Nov 16. New highs gold
–Gold has exploded to a new high this morning, negating last Thursday’s reversal.
–News today includes Retail Sales expected +0.9% from-1.5, and +0.4% x-auto. Empire State Survey expected 29 from 34.57.
–Related to retail: “American shoppers are splitting again: The affluent are finally starting to buy, picking up designer clothes at places like Nordstrom, while those on the lower economic rungs are still scrimping by, heading to Walmart for the basics.” Also, Walmart notes “more pronounced swings in spending between paycheck cycles – a sign that people have little extra to spend.” (Huffington Post). This dynamic sounds like a page out of Reagan’s “trickle down” theory…
–NY Times reports that the law that extended unemployment benefits and the tax credit to home buyers also allows large firms to offset losses from 2008 and 09 against income going back as far as 5 years. “Among the biggest beneficiaries are home builders, analysts say.” [As if govt guarantees and buying of mortgages, tax credits, and rock bottom rates aren’t helping enough]. The article ends with this: “Pretending to promote job creation, the government is dispensing cash to companies that either do not need it or need it precisely because they didn’t run their businesses prudently. Isn’t there something wrong with that picture?”
–I would argue that anecdotal evidence of firms regaining pricing power has been a result of fewer competitors as weak companies go out of business. Aid to large home builders seems to fly in the face of admin efforts to reflate real estate prices.
–Treasury options expire Friday. Big buyer of TYZ 119.5/20/20.5 c fly for 4 to 5, 20k.
