11/09/09 - Dow Jones Sets 2009 Yearly High Point!

[PearlHowardman]

http://www.nytimes.com/2009/11/10/business...tml?_r=1&hp

 

Dow Hits High for Year as Dollar Weakens

 

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By JAVIER C. HERNANDEZ

Published: November 9, 2009

 

The Dow raced out of the gate on Monday and ended the day at highs for the year.

 

But along the way, the dollar weakened, and as a result, prices for commodities like gold continued to rise.

 

Shares on all three continents rose after finance ministers said over the weekend that they would push ahead with efforts to revive economic growth through interest rates and increased government spending. The Dow Jones industrial average ended the day more than 200 points higher.

 

At the same time, the ministers offered no assurance that they would take steps to support the dollar. That weakened the currency, and the dollar fell to $1.50 against the euro, the first time it has reached that threshold since late October.

 

In turn, gold rose to record levels, hitting $1,105.20 an ounce. Last week, it climbed nearly 5 percent, buoyed by news that India had bought 200 tons of gold from the International Monetary Fund. Oil also rose, settling $2.02 higher at $79.45 a barrel.

 

“Economic and financial conditions have improved following our coordinated response to the crisis,” said a statement from the finance ministers of the Group of 20, comprising the world’s wealthiest nations, who met over the weekend in St. Andrews, Scotland. “However, the recovery is uneven and remains dependent on policy support.”

 

Brian Dolan, chief currency strategist for Forex.com, said the silence from the G-20 finance ministers on the dollar turned a grim prognosis even bleaker. Mr. Dolan said investors were abandoning the (dollar) currency because of low interest rates in the United States and concern that its deficits would continue to swell.

“A lot of it is sentiment-driven and there the dollar is getting a vote of no confidence,” Mr. Dolan said. “The massive borrowing by the U.S. government is undermining confidence in the longer-term outlook for the dollar.”

 

Investors appeared to be directing their focus to riskier equities and turning away from the currency markets. The dollar is considered a low-yield investment, given the historically low interest rates in the United States. Last week, the Federal Reserve gave no indication that it planned to raise interest rates anytime soon, leaving investors to reroute their funds toward the stock market, oil and gold.

 

While the faltering dollar will make imports more expensive for American consumers, it will also make American exports more competitive overseas.

 

The G-20 finance ministers said they were concerned by rising unemployment, even as the broader economy strengthens. In the United States, the unemployment rate reached a 26-year high of 10.2 percent in October, surprising economists and investors.

 

At the close, the Dow Jones industrial average was up 203.52 points, or 2 percent — its highest level in a year, beating the previous record on Oct. 21. The Standard and Poor’s 500-stock index was up 23.78 points, or 2.2 percent, and the technology-heavy Nasdaq composite index was up 41.62 points or 1.97 percent.

 

The rally was broad-based, led by financial companies as well as industrial, chemical and mining stocks. Shares of the General Electric Company rose 3.5 percent after reports that G.E. and the Comcast Corporation had agreed to value NBC Universal at about $30 billion as the companies discuss a joint venture.

 

Shares of Citigroup were up 2.7 percent while Bank of America rose 4.7 percent and Wells Fargo rose 4.2 percent.

 

M. Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Okla., attributed the gains overall to a renewed appetite for risk.

 

“When you have zero percent inflation, zero percent interest rates, zero percent money markets rates, and when you have metals and gold that have skyrocketed to astronomical levels, stocks look pretty good in comparison,” he said.

 

Overseas markets were also up. The FTSE 100 in Britain closed 1.8 percent higher, the CAC 40 in France was up 2.1 percent, and the DAX in Germany was 2.4 percent higher.

 

Overnight, the Nikkei average in Japan closed 0.2 percent higher, and the Hang Seng in Hong Kong climbed 1.7 percent.

[BillsNYC]

Gold closed at its highest rate as well, which doesn't say much for the economy.

[Chef Jim]

But the Dow is the economy!

[Magox]

Gold closed at its highest rate as well, which doesn't say much for the economy.

I own a bullion brokerage, and I can tell you that BUSINESS IS GREAAAAAAAT!!!!!!!!

 

 

I decided to go into this business a few years ago because I knew that the Fiscal policies we had, starting from the Bush years was going to systematically devalue the U.S dollar. The Treasury department wants a weaker dollar, they will never admit it, but they want it. It is the only way they see it as being able to reduce the deficit. Which is a two prong attack, one is to inflate our way out of debt, which of course leaves our debtholders S.O.L and the other which is the greatest form of protectionism, is devalue the dollar to make our goods more competitive to overseas customers.

 

Now that BO is in office, Gold investments will go higher than anyone in here could possibly imagine. We're telling our clients that we will see $1300 by Q2 of 2010 and ultimately above $3000 in the next 5 years.

[Chef Jim]

I own a bullion brokerage, and I can tell you that BUSINESS IS GREAAAAAAAT!!!!!!!!

 

You own a soup kitchen?

[murra]

Remind me again what the government intervention is with our stock market?

[Chalkie Gerzowski]

You own a soup kitchen?

 

 

many will soon

 

[keepthefaith]

I own a bullion brokerage, and I can tell you that BUSINESS IS GREAAAAAAAT!!!!!!!!

 

 

I decided to go into this business a few years ago because I knew that the Fiscal policies we had, starting from the Bush years was going to systematically devalue the U.S dollar. The Treasury department wants a weaker dollar, they will never admit it, but they want it. It is the only way they see it as being able to reduce the deficit. Which is a two prong attack, one is to inflate our way out of debt, which of course leaves our debtholders S.O.L and the other which is the greatest form of protectionism, is devalue the dollar to make our goods more competitive to overseas customers.

 

Now that BO is in office, Gold investments will go higher than anyone in here could possibly imagine. We're telling our clients that we will see $1300 by Q2 of 2010 and ultimately above $3000 in the next 5 years.

 

 

Good for you. Enjoy the ride. I was advised in 2002 to buy gold. Did nothing about it. Another miss. Seems to late but not at your numbers. Did buy silver last year which has done OK recently. Different market but gold rise helps it too.

 

My answer to the deficit is to create a new class of tariff. One that taxes Chinese imports but is charged to the exporter (the Chinese). That way we can pay them back with their money and the lower our currency goes the less it costs..

[Magox]

Good for you. Enjoy the ride. I was advised in 2002 to buy gold. Did nothing about it. Another miss. Seems to late but not at your numbers. Did buy silver last year which has done OK recently. Different market but gold rise helps it too.

 

My answer to the deficit is to create a new class of tariff. One that taxes Chinese imports but is charged to the exporter (the Chinese). That way we can pay them back with their money and the lower our currency goes the less it costs..

I don't think it's too late at all to buy precious metals. I can tell you this with certainty, if the value of the dollar keeps declining, then the value of precious metals will keep appreciating. However, If I were looking to buy precious metals, there is a decent possibility that it will continue to appreciate over the next few months, however, I would wait until Q2 of 2010. Every year over the past 8 years we've seen precious metals correct, and usually it corrects by a good bit either late in Q1 or in Q2. Once it starts correcting, it usually is a 6 week correction. After the market has corrected and starts basing, then I'd make my purchase.

 

We have an $11.5 trillion deficit and according to the White House's rosy projections it will increase by another $9 Trillion in the next 10 years, which really means it will increase by about another $11-13 trillion.

 

So to put things into context, our interest payments 10 years from now will most likely be over a TRILLION dollars a year, JUST IN INTEREST PAYMENTS, which is more than what we have spent in the ENTIRE IRAQ AND AFGHANISTAN WAR COMBINED!!

 

And that doesn't even include the massive money printing from the Federal Reserve. We've printed more money in the last 10 months than we have in the last 50 years combined.

 

The other thing you have to take into account is that we have .13% interest rates. Banks are basically getting money for free, which now puts us at the lowest interest rates across the globe. We are now the new CARRY TRADE. That title use to belong to the Japanese, and when some institutional investors wanted to buy riskier assets they would use the Japanese who had the lowest interest rates to fund their purchases using the yen, which puts downward pressure on their currency.

 

Now the U.S has the lowest interest rates, so when people feel optimistic to buy stocks, that puts downward pressure on the dollar, as long as we have the lowest or one of the lowest interest rates that will continue to keep putting pressure on the dollar. Considering we have the biggest structural problems with Unemployment, credit shrinking, commercial realestate imploding, depressed home prices, WE WILL BE THE LAST TO RAISE INTEREST RATES, and most likely the SLOWEST along with the JAPANESE. So expect this to be another negative for the dollar.

 

Lastly, our Treasury wants a weaker dollar by design, for the reasons I had mentioned earlier.

 

It's not just small retail investors aka (GOLD BUGS) that are in precious metals, but now you have all the investment brokerages advising their clients to buy metals, the top money managers/Hedgefunds (STEVE LEHMAN, JOHN PAULSON, DAVID EINHORN) who are buying gold, Insurance companies, Pension funds, and now CENTRAL BANKS/GOVERNMENTS like INDIA who just bought 200 tons at $1045 an oz.

 

Its all about diversification and fear. Fear that the dollar is going to continue to decline and fear that inflation is going to be rampant at some point over the next 5 years.

 

To answer your question, I own alot of silver. Much more upside than gold, but more volatile as well. When metals go's up, silver outperforms when metals go down, it goes down the elevator.

[Chalkie Gerzowski]

I don't think it's too late at all to buy precious metals. I can tell you this with certainty, if the value of the dollar keeps declining, then the value of precious metals will keep appreciating. However, If I were looking to buy precious metals, there is a decent possibility that it will continue to appreciate over the next few months, however, I would wait until Q2 of 2010. Every year over the past 8 years we've seen precious metals correct, and usually it corrects by a good bit either late in Q1 or in Q2. Once it starts correcting, it usually is a 6 week correction. After the market has corrected and starts basing, then I'd make my purchase.

 

We have an $11.5 trillion deficit and according to the White House's rosy projections it will increase by another $9 Trillion in the next 10 years, which really means it will increase by about another $11-13 trillion.

 

So to put things into context, our interest payments 10 years from now will most likely be over a TRILLION dollars a year, JUST IN INTEREST PAYMENTS, which is more than what we have spent in the ENTIRE IRAQ AND AFGHANISTAN WAR COMBINED!!

 

And that doesn't even include the massive money printing from the Federal Reserve. We've printed more money in the last 10 months than we have in the last 50 years combined.

 

The other thing you have to take into account is that we have .13% interest rates. Banks are basically getting money for free, which now puts us at the lowest interest rates across the globe. We are now the new CARRY TRADE. That title use to belong to the Japanese, and when some institutional investors wanted to buy riskier assets they would use the Japanese who had the lowest interest rates to fund their purchases using the yen, which puts downward pressure on their currency.

 

Now the U.S has the lowest interest rates, so when people feel optimistic to buy stocks, that puts downward pressure on the dollar, as long as we have the lowest or one of the lowest interest rates that will continue to keep putting pressure on the dollar. Considering we have the biggest structural problems with Unemployment, credit shrinking, commercial realestate imploding, depressed home prices, WE WILL BE THE LAST TO RAISE INTEREST RATES, and most likely the SLOWEST along with the JAPANESE. So expect this to be another negative for the dollar.

 

Lastly, our Treasury wants a weaker dollar by design, for the reasons I had mentioned earlier.

 

It's not just small retail investors aka (GOLD BUGS) that are in precious metals, but now you have all the investment brokerages advising their clients to buy metals, the top money managers/Hedgefunds (STEVE LEHMAN, JOHN PAULSON, DAVID EINHORN) who are buying gold, Insurance companies, Pension funds, and now CENTRAL BANKS/GOVERNMENTS like INDIA who just bought 200 tons at $1045 an oz.

 

Its all about diversification and fear. Fear that the dollar is going to continue to decline and fear that inflation is going to be rampant at some point over the next 5 years.

 

To answer your question, I own alot of silver. Much more upside than gold, but more volatile as well. When metals go's up, silver outperforms when metals go down, it goes down the elevator.

 

invest in lead

[HereComesTheReignAgain]

invest in lead

 

With a copper jacket!

[Chef Jim]

invest in lead

 

Invest in or buy? Two different things.

[John Adams]

3500/15000

[PearlHowardman]

That's all fine-and-well for the Investor Class.

 

But what about the unemployed? Looking at worsening unemployment numbers every month? With a backdrop of incompetent President Obama and the incompetent Democrats putting us into deeper and deeper debt via another incompetent broken government-option agency disguised as health care reform?

 

Unemployed, with no prospects. America going into deeper debt. And world finance ministers believing that the US dollar is on its way to being almost worthless!

 

"Change We Can Believe In"

 

Bummer!

[Chalkie Gerzowski]

Invest in or buy? Two different things.

 

buy... why wait.

[Chef Jim]

That's all fine-and-well for the Investor Class.

 

But what about the unemployed? Looking at worsening unemployment numbers every month? With a backdrop of incompetent President Obama and the incompetent Democrats putting us into deeper and deeper debt via another incompetent broken government-option agency disguised as health care reform?

 

Unemployed, with no prospects. America going into deeper debt. And world finance ministers believing that the US dollar is on its way to being almost worthless!

 

"Change We Can Believe In"

 

Bummer!

 

I have faith in the business owners of the US. Jobs will come back, they always do inspite of who's in the WH.

[PearlHowardman]

I have faith in the business owners of the US. Jobs will come back, they always do inspite of who's in the WH.

 

I have faith in US business owners, too. But the jobs will come back - overseas! Even if our exports are supposed to be more competitive.

[keepthefaith]

I have faith in US business owners, too. But the jobs will come back - overseas! Even if our exports are supposed to be more competitive.

 

 

Hmmm....

 

Jobs lost overseas.

 

Note to elected officials:

 

• 
  

Identify the largest categories of imported goods and the largest opportunites for emerging products (like energy and dare I say health care)

• 
  

Set strong policies to promote private domestic investment and production

• 
  

Move the hell out of the way

• 
  

Watch economy grow

[bills_fan]

This chart says more than anything. The dollar index vs. the S&P 500 from March through now.

[Magox]

This chart says more than anything. The dollar index vs. the S&P 500 from March through now.

This is a reflection of an appetite for risk, the carry trade and the unwinding of the dollar, more than anything else.