The Enduring Popularity of Gold - Guest Post

Guest post by Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors.

The Enduring Popularity of Gold

The World Gold Council (WGC) reaffirmed the power of the Love Trade in its 2011 Gold Demand Trends report released this week. Gold demand grew 0.4 percent in 2011 despite a 28 percent year-over-year increase in bullion’s average price.

After flirting with the top spot for some time, China emerged as the world’s largest gold market for jewelry and investment during the fourth quarter of 2011 as demand in India weakened. This is the first time China’s demand outpaced India’s in 11 quarters. However, India did retain the gold demand crown for the entire year, purchasing 933 tons compared to China’s demand of 770 tons.

I always say the trend is your friend, and I believe China’s increasing demand for gold is one trend that is just getting started. Although gold imports from Hong Kong were cut in half in December, HSBC Global Research reports that overall gold imports from Hong Kong were 10 times the historical average from January through November 2011. HSBC expects a continued rise in Chinese incomes will keep demand at a robust pace. The WGC sees domestic demand for gold jewelry and investment driving 20 percent growth in Chinese gold demand during 2012.

China should consider its leadership as the No. 1 gold market a short-term position, though. While China’s presence in the bullion market is strong and growing for jewelry and investment, India’s ancient relationship with the yellow metal is such that “domestic drivers of demand are largely independent of outside forces,” says the WGC. The WGC does not see India’s role in the gold market diminishing over the long term.

Ajay Mitra, the WGC’s managing director for the Middle East and India, recently expressed India’s strong ties with gold in a 60 Minutes feature. Gold has always been a part of India’s history, culture and tradition. I have witnessed firsthand the strength of this bond many times over the years. As the famous saying goes, “no gold, no wedding.”

Don’t Forget About the Fear Trade

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Eurogroup Statement on €130B Greek Bailout, PSI Exchange (EUR/USD Charts)

The euro (EUR/USD) initially spiked, but reversed sharply at 1.33 (now key resistance), after an agreement was reached by the "Eurogroup" (Eurozone Finance Ministers) and Greek government to provide Greece with a €130 billion bailout package in exchange for fiscal consolidation, which would lower Greece's Debt/GDP ratio to 120.5% by 2020. The ECB will also "forgo profits" on its Greek bonds to help lower the debt ratio. But, to receive the bailout cash, private Greek bond holders (PSI) must agree to a debt exchange that would take a 53.5% nominal loss. This would prevent a disorderly default for Greece in March. Analysis by the IMF, ECB and European Commission believes the 120.5% Debt/GDP target could be hard to achieve.

Reuters: "Greece will need additional relief if it is to cut its debts to 120 percent of GDP by 2020 and if it doesn't follow through on structural reforms and other measures, its debt could hit 160 percent by 2020, a confidential analysis conducted by the IMF, European Central Bank and European Commission shows."

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Same Uptrend Line, Different Year (SPX)

This is interesting. Since the March 2009 low, the S&P 500 has built three of the exact same uptrend lines (slope). It's another y=mx+b algo conspiracy in the markets. Thoughts?

chart at stockcharts.com

Links For 2/18/2012

"The Decline and Fall of the Roman Empire", Presentation by DoubleLine Capital's Jeff Gundlach - Business Insider (Slides)

Credit Suisse The Sequel: "Probability Of The Largest Disorderly Default Loss In History On March 20 Has Increased" (Greece) - Zero Hedge

JPMorgan Gets Bullish as BofA Says Yields Entice: Credit Markets:  - Bloomberg at SF Gate

JP Morgan's Thomas Lee Has 1,430 Year-End Target For S&P 500 - Bloomberg Video

Morgan Stanley: January Exhibited This Tell-Tale Sign Of A Market Top - Business Insider

China’s Housing Market in ‘Mother of All Bubbles,’ Grantham, Mayo Says - Bloomberg

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How Will Increased Iranian Sanctions Affect South Africa - Guest Post

Refinery in Cape Town, South Africa (source: Wikipedia)

Guest post by John C.K. Daly of Oilprice.com

How Will Increased Iranian Sanctions Affect South Africa

The U.S. new sanctions initiative, strongly supported by Israel, to impose new sanctions against Iran, is designed to punish it for its purported covert nuclear weapons program by imposing new restrictions on Tehran.

As a result, many of Iran's oil customers are scrambling to avoid collateral damage to their economies.

The sanctions' potential fallout is now hitting South Africa, Africa's biggest economy, which receives nearly 25 percent of its needs from Iran, roughly 98,000 barrels per day (bpd), or about 4 percent of Iran's total exports.

South Africa's economy, which has been hit by fuel shortages in the past because of strikes and refinery problems, would be hard-pressed to fill any gap quickly.

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IEA: Future Sanctions Already Severely Effect Iranian Oil Exports (With Export Map) - Guest Post

Source: GDS Infographics

Guest post by Joao Peixe of OilPrice.com

IEA: Future Sanctions Already Severely Effect Iranian Oil Exports

In the IEA’s monthly Oil Market Report they have said that the European and US trade sanctions designed to impede Iran’s nuclear program could affect far more than the 600,000 barrels per day (bpd) that the EU normally imports.

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Canadian Prime Minister Shills Alberta Oil Sands in China - Guest Post

Western Canadian Sedimentary Basin (Wikimedia)

Guest post by John John C.K. Daly of OilPrice.com

Canadian Prime Minister Shills Alberta Oil Sands in China

Canadian Conservative Prime Minister Stephen Harper is in the midst of an official visit to China.
His mission?

To convince Beijing's mandarins to buy Canada's Alberta oil sands hydrocarbon production, now that Republican Congressional overreach has effectively sidelined the Keystone XL pipeline, designed to transit the oil to U.S. Gulf of Mexico refineries, for the foreseeable future.

Harper faces an uphill struggle, as China is questioning the delays in implementing the Northern Gateway pipeline, to transit Alberta's oil to Canada's western coast for transshipment to China.

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Chart: 10y EFSF-German Bund Yield Spread; Moody's Affirms EFSF Aaa Rating, Stable Outlook

Moody's Investors Service "affirmed its provisional (P)Aaa long-term debt rating with a continued stable outlook for the debt issuance programme of the European Financial Stability Facility (EFSF)." It mentioned that it downgraded and lowered its outlook on Euro nations that are part of the EFSF's "guarantor pool" (France has 21.8%, Italy 19.2%, Spain 12.7%, and Austria 3%). Germany guarantees 29% of the fund. I found a Thomson Reuters chart (as of 2/14/2012) of the EFSF 10-year yield - German Bund yield spread and the 10y France -German Bund yield spread. The chart is here.

Source: Thomson Reuters Datastream

Moody's Lowers Outlook on UK, France; Downgrades Italy, Spain, Portugal; EUR/USD Hit

EUR/USD - freestockcharts.com

I know European sovereign debt downgrades are pretty much priced in, but today Moody's downgraded and lowered its outlook on a few European nations. It downgraded Italy to A3 from A2, Malta to A3 from A2, Portugal to Ba3 from Ba2, Slovakia to A2 from A1, Slovenia to A2 from A1, and Spain to A3 from A1 (two notches). All have negative outlooks. Moody's also lowered its outlook on France, Austria and the United Kingdom to negative. All are rated Aaa, which is the highest credit rating.

EUR/USD is trading lower at 1.31533, and is close to testing 10/4/2011 support again at 1.31460. The 50DMA is at 1.2998 on the chart. Since the UK is not really in the spotlight at the moment, here is the reasoning behind Moody's negative outlook.

"RATIONALE FOR NEGATIVE OUTLOOK

The primary driver underlying Moody's decision to change the outlook on the UK's Aaa rating to negative is the weaker macroeconomic environment, which will challenge the government's efforts to place its debt burden on a downward trajectory over the coming years. These challenges, reflecting the combined effect of a commodity price driven hit to real incomes, the confidence shock from the euro area and a reassessment of the lasting effects of the financial crisis on potential output, were already evident in the government's Autumn Statement. The statement announced that a further two years of austerity measures would be needed in order for the government to meet its fiscal mandate of achieving a cyclically adjusted current budget balance by the end of a rolling five-year time horizon, and to reach its target of placing net public sector debt on a declining path by fiscal year 2015-16.

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Links on the Greek Austerity Vote, Protesting

Greece Set for Crucial Vote on Austerity (WSJ)
German Leaders Maintain Pressure as Greece Debates Budget Cuts (Bloomberg)
Time Starts Running Short to Avoid a Default by Greece (WSJ)
Greece set to defy protesters and accept eurozone bailout deal (Guardian)
Live Streams From Athens And Greek Parliament (Zero Hedge)
Athens buildings burn as lawmakers weigh austerity (Reuters)
UBS Asks: Has Greece Already Been Printing 'Quasi-Drachmas'?! (Business Insider)

Blogger's New Dynamic Views Magazine Template

Look how good Blogger's new Dynamic Magazine template looks. I just need a way to add html/java widgets to the sidebars. They have seven other dynamic versions as well. By the way, if you want to put page numbers at the bottom of your index and label pages, get the code at Abu Farhan's blog (it doesn't seem to work on date pages though).

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Market Timers' McClellan and DeMark Are Cautious on the S&P

Tom McClellan, who runs the McClellan Market Report, thinks the S&P will trade "violently sideways" for the next four months. He was featured on Bloomberg TV on 2/6/2012: McClellan Says U.S. Stocks May Trade Sideways Until June. He mentioned that the Eurodollar futures commercials COT (commitment of traders) chart from last year correlates almost perfectly with the S&P 500 today. For more info on this, read his "Chart in Focus" post from 5/27/2011: Commercial Traders Foretell Market’s Movements. The correlation correctly predicted that the S&P would peak in early June and bottom out in October. This is amazing. On 2/3/2012, before his Bloomberg appearance, McClellan released a new warning: Eurodollar COT Indication Calls For Big Stock Market Top Now.

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Russia Behind Bulgarian Anti-Fracking Protests? - Guest Post

Guest post by John C.K. Daly of Oilprice.com

Russia Behind Bulgarian Anti-Fracking Protests?

Pity the poor Eastern Europeans. Fifty years under the domination of their massive Soviet eastern neighbor then the collapse of Communism there two decades ago offered undreamed of opportunities to join both the European Union and NATO.

But they still remain dependent on the Russian Federation for the majority of their oil and gas needs, and the new capitalists in Moscow do not hesitate to charge the highest prices possible.

According a number of East European nations, particularly Poland and Bulgaria, are actively investigating the possibility of establishing hydraulic fracturing ("fracking") operations on their territory to develop an indigenous natural gas industry and undercut the Russian Federation's state-owned natural gas monopoly Gazprom.

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Bernanke Warns About Fiscal Challenges, Federal Debt/GDP vs. 10-Year Treasury Yield Chart

On February 2 and 7, Federal Reserve Chairman Ben Bernanke, in his testimony before the U.S. Senate and House Committees on the Budget, gave his outlook on the economy and warned about the U.S.'s "unsustainable deficits" and "structural fiscal imbalances". Read his statement below. I also added a chart of Gross Federal Debt/GDP from 1939-10/2011 versus the 10-year note yield from 1962-present. It is interesting that the 10-year yield peaked when Gross Federal Debt/GDP bottomed in the early 1980s, which was due to inflation. Related: Congressional Budget Office Sees Big Decline In Budget Deficit/GDP Between 2012-2022 (see their alternative scenario as well).

Link to chart at St. Louis Fed

"Fiscal Policy Challenges
In the remainder of my remarks, I would like to briefly discuss the fiscal challenges facing your Committee and the country. The federal budget deficit widened appreciably with the onset of the recent recession, and it has averaged around 9 percent of gross domestic product (GDP) over the past three fiscal years. This 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.

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In the Bullring With Gold - Guest Post

Guest post by Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors.

In the Bullring With Gold

After prices fell 10 percent in December, many investors wondered if the bull market in gold was running out of steam. That was before Federal Reserve Chairman Ben Bernanke swooped in with a “red cape” and fired the bulls back up. Since the Fed reassured the world that interest rates will remain at “exceptionally low levels” for another two years, gold has jumped more than three percent.

UBS described the situation simply, “if investors needed a (further) reason why they should be long gold now, they got it yesterday … a more accommodative policy is a very good foundation for gold to build on the next move higher.”

To gold bugs, two more years of near-zero, short-term interest rates means negative real interest rates are here to stay, and this has historically been a strong driver for higher gold prices.

Bernanke and the Fed aren’t the only central bankers in the fiscal and monetary bullring. Brazil has cut its benchmark interest rate a few times and China lowered its reserve rate for banks in December. According to ISI Group, 78 “easing moves” have been announced around the world in just the past five months as countries look to stimulate economic activity.

One of the main weapons central bankers have employed is money supply, which has created a ton of liquidity in the global system. Global money supply rose 8 percent year-over-year in December, or about $4 trillion, according to ISI. I mentioned a few weeks ago how China experienced a record increase in the three-month change in M-2 money supply following China’s reserve rate cut.

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Confidence Game - Film About Bear Stearns' Collapse (Trailer)

There's another film coming out on the 2008 financial crisis. Confidence Game, a documentary film by Blue Chip Films (Nick Verbitsky), is about the collapse of investment bank Bear Stearns in March 2008. I watched the trailer and it looks similar to Inside Job. I'm not sure when it comes out. Watch it below (h/t Market Folly).

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EUR/USD at 50DMA (2/1 Low) Waiting On Greek Debt Decision For Next Move

EUR/USD is at 1.3049 (-0.28%) and testing the 2/01/2012 low and 50DMA, according to my chart. All eyes are on a Greek catalyst or unforeseen event in the eurozone.

EUR/USD 3-month chart snapshot (chart source: optionsxpress)

Links: Greek Bailout Deadline, Explosions in Homs, Syria (Video)

Syria and Greece are in the news tonight.

Greece

Greece reaches make-or-break moment: (eKathimerini)

PM’s talks with leaders spill over deadline (eKathimerini)

Greek Leaders Agree on a Rescue Framework (Bloomberg)

Greek parties face EU bailout deadline (International Business Times)

Britain Prepares for Worst as EU Struggles (Bloomberg)

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PIMCO's Bill Gross on Treasury Yields at the Zero-Bound, Deleveraging Cycle

Bill Gross, co-founder of PIMCO and manager of the $244 billion PIMCO Total Return Fund, wrote in his February Investment Outlook ("Life - and Death Proposition") that the Fed's extended zero percent interest rate policy and short and intermediate-term Treasury yields at the zero-bound could have unintended consequences. The last paragraph pretty much sums up his growth outlook.

"Where else can one go, however? We can’t put $100 trillion of credit in a system-wide mattress, can we? Of course not, but we can move in that direction by delevering and refusing to extend maturities and duration. Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside. Still, zero-bound money may kill as opposed to create credit. Developed economies where these low yields reside may suffer accordingly. It may as well, induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper.

Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth, and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this up as we go along for what may seem like an eternity. A 30-50 year virtuous cycle of credit expansion which has produced outsize paranormal returns for financial assets – bonds, stocks, real estate and commodities alike – is now delevering because of excessive “risk” and the “price” of money at the zero-bound. We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time."

Source: PIMCO 

Congressional Budget Office Sees Big Decline In Budget Deficit/GDP Between 2012-2022 (Slides)

Source: CBO.gov

A few days ago the Congressional Budget Office (CBO) released its budget and economic projections for the years 2012-2022 (pdf). I embedded the slides after the jump. The blog Pragmatic Capitalism has an interesting post on the release: "CBO: Budget Deficit To Drop “Markedly”, Threatens Economic Stability Stability." Under CBO's baseline scenario, unemployment falls, the budget deficit as a percentage of GDP declines, interest rates rise steadily, inflation stays under control, labor income rises to GDI (gross domestic income), net business fixed investment rises, and residential housing investment remains weak with the number of vacancies. Under their alternative scenario, however, they see the budget deficit/GDP percentage declining less than expected for a number of reasons.

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Poland Gives Green Light to Massive Fracking Efforts - Guest Post

Guest post John C.K. Daly of OilPrice.com

Poland Gives Green Light to Massive Fracking Efforts

There is perhaps no more controversial energy source after nuclear than "hydraulic fracturing," or "fracking," of subterranean shale deposits containing pockets of natural gas.

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Video: Flying Nano Quadrotor Robots Moving In Formation!

This is a must see video. Watch flying "nano quadrotor" robots swarming around a room and moving in formation. They are like the robots in the movie Batteries Not Included. They were developed at the University of Pennsylvania's General Robotics, Automation, Sensing and Perception (GRASP) Laboratory. I found the video originally on Slashdot.

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Watch Bloomberg TV Live

Watch Bloomberg TV that streams live on Bloomberg.com (or specifically Bloomberg.tv).

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Applying Fibonacci to Stock Market Patterns - Guest Post by Elliott Wave International

Guest post by Elliott Wave International (I'm an affiliate partner as well)

Applying Fibonacci to Stock Market Patterns
It's easier than you might think!
February 1, 2012

By Elliott Wave International

Patterns are everywhere. We see them in the ebb and flow of the tide, the petals of a flower, or the shape of a seashell. If we look closely, we can see patterns in almost everything around us. The price movements of financial markets are also patterned, and Elliott wave analysis gives you the tools to interpret those patterns.

The Fibonacci sequence is vital to Elliott wave analysis -- as a matter of fact, R.N. Elliott wrote that the Fibonacci sequence provides the mathematical basis of the Wave Principle. Once you understand the Fibonacci sequence, it's easy to apply it to the markets you trade.

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Watching German Bund Yields, BUNL (Bund Future ETN), EUR/USD (2/1/2012)

German government bonds (bunds) and the euro will be interesting to watch as Greece either makes a deal with Greek bond holders to take a 70% loss to reduce its debt load by 100 billion euros, which would allow the next rescue loan from the EU (mainly Germany) and International Monetary Fund (AP), or sees a disorderly default. To make things even more interesting, the European Central Bank "is planning a second round of three-year bank loans next month (LTRO), after lending 489 billion euros ($645 billion) in December" (BusinessWeek), to add more emergency liquidity to the banking system and for banks to buy distressed sovereign debt like a carry trade. Portugal is getting hit as well. On early Monday morning, Portuguese bond yields, its spreads to German bunds, and 5-year CDS rose to new highs.

Tom DeMark mentioned last week on Bloomberg TV that German bunds were exhausted to the upside and could collapse if a signal was triggered. German bunds moved up since then (yields down), but they could be setting up again. Bund bears are fighting a strong uptrend. Egan-Jones downgraded Germany's credit rating from AA to AA- on January 18. Sean Egan, co-founder of Egan-Jones, told CNBC's Fast Money and Fox Business that they downgraded Germany because its debt/gdp ratio was rising, and it will have to "absorb the cost" of supporting other eurozone countries on the brink (Greece, Portugal) through bailout funds (EFSF etc.). But, Egan mentioned that German bond yields would stay down in the short-term because it remains the safest credit in the eurozone during the sovereign debt crisis, and the ECB is pumping liquidity into the system to keep rates down (as mentioned above). It's similar to why U.S. Treasury bonds rallied after they were downgraded by S&P. Below are charts of 5 and 10-year German bund yields, BUNL (the German Bund Futures ETN), and EUR/USD. EUR/USD is trying to climb back above the recent uptrend line. It is currently at 1.31734, +0.79%.

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DeMark Still Thinks S&P Tops at 1338-1342, With Perhaps An Intraday Spike to 1375

UPDATE: Tom DeMark told Bloomberg TV's Adam Johnson yesterday that the S&P will still top out between 1338 and 1342 (closing prices), with perhaps an intraday spike to 1375. DeMark said the long-term trend is "recycling". I blogged about DeMark's previous Bloomberg appearance here. The S&P 500 hit an intraday high of 1,333 last Wednesday, which is where the 2007 downtrend hits, but pulled back to 1,312 today. As noted on my previous post, there are still two more uptrend lines to break to confirm further downside ahead, in my opinion. DeMark created the DeMark Indicators, which traders use to measure market exhaustion. I've been following what DeMark's been saying in the media since January 2011, and he's been mostly right on his major market calls.

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10-Year Portuguese-German Yield Spread Spikes to 14.51 (New High), 10-year Yield at 16.45% (Charts)

The 10-year Portuguese/German yield spread is up 8.56% right now at 14.51! This is a new high it looks like. The spread measures Portugal's credit risk to Germany, since Germany is the safest sovereign credit in the eurozone. Look at the 1-year chart below of the spread. It is going parabolic! The 10-year Portuguese government bond yield is hitting a new high as well, up 8.1% at 16.45%. And last but not least, Portugal's credit default swaps hit a new high. Is there a bailout or default event coming?

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EUR/USD Lower Ahead of Greek Debt Talks, EU Summit (Market Links)

While waiting for news on the Greek debt deal and EU summit, here are some headlines in the meantime and a chart of EUR/USD at 1.317 (-.05%). Look at the perfect uptrends in the descending channel. The March E-mini S&P future is at 1305.5 (-0.53%).

Goldman's Tom Stolper Conducts Sunday Hitfest On The USD (1/29/2012, Zero Hedge)

Cutting Into Muscle - The Record Corporate Margin Juggernaut Has Just Rolled Over (1/28/2012, Zero Hedge)

Bubble Watching: Hainan Edition (looking at the property bubble in China) (1/30/2012, Also Sprach Analyst)

China Signals Limited Loosening as PBOC Bucks Forecast (1/29/2012, Bloomberg)

Hedge Funds Lift Bets to Two-Month High as Rally Accelerates: Commodities (1/29/2012, Bloomberg)

ROBERT SHILLER: A Housing Bottom? What Are They Thinking? (interviewed by Henry Blodget at Davos, Business Insider)

Recession Scares DoubleLine's Gundlach More Than Rising Rates (1/24/2012, Forbes)

Global Oil Production Update: A Strange Future Has Arrived (1/29/2012, Gregor.us)

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Is $SPY Exhausted Yet In Uptrend? $EURUSD Just Spiked to 1.317! (Technical Update)

Here is some technical analysis for $SPY (the S&P 500 ETF) and EUR/USD. EUR/USD just pierced through October 2011 resistance and hit 1.317. The euro spiked against the dollar yesterday after the Fed (FOMC) said they anticipate "exceptionally low levels for the federal funds rate at least through late 2014." The FOMC kept the rate at 0-0.25%, and are continuing to reinvest principal payments from agency debt and agency mortgage-backed securities in agency MBS. It is interesting that EUR/USD's current uptrend line has the same exact slope as the October 2011 uptrend line. Y=mx+b algo? While the Euro is flying high, there is still a risk it could breakdown if there's a negative euro-zone catalyst, negative ECB catalyst, or expectations of a disorderly default by Greece. Simon Derrick, chief currency strategist at Bank of New York Mellon, told Bloomberg TV on 1/19/2012 that he thinks the Euro could trade down to 1.15-1.20 during the quarter. Other euro bears believe it will eventually hit parity with the dollar. For now, EUR/USD is climbing in an uptrend inside a descending channel.

EUR/USD (source: freestockcharts.com)

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Something's Fishy in Tripoli - Guest Post

Guest post by Daniel J. Graeber of Oilprice.com

Something's Fishy in Tripoli

Way back in early 2011, members of the U.N. Security Council had no problem getting a resolution through that authorized military force in Libya ostensibly to protect civilians from attacks by forces loyal to strongman Moammar Gadhafi. The year before, lawmakers on both sides of the Atlantic were bickering over who did what and why in terms of the cancer-stricken Lockerbie bomber. This Scottish decision to release him, depending on which U.S. lawmaker you spoke with, was tied to a BP deal to drill for oil in Libya. Despite fractures in the new interim government in Tripoli and reports of renewed protests, a decision by the Italian government to quietly discuss trade relations suggests something isn't quite right in the way Western allies pick their fights.

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Fed Sees 0% Fed Funds Rate Through 2014! (Economic Projections Table)

In today's FOMC statement, they decided to keep the federal funds rate at 0-0.25% and anticipate "exceptionally low levels for the federal funds rate at least through late 2014." ZIRP! They also "decided to continue its program to extend the average maturity of its holdings of securities as announced in September" (operation twist). Below is the full release and a table of their projections for GDP growth, PCE inflation and the unemployment rate. They lowered their GDP growth projection for 2012 and 2013 from November, lowered their unemployment rate projection, and kept PCE inflation slightly unchanged. I also embedded Bernanke's press conference.

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Live Video of President Obama's 2012 State of the Union Address

I embedded the live Youtube video: "The online-only enhanced version of President Obama's third State of the Union Address features charts, stats and data that helped inform President Obama's policy decisions." You can now follow The White House on Google+.

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IMF Lowers Global Growth Outlook, Europe is Epicenter (IMF Videos, 1/24/2012)

The IMF (International Monetary Fund) lowered its global growth outlook from its September projections. Europe tipping into recession is the greatest risk ("epicenter") to world growth. Read more: World Economic Outlook Update: Global Recovery Stalls, Downside Risks Intensify -IMF). In the three videos I embedded below, the IMF talked about their global growth outlook, fiscal challenges advanced economies face, and financial sector risks. Issues raised by IMF analysts have been addressed by the United Nations, Ray Dalio on Charlie Rose, Robert Prechter, David Rosenberg, and Richard Koo, on this blog (views vary): Fiscal consolidation and private sector de-leveraging by households and banks threaten global growth. The question is how governments manage it. Do they spread out the deleveraging process, or clear the debt quickly. George Soros, who manages billions and trades the macro environment, told Newsweek that he expects either a deflationary environment, or, worst-case scenario, a collapse of the financial system.

2012/2013 growth projections (full chart at IMF)

"In an update to its World Economic Outlook (WEO), the IMF said that the euro area would fall into a mild recession in 2012 after the euro area crisis entered a “perilous new phase” toward the end of last year, affecting other parts of the world including the United States, emerging markets, and developing countries.

Overall, activity in the advanced economies is now projected to expand by just 1.2 percent in 2012—a downward revision of ¾ percentage points relative to the forecast last September—picking up to a still tepid 1.9 percent the next year. The global growth outlook for this year is 3.3 percent."

See a chart of the IMF's downside scenario (% deviation from WEO baseline) for World and Euro area GDP growth at Zero Hedge.

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George Soros: Deflation is Best-Case Scenario, Collapse of Financial System is Worst-Case Scenario

Famed macro trader/hedge fund manager, George Soros, was interviewed by Newsweek and issued a warning for the developed world.

Image Source: NorwayUN

"“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”"

Read more at the TheDailyBeast. What are Soros' thoughts on Central Banks printing money?

Jon Stewart on Newt Gingrich (Daily Show Clip)

This was an interesting clip on the Daily Show (h/t Zero Hedge via Daily Crux).

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Links: Greece Debt, Portugal, Japan, Treasuries, S&P 500, Natural Gas (1/24/2012)

Eurozone finance ministers reject Greek debt offer - (Telegraph)

Euro zone ministers reject private bondholders' Greece offer - (Reuters)

EU Seeks Bondholder Concessions on Greece (Bloomberg)

Timely Greek lessons on the eurozone crisis (by George Provopoulos, Bank of Greece) - (Financial Times)

Fears Mount That Portugal Will Need a Second Bailout - (WSJ)

Bids for Portugal REN with 30-50 pct premiums-sources (Reuters)

Goldman Tells Clients To Short US 10 Year Treasurys (Zero Hedge)

10 Good And Bad Things About The Economy And Rosenberg On Whether This Isn't Still Just A Modern Day Depression (Zero Hedge)

Credit Suisse: 11 Reasons We'll See S&P 1,400 This Year (PragCap)

EU May Be Preparing for Greek Default, Bank of New York Mellon Strategist Simon Derrick Says (Bloomberg Video)

Hussman: Recession risk remains very high (HussmanFunds)

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Watch The Republican Debate Live Here (NBC)

Tonight's NBC Republican debate is in Tampa, Florida and moderated by Brian Williams. Ron Paul, Mitt Romney, Newt Gingrich and Rick Santorum are left. Watch it live below. Photo source: NBC.

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Tom DeMark: S&P is Close to a Top, Bullish on DAX, Bearish on Bunds (Charts)

Tom DeMark, creator of the DeMark Indicators (used to time market exhaustion), was on BloombergTV last Friday and made a call that the S&P 500 would top out between 1,338-1,342 this week (specifically on Tuesday). It closed on Friday at 1,315. Watch the interview after the jump for more details. The chart definitely looks like it's getting exhausted after this nice rally. On December 5, DeMark predicted that the S&P would hit 1330-1345 when it was trading at 1,258. He thought it would hit by Christmas, so he was a month off. The downtrend from the 2007 peak and 2011 high hits around 1,330 today.

He is also bullish on the German stock market (Frankfurt DAX) and bearish on German bunds (government bonds). I charted out the DAX and German Bund ETN (BUNL) below. Actually, BUNT (3x German Bund ETN) looks interesting as well. German bund yields are available at Bloomberg.com (10-year German bund yield). Interesting. So, are DeMark's indicators predicting that a "hard Greek default" will be averted? Or is his call for the short-term.

Greece can't make a €14 billion bond payment on March 20, so it is trying to cut a deal with private creditors to swap into new Greek debt at a loss so it can get bailout money from the European Union and IMF. Read the articles below for more information. There's a meeting today with finance ministers and an important EU summit on January 30. Wow, EUR/USD is up 0.83% at 1.30. Something is up, at least in the short-term.

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