BullMarketRun.com

Gold is steady today after yesterday’s sell-off…as of 8:30 am Pacific, the yellow metal is up $12 an ounce at $1,622…Silver is 59 cents higher at $30.52…Copper is up 2 pennies at $3.23…Crude Oil is $1.23 higher at $82.44 while the U.S. Dollar Index is off half a point at 77.61…investors are cheering some encouraging U.S. economic news that came out this morning as well as the German parliament’s approval of crisis measures to bolster the euro zone rescue fund…

The CDNX, after a 68-point drop yesterday, was up as much as 14 points in early trading but has since fallen below 1500…as of 8:30 am Pacific, it’s off 13 points at 1490…the performance of the CDNX this month (down more than 300 points or 17%) is worrisome…it could not hold the August low and two critical long-term moving averages (300-day and 500-day) are clearly in danger of reversing to the downside sometime during the fourth quarter…the CDNX led the major markets into a bull phase in early 2009 and has been leading them, it appears, into a bear phase since March of this year…in otherwords, the lows for the year in both the Dow and the TSX are likely to occur during Q4…that’s what the CDNX is now telling us…protection of capital and an abundance of caution are warranted more than ever at the moment with the situation in Europe the most troubling and potentially damaging to the markets…a quick solution to the debt woes in the euro zone is simply not likely – the politics seem to be insurmountable – and the risk of a financial meltdown along with social unrest in that part of the world have to be considered significant…as bad as the situation in Greece is, it’s only one of five major countries that are now edging toward default…the other four – Ireland, Portugal, Spain and Italy – owe eight times more than Greece does…for the situation in the euro zone to stabilize and improve, one has to have an incredible degree of faith in politicians – the same ones who created the mess in the first place…there are many CDNX companies with outstanding projects and long-term prospects and we will continue to follow those situations closely, but a “capitulation” moment in this market has not yet occurred in our view…the good news is, fortunes are born at times such as this…the strongest companies will survive and flourish over the long-term…

On The Economic Front

The number of people seeking unemployment benefits in the U.S. has fallen to its lowest level in five months, though the reasons for that may have nothing to do with an improved employment picture…weekly claims slipped below the psychologically important 400,000 mark, falling 37,000 to 391,000…analysts had expected a drop of 3,00o (the four-week average, a less volatile measure, fell to 417,000, the first drop in six weeks)…meanwhile, the U.S. economy grew slightly more than previously reported in the second quarter, helped by consumer spending and export growth that was stronger than earlier estimated, according to a government report this morning that pointed to slow growth rather than a recession…gross domestic product grew at annual rate of 1.3%, the Commerce Department said in its third and final estimate for the quarter, up from the previously estimated 1%…the revision was a touch above economists’ expectations for a 1.2% pace and took GDP growth back to the government’s original estimate of 1.3%…the economy expanded at a 0.4% rate in the first three months of the year…while the expenditure side of the economy showed severe weakness in the first half, economic activity as measured by income fared a little better…gross domestic income rose at a 1.3% rate in the second quarter after increasing 2.4% in the first quarter…the report also showed after-tax corporate profits rising at a 4.3% rate in the second quarter, the largest increase in a year, instead of 4.1%…profit ticked up 0.1% in the first quarter…

Economists at Citigroup have again cut their global gross domestic product forecasts for 2011 and 2012 as growth prospects “continue to deteriorate quickly”…at a global level, the bank’s Citi Investment Research & Analysis unit predicted today that growth will slow to 3% this year and 2.9% in 2012… 2% global growth is seen by the International Monetary Fund and the World Bank as the classification for global recession…the cut marks Citi’s second in less than a month…it last downgraded the global economy on September 6…Citi downgraded its outlook for the United States, Canada, the U.K., Europe and Japan individually…it cut its view on China’s 2012 growth rate to 8.7% from 9%…

A closely-watched indicator of business and consumer confidence in the euro zone slumped for a seventh consecutive month in September, raising fears of a double-dip recession there…the European Commission’s economic sentiment indicator fell 3.4 points to 95.0, bringing it well below the long-term average of 100 and to its lowest level in nearly two years…the September fall comes on top of two large drops in July and August, prompting concern about the third quarter, which comes to a close this week…

An economist at Goldman Sachs is predicting a 40% chance of “stagnation” in the world’s developed markets…having analyzed 150 years of macroeconomic data, Goldman Sachs has found 20 examples of stagnation similar to those experienced by Japan in the 1990’s, most of which occurred during the last 60 years in developed economies…“During these episodes, GDP per capita growth hovers below 1% and is less volatile than usual…they are also characterized by low inflation, rising and sticky unemployment, stagnant home prices, and lower stock returns”…that’s the view of Jose Ursua, an economist at Goldman Sachs, as reported by CNBC this morning in an article by Patrick Allen…”Because these events are correlated with financial crises, the conditional probability of stagnation in the current environment is higher than normal,” Ursua stated…“Trends in Europe and the U.S. are so far still following growth paths typical of stagnations…”whether these countries manage to avoid a ‘Great Stagnation’ by a pick-up in the recovery is likely to depend on policy being able to restore confidence and putting in place reforms that can decisively jolt growth,” he concluded…

Federal Reserve Chairman Ben Bernanke, in a speech yesterday, stated the U.S. can learn how to boost long-run growth from successful emerging economies…”Advanced economies like the U.S. would do well to relearn some of the lessons from the experiences of the emerging market economies,” he said…emerging market growth shows “the importance of disciplined fiscal policies, the benefits of open trade, the need to encourage private capital formation while understanding necessary public investments, the high returns to education and to promoting technological advances, and the importance of a regulatory framework that encourages entrepreneurship and innovation (our emphasis) while maintaining financial stability,” Bernanke stated…