Weekly Market Digest

Fri, Oct 15, 2010 - 10:13am

Consumer Prices in U.S. Rise 0.1% in September

(Bloomberg) The cost of living in the U.S. rose less than forecast in September, indicating companies are keeping a lid on price increases to stoke demand.

The consumer-price index rose 0.1 percent after 0.3 percent gains in the prior two months, figures from the Labor Department showed today in Washington. Economists projected a 0.2 percent gain, according to the median forecast in a Bloomberg News survey. Excluding volatile food and fuel costs, the so-called core rate was unchanged for a second month.

Now for the rest of the story…The CPI for all items (including food and fuel) rose 1.1% last month. That hits you where you live.

U.S. Consumer Confidence Unexpectedly Decreases

(Bloomberg) Confidence among U.S. consumers unexpectedly declined in October, with Americans more pessimistic about current economic conditions.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 67.9, the lowest since July, from 68.2 in September. Economists estimated an October reading of 68.9, according to the median forecast in a Bloomberg News survey.

U.S. Posts Second-Largest Annual Budget Deficit on Record

(Bloomberg) The U.S. government posted its second straight annual budget deficit in excess of $1 trillion as lingering unemployment constrained tax revenue.

Bubble, Bubble, Toil and Trouble…

-- The Investment Company Institute has just reported the latest in what is now a weekly joke. Retail investors are out permanently, as was confirmed by the 23rd sequential outflow from domestic equity mutual funds, this time redeeming $5.6 billion, the highest since the beginning of September, right before the Fed full blown stock ramp intervention began. And that brings the total YTD mutual fund redemptions to $80 billion. Sorry bankers - no greater fool to buy your bubbly shares.

Treasuries Face a Weekly Loss

-- Treasuries declined for the week as weak bond auctions and speculation the Federal Reserve will buy more bonds to stimulate the economy remained in limbo. The recent rally in stocks seems to have taken the steam out of the Long Bond. Bonds still remain in their uptrend, however.

Gold stalled at a new high. Everyone thinks it can go higher…

--Gold declined in New York as a rally to near a record on concern for further policy easing in the U.S. prompted some sales of the metal. Gold gained earlier today as the dollar slumped to an eight-month low against the euro after Federal Reserve Chairman Ben S. Bernanke said additional monetary stimulus may be warranted because inflation is too low and unemployment is too high. The dollar since rebounded. Gold futures reached a record ,388.10 an ounce yesterday.

Japan’s Strong Yen Puts a Lid on Stocks

-- Japanese benchmark stock indexes retreated from the biggest gains in a month yesterday after the yen rose to a 15-year high, damping exporters’ profit outlooks. Banks dropped after a report they will sell cross-shareholdings. “Worries about the yen’s strengthening still remain,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., “A lot of attention is on the currency’s moves.”

China’s Markets Surge Higher

-- China’s stocks rose for a seventh day, capping the longest rally in 11 months, as economic growth spurs higher fund flows into the country and improving earnings prospects bolster the nation’s lenders. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, gained 91.52, or 3.2 percent, to 2,971.16 at the 3 p.m. close, the most since May 24 and the longest winning streak since the eight days to Nov. 10, 2009.

The Dollar Decline Continues

-- The dollar erased earlier losses against the euro and a basket of major currencies and turned up slightly Friday, after Federal Reserve Chairman Ben Bernanke hinted at more quantitative easing but remained conservative in his comments.

Still, the U.S. unit is down broadly for the week as any kind of asset-purchase program tends to devalue a country’s currency.

Robo-signers: Mortgage Experience Not Necessary

-- (AP) In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says. As part of his work, Ticktin gathered 150 depositions from bank employees who say they signed foreclosure affidavits without reviewing the documents or ever laying eyes on them -- earning them the name "robo-signers."

Retail Gasoline Prices Ramped Higher This Week

--The Energy Information Agency weekly report observes, “The U.S. average retail price for a gallon of gasoline shot up 9 cents from last week to .82 per gallon and was __spamspan_img_placeholder__.33 per gallon higher than last year at this time. Prices were up across the country. East Coast prices saw the biggest increase, gaining a dime, but remaining below the national average price at .77 per gallon. The Midwest was close behind with an increase of nine and a half cents.”

Natural Gas Consumption Lower This Week

-- The U.S. Energy Information Administration reports, “Following declines heading into the holiday weekend, natural gas prices rallied at most market locations, posting gains on the week since last Wednesday. These price increases were influenced by increased consumption in the electric power sector; however, estimates for total consumption were lower this week than last.”

Fed Wants to Hoodwink Public, Only Fools Itself: Caroline Baum

(Bloomberg) If I were a central banker, I would be afraid.

If I were a central banker getting ready to embark on another round of quantitative easing, I would be very afraid.

Here’s why. Central bankers in the U.S. are being bombarded with market-based signals suggesting their fears of deflation, or falling economy-wide prices, may be misplaced.

Gold prices continue to set new highs. The U.S. dollar, the global reserve currency, keeps sinking amid expectations the Federal Reserve will dilute the existing stock starting at its Nov. 2 to 3 meeting.

Commodity prices, both industrial and agricultural, are on a tear. The CRB Spot Raw Industrial Price Index, which includes scrap metals, cotton and rubber -- but not oil -- hit an all- time high this week.

Ben Lied This Morning

(ZeroHedge) Over the years a good number of speeches by our leaders have been marked by history. Abe said, “Four score…”, Jack said, Ask not…”, George said, “Mission accomplished…” I think we got more of those memorable worlds today from Bernanke. His comments will be remembered like George’s. They will stick in our minds and thoughts for decades. And like George’s words, history will prove them to be a lie. Ben’s lies will cost us trillions, and quite possibly our way of life. His lie:

I am confident that the FOMC will be able to tighten monetary conditions when warranted, even if the balance sheet remains considerably larger than normal at that time.

How could he possibly be “confident” that this can be done? It has never been done before. No sane man can make such a promise when there is no history to guide us. Bernanke is sane, therefore I conclude that he is lying to us on this critical fact.

Want a Real View of the Economy? Talk to a CEO

(ZeroHedge) Just how awful have things gotten that (the Feds) got ONE QE program occurring and they’re already talking about introducing a second LARGER one at the same time?

Well, according to US CEOs things are flat out awful… as in May 2009 BAD. According to Bloomberg:

Confidence among chief executive officers in the U.S. sank in October to the lowest level since May 2009, when the world’s largest economy was still in a recession, according to a survey from the Business Council... The group’s gauge of expectations for the economy six months from now fell to 51.7, the lowest since February 2009.

Meet Danielle And Jim Plus 9: The Squatters Who "Reclaimed" Their Foreclosed Home Over The Weekend

(ZeroHedge) Unfortunately, surreal stories like this will very soon become daily news. As was pointed out yesterday, Simi Valley has just seen the first case of a forced reclamation of a foreclosed home, after Jim and Danielle Earl took their nine (9!) children, ages 9-23, and a locksmith and broke into the six-bedroom house that had been foreclosed upon for lack of payment, and on which the couple owed 0,000! And where would such brilliant advice originate from? Why, the couple's lawyer of course…

Quantifying The Full Impact Of Foreclosure Gate: Hundreds Of Billions To Start

(ZeroHedge) As people finally realize that there is no getting away from a self-imposed (or sent from above) foreclosure moratorium reality, the next question is the quantification of what the hit to banks will be. As bank stock shares are demonstrating today, it will be substantial and is already starting to be priced in. According to FBR's Paul Miller, as cited by Bloomberg, "faulty foreclosures may cost U.S. lenders billion for every month that home seizures are delayed and the tab could reach billion... Investigations of how banks are seizing homes may prolong foreclosures by as much as three months, at a rough cost of ,000 per month for each property in the pipeline. The biggest firms likely need to add staff to comb through the files, costing them each million a year." This is a very a modest estimate.

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