafter.

Good investing,
Tom Dyson
 

Citigroup at the Public Teat

Gary’s Note: Despite wanting to pay back some TARP, Citigroup will still be a bloated, sickly animal on the dole. And there are others. Samantha Buker reports below.

By Samantha Buker
December 15, 2009
Baltimore, Maryland, U.S.A.

Citigroup at the Public Teat

Citigroup is to pay back $20 billion in TARP to government. Why stop so soon the magic IV drip known as TARP funding (which had just been so graciously extended by the Treasury)? It’s not because the company is back in good health. It just wants to keep ahead of the talent poaching with the zombies doing jumping jacks — the likes of Goldman Sachs.

Having just come off an IV drip-fueled recovery from pneumonia last week myself, I know it’s hard to work at full capacity even now. I’m still weak. Citigroup will be paying for its government payback by offering new shares and — surprise — taking on new debt!

Obviously, one golden rule escapes Citi: “Neither a borrower nor a lender be.” Too bad that’s its business model’s backbone. Punishing shareholders with dilutive offerings is the only “powerful” move. Just like collecting higher interest on its customers’ maxed-out credit cards, this move doesn’t equal solvency. We’d dump shares of Citi right now — our federal government plans to do so “sometime this year.” (Too bad it wasn’t day trading like the rest of Wall Street.)

Of course, the time for outrage was long ago…back in the go-go late ’80s. Like today, it was a time between recessions. Unlike today, it was a time where the fed government was about to look at balancing the budget. But on Wall Street right now, banks are paying back TARP left and right and it’s a wonderful life once again.

We don’t believe the WSJ hooey and look toward a “Ghost of Citi Past” to show us the true health of his former company.

Contrite Former CEO Tells All As Citizen

“I would compartmentalize the industry for the same reason you compartmentalize ships. If you have a leak, the leak doesn’t spread and sink the whole vessel. So generally speaking, you’d have consumer banking separate from trading bonds and equity.”

  — Former Citicorp CEO John S. Reed, on Nov. 6, 2009

Now you tell us, John? This is not a case of better late than never. The bastard company that he stitched together with the infamous Sandy Weill is just one of many overweight passengers on our beleaguered ship of state.

Back in 1989, Sarah Bartlett for The New York Times wrote of him:

“Talking with John S. Reed, the chairman of Citicorp, is a little like standing on the bow of an ocean liner and peering into the distance through a spyglass. There, just barely visible on the horizon, is the fuzzy outline of the Citicorp of tomorrow.”

Reed boasted to her of creating “the world’s first truly global financial institution.” Mombasa, Bangkok, Sao Paulo, Dusseldorf…it all sounded so good, until the merry-go-globe stopped in its tracks in the credit crisis.

Today, in late 2009, Reed writes to The New York Times to apologize for his role in creating Citigroup. His mea culpa asks pardon: “When you’re running a company, you do what you think is right for the stockholders. Right now, I’m looking at this as a citizen.”

A citizen? Wow, he must still be holding a lot of Citi stock…We’re now on equal footing with Mr. Reed, since our government Treasury now holds 34% of this accursed stock.

Now we’ve hit on the base problem of modern economics. Back in Adam Smith’s day, “citizenship” was getting a new patina: fresh blood crying, Freedom! Nonfeudal economics played out as moral philosophy. Wall Street tells you it’s science, while its calculations and models constantly fail.

Our 70-year-old talking ghost of a former global financial wunderkind, John S. Reed, shows us the dilemma in black and white. Back in ’89, a few days before hitting 50, Reed was a greed-based, bigger-is-better economist. Even the Third World was his oyster. Today, he’s decided to become a philosopher from his Park Avenue office.

We wonder whether this Scrooge will really pay campaign donations to those who would reinstate the Glass-Steagall Act. Moral philosophy only chugs along into the fighting ring when plenty of money backs it. 

The One-Man Bank Smackdown

However, this would mean giving dough to one Vermont independent, Sen. Bernard Sanders. (This guy is also the only conscientious objector who says: Remove Ben from his Fed perch. Sixty votes are needed this week, and Ben has no reason to quake in his Italian loafers.)

Sanders says: If a bank is too big to fail, it’s too big to exist. His proposal allows the Treasury to come in and take a hacksaw to institutions in the financial sector. Note that The New York Times now calls this sector: “the nation’s financial system” — another sign that Wall Street’s merged darlings and bank holding companies are way too big for their bespoke britches.

So Sanders leads the charge: Break up Citigroup. And while you have the machete out, Geithner, tackle Bank of America, JP Morgan Chase, and Wells Fargo. It should come as no surprise that when pressed, Sen. Sanders would check the box labeled “Socialist.” I’m betting that’s why he did not include government sucklings Fannie Mae and Freddie Mac on the list of breakup candidates.

Writing you from the front lines of life-support,
Samantha Buker.

JPY weakens again on weak bond market. Pound rebounds as Moody's declares no revision to UK credit rating in the Works.

USD outlook remains in suspended animation awaiting today's US Advance Retail Sales.

---

MAJOR HEADLINES – PREVIOUS SESSION

• China Nov. Producer Price Index fell -2.1% YoY vs. -2.4% expected and -5.8% in Oct.
• China Nov. Purchasing Price Index fell -3.6% YoY vs. -4.0% expected and -8.4% in Oct.
• China Nov. Consumer Price Index rose +0.6 YoY vs. +0.4% expected and -0.5% in Oct.
• China Nov. Retail Sales rose 15.8% YoY vs. 16.5% expected and 16.2E in Oct.
• China Nov. Industrial Production rose 10.3% YoY vs. 10.2% expected and 9.4% in Oct.
• China Nov. New Yuan Loans totaled 294.8B vs. 250B expected and 253B in Oct.
• China Nov. Trade Balance fell to $19.1B vs. $24.3B expected and $24B in Oct.
• Japan Nov. Consumer Confidence fell to 39.9 vs. 40.7 expected and 40.8 in Oct.

---

THEMES TO WATCH – UPCOMING SESSION

(all times GMT)

• UK Nov. PPI Input/Output (0930)
• Canada Oct. New Housing Price Index (1330)
• US Nov. Import Price Index (1330)
• US Nov. Advance Retail Sales (1330)
• US Dec. Preliminary University of Michigan Confidence (1500)
• US Oct. Business Inventories (1500)

Market Comments
US treasury futures continued to slide and Asian equity markets ticked higher in the Asian session, helping to underline the recent support in USDJPY, which has come some 150+ pips off its recent lows. Chinese data appears strong save for the shrinking Trade Balance number, which underlines the idea that China is trying to stimulate its way into the future. Many are raising questions about the quality of Chinese growth, but for now, the market seems to be willing to take it more or less at face value. The USD has been treading water against developing Asian currencies for about two months now in a shrinking range. Today's Chinese data failed to provide a catalyst for any action.

Elsewhere, the greenback seems to have gone into some kind of suspended animation here, refusing to give a sign of what it wants to do after mounting a comeback and now more or less continuing to ward off weakness despite relatively strong risk appetite elsewhere. The pound found considerable relief overnight after rumors of a Moody's revision to the UK's AAA reading on its sovereign debt. Moody's was out denying the rumors point blank. This sent GBPUSD back over 1.6300 before Londoners even arrived for work and EURGBP back toward the interesting 0.9020/00 zone of support, a break of which would look significant. The pound has survived Brown and company's attack on bank bonuses relatively well, something that adds another arrow the rare pound bull's quiver.

Chart: EURGBP
EURGBP getting interesting as we head into the European session, considering the obvious focus on the 0.9020/00 support area (flatline and the skimming along the 21-day moving average). If this area gives way soon, the pair could go on for a full test of the 200-day moving average below 0.8900 again.

Looking ahead
All eyes are on the US retail sales data today. A mild improvement is expected despite chain store sales reporting a small drop for the month in same store sales. The US 10-year note benchmark deserves plenty of attention today as it is now trading up against a near 1-month high at the psychologically significant 3.50% level. JPY crosses have been the big movers of late and the kind of volatility we have seen is likely to persist .As for the USD, it feels like today is the today that we either see confirmation or rejection of the recent rally after two days of going absolutely nowhere.

US Weekly Claims disappoint, but Trade Balance improves unexpectedly.

Did the SNB hint that it is relaxing some of its interventionist vigilance?

---

MAJOR HEADLINES – PREVIOUS SESSION

• Sweden Nov. CPI out at 0.0% MoM vs. -0.1% expected
• Switzerland SNB kept 3-month Libor Target Rate at 0.25%  as expected
• Norway Nov. CPI out at +0.3% MoM and +1.5% YoY, vs. +0.2%/1.4% expected, respectively
• Norway Nov. Producer Prices including oil out at +4.8% YoY vs. -4.1% in Oct.
• Sweden Nov. AMV Unemployment Rate fell to 5.3% vs. 5.4% expected and 5.4% in Oct.
• UK Bank of England kept rate at 0.50% as expected
• UK Bank of England kept Asset Purchase target at £200 billion as expected
• Canada Oct. International Merchandise Trade out at +0.4B vs. -0.7B expected and -0.9B in Sep.
• US Oct. Trade Balance fell to -$32.9 billion vs. -$36.8 billion expected and -$35.7 billion in Sep.
• US Weekly Initial Jobless Claims rose to 474k vs. 455k expected and 457k last week
• US Weekly Continuing Claims out at 5157k vs. 5450k expected and 5460k last week

---

THEMES TO WATCH – UPCOMING SESSION

(All times GMT)

• US Fed's Duke to Speak (1845)
• US Nov. Monthly Budget Statement (1900)
• China Nov. Producer/Purchasing Price Index (0200)
• China Nov. Consumer Price Index (0200)
• China Nov. Retail Sales (0200)
• China Nov. Industrial Production (0200)
• China Nov. Fixed Assets Investments (0200)
• Japan Nov. Consumer Confidence (0500)

Market Comments
A further gentle rally in risk appetite is seeing the USD test its first important lines of support in today (EURUSD 1.4760/80 and AUDUSD in 0.9180 to 0.9200, to take two benchmarks). Meanwhile, JPY crosses were generally higher as bond yields have more or less eased off the recent move higher. There is zero momentum in equity downside as we enter the NY session, so the USD rally may be in for a hiccup if the bears don't come out of the closet today.

SNB: hint, hint
The SNB rate decision came and went today with little fanfare, as rates are not expected to budge there any time soon. All eyes were on any hints at a change of stance on currency intervention. The SNB did provide a bit of a hint, though the market has hardly reacted to today's meeting and statement. That change is from September's "[SNB declaring it was set on] preventing any appreciation" to the current "[SNB} will act to counter an excessive appreciation". This would seem to allow the franc to float a bit more freely vs. the Euro if anyone out there wants to test what the SNB means by "excessive".

US Trade Data: a conundrum
The US Trade Data was better than expected, supposedly boosted by strong exports. But the ex-petroleum trade data saw no change - so was the difference an increase in exported petroleum products?? This is not exactly a strong source of future exports for the US considering its enormous oil import bill. Considering the further rise in average oil prices through November, next month's data is unlikely to show a positive trend for the headline trade balance number unless overall oil imports decreased sharply. The overall trend in the ex-petroleum number is the most important for the time being as long as the oil market doesn't spike higher (has in fact done the opposite over the last couple of weeks).

Chart: US Initial Jobless Claims
Note that this is the time of the year when non-seasonally adjusted job claims ramp into a new year. While it is encouraging that this year's ramp is far below last years, it is rather disconcerting that claims are still rolling in at a pace far faster than two years ago when the recession was getting under way, and (even on a seasonally-adjusted basis) faster than at the point when the Lehman implosion rocked markets last year. There is a long way to go on the US jobs front, and Obama is clearly worried and cooking up jobs plans to increase employment into the November mid-term elections.

Looking ahead
Plenty of interest on the radar for Friday, with the raft of Chinese data tonight (China implosion watch may be a bit premature, but it will be interesting to see if some of the Retail data fades now that the authorities have pulled out the rug from the credit gasoline fire that was instigated earlier this year). Tomorrow features UK PPI data, US Advance Retail Sales for November, and the preliminary December Michigan Confidence reading.