Soros, Taylor, El-Erian, Grant, Ackermann On Eurozone Crisis; Gary Shilling, Marc Faber on China

Euro Banknotes (Wikimedia/ECB)
Watch the Greek austerity/budget cut vote tomorrow and see how EUR/USD reacts (read my previous post on EUR/USD technical levels to watch). Below are opinions of what to expect going forward with Greece (+ analysis on China, Japan and Italian banks).

Josef Ackermann (Deutsche Bank CEO) Greek woes may eclipse Lehman (Reuters, 6/27/2011)

Soros Says a Euro Exit Mechanism Is ‘Probably Inevitable’ Amid Debt Crisis (Bloomberg, 6/27/2011)

Financial Meltdown if Greece Defaults: S&P Equity Strategist (Yahoo Finance - Breakout Video, 6/27/2011)

EU has Plan B if Greece rejects austerity -sources (Reuters, 6/27/2011)

Norway Won’t Be Haven From Greek Default (Bloomberg, 6/28/2011)

U.S. Money Funds Risk Losses From Europe Crisis (Bloomberg, 6/27/2011)

Jim Grant (Interest Rate Observer): Money market mutual funds in the U.S are exposed to sovereign risks in Europe (Bloomberg Video, 6/20/2011)

Scenarios: Possible impact of a Greek ratings default (Reuters, 6/27/2011)

Greek debt restructure inevitable: PIMCO's El-Erian (Reuters, 6/26/2011)

EUR/USD at Crossroads Waiting on Greek Budget Cut Vote (Charts)

EUR/USD (see larger views below)
EUR/USD (Euro in U.S. Dollars) is trying to confirm a direction in the center of a descending channel. It rallied hard last night when Premier Wen said he would invest in the Euro-zone's sovereign debt. At Bloomberg (6/26/2011):
"Premier Wen Jiabao said China will keep investing in Europe’s sovereign bond market, providing a vote of confidence in the region roiled by the debt crisis."

And French banks are willing to rollover greek debt. At Bloomberg (6/27/2011):
"The euro maintained yesterday’s gain against the dollar on optimism Greece’s creditors will agree to roll over the nation’s debt to forestall the currency union’s first default."

However, the Euro started falling on fears that Greek austerity might not pass. At Bloomberg (6/28/2011)
"The euro fell against the dollar and yen, reversing earlier gains, before Greek lawmakers vote on budget cuts tomorrow needed to prevent the currency union’s first default."

Who knows what will happen tomorrow. Like I said in my previous post, in my opinion EUR/USD needs to stay above 11/4/2010 support (1.4281) to prove it can test the upper-bound of the descending channel. The 50 day moving average and the near-term downtrend line also need to be violated. If EUR/USD can't stay above 1.4281, it could test the major uptrend line and 200 day moving average inside the symmetrical triangle. Click on the charts below for a larger view. I'm going to construct a link-fest with various opinions on the Greek debt crisis and Euro (see it here).

China Winning the Race for Central Asia's Energy Riches - Guest Post

Source: Photobucket
Guest Post by OilPrice.com

China Winning the Race for Central Asia's Energy Riches

Many western analysts have described the post-Soviet tussle for Caspain and Central Asian energy reserves as the new "Great Game, except this time around, Russia is facing the U.S. rather than the British empire.

To a dispassionate outside observer however, what is most striking about the prolonged wrangle between Moscow and Washington for hydrocarbons, military bases and influence is the emergence of an understated sly newcomer who has managed to bag many of the region's assets - China.

There are many reasons for this, despite the fact that both Russia and the U.S. both seemed to hold winning hands.

FOMC Statement, Economic Projections, Bernanke's Press Conference (Video-Transcript) - 6/22/2011

Bernanke's Press Conference 6/23/2011
On 6/22/2011, the Federal Reserve released updated economic projections and said in the FOMC statement that the U.S. economic recovery was "continuing at a moderate pace, though more slowly than the Committee had expected" and "recent labor market indicators have been weaker than anticipated. The Fed completes its second round of quantitative easing ($600 billion in Treasury bond purchases) at the end of the month, but will continue to reinvest principal payments from agency debt and agency mortgage-backed securities in Treasury securities. I embedded Bernanke's press conference and transcript as well.

Overnight market update: E-mini S&P 1261.75 (-0.18%), EUR/USD 1.41196 (-0.06%), Gold/USD 1504.14 (-0.01%), August Crude Oil Future 90.69 (-0.52%), Nikkei 225 9619.57 (-0.61%), Hang Seng 22,025 (-0.66%).

FOMC Statement on June 22, 2011:
Fed Economic Projections (GDP, Unemployment, PCE Inflation) 6/2011
Information received since the Federal Open Market Committee met in April indicates that the economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected. Also, recent labor market indicators have been weaker than anticipated. The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Inflation has picked up in recent months, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions. However, longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The unemployment rate remains elevated; however, the Committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline toward levels that the Committee judges to be consistent with its dual mandate. Inflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

10 Year Italian-German Bund Yield Spread Makes New High; Watching Spain (Chart)

Italy - Germany 10Y Spread (Bloomberg)
After Moody's put "Italy's Aa2 ratings on review for possible downgrade",  I charted out Italy's 10-year bond yield and randomly opened up a chart of the 10 Year Italian-German bond yield spread (ITAGER10:IND) on Sunday 6/17/2011, and it appeared to me that the spread wanted to test the high on 1/10/2011 (1.97) and potentially make a new four year high. I told my twitter followers to watch it on Sunday night. During the next four days the spread went from 1.88 to 2.07 and made a new high. The 5-year Italian-German bund (ITAGER5:IND) spread did not make a new high, but it did spike to test the high on 1/10/2011 (2.17). Thoughts?

The spread measures Italy's credit risk against Germany which is considered the safest credit in the Eurozone. There is an ongoing sovereign debt crisis in Europe with the PIIGS (Portugal, Italy, Ireland, Greece and Spain), so these spreads are important to watch. Today the 10 Year Spanish-German Bund spread (SPAGER10:IND) closed 6 basis points away from the high made on 11/30/2010 (283). The 5 year spread is not on Bloomberg.com. I provide links to more spread quotes on Bloomberg.com in this post.

*This just in:

Moody's Warns On Ratings Of Italian Banks (WSJ)

China Formally Working With IMF To Avoid Eurozone Restructuring - Qu Xing, director of the China Institute of International Studies (Zero Hedge)

China Recognizes Risk Of Buying Euro-Zone Sovereign Debt -China Adviser (Wall Street Journal)

Chinese Energy Policies Harming Neighbors - Guest Post

South China Sea (Wikimedia)
Guest post by OilPrice.com

Chinese Energy Policies Harming Neighbors

China's omnivorous energy requirements have been attracting increasing attention as of late, as Beijing attempts to secure any and all sources of power for its growing industrial base.

Nowhere is this more noticeable than Beijing's policies in the South China Sea, where Chinese assertions of sovereignty are unsettling the Philippines, Taiwan, Vietnam, Malaysia, Indonesia and Brunei, all of whom have counter claims on the various shoals and islets.

China's landward neighbors are also feeling the hot breath of Beijing's mandarins, however, most notably its economic rival India, with whom China fought a brief war in 1962 in the Himalayas over a disputed frontier, where the alpine conflict, according to China's official military history, achieved China's policy objectives of securing borders in its western sector in retaining Chinese control of the Aksai Chin with India accepting the de facto borders which codified along the Line of Actual Control.

Now China and India are engaged yet again in a spat, this time over the headwaters of the Brahmaputra River. According to New Delhi China is planning up to 24 hydroelectric facilities with a cumulative power generation capacity of nearly 2,000 megawatts along Brahmaputra's source, the Arun River, before it descends into India.

BAC, ProLogis, NRG Energy Partner in Huge Rooftop Solar Generation Project (With DOE Loan)

I thought this was interesting:

Source: Flickr (Montgomery County, MD)
Landmark Rooftop Solar Project to Create Thousands of Jobs in 28 States

Bank of America Merrill Lynch, Prologis and NRG Energy Secure an Offer of a Conditional Loan Guarantee Commitment From Department of Energy NEW YORK, Jun 22, 2011 (BUSINESS WIRE) --

Rooftop solar generation takes a giant leap forward as a consortium of leading companies - Bank of America Merrill Lynch, Prologis and NRG Energy - announce an offer of a conditional commitment from the U.S. Department of Energy's Loan Programs Office to help finance the largest distributed rooftop solar generation project in the world. The loan guarantee supporting $1.4 billion of debt facilitates a total project size of about $2.6 billion, which is being financed entirely by the private sector over the next four years.

This distributed solar project will generate employment across 28 states and will create the equivalent of more than 10,000 full-year jobs. Once fully funded and completed, these installations are expected to provide approximately 733 megawatts (MW) of distributed solar energy, which is enough clean, renewable energy to power approximately 100,000 homes.


Kazakhstan's Uranium Industry Could Lose Its Luster - Guest Post

Guest post by OilPrice.com

Kazakhstan Uranium Reserves (via Ernar Sagatov)
Kazakhstan's Uranium Industry Could Lose Its Luster

What a difference a year and a tsunami make.

Western investors have been salivating over the post-Soviet space's energy riches since the 1991 collapse of communism. While focusing on the Caspian's hydrocarbon reserves other mineralogical riches awaited development as well, none more so than Kazakhstan's vast uranium deposits.

Given an investor-friendly government in Astana, the country's uranium deposits seemed to be the Next Big Thing, an attitude encouraged by the government of President Nursultan Nazarbayev. Kazakhstan contains the world's second-largest uranium reserves, estimated at 1.5 million tons. Until 2009 Kazakhstan was the world's No. 3 uranium miner, exceeded only by Australia and Canada; the three countries account for more than half of global uranium production.

A mere five years ago Kazakhstan produced 5,279 tons of uranium, 21 percent more than in 2005.

Even better, local markets seemed assured in the form of Asia's rising economic powerhouses China and India. China's Commission of Science Technology and Industry for National Defense in its 11th Five-Year Plan for the Nuclear Industry said China intended to produce 40 gigawatts of nuclear power electrical generating capacity by 2020. Even though nuclear power currently accounts for just 1.4 percent of China's electrical power generation, China's planned nuclear power reactors were estimated to need 44 million pounds of uranium annually, as more than 16 provinces, regions and municipalities announced intentions to build NPPS, bringing the country's total of 77 planned and proposed new reactors.

Bill Gross: College is a Waste (College Tuition Inflation, Student Debt and No Jobs)

In his most recent note, Bill Gross, manager of the largest bond fund in the world at PIMCO, said college is a waste and needs to restructured in order to create jobs again. Read the full note here.

"​A mind is a precious thing to waste, so why are millions of America’s students wasting theirs by going to college? All of us who have been there know an undergraduate education is primarily a four year vacation interrupted by periodic bouts of cramming or Google plagiarizing, but at least it used to serve a purpose. It weeded out underachievers and proved at a minimum that you could pass an SAT test. For those who made it to the good schools, it proved that your parents had enough money to either bribe administrators or hire SAT tutors to increase your score by 500 points. And a degree represented that the graduate could “party hearty” for long stretches of time and establish social networking skills that would prove invaluable later on at office cocktail parties or interactively via Facebook. College was great as long as the jobs were there.

So is college tuition (higher education) in a bubble? Here are facts Gross provided. The chart above compares college tuition, home prices and the CPI.

EUR/USD Chart Testing 50DMA Before Greek Confidence Vote

EUR/USD broke above resistance in the vertex and is still riding the uptrend line. It is now testing the 50 day moving average. Catalysts ahead include the Fed meeting and Greece confidence vote. Continue to watch that trend line and floor support (Nov 2010 high). If tested again and breached, I think it presents a decent short opportunity (in my opinion). A chart with EUR/USD updated is after jump, as well as a hyperlink to the layout with trend lines. You can also watch the EUR/USD quote live on the FreeStockCharts.com widget on the sidebar.



Obama Impersonator at Republican Leadership Conference (Reggie Brown)

While waiting on Greece's confidence vote, watch some political comedy that occurred over the weekend. Reggie Brown, a comedian and Obama impersonator, performed at the Republican Leadership Conference in New Orleans on Saturday and was eventually kicked off stage, haha. He started taking shots at Republicans and they cut off his mic during a joke on Michele Bachmann. From the Washington Post:
“Had I been in the room I would have pulled him sooner,” Charlie Davis, executive director of the RLC told The Fix. “We have zero tolerance for racially insensitive jokes. As soon as I realized what was going on, I rushed backstage and had him pulled."
He does a good impersonation. Watch the CSPAN video after the jump.

Sarah Hewin: Greek Banks More Exposed To Sovereign Debt Crisis (CNBCTV18)

Sarah Hewin (Source: Youtube)
If you want detailed information on the Greek sovereign debt crisis, Sarah Hewin, Head of Research at Standard Chartered Bank in Europe, explained everything on CNBCTV18 yesterday. Read the full transcript or watch the video after the jump. I also provided links to breaking news on the situation. Ahead of the confidence vote, the Greek 2-year government bond yields 28.098% (went from 28.81% to 28.09% this morning) and EUR/USD is trading higher at 1.43433. Good luck Greece!
Greece 2-year Gov Bond Yield (Bloomberg)
"The question is how voluntary a voluntary rollover can be is an interesting one. I think that there is a certain amount of behind the scenes coercion which is going on for large banks, particularly state owned banks in Europe to rollover debt as it falls due. Now, the main thing is that there should not be seen to be any coercion because if that’s the case then the ratings agencies have said that they will class Greek debt as in default, and if that’s the case then the European Central Bank has said that they will no longer accept Greek debt as collateral. So the definitions are quite important. 
The main difference really is that in a truly voluntary situation you frankly don’t know how much debt is going to be rolled over. So it’s a bit of a shot in the dark as to how much you can rely upon the private sector to refinance that debt as it falls due. The overall exposure to Greece, again an interesting question, we have got various parts of the global economy which has exposure to Greece but of course the main holders of Greek debt are the Greek banks themselves, the European banks hold probably 80% of foreign banking exposure to Greece and amongst those European banks its France and Germany that have the major holdings, has major holding in euro size. But if you look at what their holdings are as a share, as a percent of the banking sector assets is relatively small amount. The Greek banks are much more exposed on that measure."

Aviation Biofuels About to Take Off (Camelina) - Guest Post

Camelina and Algae Fuels via U.S. Navy
Guest post by OilPrice.com

Aviation Biofuels About to Take Off

An extraordinary convergence of recent events seems poised shortly to make aviation biofuels the belle of the investor's ball.

The first is that on 8 June the follows the international standards certifying body ASTM International announcing its approval of its BIO SPK Fuel Standard, to be made official later in the year, of the use of hydrotreated renewable jet (HRJ) Jet A-1 fuel in commercial aviation. The potential financial implications are massive, as together the airline industry and the U.S. military use more than 42.25 million gallons (1.5 million barrels) of jet fuel a day.

One of the leading contenders for ramping up production of Jet A-1 HRJ is camelina, which has undergone extensive testing by both civilian airlines and the U.S. military. Camelina HRJ qualifies as a "drop-in" fuel, which can simply be mixed with regular Jet A-1 in a 50-50 ratio, allowing jet engines to function without any modifications.

In March 2010 Biomass Advisors released their 116-page study, Camelina Aviation Biofuels Market Opportunity and Renewable Energy Strategy Report, projecting that by 2025 one billion gallons of camelina biofuel would be produced for the aviation and biodiesel sectors, creating 25,000 new jobs and producing over $5.5 billion in new revenues and $3.5 billion in new agricultural income for U.S. and Canadian farmers. Biofuels Digest is projecting that global advanced biofuels capacity will reach 4.003 billion gallons by 2015, based on company announcements to date, with capacity reaching 718 million gallons in 2011, 1.522 billion by 2012, 2.685 billion by 2013, and 3.579 billion gallons by 2014.

Fuel and oil comprise 25 percent of civilian airlines' operating costs. When the price of jet fuel rises one cent, it increases the global cost of aviation $195 million.

Italy, Spain, Greece, Portugal, Ireland Spreads to German Bunds (Quotes)

10Y Portuguese-German Yield Spread (Bloomberg)
Bloomberg.com has charts and quotes of Eurozone government bond yield spreads to German bunds as a sovereign credit risk indicator. Germany is considered the safest sovereign credit in the Eurozone; so if a country's bond yield increases against German bunds, then credit risk is rising. Unfortunately I could only find 10-year spreads on Bloomberg's website (UPDATE: The 5Y Italian-German Bund spread works, you can try to tweak the other quotes). Apparently 5-year spreads are more important to watch. You can also watch the government bond yield itself and the credit default swap to monitor credit risk. Look at the snapshot of Portugal-Germany during the past year!

*Update: Unfortunately Bloomberg.com took these charts down, but the spreads are still available on a daily basis (the links redirect to their government bond center). You can still view charts of government bond yields.

*Update #2: You can view charts of these spreads (risk premiums) at countryeconomy.com.

First the PIIGS:
10 Year Greek - German Bund Spread (.GRGER10:IND)
10 Year Italian - German Bund Spead (.ITAGER10:IND)
5 Year Italian - German Bund Spread (.ITAGER5)
10 Year Portuguese - German Bund Spread (.PORGER10:IND)
10 Year Ireland - German Bund Spread (.IRGERSP:IND)
10 Year Spanish - German Bund Spread (.SPAINGER10:IND) (works)

France, Belgium and the UK:
10 Year French - German Bund Spread (.FRAGER10:IND)
10 Year Belgium - German Bund Spread (.BELGER10:IND)
10 Year U.K. Gilt - German Bund Spread (.UKGER10:IND)

Related Post on June 24, 2011: 10 Year Italian-German Bund Yield Spread Makes New High; Watching Spain (Chart)

For more bond quotes and charts at Bloomberg.com visit this post at tickerforum.org. Market participants can now trade 10-year Sovereign Yield Spread Futures. Here is the press release and video via CME Group. I embedded the video after the jump.

"CME Group Announces the Introduction of Sovereign Yield Spread Futures to Help Manage Risk Exposure Between Government Bond Markets

LONDON, April 21, 2011 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, has announced today that it will introduce cash-settled Sovereign Yield Spread futures beginning May 22 for a trade date of May 23. The six countries represented in the initial launch phase include France (OAT), Germany (Bund), Italy (BTP), Netherlands (DSL), United Kingdom (Treasury Gilts), and United States (Treasury Notes). These products are listed by and subject to the rules of CME, and further diversifies CME Group’s Interest Rates product portfolio.

Moody's: Italy's Aa2 Ratings On Review For Possible Downgrade (10-year Bond Yields 4.81%)

Italy 10-Year Government Bond Yield
(Source: Bloomberg.com)
From Moody's Investors Service on Friday June 17, 2011. To your right is Italy's 10-year government bond yield.
"Moody's places Italy's Aa2 ratings on review for possible downgrade

Frankfurt am Main, June 17, 2011 -- Moody's Investors Service has today placed Italy's Aa2 local and foreign currency government bond ratings on review for possible downgrade, while affirming its short-term ratings at Prime-1.

The main drivers that prompted the rating review are:

(1) Economic growth challenges due to macroeconomic structural weaknesses and a likely rise in interest rates over time;

(2) Implementation risks surrounding the fiscal consolidation plans that are required to reduce Italy's stock of debt and keep it at affordable levels; and

(3) Risks posed by changing funding conditions for European sovereigns with high levels of debt.

Moody's review will evaluate the weight of these growing risks in light of the country's high rating but also relative to some credit-strengthening trends that have been observed in recent years and are expected over the coming years, such as improved fiscal governance, lower budget deficits and a modest economic recovery.

RATIONALE FOR REVIEW

First, the Italian economy faces growth challenges in an environment characterized by long-term structural impediments to growth and potentially rising interest rates. Structural economic weaknesses -- mainly low productivity and important labour and product market rigidities -- have been a major impediment to growth in the last decade and continue to hinder the economy's recovery from the severe recession it experienced in 2009. Italy has so far only recovered a fraction of the nearly seven percentage points in GDP that it lost during the global crisis, despite low interest rates, which are likely to rise in the medium term. Growth prospects for the Italian economy in the coming years will be a crucial factor that will determine the government's revenues and the achievement of fiscal consolidation targets.

EUR/USD Inside Vertex Waiting For Eurozone Catalyst (Trends, Channels To Watch)

EUR/USD (FreeStockCharts.com) - shorter term
I'm watching the EURUSD vertex point. Putting the action into words, The Euro in U.S. Dollars is testing the high from November 2010, as well as uptrend support from January 2011. The green circle shows where it would trade if EURUSD successfully broke above the November high with support from the rising trend. However, it is still in a wide descending channel. If EURUSD breaks below the uptrend line from January, EURUSD would trade inside of a longer term symmetrical triangle using the uptrend line from June 2010 as support.

EURUSD is trading below the 50 day moving average (blue line) and above the 200 day moving average (red line). I wouldn't be surprised if the Dollar rallied further here (EUR/USD moved lower) and market pulled back as a result, but the debt ceiling debate, end of QE2 and U.S. economic slow down will all affect Treasury yields and the U.S Dollar going forward. The sovereign debt crisis in Europe, as well as contagion risks, are affecting the Euro. For more information and catalysts that lie ahead read these articles below. I also embedded a video with Greek Prime Minister George Papandreou addressing parliament (via Al Jazeera).

Europe Fails to Agree on Greek Aid Payout (Bloomberg)
Europe delays decision on emergency loans to Greece (Reuters)
EU’s Juncker Says Progress Made on New Greek Aid Package (Bloomberg) ?
Euro zone finance ministers' statement on Greece (Reuters
)
Official Statement By An Insolvent Europe On An Insolvent Greece (Zero Hedge)

Japan says G7 finance leaders discussed Greek crisis (Reuters)
Greek Default Would Spell ‘Havoc’ for Banks (Bloomberg)
Related: Italy’s Bond Ratings May Be Downgraded by Moody’s Amid ‘Growth Challenges’ (Bloomberg)
Pimco head says EU must change course on Greek aid (Reuters)
"Europe risks wasting more money for nothing if it keeps pumping billions into the ailing Greek economy, the head of Pimco, the world's largest bond fund, said in an interview published on Sunday."
If All Else Fails, Lower Your Standards (Irwin Seltzer - Wall Street Journal)

*EUR/USD (FreeStockCharts.com) - longer term*

Soros: China Risks Hard Landing (Shanghai, Hang Seng, FXI, EWH Charts - 6/19/2011)

via Flickr (JamesReaFotos)
George Soros warned about China's economy at a conference in Oslo, according to Bloomberg.

"China has missed its opportunity to stem inflation and may now risk a hard landing, billionaire investor George Soros said."

"The world’s second-largest economy is in a “bit of a bubble,” Soros, 80, said today at a conference in Oslo. There are some signs that China is “losing control,” he said."

"China’s formula for steering its economy is “running out of steam,” Soros said, adding the country is seeing the beginnings of wage-price inflation."

Shanghai Stock Index ($SSEC) 1-year Chart

Soros also talked about Europe and Africa. Below I put up charts of the Shanghai Stock Composite Index ($SSEC), Hang Seng Index ($HSI), FXI (iShares FTSE China 25 Index ETF) and EWH (HongKong iShares). They all look like they are rolling over and/or piercing near term support levels. EWH, and probably the others, couldn't break above the 2008 high so I bet it retraces a bit. A breakout above 2008 resistance would signal long-term upside in my opinion. In the near term, these charts need to break out of downtrends and confirms support levels. Jim Chanos, who warned about Enron before it collapsed, has been bearish on China for a while. (Jim Chanos: China's Economic Growth Path Is Unsustainable (CNBC) 5/6/2011).

JOE (St. Joe Co.) Tests Symmetrical Triangle! - Chart

If JOE breaks down, $13 looks like a decent support level from 1998-1999. Thoughts? David Einhorn and Whitney Tilson value JOE between $7 and $13 (see previous posts for CNBC videos and links to reports).

St. Joe Company ($JOE) - Source: FreeStockCharts.com

Recent posts on $JOE:

St. Joe is Whitney Tilson's Largest Short Position, Berkowitz Wants $JOE As Largest Position (May 24, 2011)

David Einhorn is Still Short St. Joe and Moody's, Buys Yahoo (Greenlight Q1 Letter) (May 11, 2011)

St. Joe (JOE) May $24 Call Volume; BlackRock, Fidelity Magellan Own a Huge Chunk of Shares (April 20, 2011)

SEC Conducts Inquiry Into St. Joe's Land Impairment Practices (JOE) (January 12, 2011)

Einhorn's Presentation On Why He's Short St. Joe Vs. Bruce Berkowitz Who Owns 30% (December 20, 2010)

*I am not long or short this stock

Nuclear Twilight in Europe (Germany) - Guest Post

Nuclear Power Plants in Germany
(via Wikimedia Commons)
Guest post by OilPrice.com (image added)

Nuclear Twilight in Europe

It is becoming evident to many that the March nuclear catastrophe at Japan's six reactor Daichi Fukushima complex has dealt a huge, possibly fatal, blow to the nuclear industry's hopes of a revival.

A year ago even global warming enthusiasts reluctantly embraced nuclear power as a carbon-free energy generating system, and the industry was ramping up for glory days as a result.

The triple whammy against nuclear power beginning with the 1979 partial meltdown at Three Mile Island, followed by 1986's Chernobyl disaster and now Fukushima, effectively present a "three strikes and you're out" call against civilian nuclear energy power generation for the foreseeable future.

That said, with the trillions of dollars already invested in 436 nuclear power plants (NNP) worldwide, according to the International Atomic energy Agency (IAEA), the industry has begun to push back, and "ground zero" is emerging as Europe, not Japan, with the lawyers circling.

In the wake of Fukushima, German Chancellor Angela Merkel announced on 30 May that Germany, the world's fourth-largest economy and Europe's biggest, would shut down all of its 17 would abandon nuclear energy completely between 2015 and 2022, an extraordinary commitment, given that Germany's 17 NPPS Germany produce about 28 percent of the country's electricity.

If Berlin's announcement sent nuclear power proponents seating, worse was to follow, as Switzerland is examining a proposal to phase out the country's five nuclear plants by 2034.

EUR/USD Levels To Watch, LIBORs, Europe Debt Crisis Updates (6/16/2011)

EUR/USD could test the 200dma and 1.5 year uptrend line. The October 2010 peak looks like resistance again. The Eurozone sovereign debt crisis still hasn't been resolved, and since banks own this debt there are worries over contagion risk. Greece's 5Y credit default swap just hit a new high (1,769.175 bps USD). This could help, via Reuters: "IMF expected to pay next Greek tranche: eurozone sources". Below is some DV proprietary chart art and links to relevant articles. Watch LIBORs and the U.S. 2-year swap spread to see if interbank dollar funding risks are being repriced. Read more at Bloomberg"Europe Faces ‘Lehman Moment’ as Greece Unravels: Euro Credit".


Source: FreeStockCharts.com  (click for larger view)

1-Month, 3-Month LIBOR (London Interbank Offered Rate)
Direct Source: StockCharts.com

Related articles:

Hedge Funds Ramp Up Extreme Bets Against Euro
"According to a Deutsche Bank note to a client, one "U.S. house" bought a very large amount of one-month euro/dollar put options with a $1.40 strike price on Tuesday and Wednesday. At Bank of America, brokers saw someone buy a $1 billion put option with a strike price of $1.30 and an end-of-year maturity date." (WSJ)

Euro Declines to Three-Week Low on Concern Europe Debt Crisis Is Worsening (Bloomberg)

Euro-Dollar Puts Reach Highest in Year on Greece’s Sovereign-Debt Turmoil (Bloomberg)

Greek Bank Threat is Main Stability Risk: ECB (Bloomberg)

European stocks falter on debt contagion woes (Reuters)

Greece, Ireland, Portugal Lead Sovereign Credit-Default Swaps to Records (Bloomberg)

Greek Government Fall Would Be Big Step To Disorderly Default -Fitch Analyst (WSJ)

Treasuries Advance on Europe Concerns, Two-Year Yields Fall to 2011 Low (Bloomberg)

Japan’s Bonds Rise as Greece Political Turmoil Boosts Demand for Safety (Bloomberg)

Rise in dollar funding pressures spooks traders (Reuters)

ECB Constancio: Restructuring Could Increase Contagion Risk (iMarketNews)

Interest Rate Swap Spreads Widen Most Since November; Moody's Warns French Banks (Bloomberg)

Guggenheim's Minerd Interview on Global Markets, Greece's Debt Problems (Bloomberg Video)

FX Concepts's Conklin on Euro, Dollar Outlook (Bloomberg Video)

John Burbank: Asset Prices Down 10, 15, 20 Percent Will Bring QE3 Speculation

John Burbank, managing member and chief investment officer at hedge fund Passport Capital, spoke at the Committee for a Responsible Federal Budget Annual Conference yesterday (read Bernanke's keynote here) on the debt ceiling and end of QE2. I transcribed what he said below. He covered how he's investing around the Fed which I thought was important.
"There are so many variables. August seems like a long time away if you're in the market everyday. We should have a European default by then and we should understand the rate we're growing in the U.S. I think the 10 year (Treasury) is really telling you that there's low growth and a deflationary outlook, and that QE2 is ending. The markets have responded far more to what Bernanke is doing and likely to do than anything else I'd say because investing in inflation is exactly opposite to investing in deflation. Pretty much you have to turn your portfolio upside down and do the opposite. So, I think the investors and business people don't have clarity and there are so many different variables.

The question is, who's going to fix this? Is it Congress? Or is it Bernanke? Or is it the markets? Which is going to happen first. And the question is, is it going to be inflation or is it going to be deflation? Right? A lot of people compare investing to playing poker, and I say it's like we're watching the last table of the World Series of Poker because I don't know how to invest without watching what Fed does, Congress does, Beijing does. The biggest players who essentially set prices. That's the problem, we have no clarity. So the debt ceiling is just one of many different variables that we need to understand as investors"

"I think the biggest thing is QE2 is ending and many investors assume QE3's magically right around the corner. If it's not, asset prices are going to fall. They are going to fall 10, 15, 20% and then the market can start speculating on QE3."

[Question by Steve Liesman: Were you fumbling with your Blackberry hitting the sell button while Lindsey was talking?]

"Oh, Ive already been hitting the sell button most of this year so."

"The problem with the markets is people assume liquidity and the utility of the very near term is far more powerful than the certainty of the long term. So if Bernake is in the market buying Treasurys, the 10 year goes up to 4%. But then growth starts faltering and you start discounting the end (of QE2), and here the 10 year goes to 3%"

Full segment featuring John Burbank: http://www.c-spanvideo.org/program/BudgetAnnu/start/3294/stop/11530

Bernanke's Keynote at Federal Budget Conference (Full Text, 6/14/2011)

Source: CSPAN
Watch the full video at cspan.org. The conference included Rep. Paul Ryan, Sen. Michael Bennet, Alan Simpson, Lawrence Lindsey, Neel Kashkari (PIMCO, Interim U.S. Assistant Secretary of the Treasury for Financial Stability/ set up TARP during the financial crisis), Michael Pond (interest rate strategist at Barclays Capital), Diane Swonk (Mesirow Financial), John Burbank (Passport Capital), Carlo Cottarelli (IMF), Steve Rattner, Norm Ornstein (American Enterprise Institute), Rudolph Penner (former director of Congressional Budget Office), Marne Obernauer (Beverage Distributors Company) and many more. It is getting serious folks.
Chairman Ben S. Bernanke
At the Annual Conference of the Committee for a Responsible Federal Budget, Washington, D.C.
June 14, 2011

Fiscal Sustainability

I am pleased to speak to a group that has such a distinguished record of identifying crucial issues related to the federal budget and working toward bipartisan solutions to our nation's fiscal problems. Today I will briefly discuss the fiscal challenges the nation faces and the importance of meeting those challenges for our collective economic future. I will then conclude with some thoughts on the way forward.

Fiscal Policy Challenges
At about 9 percent of gross domestic product (GDP), the federal budget deficit has widened appreciably since the onset of the recent recession in December 2007. The exceptional increase in the deficit has mostly reflected the automatic cyclical response of revenues and spending to a weak economy as well as the fiscal actions taken to ease the recession and aid the recovery. As the economy continues to expand and stimulus policies are phased out, the budget deficit should narrow over the next few years.

Unfortunately, even after economic conditions have returned to normal, the nation faces a sizable structural budget gap. Both the Congressional Budget Office and the Committee for a Responsible Federal Budget project that the budget deficit will be almost 5 percent of GDP in fiscal year 2015, assuming that current budget policies are extended and the economy is then close to full employment.1 Of even greater concern is that longer-run projections that extrapolate current policies and make plausible assumptions about the future evolution of the economy show the structural budget gap increasing significantly further over time. For example, under the alternative fiscal scenario developed by the Congressional Budget Office, which assumes most current policies are extended, the deficit is projected to be about 6-1/2 percent of GDP in 2020 and almost 13 percent of GDP in 2030. The ratio of outstanding federal debt to GDP, expected to be about 69 percent at the end of this fiscal year, would under that scenario rise to 87 percent in 2020 and 146 percent in 2030.2 One reason the debt is projected to increase so quickly is that the larger the debt outstanding, the greater the budgetary cost of making the required interest payments. This dynamic is clearly unsustainable.

David and Goliath: Vietnam Confronts China Over South China Sea Energy Riches - Guest Post

South China Sea (Wikimedia)
Guest post by OilPrice.com (continued from part 1)

David and Goliath: Vietnam Confronts China Over South China Sea Energy Riches

An increasingly fractious maritime confrontation is developing in the South China Sea, with enormous implications for international companies interested in developing East Asia's offshore hydrocarbon resources. Far from the radars of city of London and Wall Street investors, the clash has seen Vietnam emerge as spear carrier for its fellow ASEAN members on the dispute.

Offshore drilling is the most capital-intensive form of exploiting hydrocarbons, but its expense and scarcity has also allowed technically advanced Western companies to drive hard bargains with third world countries over their offshore waters, as they don't have indigenous advanced technical resources nor finances to exploit their maritime wealth.

Accordingly, most countries attempt to procure the best bilateral deals with foreign companies to get a taste of the offshore revenues that come from exploiting their Exclusive Economic Zones (EEZs), which the 1982 United Nations Convention on the Law of the Sea (UNLOS) recognized 12 nautical miles as normal for territorial seas and waters and provided international recognition of 200 mile EEZs. On the vexed question of overlapping claims, When an overlap occurs, UNLOS deferred to the competing states to negotiate to delineate their final and actual maritime boundary, with the general principle that any point within an overlapping area defaults to the nearest state.

According to U.S. government statistics, Vietnam's oil and gas industry is currently the country's biggest foreign currency earner and a major procurer of imported technology. Since Vietnam's first oil export shipment in April 1987, crude oil has earned over $17 billion for Vietnam's economy, all of it from offshore production. Vietnam is currently Asian third largest oil producer behind Indonesia and Malaysia.

S&P Downgrades Greece to CCC, Watch Greek Stock Indexes (10Y Bond Yield at 17.13%; 5Y CDS 1,590)

Standard and Poor's downgraded Greece to 'CCC' from 'B' today. Greece's 10-year government bond yield rose to 17.13% this morning and its 5Y credit default swap made a new high at 1,590 basis points. See charts below and an excerpt from the S&P report after the jump (and links to more yields).

I think Greek stocks will be interesting to watch going forward as Greece and other Eurozone members deal with their sovereign debt issues. $ATG (Greece General Shares) broke below 2000 and 2009 support and the next support level is between 865-900 (in 1996-1997). Watch it trade in its new channel up against downtrend resistance. There is also a Dow Jones Greece Index ($GRDOW) which looks similar. I'd like to see that above 2003 resistance.

Unfortunately there isn't an ETF trading in the U.S, but I found out there is one on the Xetra Exchange quoted in Euros (Lyxor ETF MSCI Greece - see chart #3). Are there option chains online anywhere I can watch on this ETF, or others.

$ATG (Greece (Athens) General Share (StockCharts)

$GRDOW (Dow Jones Greece Stock Index) - StockCharts.com

ECRI: Slowdown In U.S. Economy, Global Industrial Growth Underway Using Long Leading Indicators

Lakshman Achuthan, co-founder of the Economic Cycle Research Institute (ECRI), told WSJ TV today that ECRI's long leading indicators were predicting a cyclical economic slowdown in U.S. that could last a couple of quarters.
"Now when we look this summer, the first call is a slowdown in global industrial growth (manufacturing sector). Looking at U.S. specific cycle indicators, we see in the wake of that call for a global industrial slowdown, we see a slowdown in the broad U.S. economy (services, construction etc)."

Watch the full interview below. ECRI has free excel data and charts available at their website which includes the U.S. Future Inflation Gauge, U.S. Leading Home Price Index, U.S. Weekly Leading Index (and growth), U.S. Coincident Index and U.S. Lagging Index.

Robert Shiller: Home Price Slide Could Last 20 Years, 10 to 25 Percent Decline Wouldn't Surprise Him

Robert Shiller, Yale Economist and co-founder of the S&P Case-Shiller Home Price Index (which recently confirmed a double dip in housing), told Reuters at the S&P Housing Summit that he wouldn't be surprised if home prices fell 10 to 25%, and the slide could last for 20 years. He said, "I'm a little pessimistic. We've been in a five year decline already, since the peak in 2006, and I don't see evidence that we're coming out of it."  I embedded the Reuters video after the jump. Shiller also said the U.S. economy faces the risk of a double-dip recession and a potential Japanese scenario.

Did you know there used to be two S&P/Case-Shiller Home Price ETFs that traded? (DMM and UMM) There was no market for them so they shut down. From MacroMarkets (co-founded by Robert Shiller): "MacroShares Major Metro Housing allow investors to express a bullish or bearish view on the movement of the S&P/Case-Shiller Composite-10 Home Price Index."

Why Japan Will Turn to Solar Energy Following Fukushima - Guest Post

Solar Two Power Plant (Wikimedia Commons)
Guest post by OilPrice.com

Why Japan Will Turn to Solar Energy Following Fukushima

As the dire news continues to leach out of Fukishima, the silver lining in its nuclear cloud is that renewable energy technologies, despite their daunting start-up costs, are receiving renewed scrutiny.

Make no mistake - given the trillions of dollars invested over the last five decades in nuclear energy, the industry and its lobbyists will not go down without a fight, promoting new, "safe" reactor designs, etc. etc. etc.

But the Fukushima debacle has finally bared the industry's darkest secret, it inability to manage its nuclear waste. The six reactor TEPCO Daichi Fukushima stored all its waste onsite, and the spent fuel rods and their lack of cooling have been a major contributor to the high radiation levels observed around the facility. Worse for nuclear power proponents has been the reluctant admission by TECPO that three of the complex's six reactors apparently did in fact suffer a meltdown.

So, what's next?

Hydroelectric facilities are a proven technology, but expensive and take years to construct.

Wind power also has substantial start-up costs, is erratic, and faces environmental opposition.

With the notable exception of bioethanol, little real money has gone into biofuel renewable, particularly in the U.S., where bioethanol produced from corn has a hammerlock on both subsidies and crop insurance, despite rising concerns about shifting land from food to energy production is driving up costs of foodstuffs. The leading contenders for bio-renewables, camelina, algae and jatropha, all are starved for investment as a result.

Which leaves solar energy, whose major draw back up to now has been its high cost to generate kilowatts.

S&P, FX, Natural Gas, Roubini, Jim Rogers, Tepper, Albert Edwards, Gary Shilling Updates

Frankfurt Exchange (Source: Flickr/orb_cz)
Important Linkfest!
  • Charts That Matter Next Week (With Focus On S&P 500 H&S Formation) - Zero Hedge, 6/12/2011 (Podcast and report)
  • Rogers Short on U.S. Techs, Bonds, an American Bank, Emerging Markets, Long Currencies and Commodities ("the next recession will be worse than 2008") - Reuters Insider, 6/10/2011
  • Revisiting The "Ice Age" - SocGen's Albert Edwards Charts America's Descent Into Japan, And The Market's Descent To S&P 400 - Zero Hedge, 6/11/2011
  • Tepper's Take on QE3 - CNBC Video, 6/10/2011

    His email to CNBC: "Basically Bernanke said no QE3. If SPX is down a couple hundred points and financial conditions tightened maybe they would reconsider.  There is no logic to QE3 now and the only result might be more food and energy inflation. We're in a difficult investing environment. Short and sweet."

    Here is an interesting story related to Appaloosa's involvement in Washington Mutual's bankruptcy with trust preferred securities - Hipster Battles Funds - WSJ (retail investors ftw)
  • Investors Can Profit From 'Inevitable" Financial Crisis: Mobius (Templeton Asset Management) - CNBC - 6/7/2011

Skyworks Retraces 2009-2011 Bull Move, Market Following (SWKS, RFMD, SOXX, AAPL, SPY, DIA Performance)

Source: Skyworks June Presentation
Since the bull market began in early 2009, I continued to watch smartphone semiconductor company Skyworks Solutions (SWKS) as a signal for continued market appreciation (1, 2). The iPhone and iPad use Skyworks semiconductors, or specifically the Skyworks power amplifier module SKY77340 (or now SKY77344?). Skyworks broke out of an eight year sideways channel in 2009 and continued to rally inside of a steep rising wedge that had a $32 target. SWKS eventually hit a high of $37.5 in February 2011. The tide then turned and SWKS started to retrace that huge move; as did its main competitor RF Micro Devices (RFMD). It broke below the rising wedge and is now down 35% from the peak with shares currently trading at $24. As you can see the market is now following suit.

This chart shows the performance of SWKS against RFMD, SOXX (iShares PHLX SOX Semiconductor Sector Index Fund), AAPL (Apple), SPY (S&P 500 ETF) and DIA (Dow Index ETF). I provided more chart analysis after the jump along with the Skyworks June 2011 presentation (embedded pdf), its growth forecast, snapshots of Q2 results (balance sheet/income statement against 2010) and recent analyst notes from Oppenheimer and Sterne Agee.

SWKS, RFMD, AAPL, SOXX, SPY, DIA (source: StockCharts.com)

U.S. - Venezuelan Relations - Just "Frozen" or Beyond Repair? - Guest Post

Petroleos de Venezuela (Wikimedia)
Guest post by OilPrice.com (photo added separately)

U.S. - Venezuelan Relations - Just "Frozen" or Beyond Repair?

According to the U.S. Energy Administration, two months ago the United States total crude oil imports averaged 9,033 thousand barrels per day (tbpd), with the top five exporting countries being Canada (2,666 tbpd), Mexico (1,319 tbpd), Saudi Arabia (1,107 tbpd), Venezuela (930 tbpd) and Nigeria (918 tbpd.)

Notice anything odd about this list? First, three of the top five oil exporters to the U.S. are in the Western hemisphere, and two of them are neighbors.

Secondly, only two of the five states can comfortably be described as stable. Mexico is slowly unraveling due to the drug war, Nigeria's militant regularly attack foreign oil concessions in the Niger delta and Saudi Arabia's geriatric monarchy is nervously watching events unfold in the Middle East, wondering if the "Arab spring" may impact their autocratic hold on power, a view no doubt made more nervous by the sudden arrival on 6 June of Yemeni President Ali Abdullah Saleh to Saudi Arabia for medical treatment.

Of the remaining two, Canada is a stable, prosperous state, and its relations with Washington are excellent.

Which leaves Venezuela - while a stable state, its policies under President Hugo Chávez have rattled Washington to the point that since 2010 neither state has had accredited ambassadors.

On 28 June 2010 President Obama nominated Palmer as U.S. Ambassador to Venezuela but three months later Chávez announced on his weekly TV program that he would not allow Larry Palmer to take up his post after Palmer told a US senator that morale in the Venezuelan army was low and that members of Chávez's government had ties to leftist FARC Colombian rebels. On 28 December Chávez flatly refused to accept Palmer because of his derogatory remarks and the following day the U.S. revoked the accreditation of Venezuelan ambassador, Bernardo Álvarez Herrera.

Investors Salivating Over Mongolian Energy Resources (Erdenes-Tavan Tolgoi) - Guest Post

Tavan Tolgoi Coal Mine (source: Wikimedia Commons)
Guest post by OilPrice.com (photo added separately)

Investors Salivating Over Mongolian Energy Resources

Sometime in the next 12 months, an energy IPO offering in distant Mongolia already has foreign investors salivating.

The darling of the international energy community is coal company Erdenes-Tavan Tolgoi ("Five Hills") Ltd., popularly known as TT, which has yet to begin operations.

To give an idea of the potential foreign interest, analysts believe that the IPO will be handled by Goldman Sachs Group Inc. and Deutsche Bank AG.

What is TT bringing to the market that has caused such interest? A massive deposit located in the east Tsankhi area of the Gobi desert and estimated to hold over 6.4 billion metric tons of coking coal, the world's biggest untapped deposit of its kind.

Mongolia's government is currently selecting an operator for the massive deposit and is expected to be a large, experienced foreign mining company. Heightening investor interest was a successful public offering last fall in the autumn of 2010 by Mongolian Mining Corp., Mongolia's largest privately held domestic producer and exporter of coking coal, whose Ukhaa Khudag (UHG) mine is within the Tavan Tolgoi coal formation in the southern Gobi. Mongolian Mining Corp.'s IPO was floated on the Hong Kong Stock Exchange and raised $651 million.

In contrast, analysts are predicting that the TT IPO could raise as much as $10 billion.

FX Concepts' John Taylor Says Cycle Has Turned, Global Equities Headed Lower (EUR/JPY, EUR/USD)

Source: CNBC
John Taylor, chairman and CEO of $8+ billion hedge fund FX Concepts, told Bloomberg TV on June 6 that the "cycle has turned" and "global equities are on the brink of a downtrend that will last until the end of the year". Why? The U.S. and Europe are slowing down, QE2 is ending (w/ no QE3 in sight, yet) and the market will start pricing in the fiscal stimulus coming off in 2012. He thinks 2012 "is going to be a terrible year" and that the U.S could be in a recession.

The classic "risk off" trades seem to be in play again with a few wild cards. Taylor said "it is bullish for the Yen, bullish for the Dollar, bearish for commodities and bearish for the equity market." He's trying to time a U.S. Dollar reversal (EUR/USD short), but in the meantime he's short the Euro against the Japanese Yen (EUR/JPY). When mixing together the Dollar, no QE3 and an economic slowdown, Taylor said, "when the economy is really bad that means that the banks slow down lending and there's a shortage of Dollars in the world. And I don't think QE3 is coming back; that's really the wild card here is QE3 now. If the Fed comes out and makes some statements and says no we're not going to do QE3 right away, the Dollar will get very strong". What about carry trades?

S&P 500 ETF (StockCharts.com)
On CNBC on June 2, Taylor mentioned that "the more trouble we have with the debt ceiling, the stronger the bond market and Dollar will be.  It means we're going to do something, and when we do something obviously that's going to really drive the Dollar up. Because Europe can't do anything; Europe is falling apart...."

Taylor is also bearish on U.S. equities. He believes $1,000 is a "respectable" level on the S&P. SPY (S&P 500 ETF) broke the bull market uptrend from March 2009. The next support levels are $124.5 (200 day moving average) or $120 (pre-flash crash high, April 2010 support) if it keeps drifting lower. The S&P could re-test some resistance levels at some point ("Oppenheimer Technician Carter Worth Says It's Time to Buy" - CNBC 6/7/2011). Hopefully you've been hedged in some way or short during the past month. It is interesting that the VIX hasn't been moving much; read "The VIX Has Completely Changed Character" at Investing With Options. Watch the Bloomberg and CNBC videos after the jump.

Sun VIX Spikes, Watch Solar Flare Prominence Eruption 6/7/2011

Source: NASA
In space volatility news, the sun's VIX (solar x-ray flux) is spiking. The Space and Heliospheric Observatory said, "the Sun on June 7, 2011, starting at about 06:41 UT unleashed one of the most spectacular prominence eruptions ever observed, in fact, one could call it a "prominence explosion." Watch the videos after the jump, you won't regret it. More from NASA:
"The Sun unleashed an M-2 (medium-sized) solar flare, an S1-class (minor) radiation storm and a spectacular coronal mass ejection (CME) on June 7, 2011 from sunspot complex 1226-1227. The large cloud of particles mushroomed up and fell back down looking as if it covered an area of almost half the solar surface."
According to NASA/Marshall Solar Physics, the sunspot cycle is supposed to peak out in 2013:
"The current prediction for Sunspot Cycle 24 gives a smoothed sunspot number maximum of about 69 in June of 2013. We are currently over two and a half years into Cycle 24."
Any new updates from Charles Nenner? On my previous post on 11/30/2010, Nenner said the next crisis would hit in 2013 when the sunspot cycled peaked, and predicted Dow 5,000.

Ben Bernanke's U.S. Economic Outlook, Sees Growth Picking Up In Second Half (6/7/2011)

Source: Wikimedia Commons
Here it is via FederalReserve.gov. Apparently no mention of QE3 tanked the market yesterday.

Chairman Ben S. Bernanke
At the International Monetary Conference, Atlanta, Georgia

June 7, 2011

The U.S. Economic Outlook


I would like to thank the organizers for inviting me to participate once again in the International Monetary Conference. I will begin with a brief update on the outlook for the U.S. economy, then discuss recent developments in global commodity markets that are significantly affecting both the U.S. and world economies, and conclude with some thoughts on the prospects for monetary policy.

The Outlook for Growth
U.S. economic growth so far this year looks to have been somewhat slower than expected. Aggregate output increased at only 1.8 percent at an annual rate in the first quarter, and supply chain disruptions associated with the earthquake and tsunami in Japan are hampering economic activity this quarter. A number of indicators also suggest some loss of momentum in the labor market in recent weeks. We are, of course, monitoring these developments. That said, with the effects of the Japanese disaster on manufacturing output likely to dissipate in coming months, and with some moderation in gasoline prices in prospect, growth seems likely to pick up somewhat in the second half of the year. Overall, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers.

As is often the case, the ability and willingness of households to spend will be an important determinant of the pace at which the economy expands in coming quarters. A range of positive and negative forces is currently influencing both household finances and attitudes. On the positive side, household incomes have been boosted by the net improvement in job market conditions since earlier this year as well as from the reduction in payroll taxes that the Congress passed in December. Increases in household wealth--largely reflecting gains in equity values--and lower debt burdens have also increased consumers' willingness to spend. On the negative side, households are facing some significant headwinds, including increases in food and energy prices, declining home values, continued tightness in some credit markets, and still-high unemployment, all of which have taken a toll on consumer confidence.