MARKET UPDATE Wed. JUNE 19, 2013
Dow Jones 15,112.19 -206.04 (-1.35%)
S&P 500 1,628.93 -22.88 (-1.39%)
Nasdaq 3,443.20 -38.98 (-1.12%)
EUR/USD 1.3287 -0.00 (-0.05%)
10-Year Bond 2.31 0.13 +5.91%
Gold 1,346.20 -27.80 -2.02%
Oil 98.06 -0.42 -0.43%
Currency Pair Price Change %Change
EUR/USD 1.3288 -0.0005 -0.0376%
AUD/USD 0.9282 -0.0061 -0.6561%
GBP/USD 1.5478 -0.0009 -0.0581%
USD/JPY 96.5850 +0.2300 +0.2387%
EUR/JPY 128.0931 -0.5384 -0.4186%
NEWS UPDATES JUNE 19, 2013
PERFECT STORM – GLOBAL EDITION
STRONG DOLLAR:
Dollar surges as bond buys could slow this year
By Saumya Vaishampayan and Carla Mozee, MarketWatch
June 19, 2013, 5:14 p.m. EDT
http://www.marketwatch.com/story/dollar-slips-vs-yen-with-fed-outlook-in-sight-2013-06-19
HIGH INTEREST RATES:
Bernanke Signals Interest Rates to Rise, Dow Drops 200 Points
Federal Reserve chairman believes unemployment will fall and the economy will grow.
02:10 | 06/19/2013
http://abcnews.go.com/WNT/video/bernanke-signals-interest-rates-rise-dow-drops-200-19441101
HIGH OIL PRICE:
OIL PRICES CLIMB prices climb above $98 before US Fed meeting
By PABLO GORONDI | Associated Press – 6 hrs ago – Tuesday, June 18, 2013
http://news.yahoo.com/oil-prices-climb-above-98-us-fed-meeting-130444029.html
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PERFECT STORM – DOMESTIC COMPONENTS
EDUCATION:
As college costs rise in US, parents fall short of saving goals
By Heather Struck – NEW YORK | Tue Feb 26, 2013 12:00am EST
Parents Robbing Retirement To Pay For College
By Sharon Epperson | CNBC – 9 hours ago Tuesday, February 26, 2013
http://my.news.yahoo.com/parents-robbing-retirement-pay-college-102814231.html
RETIREMENT / PENSION:
Study Says People May Not Be Putting Enough Away For Retirement
June 16, 2013 5:00 AM By Jim Melwert
HEALTH CARE:
Health Care Act worries small businesses who say they’re not ready for new law
May 3, 2013 10:42 AM
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Oct. 23, 2012 – About three years ago, discussion on Financial Capitalism and
Democracy on WAIS was summarized in one post
re: Capitalism and Democracy (Oct. 18, 2009)
(“Perfect Storm Syndrome” was originally e-mailed on June 3, 2005)
Excerpt:
“Bienvenido Macario (BM): I’m not sure if the major players in the (US) financial system support the Bush and Obama administrations’ efforts to compel China to properly price their undervalued Yuan against the US dollar, among other currencies. Whether these players were also in favor of a “strong dollar” that both the Bush administration and Treasury Sec. Geithner were seeking is not clear. As of last week the US Treasury quietly abandoned the pursuit of a “strong dollar” and the stock market rose.
I am not in favor of a weak US Dollar, but currencies and liquids behave exactly the same: water seeks its own level. The components of the Perfect Storm Syndrome-Global Edition are:
The components of the “Perfect Storm Syndrome – Global Edition” are:
1.) High oil prices;
2.) High interest rates &
3.) A strong dollar (currency wars/ currency worries).
While the Domestic Components of the “Perfect Storm Contagion” are:
1.) Health care (high costs);
2.) Retirement/pension (lack thereof) &
3.) Education (this is the biggest challenge of all as the strong dollar is in the global edition).
From:
“The Perfect Storm” as posted on WAIS Oct. 18, 2009
https://www.nedmacario.us/perfectstorm-as-posted-on-wais-23-oct-2012/
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June 19, 2013 – THE PERFECT STORM HAS ARRIVED
June 05, 2013 – Why do I think “dust will settle around 22 June”? Because the Fed has yet to cut back on the stimulus. But in the mean time today Wed. 06/05/13 mortgage interest rates went UP from 3.6% to 4.07%.
It shouldn’t matter how high or low the interest or tax rates are as long as corporations and businesses know how to anticipate the coming challenges. (Please see on my website: Paper No. VIII – Forecast on Businesses & Industries –5/21/2004 updated 11/16/2012 ).
During Reagan’s time interest went up as high as 20% (June 1981). During Eisenhower’s time tax rates was as high as 90%!
Someone gave a good analogy using a football game where your team is behind by 27 points with less than 10 minutes to go in the 4th quarter. Are you going to wait for the game to finish or head out and avoid the traffic? The same with the Fed’s stimulus cut back. You want to dump your stocks while you still can. After a certain price point, might as well hold on to it.
================================
Bienvenido Macario shared a link.
Honestly, I kinda forgot I did make a FB prediction on June 5, (2013) at 6:32pm that, “dust will settle around June 22, 2013”.
Market Watch Fri. 06-21-13
Dow Jones 14,799.40 +41.08 (0.28%)
S&P 500 1,592.43 +4.24 (0.27%)
Nasdaq 3,357.25 -7.38 (-0.22%)
EUR/USD 1.3118 -0.01 -0.83%
10-Year Bond 2.51 0.09 +3.93%
Gold 1,292.80 6.90 +0.54%
Oil 92.89 -1.42 -1.51%
Name Price Change % Chg
EUR/USD 1.3118 -0.01 -0.83%
USD/JPY 97.8250 0.48 +0.49%
GBP/USD 1.5423 -0.01 -0.55%
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It looks like the market is starting to recover. I picked these interesting articles from yesterday. On CNBC an analyst who was also with Michael Santoli was not very happy with Ben Bernanke. He said Bernanke “is confused” having started Q4 in Jan. and then by May decided to announce plan of tapering off the stimulus. As American as apple pie, the blame game began which I think would make things worse next week.
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1.) Did Ben Bernanke Just Kill the Stock Market Rally?
June 21st, 2013 ETF Daily News
Michael Lombardi: What a remarkable past 20 hours it’s been…
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2.) Did the Federal Reserve Just Kill the Housing Recovery?
By George Leong for Investment Contrarians | Jun 21, 2013
Get ready folks, the party in the housing market may be drawing to a close. Sure, the housing market has steadily improved—you can thank the Federal Reserve for that. But nothing lasts forever.
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3.) Do Markets Fear Central Banks’ Grip Is Slipping?
By Michael Santoli | Michael Santoli – Fri, Jun 21, 2013 2:56 PM EDT
====================
I don’t know maybe the CNBC guest who said “Bernanke is confused and is more interested in preserving his legacy”, might be interested in this WAIS post from March 30, 2013
“Tor Guimaraes wrote on 27 March:
“Bernanke’s cheap money policy for the banks is also robbing depositors to the tune of US$400 billion per year. Compared to this, the Cyprus one-time total depositor haircut of €6 billion is relatively minor. And such horrible thoughts are not coming from leftist idealists but from experienced financial managers.”
Those experienced financial managers who are complaining about the Fed’s low interest policy are not looking at the overall picture and are afraid to look for real culprits. Bernanke has tied interest rates to the unemployment rate. If the jobless rate goes below 6%, interest rates will increase.
We discussed this issue years ago. As Paul Volcker himself said in February 2010, even the experts do not know what’s going on, something I openly suspected in my December 15, 2007 post giving the private sector 3 1/2 months to do something or we are going to a recession.
On the first day of sequestration, the Fed did not hide its frustration of mortgage profits going up 233% compared to 2007. Did the banks profit? No!
It was Fannie Mae and Freddie Mac, perhaps trying to justify their existence when sequestration is shutting down vital government services and issuing furloughs, who declared they are profitable at the expense of homeowners and the housing industry.
What Fannie Mae and Freddie Mac should do, as I pointed out in May 2010, is to compete with each other. What the government oversight should do is make sure Fannie and Freddie abide by their mandate, i.e. compete with each other. (If the formation of a 3rd GSE is needed to promote competition, then they should form a 3rd GSE.)
So to divert the attention from their mistakes and to keep the circus going with Congress in the limelight, they conspired with the media to focus on same-sex marriage, gun control, and other issues that the conservatives who probably are in cahoots, swallowed hook, line and sinker. Later they will play the blame game when we are in another recession.
Bernanke has pegged the raising of interest rates to the unemployment rates. All the government should do is come up with fictitious unemployment rate of below 6% and Bernanke will raise interest rates. Why can’t the government do that? Because it is not an election year.
JE comments: I’m confused: if Freddie and Fannie are presently making a lot of money, why the urgency to raise interest rates? And how could the US government “cook” its data to show an artificially low unemployment rate? Aren’t there independent checks on these figures? The Fed could simply raise rates if it chooses to, regardless of unemployment.
Here is Bienvenido Macario’s prophetic post of December 2007. Bienvenido predicted a recession in 3 and 1/2 months; the economy actually dragged on for another half year before the autumn 2008 meltdown: (to be provided in the comments section.)
From: Interest Rates and the Economy (Bienvenido Macario, USA, 03/30/13 4:17 am)
http://waisworld.org/go.jsp?id=02a&objectType=post&o=75923&objectTypeId=66967&topicId=239