- Sovereign debt markets remain nervous with concerns about the fallout from Greece’s downgrade and how this will affect the already damaged balance sheets of some European banks. Bearish analysts who were calling gold a bubble when gold traded at $700 and at $850 are becoming more vocal again but they are likely to be proved wrong again as this has all the hallmarks of another correction and consolidation. Especially as physical demand for bullion remains very robust and will likely continue to do so as long as there are sovereign debts risks, risks of double dip recessions and as long as investors remain concerned about the medium to long term inflation threat posed by the continuing unprecedentedly loose fiscal and monetary policies.
- President Barack Obama outlined new multibillion-dollar stimulus and jobs proposals Tuesday, saying the nation must continue to “spend our way out of this recession” until more Americans are back at work. The Government will continue debasing the U.S. dollar by printing as much money as it takes to try and create jobs. Inflation is coming and now is the time to prepare your portfolio.
- Goldman is forecasting no Fed rate hikes until 2012. That means over two more years of ultra-low interest rates.
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- Moody’s fingered the U.S. and U.K. among top-rated sovereign borrowers, saying the two must prove they can reduce their bulging deficits or risk a downgrade to their AAA credit ratings. Moody’s called the pair merely “resilient” rather than “resistant,” a label it applied to Canada, France and Germany.
- Fed chief Ben Bernanke said Monday the economic recovery still faces “formidable headwinds” and warned unemployment will likely remain elevated, cooling speculation of an early increase in interest rates. A surprising decline in the U.S. jobless rate Friday spurred concerns the Fed might move quickly to raise rates, but Bernanke said the Fed was sticking to its pledge to hold borrowing costs at exceptionally low levels.
- Analyst Meredith Whitney says the government is now out of bullets to support the economy. She says if the economy doesn’t slow down now, it will in Q1. Whitney said nothing has changed other than the banks refinancing themselves. Whitney says the overall market is extended. Meredith said she is 100% confident that the consumer is not getting any better and since 70% of the economy is supported by the consumer, the S&P 500 will likely fall in 2010.
- Dennis Gartman on jobs report: Workers simply have become discouraged and are still pulling themselves out of the job market, thus forcing the participation rate, as it is known, to its lowest level in two decades. Further… and this really does cause us some confusion and casts doubt upon the veracity of Friday’s report… the civilian labor force was actually reported to have fallen when mere demographics… mere arithmetic… said it must increase instead.
