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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 454800  
Subject: Control Panel: Upward & onward Date: 10/7/2012 2:27 PM
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This week, the Civilian Unemployment Rate fell to below 8% for the first time since early 2009. Yippee! In addition, M1 exploded upward and the M1 multiplier increased. MZM and M3 increased faster than the growth in GDP. Financial conditions are loose.

The Control Panel continued its "upward and onward" trend, moving into "Extreme Greed." All sentiment indicators became more optimistic (Bullish Percent, the VIX, New Highs-New Lows, Advance-Decline, Percent of S&P 100 stocks over 200-day MA).

International stock markets (including China) ticked upward last week.

The dollar continued its falling trend. The USD index is now under 80, which Jeff sees as bullish for stocks due to improved competitiveness for U.S. exports. The euro and Swiss franc rose.

Despite QE3 and the usual noise, the underlying trend of long-term Treasury debt is gently upward. Maybe the "bond vigilantes," who have been catatonic since the 2008 crisis, are finally stirring awake. If long-term Treasury yields rise relentlessly, government budgets will be adversely impacted. Not to mention that trillions in outstanding Treasury debt (including the debt that the Federal Reserve shifted from short to long term during Operation Twist) will plunge in value.

During normal times (when the bond market is free and not held in a hammerlock by the central bank), the yield curve becomes steeper (long-term rates rise) during an economic recovery. The yield curve steepened slightly last week, though the shorter end is on crack cocaine and will be at least until 2015, according to Fed Chairman Ben Bernanke.

Dr. Copper (and the "mungofitch ratio" of copper:gold) are rising, showing economic improvement.

However, the Value of Manufacturers' New Orders for All Manufacturing Industries dropped in August. It's hard to say whether this is signal or noise.

ECRI continues to say that the U.S. economy is in recession. The Fed's Leading Index for the United States shows slow growth.

"European officials will move to prevent Spain from dragging the single currency into a new round of convulsions this week as a series of high-level meetings aim to ratchet down the three-year-old European debt crisis." We all know how that will work -- bottom line will be a dramatic increase in the euro money supply if they succeed, crisis if they don't. Spanish bond yields are stable below 6%, so the market is optimistic.

Since none of the numbers add up, the pressure will build as deficits grow and central banks force ZIRP. Japan shows us that this process can continue until most METARs are wrinkled and grey (if not actually buried).

The U.S. election will be over in a month and attention will turn to the really important factor: Congress and the 2013 fiscal cliff.

Onward and upward! Party on!
Wendy


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http://stockcharts.com/freecharts/candleglance.html?$USD,$XA...

http://money.cnn.com/data/fear-and-greed/
http://research.stlouisfed.org/fred2/series/MZM

http://research.stlouisfed.org/fred2/series/M1
http://research.stlouisfed.org/fred2/series/MULT
http://research.stlouisfed.org/fred2/series/M1V

http://www.nowandfutures.com/articles/20060426M3b,_repos_&am...

http://research.stlouisfed.org/fred2/series/NFCI

http://research.stlouisfed.org/fred2/series/AMTMNO

http://www.businesscycle.com/

http://research.stlouisfed.org/fred2/series/USSLIND
http://www.bloomberg.com/markets/rates-bonds/government-bond...

http://www.bloomberg.com/news/2012-10-07/europe-moves-to-con...

http://www.bloomberg.com/quote/GSPG10YR:IND
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