Morning Update/ Market Thread 7/5 - Not so Independent Edition…

Good Morning,

I hope everyone had a happy Independence day!

Equity futures are down slightly this morning, the dollar is higher, bonds are higher, oil is higher, gold & silver are significantly higher with gold so far refusing to fall beneath the $1,500 an ounce mark, and most food commodities are also higher.

The dollar has been forming a very clear triangle, and today it is bouncing off lower support. Again, the direction of break from this triangle will tell us what the next trend for equities and commodities will likely be:



Last week’s bounce in equities was very bullish with the weekly candle erasing the past two weeks of decline, and placing the major averages above their respective 50dma’s once again. That said, they are also over their upper Bollinger bands and in overbought territory. Also remember that the full version of QE2 is now officially over and the continuing version of QE3 does not have the same horsepower behind it (that we know of).

Factory Orders are released at 10 Eastern this morning. The rest of the week is fairly light data wise, but the Employment Situation Report for July is released Friday morning.

Below is a chart from Martin Weiss showing the Greek 5 year default risk still climbing even after the second “bailout.”



Of course it was no bailout at all, what is was is the exact same thing as throwing a drowning man a big chunk of concrete – gee, thanks for the help! Part of their bizarre attempt to kick the can was to force “rollovers” of big portions of their previous debts whether agreed to or not by those holding said debt… and that, is what is otherwise known as a default. Amazingly, the ratings agencies picked up on this not so little fact, that you can’t just change the terms of a contract unilaterally without deserving a default rating.

It’s still amazing to me that after all this time we collectively still can’t acknowledge the reality of the situation and then truly deal with it. The impossible math is glaringly obvious to even the most casual observer. What this says is that we are pressing on regardless because of special interest capture of government. It is complete and it is total. Proof of that is to even consider for one moment appointing Jamie Dimon, the CEO of JPMorgan, to head the Treasury Department. If they do that, then the shift to corpocracy/ kleptocracy will be complete. There’s really only one step worse, and that would be someone like Dimon assuming the role of President – not that he isn’t effectively already in that role.

And the tragic truth of the matter is that these sick narcissist figures like Dimon are literally destroying many, many lives, both economically and physically. The tragedy that is Fukushima is yet another example of special interest capture that is literally going to cost thousands upon thousands of lives. The cover-up and lies emanating from Japan are tsunami-like in proportion. The NRC is complicit and will never do the right thing until forced.

I hope everyone realizes that you are not living the “Independence” that is being spun at you. Be careful WHO and what you pledge your allegiance to.

Latest Trading Diary

Shaza sent this in and it is time to get back to trading.


The Big Picture

By Colin Twiggs
July 5th, 2011 3:00 a.m. ET (5:00 p.m. AET)
These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.

Technical Instability

The market is currently experiencing volatility on a scale last witnessed in the 1930s. The S&P 500 chart for the last 60 years (semi-log scale with trend channel at 3 standard deviations, data courtesy of Yahoo: symbol y_^gspc) shows a broadening formation, starting in 2000, of greater magnitude than anything since the 1930s. The stagflation era of the 1970s is small by comparison, and the crash of October 1987 barely noticeable.
SP 500 Index
We are not out of the woods yet. High above the 700/800 lows is an inherently unstable situation. A failed down-swing, similar to the 1977-79 trough that respected the lower trend channel, would establish a new base on which the market can build.

3 Fundamental Issues

Gold holds steady after S&P warning on Greece


(Reuters) - Spot gold held steady on Tuesday, after a warning by ratings agency Standard & Poor's that it would treat plans for a rollover of privately-held Greek debt as a selective default, underpinning safe haven demand for bullion.

FUNDAMENTALS

* Spot gold rose 0.09 percent to $1,496.84 an ounce by 0038 GMT (8:38 p.m. EDT).

* U.S. gold gained 1 percent to $1,497.60.

* Rating agency S&P warned Greece would likely be in default if it follows a debt rollover plan pushed by French banks.

* The euro hovered near one-month highs versus the dollar, shrugging off S&P's warning on Greece, as expectations that the European Central Bank will raise interest rates on Thursday helped buoy the single currency.

MARKET NEWS

* The dollar index .DXY gained slightly on Tuesday, but remained near one-month lows.

* U.S. crude futures edged up on Tuesday to remain above $95 a barrel, ahead of U.S. factory orders data gauging the strength of the world's top economy and oil consumer.

(Reporting by Rujun Shen; Editing by Ed Lane)


The scariest risks to the economy


NEW YORK (CNNMoney) -- U.S. policymakers are racing to reach an agreement before the debt ceiling is breached. But the biggest risks to the U.S. economy are mostly out of their hands.
CNNMoney surveyed 27 economists and asked them to choose from a list of possible threats facing the economy. What scares them most? A sovereign debt default by a European country such as Greece. More than half of those surveyed ranked it as one of their top two concerns, with 10 choosing it as their number one worry.
"A Europe debt default could cause financial crises as large as the 2008 one due to financial system interconnections," said Bill Watkins, executive director of the Center for Economic Research and Forecasting.
Another oil price shock, which most likely would come from further political turmoil in the Middle East and North Africa, is their next biggest worry.

See the full survey results

Many economists blame the spike in oil earlier this year for the slowdown in economic growth, as it raised costs for businesses and cut into consumer spending. And though oil and gas prices have come off their highs of a couple of months ago, the threat they pose to the economy has not vanished.
"Oil prices sustained above $125 a barrel for six months or longer would guarantee another recession in 2012," said James Smith, chief economist for Parsec Financial Management.
After tumbling on the news that the U.S. was releasing 30 million barrels of oil from the Strategic Petroleum Reserve, oil prices are on the rise again, currently hovering around $95 a barrel.

Recovery at risk

Earlier in the year, the economy seemed to be on the road to recovery. But economic growth began to slow in late spring, leading many economists toslash their forecasts and revive talk of a double-dip recession.
Though the economists do see major risk from a possible U.S. default in the event that Congress does not raise the debt ceiling, they did not view that as being very likely.
"While the consequences of Congress failing to raise the debt ceiling are most significant, the probability of that occurring are extremely remote," said Kevin Giddis, head of fixed income for Morgan Keegan, who ranked it as the least serious threat.
Still, enough economists are worried about the debt ceiling debate that 10 of them picked it as one of the top two worries, with six of those ranking it number one.
Relatively few of the economists surveyed were worried about the other risks they had to choose from -- a slowdown among emerging economies such as China, or budget cutting by federal, state and local governments.
"Austerity is a short-term risk, but will help long-term," said David Wyss, former chief economist at Standard & Poor's, now visiting fellow at Brown University. "The odds of too big a budget cut seems small."

The Declaration of Independence: A Transcription

Happy 4th of July from Queenbee

IN CONGRESS, July 4, 1776.
The unanimous Declaration of the thirteen united States of America,
When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.--Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.
He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
He has affected to render the Military independent of and superior to the Civil power.
He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For Quartering large bodies of armed troops among us:
For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:
For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us in many cases, of the benefits of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences
For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:
For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.
He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.
Nor have We been wanting in attentions to our Brittish brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.
We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

Pound Declines to 15-Month Low Against Euro as U.K. Manufacturing Slows


The pound posted its biggest weekly decline in a month against the euro as signs that the U.K. economic recovery is faltering reduced the scope for interest- rate increases from the Bank of England.
Sterling fell versus 12 of its 16 major counterparts tracked by Bloomberg this week, losing most against the Swedish krona and sliding to a 15-month low versus the euro. Reports this week showed U.K. confidence fell and manufacturing growth unexpectedly slowed in June while a Credit Conditions Survey by the central bank predicted mortgage demand to drop in the third quarter. Bank of England policy maker Adam Posen said on June 27 that a call by theBank for International Settlements for higher rates worldwide to curb inflation was “nonsense.”
“Sterling is being completely marginalized by the worsening economic growth outlook in the U.K.,” said Peter Rosenstreich, chief foreign-exchange analyst at Swissquote Bank SA in Geneva. “If we continue to see an erosion in growth prospects then the possibility of rate hikes is virtually out of the question.”
The pound slid 1.6 percent this past week to 90.35 pence per euro as of 4:32 p.m. in Londonyesterday, from 88.90 pence on June 24. It reached 90.84 on July 1, the weakest intraday level since March 2010. Sterling gained 0.7 percent against the dollar to trade at $1.6069, from $1.5959 at the end of last week. Against Japan’s currency, the pound added 1.2 percent to 129.87 yen.

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