DOW: Where's the Floor?

Events are happening fast! Another 679 points lost on the DOW today -- a 7.3% hit.

So when will this rout end and where's the floor? Well, we've fallen through ALL resistance levels as shown on the weekly DOW chart below, so we've got to use a different chart.

The 15 year monthly chart below provides us with a much wider picture - allowing us to see where the next support levels are - Hmm, the first one is pretty easy to spot isn't it?

Yes, 7,200 is the next downside support level (last seen in 2002). If we happen to fall through that support, the next stop is ~ 6,500 (last seen in 1997) followed by 5,000 (last seen in 1995).

After that, we're in the dirt somewhere in the high 3,000 range.

Will we fall that far? At this point, anything is possible. I really thought my DOW 9K prediction (by the end of 2008) was pretty bold. Never did I expect to see this much market turmoil.

Certainly seems like the wings have fallen off our economic plane, and with Pilots Paulson and Bernanke now yanking at the many useless levers, looks like the only likely outcome will be a massive fireball of a crash landing.

Randy

Plunge Protection Team (once again) to the Rescue!

The DOW fell hard from opening today and the losses accumulated throughout the afternoon - at one point (~ 2:45pm) it was down 800 points and the meltdown was all but assured, but wait! Take note of the hand of God coming into the picture at ~ 2:50 - pulling the DOW back up over 400 points in the last hour of trading.

Free markets?

Absolute Bullshit!

These four malicious, lying, thieving bastards (Heads of The Plunge Protection Team), need to be crucified!

Treasury Secretary Paulson (Chairman of the PPT)

Ben Bernanke (Chairman of the Board, Federal Reserve System)

Christopher Cox (Chairman of the Securities and Exchange Commission)

Walter Lukken (Chairman of the Commodity Futures Trading Commission)

For those who don't know: The Plunge Protection Team (PPT) was created by Ronald Reagan back in 1988 through executive order 12631. The Working Group on Financial Markets, also known as the PPT was created to respond to events in the financial markets surrounding October 19, 1987 ('Black Monday'). They are chartered with providing recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of United States financial markets and maintaining investor confidence".

Former Federal Reserve Board member Robert Heller, in the Wall Street Journal, opined that "Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole."

Today however, they are both flooding the market with liquidity AND actively engaged in manipulating the entire market spectrum - using their game of charades in an attempt to game confidence in the markets - an abominable crime!

Remember Martha Stewart and her small-time mischievious "insider trading" - HA!

How about these guys DISTORTING THE ENTIRE US MARKETPLACE? - They should be locked up for LIFE!

WAKE UP PEOPLE! It's almost time to grab the pitch forks and march on Washington!

Signed - a very disgusted Randy

Can't Stop Kondratieff Winter!

Tim Wood, one of the writers/analysts I regularly follow, wrote an article on Friday related to the recent bailout package: It Ain't Gonna Work .

Tim feels (and I'd have to agree) that our financial powers that be (FPTB) have been working hard to fight a secular bear market that actually started in 2000, and their manipulative ways have merely delayed, but will not stop the looming Kondratieff Winter that lies in wait.

Excerpts from It Ain't Gonna Work :

By every historical measure the equity markets slipped into a secular bear market in 2000. As a result, we began to see efforts by the powers that be to keep the market afloat. I have stated all along that manipulation will ultimately not work. I have also stated all along that all this will do is make matters worse in the end. Well, I would think that everyone can now see, matters are indeed much worse. Yet, the Fed, the Treasury and the politicians continue to think that they can “fix” the problem by throwing more money at it. They do not understand that they can’t “fix” this economic crisis. They also do not understand that it is their trying to “fix” things in the past that has created the current situation. All markets as well as the economy must both inhale and exhale. They are trying to prevent the exhaling and it ain’t gonna work.

What we are dealing with is the wrath of Kondratieff Winter, which is about the purging of excess credit. Along with that comes deflation and along with that global stock markets enter into extended declines. Real estate declines, economic growth slows, commodities decline, bankruptcies accelerate as the excess credit is purged from the system, the banking system is shaken, the free market is blamed and we move toward national fascist political tendencies. We are now seeing each and every one of these symptoms of K-wave winter. For the record, I did not make up these symptoms to fit the current situation. I have original writings by Nikolai D. Kondratieff and the signs of K-wave winter were quoted from a book by David Knox Barker titled, The K-wave and was published in 1995. Don’t think the powers that be aren’t aware of Kondratieff Winter. They know full well what we are facing and that is why they have tried to hold back its wrath as diligently as they have since 2001.

...Personally, I think that the powers that be helped to make matters worse by postponing the inevitable and that they are now facing checkmate because the dye has now been pretty much cast.


So you ask, sounds pretty scary, but just what exactly is a Kondratieff Winter?

Well, a piece I wrote back in 2007 explains what it is and then goes even further by explaining why/how the Kondratieff Winter of 2001+ was delayed - to now anyway:

Suggest you become familiar with the term, as it will be our destiny: Kondratieff Winter - From Dec 2007 Post


Best Regards

Randy

Social Consequences of an economic meltdown?

Back in Jan 08, I pondered aloud several questions related to the potential Social Implications of (what was then) a looming economic crisis. Turns out, many readers were wondering the same and this was one of my highest traffic posts ever.

If you haven't already done so, read the info at the following link then come back to read the rest of this post.

SOCIAL IMPLICATIONS of a SIGNIFICANT ECONOMIC DOWNTURN



Well, nine months have passed since those words were written and there can now be no doubt (1) that this crisis is one of the most significant economic downturns in history and (2) the Massive bailout package being worked is just a bandaid to slow the controlled financial implosion. Even John McCain realizes this and recently stated in his debate with Obama: "This is not the beginning of the end, but the end of the beginning - if we come out with a package that will keep these institutions stable..

With that digested and the knowledge things are likely to get far worse, what can we anticipate for our future - just how bad could things get for the little guy living in the suburbs - trying to raise a family?

I'll refrain from trying to list all possible consequences, as there are far too many potential outcomes, but I would like to highlight several major consequences that could be initiated by a worst-case financial panic...

Note: I'm not trying to scare anyone here, but merely trying to create an awareness and food for thought - so that you can use the information to better prepare your family (in the event the worse-case scenario actually happens).

Let us hypothetically propose the economic crisis intensifies:

Hundreds more banks/financial institutions implode and the FDIC runs out of money - a nationwide run on the banks ensue; consumer credit has consistently gotten worse and available credit-card credit-lines have finally been turned off/reeled in - unemployment skyrockets due to the lack of new credit/spending; inflation rages as the dollar falls sharply; the economic crisis deepens and trillions in unpayable derivative contracts unwind quickly - stock markets collapse around the globe and the crushing pressure is exacerbated by foreign holders of US Debt who finally rush to the exit doors.

The Gvt panics and Stock Markets are closed indefinitely while ATM machines, banks and electronic commerce are shut down across the nation (as the government tries to figure out what to do). People grow anxious as their credit cards and debit cards don't work, and with no cash on hand, they can't buy food or gas... Those who do have cash rush to fill up their gas tanks and empty the shelves at their local grocery stores. The real economy comes to a screeching halt as deliveries of food, gas, etc can no longer make it to market.

Social unrest and general panic set in as our just-in-time economy breaks down. People are confused and scared while the government repetitively tries to reassure that they have everything under control. Hysteria eventually sets in as social chaos, looting, and roving gangs terrorize the masses (taking what they need from the unprepared). Similar situations take place across the nation as people who were on the fringes of society become hungry/desperate and/or take advantage of the lawless situation.

Martial law is ultimately declared and National Guard troops are deployed to major cities around the nation - to help restore order, distribute food, etc.

So many unknowns

Could this actually happen? I don't know - you be the judge; but it's probably better to be a prepared alarmist than an unprepared victim... Think about it.

If you've watched Paulson, Bernanke, Bush and the rest of our worried leaders over the last couple of week, you've probably been able to sense their state of alarm - Yes, they truly realize how big this crisis is...

What can you do to prepare?

I could list a thousand things here from generators, flashlights, etc, but the most important (I believe) are:

1) Have at LEAST a couple of weeks worth of non-perishable food/water on hand
2) Have enough cash on hand to make it through a possible electronic commerce shutdown
3) Maintain close relationships with friends/neighbors (help each other out)
4) If you have a gun, know how to use it - to protect your family, friends and valuable assets (cash/food).


Closing:

Yes folks this could be bad, but we Americans are an industrious/resolute bunch and (though it will take some time) we will find a way to pull out of it.

However, be aware: regardless of the ultimate significance of this downturn, America is likely to forever change as the US Dollar loses it's reserve currency status in the not too distant future.

At a MINIMUM, this economic crisis will cause our standard of living to fall and our cost of living to increase significantly.

Bottom Line:

Our future is uncertain, and we're definitely in for some difficult times ahead, but the world will NOT end - and we will survive.

Again, this post was no meant to scare, but to inform by thinking outside the mainstream box. Use this information as you may, but it's probably not a bad idea to prepare for whatever the outcome.

Best regards

Randy

DOW Update

I'm sure most readers here know the DOW took a 500 point spanking today (a 4.5% hit).

What many may not know is: Currently, DOW futures for tomorrow's open are pointing DOWN for ANOTHER 130 points (currently @ 10,800) - may get worse before the night is through.

Anyway, if you remember my July post: DOW: Next Downside Support @ 10,700 , I mentioned 10,700 is a key downside support level and if we break through it, 10,200 becomes the next support - followed by support levels in the 9,000 range - my ultimate DOW prediction for 2008.

So, will the PPT be able to pull a rabbit out of their hat, or will we see 9K before year end?




Thoughts?

Randy

The Crash of 1929

Originally produced in the mid-1990s, this film remains the most authoritative account of the Crash of 1929, and includes rare testimony from the people who worked on Wall Street at the time

Volatile Markets Ahead

Significant market volatility is likely next week as a result of the numerous economic releases that are due.

Looking at a chart of the DOW below, notice how it has spiked above its 50 Day Moving Average (50 DMA--blue line) ? Well, I think it'll fall below it once again -- starting a new leg down - once all the new economic news is digested.

DOW Daily

Due for release this week:

Monday 10:00 Existing Home Sales
Tuesday 10:00 Consumer Confidence
Tuesday 10:00 New Home Sales
Tuesday 14:00 FOMC Minutes
Wednesday 08:30 Durable Orders
Wednesday 10:35 Crude Inventories
Thursday 08:30 Chain Deflator-Prel.
Thursday 08:30 GDP-Prel.
Thursday 08:30 Initial Claims
Friday 08:30 Personal Income
Friday 08:30 Personal Spending
Friday 09:45 Chicago PMI
Friday 10:00 Mich Sentiment-Rev.


Additionally, many analysts/investors feel the dollar's rally has been overdone and now expect Gold to start rebounding:

US Dollar Index

Bloomberg: Gold May Extend Rebound on Demand for Alternative to the Dollar

Gold may rise for a second straight week on speculation the dollar's rally against the euro will stall, boosting the precious metal's appeal as an alternative investment.

Twenty-two of 28 traders, investors and analysts surveyed from Mumbai to Chicago on Aug. 21 and Aug. 22 advised buying gold, which rose 5.2 percent last week to $833.50 an ounce in New York, the first gain in a month.

My thoughts:

In addition to the above, physical demand from India and Middle East countries is expected to rise in the coming months - potentially causing supply/demand issues and driving a sharp rise in prices. For the short-term however, gold will need to get/stay above $850 for a while before the next leg up.

GOLD

Regards

Randy

End of week economic reality check

The DOW had quite a rally this week -- a FED week with very few economic reports due out in the early part. Funny - this PPT routine is becoming quite typical of our new "Free Market Economy". Prior to official Fed Speak, Gold gets crushed, the dollar rebounds and stocks soar on great economic (well, less worse than we thought) news! Then the Fed makes his obligatory worthless statement "We're gonna get tough on inflation soon, we promise - as the world laughs -- knowing these Fed geldings are stuck and WILL NOT RAISE RATES!

Mark my word -- we'll see another cut before a rate hike.

Anyway, I expect the DOW to close lower on Friday than where it is today.

Why Do I think so? Good Question:

With few economic reports due early on and as a show of force for our castrated Fed gods, much of this rally was engineered by the PPT.

Now, with the August game of Fed charades over, and with them now in a better overall position (lower gold/oil, stronger dollar and higher equities markets), it's probably time to drop the crack pipes, take off the clown suits and have an economic reality check.

I expect, as several economic/financial reports come due in the week's latter half, this recent rally to turn into a sell-off as the week progresses.

Due tomorrow:
Initial Unemployment claims, Pending Home Sales and Consumer Credit

Due Friday:
Productivity and Wholesale Inventories

More Importantly:

AIG just took another Major Dump after the closing bell today: Forbes

After the closing bell Wednesday, American International Group turned in a loss of $5.4 billion, or $2.06 per share. AIG has lost more than $18 billion over the last three quarters due to investments tied to subprime mortgages.

Freddy Mac lost another $821 million -- NYT Today

The gloom over the nation’s housing market deepened on Wednesday as Freddie Mac, the big mortgage finance company, reported a gaping quarterly loss and predicted that home prices would fall further than previously projected.

“Basically, things are still bad,” said Steven D. Persky, chief executive at Dalton Investments, a $1 billion fund in Los Angeles. “Freddie Mac is telling us that nobody really knows how much worse they will get.”

Lastly:

RBS is likely to post a Major Loss on Friday -- TimesOnline

and Barclays May Fall Most in a Decade -- Bloomberg

RBS:

The international credit crunch is set to claim its biggest Scottish casualty later this week when the Royal Bank of Scotland unveils a pre-tax loss for the first half of the year that analysts believe could reach £1.7billion.

Such a loss would be the biggest in British banking history and have major consequences not only for the financial sector, but also the Scottish economy.

The results, due to be announced on Friday, will underscore how far-reaching the credit crunch, which began in the United States more than 18 months ago, has been.

Barclays:

Barclays, the U.K.'s third-biggest bank, probably will say tomorrow that net income dropped 42 percent to 1.52 billion pounds in the six months ended June 30, analysts estimate.

Barclays said that it had 4 billion pounds of collateralized debt obligations backed primarily by residential mortgages, 4.2 billion pounds of U.S. subprime loans, 4.5 billion pounds of so-called Alt-A loans, and 12.6 billion pounds of commercial mortgages. Unlike RBS, Barclays hasn't marked down the value of its 7.3 billion pounds in buyout loans. The bank said in May that the loans were ``performing.''

``Many regard Barclays's management as being in denial in terms of writedowns on toxic assets,'' said Gordon of Exane BNP Paribas.

Best regards -- and a sincere thanks to all of you who commented to my Adsense post

Randy

Dow Update and Silver State Bank

The DOW fell another 240 points today on weak financials and rising oil. Since the peak of 14,093 reached on October 12 last year, the index is down ~ 3,000 points or 21.4% - but we're not done yet!

Keep an eye on 10,800, as it's the next downside resistance - followed by 10,680. I expect them both to be broken - however timing is the only uncertainty.

With that said, tomorrow we will see data released from the International Council of Shopping Centers showing major retail chain sales data -- Note: Consumer Spending is 70% of the US economy.

Additionally, Monthly Consumer Confidence data will be released tomorrow -- a survey of consumer attitudes on present economic conditions and their expectations of future conditions.

I just checked opening futures for tomorrow, along with current Overseas markets: They are currently a sea of red.


Changing gears a bit:

Last Saturday I told you about two new bank failures that took place over the weekend - One being First National Bank of Nevada: Two more bank failures this weekend! .

Certainly, that was big news, but what I think may be even BIGGER news is: Andrew McCain, son of Republican nominee, John McCain, has resigned from Silver State Bank's board of directors this weekend -- McCain's son resigns from two Boards of Directors

Would a banking failure under son McCain's leadership look bad for dear old dad's election prospects? Hmmm...

Well, I suggest you keep an eye on Silver State Bank. Word on the street is they are not doing well.

Take a look at Bankrate and Safe and Sound ratings for Silver State Bank, Henderson Nevada: One Star (The Lowest Possible Rating) and 5G (Lowest Possible Rating).

I can only imagine the FDIC is working disaster/cleanup plans and decided it's probably time for Andrew to get out of the picture before the bomb goes off.

Politics at it's democratic best - gotta love it!

Regards

Randy

DOW Below 11K -- two days early on my call

For those of you who follow this Blog regularly, you know I made a call in June for the DOW to eventually break below 11,700 downside support: DOW -- Trouble Ahead?...

And then once broken, I made a call last week that the DOW would actually fall/close below the psychological 11K mark. DOW: Below 11K this week...

Well, the DOW actually DID dip below 11K (3 times) on Friday, but with Plunge Protection team assistance late in the day, it ended up closing above my < 11K projection for the week DOW Daily and Hot off the press news.

Anyway, looks like my target was finally hit today -- I was two trading days early with my call.

With that said, and with our toxic banking system contagion spreading like wildfire, I believe that if things don't improve quickly, 10,680 (the next significant downside support level) may also be taken out relatively soon.

From there, looks like 10,300 is the next downside support, followed by ~ 9,700.

Damn! This is getting downright scary -- even for me! Things are happening way too fast... This is big folks!!!



All the best

Randy

Market data and Jim Rogers interview

Asian Markets tanked overnight MAJOR WORLD INDICES

Hang Seng down > 3.8%
BSE 30 down nearly 5%
Seoul down >3%
Taiwan down almost 5%

Meanwhile, US Futures are looking dismal North/Latin America:

DOW down 139 points (Below 10,900 at open)
S&P down 16 (Below 1,212 at open)

The US Dollar is falling off a cliff

US Dollar index currently at 71.37 -- OUCH!

NOTE: ALL TIME LOW FOR INTRADAY TRADE IS 70.96

Gold and silver however are looking real good Live Market Quotes:

Gold up $11 overnight ( $984 oz) headed for $1,200 this year
Silver up $.30 ( nearing 19.50 oz) headed for $28 this year


As an aside:
I saw a video of Jim Rogers on Bloomberg yesterday that I was dying to share with all of you, but it looks like Bloomberg has pulled it already. I did however find the transcript: Rogers Calls Fannie, Freddie Rescue 'Disaster'

Jim was interviewed w/regard to his view on our government's efforts to bolster Fannie Mae and Freddie Mac, the outlook for financial stocks, the dollar and commodities, and his investment strategy. Warning: He held no punches!

CAROL MASSAR, BLOOMBERG NEWS: Our next guest is the man who correctly predicted oil would reach $100 and gold $1,000. Here to join us with his outlook on energy, commodities, the dollar, the credit crisis, everything under the sun, including Fannie and Freddie, Jim Rogers, Chairman of Rogers Holdings. He comes to us from Singapore this morning.

Jim, good morning. So, what do you think about what the government is doing or proposing to do with Fannie and Freddie?

JIM ROGERS, CHAIRMAN OF ROGERS HOLDINGS: It's an unmitigated disaster. I don't know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae. I mean, what is this?

If that is what they are doing with our tax money, why don't they ask us? I didn't say, take my money, my tax money, and buy Fannie Mae. Give it back to us if that's what they are going to do with it.

And what are they doing guaranteeing their debt? The people who bought debt in Fannie Mae and Freddie Mac can read a prospectus. They can read it. It says it is not guaranteed by the government. Anybody who can read a balance sheet knew that both of those companies were a sham and they had problems.

Now, we have to bail out the Japanese? The Japanese owe hundreds of millions of dollars of this stuff and so we are going to bail out the Japanese and the Chinese and everybody else in the world? What is this?

And it ruins the Federal Reserve's balance sheet, and it makes the dollar more vulnerable, and it increases inflation, and it drives down the dollar. Other than that, good morning.

MASSAR: Good morning. All right, so where do you think - all right. You have been very critical of the Fed and certainly some of the government moves here, Jim. So where do you think this is all leading us to?

ROGERS: It is leading to more and more rampant inflation. It is leading to a decline and the eventual demise of the United States dollar. And the FDIC this weekend used 10 percent of its assets to bail out a bank.

Anybody who has got money at Bank of America better make sure they don't have over $100,000, because 10 percent of the FDIC's assets just went there this morning.

MASSAR: Jim, a viewer e-mailed me last night, actually e-mailed Bloomberg, happens to be a mortgage banker and his question was for you. He is wondering if you covered your shorts Friday, especially in Fannie Mae and Freddie Mac?

ROGERS: No, I have not covered my shorts. Obviously I should have, because you know they already are up 50 percent or something since then. If they go up a whole lot more, I will short more. They are basically insolvent. There is no question about that.

The government itself last week said the extra, the pool last week said that they are insolvent. Anybody who can read a balance sheet knows they are insolvent. So if they go up a lot, I will short more. If they go down, I will probably cover.

ELLEN BREITMAN, BLOOMBERG NEWS: Jim, it is Ellen Breitman here. I am looking at the Treasuries, which were little changed this morning. Now you have got the 10-year down 9/32s. Why are we not seeing more of a move in the Treasury market this morning? What should the investor reaction be on that front?

ROGERS: Well, I am short U.S. government bonds and I am short the long Treasuries, so for full disclosure, I think that most people are just sitting here confused and probably relieved at the moment and trying to figure out how this is going to work out.

But let me tell you how it is going to work out. It is going to mean the debt of the United States is going to be downgraded over the next few years. It means that U.S. government bonds are now going to become suspect down the line.

MASSAR: I want to go back to financials. So you mentioned Fannie and Freddie. Are you shorting most of the big names, be it Citigroup, Merrill Lynch? I mean, a lot of them are going to be reporting earnings this week or starting to, Jim. Do you not like any of the names here?

ROGERS: Carol, since I have been coming on your program, I have been short all the investment banks. I have been short Citibank, I have been short Fannie Mae, I am still short every one of them. I will cover them all some day, but some day is a long way from now.
If they rally, I will short some more. But no, why would anybody cover any of these stocks? They are all essentially in terrible, terrible financial shape.

MASSAR: You don't think we are getting to the end of this mess?

ROGERS: Well, Mr. Paulson said we have been coming to the end of it every month for the last year. I don't happen to agree with him.

MASSAR: What is your -

ROGERS: And Mr. Bernanke has also said we are coming to the end of it. Mr. Bernanke under oath told us before Congress that the housing crisis, that there was no problem in housing two years ago and three years ago. Mr. Bernanke under oath has been telling us for a while that everything is okay.


MASSAR: Jim, did we - I want to go back to Fannie and Freddie, if I may. I know I am jumping around here because there is a lot going on. I mean, did we have a choice though with Fannie and Freddie? I mean, they are responsible for what happened, the mortgages that are out there. I mean, could we have let them fail?

ROGERS: Carol, I know you always like to print money, you always like to bail out everybody in sight. But that is not the way capitalism is supposed to work. That is socialism for the rich. That is what that is. Welfare for the rich. Of course not.

Now, if we don't let Fannie Mae go broke and we are not, obviously, what is going to happen when you Band-Aid and put some Band-Aids on it for another year or two or three? What is going to happen three years from now when the situation is much, much, much worse? Then somewhere along the line, the market is going to hit us and we are not going to be able to do anything if we keep bailing out everybody in sight.

The Federal Reserve has already extended its balance sheet so desperately that they have trouble.

MASSAR: So very critical, Jim, of what the government is proposing to do with Fannie and Freddie. But yet, investors seem to like it and you have got the dollar moving up, so there seems to be a lot of support out there.

ROGERS: Well, of course investors in Fannie Mae and Freddie Mac like it. The companies were going to go bankrupt if they hadn't stepped in to do something and they should have gone bankrupt, all the mistakes they made.

I would like to know why the people at Fannie Mae aren't in jail right now, the people at Freddie Mac aren't in jail.

MASSAR: But why is - Jim, why is the -

ROGERS: You know, a lot of people have gone to jail for fraud and scams.

MASSAR: Jim, why is the dollar up, though, this morning?

ROGERS: Well, I suspect it is because there is so many shorts. Everybody is negative on the dollar, including me, and whenever you have everybody on the same side of a trade, something comes along and you have a big rally. The shorts are covered. It is the way markets have worked for a few hundred years.

MASSAR: Are you still negative on the dollar at this point?

ROGERS: I just said everybody in the world is negative on the dollar, including me. So it is bound to rally, it could rally for another few weeks, few months. How do I know? I hope that if it does rally more this year that I will use that rally to get out of the rest of my U.S. dollars. The dollar is a terribly flawed currency, Carol.

MASSAR: Yes. And that is based on what - what about your expectations for interest rates around the world? I mean, there has been a bit of a debate now about what the Fed may do, but you have certainly seen governments around the globe raising rates to combat inflation. What is your outlook there?

ROGERS: Well, you are going to see higher rates. I am short United States government bonds, long bonds, because rates are going to go higher. The U.S. government says there is no inflation, but the rest - everybody else in the world knows there is inflation.

Most governments don't lie about it any more. They know they cannot lie about them. Inflation - the U.K. just a few minutes ago said they have the highest rate of inflation since 1986. Everybody does, and the U.K. is one of the governments that usually lies about it. So if they are saying it is that bad, you know it is really bad.

MASSAR: So, Jim, how do you think this is all going to be playing out? I mean, you are over there in Singapore, you are watching this. I mean, what is your expectations, first of all, for the U.S. and the economy here in the next, what, six to 12 months - and the markets, if you will?

ROGERS: Well, the United States is in a recession. It is going to be the worst recession we have had in a long time, perhaps since the Second World War, because the federal government keeps making mistakes. The central bank makes mistakes, the Treasury makes mistakes. Everybody keeps making mistakes.

It is going to be one of the worst. It is like Arthur Burns in the 1970s, he kept making mistakes and he had a horrible time. It's like the Bank of Japan in the 1990s, they kept making mistakes and in Japan, they still call up the '90s the ?Lost Decade.?

BREITMAN: Jim, it is Ellen Breitman again. I want to ask you a question I asked an earlier guest today, which is, when you look back over your entire career, how do this play out in terms of the level of history that is being made, Friday, Sunday, and today?

ROGERS: Well, it's a very good question and the answer, I don't think I want to give you the answer because you will probably cut me off the air. What is happening here is they are ruining the value of the U.S. dollar. They are ruining the Federal Reserve. They are ruining what has been one of the greatest economies in the world, bailing out everybody in sight.

This is a disaster for America. This is a disaster for the world. Ben Bernanke and Paulson are bailing out their friends on Wall Street, but there are 300 million of us Americans who are going to have to pay for this and there are six billion people in the world who are going to have to pay for this. And they are doing it with no authorization from anybody.

Paul Volcker said a couple of weeks ago that perhaps what the Federal Reserve has done is illegal. I would submit it is illegal what they have done and what they are doing. They are saddling all of us with hundreds of billions of dollars of debt that they have no authorization to do.

MASSAR: So, Jim, if this had been another industry, take your pick, I mean, look at the woes that we have seen in the housing industry, you don't think the government would have jumped in so quickly to help out?

ROGERS: Well, I have no idea. They jumped in once before and helped out Pfizer 25 years ago, 30 years ago. Who knows? Conceivably, it depends on how many votes they think they can get. If they can buy some votes and right now, they are trying to make all their friends on Wall Street happy. But that is not good for anybody else but Wall Street.

Ben Bernanke picks up the phone every time Wall Street calls. Paulson picks up the phone every time Wall Street calls. You don't see any firemen out there in Nebraska calling him up. You don't see anybody out there with a real job. You don't see any schoolteachers in Oregon calling him up. If they did, they wouldn't take the call.

But all the schoolteachers in Oregon know that prices are going through the roof. It is very difficult for them to stay alive these days and hold body and soul together. They don't care. They take the calls from Bear Stearns. They take the call from Lehman Brothers.

MASSAR: Jim, you know, you sound so negative here. I mean, in terms of the U.S., anything you like within the U.S. market?

ROGERS: Sure. There are plenty of things that you can like in the United States market. I own - I have been buying airline stocks recently. I haven't bought any in the U.S. at the moment, but I have been buying airlines around the world. I have been buying agriculture.

I mean, America is the largest producer of agricultural goods in the world. I love agriculture, I love farmers. I wish everybody else did too.

MASSAR: Speaking of farmers, we know you love commodities. What about this commodity boom? I think recently we talked to you and or I was reading something and it said that we are in the fourth inning of a baseball game. Still there, in your view?

ROGERS: Probably around the fourth inning, that sounds good enough. Maybe the fourth and a half, maybe the top or the bottom of the fifth, something like that. The commodities bull market has a long way to go.

There are going to be corrections along the way, Carol, there always are, but no, nobody has discovered any major oil field in over 40 years. There just aren't any supplies of anything.
MASSAR: Jim, what do you make though of the arguments out there about demand destruction, about a weakening global economy and that is going to start to bring down commodities. I know you talk about some near-term corrections.

So, anything out there though that will substantially drag down commodities, in your view?

ROGERS: Well, recession, if the world goes into recession, of course it is going to drag down the demand. But remember, Carol, in the 1970s we had one of the worst decades in a long time for the economy. And oil went up ten times, the oil commodity, we had one of the great bull markets of all time in commodities because supply went down faster than demand and that is what is happening now too.

Oil can go down - you know the bull market in oil started in 1999. Three times since 1999, oil has gone down over 40 percent. It wasn't the end of the bull market. It just scared the socks off everybody, including me. That can happen again, but it is not the end of the bull market.

MASSAR: So, any pullbacks for a buying opportunity, in your view, whether it is oil, whether it is grains, whether it is base metals?

ROGERS: Yes, of course. Everything. Base metals have already corrected a lot. Wheat has corrected a lot. Sugar has corrected a lot. Get yourself some sugar, take it home, take it home from your Bloomberg.

MASSAR: Let's get back to our guest, Jim Rogers, chairman of Rogers Holdings. So, Jim, got a favorite commodity at this point?

ROGERS: No, nothing really pops into my mind. Agriculture still, some of the base metals I am looking at. Some of the base metals, Dr. Nickel and Dr. Zinc saw the recession coming long before Dr. Bernanke did and they realized that there was problems. They are down 60 percent or something.

So, I am contemplating, only contemplating and only noticing that they are down. Some of these things are down a good amount.

MASSAR: What are you waiting for to buy in?

ROGERS: I don't know, some kind of signal that they have made a bottom. Some kind of panic selling, for instance. And also watching Taiwan and China on the same basis, if we could have panic selling in an old-fashioned selling climax in Taiwan or China, I would buy both of them as well.

MASSAR: You know, the CSI 300 is down 45 percent this year, the second worst performing major benchmark tracked by Bloomberg. Why are we seeing such a pullback?

ROGERS: Well, the market went up a huge amount in the previous two years and the Chinese government acknowledges that there is terrible inflation in China. They are doing their best to cut it back. They have raised interest rates seven times in the last year. They have raised reserve requirements 15 times.

The United States central bank has cut interest rates seven times. They have thrown gasoline onto a raging inflationary fire.

MASSAR: Are you selling any of your Chinese holdings?

ROGERS: No, never sold any Chinese shares. Own them all. I hope that my daughters own them some day. I think China has got a fabulous future. Selling China in 2008 would be like selling America in 1908, just as we were on the verge of becoming a fantastic, great success story.

MASSAR: So, Jim, I am guessing, and tell me if I am wrong, though, as a pullback in Chinese shares, do you see that as a buying opportunity?

ROGERS: Well, if they have a selling climax, yes. And probably the best opportunity will be Taiwan, because for the first time in my life, there is going to be peace in Taiwan. And so that whole economy, that whole nation is now going to have a dramatic change and it will be great for the world, but certainly for Taiwan.

BREITMAN: Jim, it is Ellen again. I am curious in terms of commodities, just switching back there. So much government intervention when it comes to the financials, do you think we could see any kind of government intervention when it comes to commodities or trying to talk down some of these prices?

ROGERS: Of course we can. Do you remember 1929? They passed the Smoot-Hawley Act, which led to the Great Depression, even though 1,000 economists went on record as saying you are making a terrible mistake. Politicians did it anyway.

Remember the weapons of mass destruction? We invaded Iraq because of weapons of mass destruction. Of course, politicians can do all kinds of simple, stupid things.

The IPO market has been driven out of America now because American politicians passed some absurd laws. They will probably do something. It will drive the commodities trade outside the U.S.

You know, the United States has dominated the commodities business for over 100 years. If the Congress of the United States is about to give the world on a silver platter and say; ?Here, take what you want. We are going to give you the commodities-trading business, it is going to leave America.?

At the same time, the politicians are saying pension funds can't invest in commodities. University endowments cannot invest in commodities. At a time where there is terrible inflation, they are going to say to the pension plans, you cannot protect yourselves from inflation, too bad. And I'd do that.

MASSAR: Jim, just 30-

ROGERS: It is insane, but they will do it.

MASSAR: 30 seconds left here. I know you mentioned you are kind of looking, eyeing at base metals. Anything else you think investors should be looking at, just kind of keeping on their radar, just quickly if you could?

ROGERS: Agriculture, agriculture. You should be buying agriculture. I am buying agriculture.

MASSAR: All right. We are going to leave it on that note. Jim, as always, good to get some time with you. Have a great day. Jim Rogers of Rogers Holdings.

DOW Daily and Hot off the press news!

Well, I was only 1/2 right ( DOW: Below 11K this week) and underestimated the power of the Plunge Protection Team (PPT).

The Dow started off the day by opening > 150 points lower than yesterday's close, then spent much of the day fumbling along ~ 200 points lower -- and it actually dipped below 11,000 on three separate occasions, only to be followed by a massive PPT-induced 200 point rally late in the day (look at 2:30-3pm on chart below); ultimately closing 100 points above my target predicted earlier in the week. Oh well, we still have next week. I still believe 9K by end of year.




Hot off the press: Looks like INDYMAC HAS TANKED!!!!

Regulators Seize Mortgage Lender

Banking regulators seized IndyMac Bancorp, one of the country’s largest mortgage lenders, on Friday evening.

The bank, a star in the subprime era, is the second largest ever to fail and the first major bank to shut its doors since the savings and loan crisis of the 1980s.

The bank collapse came after a frenzied week as IndyMac’s executives tried — and failed — to bolster the bank’s financial footing. The bank, based in Pasadena, Calif., said on Monday that it had stopped making new loans and announced layoffs of more than half of its 7,200 workers. But IndyMac’s customers — afraid their savings might disappear — stampeded tellers, demanding their money back.

The run on the bank came after a critical letter about the bank’s future written by Senator Charles Schumer, Democrat of New York. Federal regulators said on Friday that Mr. Schumer’s letter had pushed IndyMac into collapse, causing the bank run and scaring away potential acquirers.

“The senator made comments in his letter questioning the viability of the institution,” John M. Reich, director of the Office of Thrift Supervision, said on a phone call with reporters. “When a member of the United States Senate makes such a statement, it frightens depositors.”

In the days after Mr. Schumer’s letter was released on June 26, IndyMac customers withdrew an average of $100 million a day from the bank, or a total of $1.3 billion, the government said. Before Mr. Schumer’s letter, the bank had been receiving net inflows of money from depositors, Mr. Reich said.

Mr. Schumer, who has been critical of bank regulators for months, released a statement, in turn, criticizing Mr. Reich’s agency.

“If O.T.S. had done its job as regulator and not let IndyMac’s poor and loose lending practices continue, we wouldn’t be where we are today,” he said.

For all the write-downs and bad news on Wall Street over the last year, few regional and local bank have shut their doors. The Federal Deposit Insurance Corporation listed just 76 troubled banks in its report in April. The handful that have failed have been a fraction of the size of IndyMac. IndyMac held $30 billion in deposits as of late March, according to the government release.

“It’s the biggest failure in 24 years,” said Chip MacDonald, a banking lawyer at Jones Day in Atlanta. “You haven’t had a lot of failures of that size, yet.”

IndyMac’s collapse was unrelated to the market worries about Fannie Mae and Freddie Mac, the big mortgage finance companies.

Next week should be quite interesting

Randy

Could this be the day?

On Monday this week, I stated the: DOW will fall below 11K this week. Thus far, it's been a rollercoaster ride and we've come close, but it hasn't yet happened -- but today could change things!

Consumer confidence, Mich Sentiment and import/export inflation all come out shortly and current DOW fututes look to be down 120 (Ouch!) -- merely 98 points from my threshold!

With that said, GOLD is looking swell -- see chart below.

Hold on to your hats folks!

Randy

Breakdown

Markets tanked again today
- DOW closed down 236
- S&P 500 down 29
- NYSE down 144
- NASDAQ down 59

DOW

S&P 500

NYSE

Note: NASDAQ (below) is the only index listed here that hasn't busted through its earlier year low, but it's only a matter of time.

NASDAQ

Looking at the charts above, one would have to assume the Plunge Protection Team has a real problem on their hands. The last vestige of a propped up pillar of consumer/economic confidence is ready to tumble, and the breakdown is here.

Closing Note:

For those of you who don't know, the NASDAQ lost ~ 80% of its value between 2000-2002. Hitting a peak intraday of 5,132 reached on March 10, 2000 and an all-time low of 1,114 in October 2002. While not as bad, the S&P 500 lost ~ 50% during the same period and the DOW ~ 40%.

To combat the deflationary ills caused by collapsing equity markets, Alan Greenspan spawned a new inflationary cure -- The HOUSING BUBBLE.

Now, this new (BIGGER) bubble is popping and the contagion is spreading globally... Could this crisis spur a similar 80% meltdown in the S&P and/or DOW in the coming months/years ahead? Personally, I don't think it's out of the question...

Looking at it from a different (lighter) perspective: Even if we took the smaller 40% haircut (from the above "prior loss" examples) this time around, we'd still be looking at a DOW in the 8K range and an S&P index in the 900's.

Regardless, it looks like the markets are finally waking up to reality and the ultimate outcome does not bode well for our economy, our country, or our way of life.

Hold on to your hats, because life will soon become far more difficult for millions of Americans.

Best Regards

Randy

DOW: Below 11K this week?

Asian Stocks are falling hard as I pen this message, following today's US indexes lower on growing credit market concerns -- Fannie and Freddie the newest cause for alarm bells:

Freddie Mac, Fannie Mae Plunge on Capital Concerns

July 7 (Bloomberg) -- Freddie Mac and Fannie Mae fell to the lowest in 13 years in New York Stock Exchange composite trading as concerns grew the two largest U.S. mortgage-finance companies may need to raise more capital to overcome writedowns and satisfy new accounting rules.

Freddie Mac fell 18 percent and Fannie Mae dropped 16 percent after Lehman Brothers Holdings Inc. analysts said in a report today that an accounting change may force them to raise a combined $75 billion. Speculation that the companies may take further writedowns also weighed on the stock, said John Tierney, a credit strategist at Deutsche Bank AG in New York.

``There's a lot of apprehension about writedowns,'' Tierney said. ``If they have writedowns, they have to raise capital. How much do they raise and how easily can they do that? Those are the questions that everybody is asking.''

Fannie Mae and Freddie Mac shares plunge

One of the strongest warning signals came Monday, when shares of two of the nation's most important housing barometers, Fannie Mae and Freddie Mac, plummeted. After falling remorselessly over the past month, in just one day Freddie Mac tumbled nearly 18 percent, and Fannie Mae lost 16 percent.

Stock prices of both companies — the nation's largest buyers of home mortgages, and traditionally the government's backstop for the housing economy — have each declined by more than 60 percent this year. Those falling prices, along with the rash of write-downs, declining stock prices and red ink at the nation's largest banks reflect a growing conviction among investors that the current housing slump will last longer, and prove more severe, than initially feared.

As a result, investors are signaling that they are far from convinced that any enterprise — even one with the strongest backing — can successfully navigate these choppy waters, and that those who do persist will pay dearly to survive.

"Everything points to a lot more bad news to come," said Paul Miller of the Friedman, Billings, Ramsey Group in Arlington, Virginia "If Fannie and Freddie are vulnerable, it means no one is absolutely safe."

Currently, futures for DOW, NASDAQ and S&P are all pointing lower for tommorow's opening. In addition, the following data products will be released tomorrow:

- International Council of Shopping Center Store Sales
- Pending Home Sales
- Wholesale Inventories
- Consumer Credit

Later this week: other data to be released:

- Jobless claims
- Import/export Prices
- Trade Balance
- Treasury Report
- Consumer Sentiment

Bottom Line: Economic reality is finally sinking in and I expect the DOW to fall/close below the psychological threshold of 11,000 THIS WEEK! Though not true chart resistance, it will be a big deal in the financial media.

Regards

Randy

DOW: Next Downside Support @ 10,700

I've been warning my readers (i.e. Look out below!) that US economic reality will finally start catching up to the markets (our last pillar of public confidence) and we saw the first example this week -- as the DOW sliced through its strong downside support at 11,700-11,600.

The next downside support level is 10,700 (see chart) last seen in July 2006. Will we fall that far?

My thoughts: Almost a certainty! I think we may even see the 9,000 range later this year!

Bloomberg: Dow Average's Drop Into Bear Market May Signal Losses

The Dow Jones Industrial Average's 21 percent retreat from a record may foreshadow more losses for the 112-year-old stock gauge, based on its performance in previous bear markets.

``I don't expect this to be the end,'' said Dean Gulis, part of a group that manages about $3 billion in Bloomfield Hills, Michigan, for Loomis Sayles & Co. ``Stocks have been trending down now for basically a year. They're going to keep struggling for a while.''

The Dow slipped into a bear market for the 12th time since 1962 yesterday

The longest profit slump in six years and the first nationwide decrease in home prices since the Great Depression pushed U.S. equities to a nine-month tumble.
General Motors plunged 74 percent in the past nine months for the Dow's biggest decline as crude oil's 79 percent surge to $143.74 a barrel hurt sales of pickup trucks and sport utility vehicles.

GM fell to $9.98 yesterday, the lowest price since 1954, according to Global Financial Data, based in Los Angeles. The Detroit-based company, battered by the slowest U.S. automotive market in 15 years, faces the possibility of bankruptcy and may need to raise as much as $15 billion, according to Merrill Lynch & Co. analyst John Murphy.

Citigroup Inc., American International Group Inc. and Bank of America Corp. each tumbled more than 50 percent as losses and writedowns at the world's biggest financial institutions topped $400 billion following the collapse of the U.S. subprime mortgage market.

Earnings at financial firms and consumer companies reliant on Americans' discretionary income slumped 56.5 percent and 19.9 percent, respectively.



Bottom Line: The downward slide ain't over yet!

All the best

Randy

We Ain't seen nothin Yet

Since the end of the housing boom in 2005, I've been stating the housing correction in Las Vegas would be significant and we'd likely see a 50% haircut (peak to trough) in home prices. Thus far, odds are looking pretty good that I'll ultimately be correct (Maybe even too optimistic).



Four years of gains wiped out in just one.

Home prices across 20 major U.S. cities have dropped a record 15.3% in the past year and are now back to where they were in the summer of 2004, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.

Las Vegas saw the biggest declines, with prices falling 26.8% in the past year.

With so many homes on the market and foreclosures rising, prices are likely to keep falling, said Patrick Newport, an economist with Global Insight

"We expect the 20-city Case-Shiller composite to fall another 15% to 20%, to a bottom at the end of 2009, translating to a peak-to-trough drop of 30% to 35%," wrote Michelle Meyer, an economist for Lehman Bros.

After accounting for 4.5% inflation over the past year, real home prices are down in every region in the nation.

Closing:

Thus far, the decline in bubble-region home prices has been quick, but I still feel we've got a long way to go. Significant banking/credit issues will soon to come to light again while unemployment numbers are due to increase significantly. Combine these issues with billions in Option Arm Resets, massive inflationary pressures and soon-to-be crucified equities markets and the result is a toxic Witch's Brew of economic misery that will continue to force massive downside price pressures across the nation.



Bottom Line: We ain't seen nothing yet!

Regards
Randy

Look out below!

The DOW lost another 131 points and even broke through the psychological 12,000 level today. As I've stated before, keep your eyes on 11,900, 11,700 and 11,600. If we fall below 11,600 (which I certainly expect, as the PPT loses control sometime later this year -- and probably quite soon) then look out below!

DOW -- Trouble Ahead?

Tumultuous Week Ahead


DOW Daily and Weekly Charts Below





Randy

DOW Surges on good news!

Thursday's retail sales reports came in twice as high as expected, while jobless claims rose significantly more than expected.

Meanwhile, today's inflation data came in mixed: May's officially reported (manipulated) Consumer Price Index rose a larger-than-forecast 0.6 percent, driven by everyday essentials like gas and food -- the biggest increase in six months. However, the (severely skewed) "Core CPI", which excludes energy and food prices, came in as expected, with a mere 0.2% rise in May.

Additionally, today's Consumer Sentiment figures, impacted by rising unemployment concerns and record gas prices, fell hard -- to the lowest registered since 1980 (Note: that would be a 28 year low for my math challenged readers).

All this great news, provided a boost to the DOW and it regained ~ 220 points over the course of the last two days. (sarcasm for those who don't know me)

Here's an interesting report from Yahoo finance, Market Update:

Stocks spiked in the final minutes of Friday’s session, ending the session with a 1.5% gain. The day’s optimistic tone was established early on as oil prices stepped lower and core economic data met economists’ expectations. The session’s advance helped position stocks to finish the week just below the unchanged mark. (My Comment: I wonder who was doing all the last minute buying? Hmm...)

With that behind us, lets take a gander at other rosy economic reports of the day:

Foreclosures Rise 48% in May as Repossessions Double

June 13 (Bloomberg) -- Banks repossessed twice as many homes in May and foreclosure filings rose 48 percent from a year ago as falling house prices trapped borrowers in mortgages they couldn't afford, RealtyTrac Inc. said in a report today.

The percentage of total outstanding U.S. homes in some stage of foreclosure in the first quarter was 2.47, the Washington-based Mortgage Bankers Association reported. The average over the last 30 years has been 0.98 percent, the industry group said.

Lenders took possession of 73,794 houses in May, more than doubling the 28,548 REOs in May 2007, RealtyTrac said.

``Right now, lenders are afraid to lend and buyers are afraid they'll be under water in a year, so unless something dramatic happens we're going to continue to see the trend go in the wrong direction,'' said Rick Sharga, RealtyTrac's vice president of marketing.

Corn surges to record highs

NEW YORK - Corn prices surged to a new record this week, dashing meat producers' hopes for lower animal feed costs.

Corn jumped to a record of $7.30 a bushel on the Chicago Board of Trade Friday after hitting new record prices for six days in a row.

The surge in price was mainly due to wet weather in the Midwest, which has drowned crops. Investors and analysts are now fearing supply of the grain could be in jeopardy since much of the crop has already been damaged.

US Airways to slash 1,700 jobs, cut more capacity

US Airways Group Inc said it will reduce its work force by 1,700, or about 5 percent, and will cut more capacity than planned and introduce new fees as the airline industry battles record fuel prices and a weakening economy.

Downgrade Flattens Fifth Third Bancorp

Fifth Third Bancorp's dividend may be doomed, according to one analyst who foresees a halved dividend and capital infusion plan in the regional bank's future.

On Friday, BMO Capital Markets Analyst Peter Winter downgraded Fifth Third Bancorp to market perform from outperform on expectations that net charge-offs will be much higher than anticipated. "Housing conditions and the overall economy have gotten much worse since March 31," Winters said.

Ford to Have More `Targeted' Buyouts at U.S. Plants

June 13 (Bloomberg) -- Ford Motor Co. will conduct additional ``targeted'' buyouts at some U.S. plants as the world's third-largest automaker shrinks its workforce to match dwindling sales.

The plan for more early departures underscores the pressure on Ford after losses of $15.3 billion over the past two years. Even with 38,000 U.S. production workers taking buyouts since 2006, the automaker may have too many plants and employees amid a 12-year decline in U.S. market share.

Chrysler raises prices 2 percent on 2008 inventory

Chrysler LLC is raising prices by an average 2 percent on most of its remaining 2008 vehicles in response to rising costs of steel and other raw materials.

The increase will take effect on vehicles shipped to dealers starting Monday, and won't affect vehicles already in dealers' inventories.

Chrysler's sales were down 25 percent in May, a month in which the whole market dropped 11 percent when compared with May of last year. Through the first five months of the year, Chrysler's sales were off 19 percent, with huge drops in larger vehicles that make up most of its lineup.

Moody's may cut Lehman's 'A1' rating on ouster of CFO

Moody's Investors Service on Friday placed Lehman Brothers Holdings A1 rating on review for a possible downgrade. The move follows Lehman's announcement that Chief Financial Officer Erin Callan is leaving. The ratings agency noted that although the purpose of the management change appears to be an effort to assure accountability for its losses and to strengthen risk and financial controls, the decision may, in fact, further erode investor confidence.

Lehman Employees Lost $10 Billion as Shares Declined

June 13 (Bloomberg) -- Lehman Brothers Holdings Inc.'s employees lost at least $10 billion as shares of the fourth- largest U.S. securities firm plummeted 74 percent from the high last year.

Office Max shares fall on index change

NEW YORK (AP) -- Shares of office-supply retailer OfficeMax Inc. hit a 52-week low on Friday, after Standard & Poor's said it would replace it on the S&P 500, effective at the close of trading

Bad economy means less access to college

Federal panel says economic downturn means fewer loans for some college students

The struggling economy is likely to make it tougher for college students to obtain and pay for loans this fall, members of a federal education panel said Friday.

The panelists, hosted by the U.S. Department of Education's Advisory Committee on Student Financial Assistance, said students face higher interest rates on loans issued by private entities like banks or may not qualify for loans at all as lenders tighten their requirements in light of the sub-prime mortgage crisis and other economic factors.



Regards
Randy

DOW Outlook and Economic Reports

The Dow Jones Industrial Average fell another 205 points today - closing at 12,083.

Since the start of trading last Friday, the DOW has lost 4% of its value and we're now only ~ 150 points away from the key downside resistance levels I warned you about last week: DOW -- Trouble Ahead?

The issue now is: we may see some additional losses later this week, as a potentially toxic mix of retail sales, jobless claims and inflation data is due for release tomorrow and Friday -- could this trigger a new selloff? Will we actually fall below key downside support? Will the Plunge Protection Team be ready and save the day once again?

Economic Reports due tomorrow:

- Import/export prices @ 08:30 EST (Consensus: 2% change)
- Jobless Claims @ 08:30 EST (Consensus: 365K)
- Retail Sales @ 08:30 EST (Consensus: .5% & .7% excluding autos)
- Business inventories @ 10:00 EST (Consensus: .3% increase in inventories)

Economic Reports due Friday:

- CPI @ 08:30 EST (Consensus: 0.5% & .2% excluding food and energy)
- Consumer Sentiment @ 10:00 EST (Consensus: reading of 59.8)

NOTE: Friday's CPI and Consumer Sentiment are biggies! Take a look at the Sentiment chart below -- last month's University of Michigan report showed U.S. consumer confidence fell to a 28-year low in May. Another grim reading on Friday could wreak havoc on the markets.

In Closing: Regardless of what the shills are saying, all is not well with our world economy and I doubt the DOW will hold up the the increasing downside pressures... Taking a quick peek as I pen this brief post -- even the Asian Markets are tanking tonight: Major World Indices .

- Shanghai is down > 3% and below 3,000
- Hang Seng is down 2.5%
- Nikkei 225 is down 2.5%
- Taiwan Weighted down 2.5%
- Straits Times down 2%

Bottom Line: We may very well see an interesting close to this week -- w/DOW possibly closing below key support levels. If it DOES break through this first resistance level, get ready for a serious fight in the days/weeks ahead, as the PPT will defend 11,700 - 11,650 with everything in their arsenal... And if that level doesn't hold, look out below!

Best regards and good night

Randy