{"id":1920,"date":"2012-01-27T17:26:51","date_gmt":"2012-01-27T17:26:51","guid":{"rendered":"http:\/\/www.itmtrading.com\/blog\/?p=1885"},"modified":"2012-03-27T00:02:13","modified_gmt":"2012-03-27T00:02:13","slug":"friday-market-update-1272012-2","status":"publish","type":"post","link":"https:\/\/www.itmtrading.com\/blog\/friday-market-update-1272012-2\/","title":{"rendered":"Friday Market Update 1\/27\/2012"},"content":{"rendered":"

ANNUAL KAHUNA MEETING<\/strong><\/p>\n

It\u00e2\u20ac\u2122s time for Davos, the world economic forum, again. But this year is different. Gone is the hubris of the elite and in its place is fear. George Soros said, \u00e2\u20ac\u0153At times like these, survival is the most important thing.\u00e2\u20ac\u009d According to an article in Reuters, he feels that the world faces one of the most dangerous times in modern history and predicts riots on the streets that will lead to dramatically curtailed civil liberties. The global economic system could even collapse altogether. Wow, he actually said it. Unfortunately he could be right.<\/p>\n

 <\/p>\n

HOLDING RATES LOW\u00c2\u00a0<\/strong><\/p>\n

The Federal Reserve has forecast that rates could stay low for another three years. This is clearly an indication that the Fed expects a sluggish economy for some time to come. With this announcement the US dollar index dropped 34 basis points and spot gold increased $44.80 and spot silver increased $1.16. The savers and those on fixed income are in trouble as inflation will continue to erode purchasing power. In search of yield many may shift money into stocks or junk bonds to chase returns. Risk on.<\/p>\n

 <\/p>\n

ATTENTION MUNICIPAL BOND HOLDERS<\/strong><\/p>\n

Moody\u00e2\u20ac\u2122s has now downgraded the general obligation bonds of both Illinois and Connecticut and indicated that they are beginning to accelerate their downgrading of US municipal debt. They cite higher pension costs and lower state revenues as the reason for the current downgrades, and warn of more state downgrades to come. This is significant because GO (General Obligation) bonds are considered safer than Revenue bonds, since principal and interest payments come out of general funds. Federal, state and municipal governments generate income through taxation.<\/p>\n

 <\/p>\n

ATTENTION ANNUITY HOLDERS<\/strong><\/p>\n

Moody\u00e2\u20ac\u2122s has downgraded SUN LIFE to Baa3, one notch above junk status. I know that you think your annuity is guaranteed, but it is only as safe as the issuing insurance company if it is a fixed annuity. If it is a variable annuity, its value is pegged to the stock and\/or bond market and the death benefit is only as safe as the issuing insurance company.<\/p>\n

 <\/p>\n

GLOBAL ECHOS\u00c2\u00a0<\/strong><\/p>\n

According to the IMF\u00e2\u20ac\u2122s current Global Financial Stability Report \u00e2\u20ac\u0153The euro area debt crisis has intensified further, requiring urgent action to prevent highly destabilizing outcomes.\u00e2\u20ac\u009d <\/strong>In my opinion, they are referring to the CDS (Credit Default Swap<\/a>) issue. As a reminder, the LTRO (Long Term Recovery Operation), is the ECB\u00e2\u20ac\u2122s money creation out of thin air, bank saving, inflation creating, taxpayer wealth transfer mechanism which is scheduled to begin its second round of operations on February 29th<\/sup><\/strong>. Rumor has it that they anticipate a $1 trillion injection. What they are trying to do is take bank failure off the table by giving them all the cash they need to payout those CDS\u00e2\u20ac\u2122s (Credit Default Swaps) in the case of a Greek bond default. The following chart shows you when those bonds come due.<\/p>\n

 <\/p>\n

\"\"<\/a><\/p>\n

 <\/p>\n

The IMF warned that the Eurozone\u00e2\u20ac\u2122s temporary bailout fund, the EFSF and the ECB (European Central Bank) may be forced to take losses on Greek bonds that were recently purchased. The ECB is fighting this so we shall see.<\/p>\n

 <\/p>\n

AND MORE DEBT<\/strong><\/p>\n

There is $8.3 trillion more debt plus interest coming due in the largest economies globally this year, according to Bloomberg. Who will buy all of this debt?<\/p>\n

Country\u00c2\u00a0 \u00c2\u00a0 2012 Bond, Bill Redemptions ($)\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 Coupon Payments<\/strong><\/p>\n

Japan \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 3,000 billion \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0\u00c2\u00a0 117 billion<\/p>\n

U.S. \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 2,783 billion \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 \u00c2\u00a0 212 billion<\/p>\n

Italy \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 428 billion \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 72 billion<\/p>\n

France \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 367 billion\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 54 billion<\/p>\n

Germany\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0\u00c2\u00a0 285 billion\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 45 billion<\/p>\n

Canada \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 221 billion \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 14 billion<\/p>\n

Brazil \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 169 billion \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 31 billion<\/p>\n

U.K. \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 \u00c2\u00a0 165 billion \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 67 billion<\/p>\n

China \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0121 billion \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 41 billion<\/p>\n

India \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0\u00c2\u00a0 57 billion\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 39 billion<\/p>\n

Russia \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0\u00c2\u00a0\u00c2\u00a0 \u00c2\u00a0 13 billion\u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 \u00c2\u00a0 9 billion<\/p>\n

 <\/p>\n

AND THE BAILOUT GOES ON<\/strong><\/p>\n

Tokyo Electric Power Co, owner of Fukushima, Japan\u00e2\u20ac\u2122s stricken nuclear plant, is getting a $13bln bailout in one of the world\u00e2\u20ac\u2122s biggest bailouts outside the banking sector. But what\u00e2\u20ac\u2122s another $13bln when your debt to GDP ratio is already higher than 200%.<\/p>\n

 <\/p>\n

LET\u00e2\u20ac\u2122S USE REAL MONEY<\/strong><\/p>\n

India will use gold instead of US Dollars to buy Iranian oil and it is expected that China will follow suit since they just signed a currency swap deal with the Bank of the United Arab Emirates (UAE) this week. Of course we are talking about Iran, whose economy is currently experiencing hyper inflation with prices almost doubling daily thanks in part to economic sanctions against them. But the use of gold to buy oil does several things;<\/p>\n

    \n
  1. 1. It undermines the US dollar as the world\u00e2\u20ac\u2122s reserve currency<\/li>\n
  2. 2. It insures purchasing power of true money used to purchase oil<\/li>\n
  3. 3. It is a visible example to other oil producing nations<\/li>\n<\/ol>\n

     <\/p>\n

    THIS WEEKS MARKETS<\/strong><\/p>\n

    You can see from the charts below that the markets like Bernanke\u00e2\u20ac\u2122s promise to keep rates low closing the week 12660.46. Let\u00e2\u20ac\u2122s see next week if the Dow can break above resistance and test levels last seen last May.<\/p>\n

     <\/p>\n

    \"\"<\/a><\/strong><\/p>\n

     <\/p>\n

    The dollar chart below tells a different story. It tells us more money printing, easing and currency devaluation. Having broken below support, the dollar is now trading in a lower trading range.<\/p>\n

     <\/p>\n

    \"\"<\/a><\/p>\n

     <\/p>\n

    Let\u00e2\u20ac\u2122s Look at Real Money<\/strong><\/p>\n

    Both spot gold and spot silver broke above current resistance levels and are now inside a higher trading range. This is the response to the Fed\u00e2\u20ac\u2122s promise to continue to accommodate the banks and government through inflation.<\/p>\n

     <\/p>\n

    \"\"<\/a><\/p>\n

     <\/p>\n

    In the physical metals world, both bullion and numismatic prices increased this week, with numismatic price increases coming in today. Availability is good in both gold and silver bullion, with more silver than gold sales this week.<\/p>\n

     <\/p>\n

    BUYER BEWARE<\/strong><\/p>\n

    It is very important that you know who you are dealing with when positioning into the physical metals. When something seems super cheap there is usually a reason. Effective Feb 20th<\/sup>, sellers on eBay.com may no longer list replica US, world and other historic coins of any kind. The policy change follows discussions between eBay and PNG (Professional Numismatics Guild). PNG President, Jeffrey Bernberg said, \u00e2\u20ac\u0153eBay is working closely with law enforcement and third-party grading services \u00e2\u20ac\u201c as well as using a number of internal tools \u00e2\u20ac\u201c to review listings that may violate eBay policy prohibiting counterfeit coins.\u00e2\u20ac\u009d<\/p>\n

     <\/p>\n

    That wraps up the wrap up. What an interesting week of developments as we march closer to the potential CDS fallout. I know I\u00e2\u20ac\u2122m talking about this a lot and of course I can be wrong since I do not control the markets. It is simply that I cannot see a way out of this $32trn explosion unless there is no default. March 20th<\/sup> is the trigger date, so put that on your calendar and we will continue to watch the markets for you and give you a heads up.<\/p>\n

     <\/p>\n

    Be safe,<\/p>\n

    Lynette<\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    ANNUAL KAHUNA MEETING It\u00e2\u20ac\u2122s time for Davos, the world economic forum, again. But this year is different. Gone is the hubris […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1207],"tags":[45,60,95,125],"class_list":["post-1920","post","type-post","status-publish","format-standard","hentry","category-blog","tag-debt","tag-gold-bullion","tag-numismatic-gold","tag-u-s-dollar"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/1920","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/comments?post=1920"}],"version-history":[{"count":1,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/1920\/revisions"}],"predecessor-version":[{"id":11007,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/1920\/revisions\/11007"}],"wp:attachment":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/media?parent=1920"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/categories?post=1920"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/tags?post=1920"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}