Friday Outlook: Commodities, Emerging Markets

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That’s it for us blogging this week. Tomorrow it’s our podcast and there’s plenty for Greg Newton and I to chat about.

One thing that’s interesting is this populist and conspiratorial article from Paul Craig Roberts who suggests that governments are doing their best to squash gold by their leasing activities. Further, he posits a controversial view that how we’ve been taught to view free trade is all wrong.

Then there is this excellent and thoughtful article regarding Geithner posted in Bloomberg. It’s thorough and well worth reading.

We’re still in a bear market and it’s as simple as that. The proposals from the Obama Administration are not finding a lot of support in markets. Tax increases are outlined here and they’re stunning. It’s hard to get comfortable with increasing taxes during a recession. I wonder how they’ve calculated the increase in tax on those earning over $250K per year. How many people will still be making that kind of money? How many near that level will ask for an amount beneath that level to avoid the extra tax. People behave in a manner to always avoid taxes and this may not be baked into the numbers.

Let’s see how we close February tomorrow. It should be with a whimper I suspect.

Disclaimer: Among other issues the ETF Digest maintains positions in IEF, TLT, TBT, and GLD.

Comments

[ozcutty:]

i'll have a guess, DJIA down 200 today

Feb 27 05:59 AM

[Sentinel:]

Look for this Bear Market to last through Obama's entire reign. This is not to pick on Obama even though I think some of his policies will prolong this bear.

If you look at that chart you will see the Bear Market of the 70's and the Tech Bear both recovered sooner. Why?

The 70's saw the formation of the Tech revolution and the beginning of the Real Estate Bubble along with the beginning of the systemic use of debt, both by government and consumers as a means of leveraging wealth.

The Tech Bubble and Bear Market recovered simply because of the logical (or illogical) conclusion of the Real Estate and Debt Revolution started in the 70's

This Market and economic environment is entirely different, even from the Great Depression. Never have we come down from such heights, with so little manufacturing base left, with high input energy prices (trust me they will come back) and saddled with so much debt both governmentally and personally.

Now with Obama adding 1.75 TRILLION dollars of new debt just this year (Hell....it's the government....round it up to 2 trillion) and for years to come, our crushing debt burden, especially in light of the fact that we will NEVER again see the exponential growth of the Reagan/Clinton years helping us manage it, will keep us from really ever getting out of the Bear Market for very long.

It's laughable that Obama states that he will cut the deficit in half by the time he leaves office in 2013. Even if that is true, at near 2 trillion dollars this year that means the deficit will be close to 1 trillion. That's roughly 600 billion more than Bush's record 400+ billion at the height of his spending orgy. No country can have sustained, significant growth with those kinds of numbers, especially in this era of debt implosion.

Feb 27 07:55 AM

[corley10:]

Why would people ask to make below $250k? That is ridiculous. If you make $500k, the first $250K would be at a lower tax rate and the amount after would be subject to the increase. You still take home more money with 500K, just less than you would have in the past. That being said, I agree that increasesing taxes during a nasty recession is beyond comprehension.

Feb 27 08:18 AM

[David Fry:]

Corley......I said: "How many NEAR that level ($250K)...." would opt for the lower amount.

Feb 27 08:25 AM

[Sentinel:]

Well...here we go again....another rally shot to hell.

The economists MISSED YET AGAIN to the downside. Q4 GDP down -6.2% vs -5.4% consensus and personal consumption down -4.3% vs. 3.7% consensus.

When 70-80% of your economy is consumption this is a disaster for economic recovery.

With housing imploding through 2010, with the National Layoff Festival going to the tune of 6 million ADDITIONAL to the 5.5 million now out of work, astronomical debt and tax burdens......

Yeah.....I'll stick to my prediction of a bear market for all of Obama's reign.

Feb 27 08:41 AM

[Sentinel:]

Sorry make that -3.7% consensus personal consumption above.

Feb 27 08:42 AM

[Sentinel:]

Oh, yeah......

Remember the Feds have fudged this number during the Reagan and the Clinton years to make it look better than it is.

For a real look go to Shadowstats.com or click this link.....

www.shadowstats.com/al...

Scroll down to the bottom and look at the way GDP USED to be figured and you will see we have been in negative GDP growth since late 2004/early 2005. Sort of explains how so many people complained about feeling left behind during the fake real estate boom.

I don't know when they will update the site with today's figures. But it continues to be ugly.

However you want to slice it or whose numbers you want to believe without significant GDP growth for a sustained period our coming Debt Default is now imminent.

Question becomes do we walk away or hyper-inflate?

Feb 27 09:03 AM

[Speedspirit:]

So what are we supoose to do? Are we just to lay down and take this?

The Bush adminastration maniulated the system to create this mess without to much resistance and now unlucky Obama is delt this hand. The bipartisan activities rusuming to solve the situation is appaling. I would like to see a movement before its to late from all you top Commentors to rally your friends and voice your opinions to Congress on fixing the matter with a fervor pace, instead of accepting this @%*!. This non nationalization is nationalization of Citi so the lies continue. We arent a slepping nation I think its just that all you who made a ton of money during the Bush games have enough to play with for now and arent upset enough to take on a fight. Shame on you.

Feb 27 09:04 AM

[JGL:]

A lot of the earners above 250 K are small businesses!

Feb 27 09:09 AM

[Conan the B...:]

The eternal optimist, Citi's uncertainity is a little more certain. AIG's $60 Billion is baked into the Cake. Obama's $3.75 Trillion deficit in 2010 is now heralded to the entire universe and yet the Idiot USD and Gold both rally,

China is supposed to be buying Copper but I can't tell from where. NG at $4, WTI no longer at a massive discount to Brent.

Thank you Mr. Fry, I'd rather you opine than try to give an opinion.

Feb 27 09:25 AM

[dc1:]

Dear Employer:

Instead of the $275,000 I am currently making; please reduce my pay to $249,999.

I don't want to pay the extra tax on the $25,001 difference...Oh! that is soooooo funny. Ha, Ha, Hee, Hee.

Feb 27 12:39 PM

[Emerald:]

Instead of raising taxes to pay for two wars, Bush borrowed the money and looked the other way as Wall Street bought mortgage brokers, lowered lending standards and here we are. Perhaps those who benefited from the lower tax rates, like myself, now need to start paying back the foreign lenders. The top tax brackets had all the benefits, now it's "pay-it-back" time.

Feb 27 01:34 PM

[AndrewBaker:]

David, thanks again: just scanning through your charts shows us that the economy is shot and heading further south, a long way further south, before we may even contemplate any upturn. I have "lost" many dollars trying to play the long game - and short term at that - recently, in the hope that something would happen to suggest we may be about to climb back up that wall of worry. But no! Nothing has happened and it won't for a l o n g while. This depression will be the main focus of the next presidential election. All my investment bets right now are short except for long gold and silver, and a quick turn on long oil (but don't blink!) which will revert to short around the time of the next OPEC meeting.

Feb 27 02:34 PM

[OldLimey:]

The fascinating thing about charts is that they're in the eye of the beholder. Take GLD. If it holds at resistance in the mid-80s, rather than a 'worrying' double top we would be looking at a powerfully bullish inverse H and S. Technically, the jury is very much out - but on fundamentals gold has to be a hold if not a buy.

Feb 27 02:48 PM

[Conan the B...:]

OldLimey: Couldn't agree more. Everyone is looking to support at $920-940 on gold. A drop below $900 would have the Double Top Crowd Crowing setting the stage for a 50% Up move.

It won't happen overnight but could in the next month.

Feb 27 03:11 PM

[johnthebears:]

Your chart of 4 bad bear markets is so important to consider.

Thank you David.

Mar 01 08:56 PM

[kris23:]

DJIA, SP500 and NASDAQ all look extremely bearish this morning according to this real time meter: www.predictwallstreet..../

Mar 02 03:22 PM