My New Client From The Mega Book Conference

Health Reform Bill Taking Shape

Read the sentence I highlighted in red, that is the most important part of this article.- Look out older people you will be paying higher insurance costs.-Lou

Details of Kennedy Health Bill Beginning to Emerge

After months of confidential negotiations on health care reform, details of what the overhaul might look like leaked out late Friday in the form of a draft of part of the bill being written in the Senate by the Health, Education, Labor and Pensions Committee.

The draft, which is now making the rounds of Washington, D.C., insiders who are closely following the health care reform negotiations on Capitol Hill and was obtained by Roll Call, concerns the issue of “coverage.”

The document reads as bill language. But Anthony Coley, a spokesman for HELP Chairman Edward Kennedy (D-Mass.), characterized the leaked material as “a draft of a draft.”

“HELP Democrats are still discussing options among themselves and their Republican colleagues,” Coley said Friday evening.

Kennedy’s bill is scheduled to be merged with similar legislation being written by Senate Finance Chairman Max Baucus (D-Mont.). Both chairmen and their respective staffs have been tight-lipped about the details of their legislation in advance of this month’s scheduled bill markups.

The portion of Kennedy’s bill that emerged Friday was in the form of a 167-page document that began: “Title I — Quality, Affordable Health Care For All Americans.” The HELP Committee’s bill is expected to be more liberal than the legislation being written by Finance.

The HELP bill’s title appears to be “The American Health Choices Act.” Among the mandates the bill would legislate, according to this draft:

• Insurance companies would be prohibited from denying coverage based on a pre-existing medical condition.

• Rates charged would be allowed to vary according to “family structure, community rating area, the actuarial value of the benefit and age.”

However, rates cannot vary based on “health-status related factors, gender, class of business, claims experience, or any other factor not described in the previous [sentence].”

President Barack Obama has demanded approval of major health care reform by year’s end. Democratic leaders in the House and Senate are pushing to pass bills out of their respective chambers by August.

Republicans have been expressing increasing resistance to the kind of reform favored by Obama and most Democrats, but their votes are not necessarily needed to approve the legislation given the Democrats’ healthy majorities in the House and Senate.

Bank Closure Friday

After a week where saw a break from bank seizures, the 37th bank closure was announced Friday afternoon.-Lou

Illinois' Bank of Lincolnwood fails, 37th of 2009

By Wallace Witkowski

SAN FRANCISCO (MarketWatch) -- Bank of Lincolnwood in Lincolnwood, Ill. became the 37th bank of the year to fail and the sixth Illinois bank failure in 2009, according to Federal Deposit Insurance Corp. Friday. Republic Bank of Chicago in Oak Brook, Ill. will assume all the bank's deposits. As of May 26, Bank of Lincolnwood had total assets of about $214 million and total deposits of $202 million. Republic will purchase about $162 million in assets with FDIC retaining the remaining assets for later disposition.

Unemployment Rate at 9.4%

There is some good news and bad news on the job front. The good news less jobs were lost than was expected, the bad is the unemployment rate is now 9.4%. My 2009 forecast issue predicted an unemployment rate of 9% but it looks like prediction was too low. We may hit 11-12% by year end. The devil though is in the previous months revision adding 82,000 to Aprils job losses look for a big revision in May as well.Lou

WASHINGTON (MarketWatch) - The U.S. unemployment rate jumped to a 26-year high of 9.4% in May as 345,000 payroll jobs were lost, the Labor Department reported Friday.

The decline in payrolls was the smallest since September, and much lower than the 500,000 expected by economists surveyed by MarketWatch. Payrolls had lost an average of 643,000 in the previous six months.

Payrolls in March and April were revised higher by 82,000.

Details of the report were mixed. While the payroll figures from a survey of business sites was much better than expected, a separate survey of households showed unemployment increased more than expected. Unemployment rose by 787,000 in the month to 14.5 million, pushing the jobless rate from 8.9% to 9.4%, the highest since August 1983.

Steep job losses continued in the goods-producing industries, with 225,000 payrolls lost. Manufacturing industries lost 156,000, with just 12% of manufacturing industries adding workers. Construction industries lost 59,000 jobs, the fewest since September.

Among 271 industries across the economy, 32.7% were hiring in May.

The pace of job loss moderated in services, which lost 120,000 jobs, the fewest since August. Temporary help jobs fell by 6,500, the fewest since the recession began in December 2007.

Health-care firms added 36,000 jobs in May. Retail lost 17,500. Financial services lost 30,000

Got Gold?

click on chart to enlarge

This chart goes hand in hand with the chart on my previous post. Smart money is plowing into precious metals as a hedge against inflation and the falling dollar. Even with the daily interference in the gold market ( by the western central banks that do not want people dumping worth-less paper dollars for real money). I have personally protected myself with a significant percentage of my net worth in gold, have you?-Lou

U.S. Interest Rates Rising Rapidly

click on chart to enlarge

Check out this chart of the 30 year U.S. bond yield. As can be plainly seen yields are rising dramatically as bond prices fall. This is not making the Fed or the Treasury very happy. Rising rates will derail any recovery. Rising rates is equivalent to spraying weed killer on the "green shoots" of economic recovery everyone is talking about. Monetizing the U.S. debt is scaring the hell out of bond investors and this is resulting in the Fed buying more and more of new issue U.S. debt issuance (with printed money). I expect yields to continue to rise this summer and then the next shoe will drop in the financial crisis and a big shoe it will be. This is the most important chart to watch, I will post it frequently.-Lou

Watch out for the Hindenburg Omen

I never heard about this technical indicator, I thought I would bring it to your attention.-Lou

Watch out for the Hindenburg Omen

By Mark Hulbert, MarketWatch

ANNANDALE, Va. (MarketWatch) -- According to a little-known technical indicator known as the Hindenburg Omen, the risk of a stock market crash right now is high.

Should we pay any attention to this indicator?

"Yes" is the answer from quite a few of the investment newsletters I monitor. Indeed, in recent days so many advisers have referred to the warnings that the indicator is emitting that investing blogs are all abuzz.

And, naturally, more than a few of you emailed me to ask that I devote a column to it.

Let me start by reviewing the Hindenburg Omen. The core idea behind it is that it's bearish whenever there are a large number of both new 52-weeks highs and new 52-week lows on the New York Stock Exchange.

From what I can tell, it was created in the 1970s by a fellow named Jim Miekka, who was editor of a newsletter called the Sudbury Report. Credit for christening this indicator the "Hindenburg Omen" goes to Kennedy Gammage, who used to edit a newsletter called the Richland Report.

Why would a large number of both new highs and new lows be bearish? Peter Eliades, editor of the Stockmarket Cycles newsletter, recently provided an answer: "Under normal conditions, either a substantial number of stocks establish new annual highs or a large number set new lows - but not both." When there are high levels of both, "it indicates that the market is undergoing a period of extreme divergence... Such divergence is not usually conducive to future rising stock prices. A healthy market requires some semblance of internal uniformity, and it doesn't matter what direction that uniformity takes. Many new highs and very few lows is obviously bullish, but so is a great many new lows accompanied by few or no new highs. This is the condition that leads to important market bottoms."

In terms of genealogy, the Hindenburg Omen is a descendant of an indicator called the High Low Logic Index, which Norman Fosback, editor of Fosback's Fund Forecaster, devised in the early 1970s. According to Gammage, the Hindenburg Omen is also "derived from a New High - New Low indicator developed by Gerald Appel many years ago." Appel, of course, is the editor of the Systems & Forecasts newsletter.

Read More:

http://www.marketwatch.com/story/the-hindenburg-omen

Benefit spending soars to new high

This number will only get larger in the years to come as more people qualify for Social Security and Medicare. We are becoming a socialist nation.-Lou 

Benefit spending soars to new high

By Dennis Cauchon, USA TODAY

The recession is driving the safety net of government benefits to a historic high, as one of every six dollars of Americans' income is now coming in the form of a federal or state check or voucher.

Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009, the Bureau of Economic Analysis reports. That's the highest percentage since the government began compiling records in 1929.

In all, government spending on benefits will top $2 trillion in 2009 — an average of $17,000 provided to each U.S. household, federal data show. Benefits rose at a 19% annual rate in the first quarter compared to the last three months of 2008.

The recession caused about half of the increase, according to the report. Unemployment insurance nearly tripled in the past year. The other half is the result of policies enacted during President George W. Bush's first term.

Following the 2001 recession — when costs normally decline — social spending soared to pay for the Medicare drug benefit, expanded health care for children and greater use of food stamps.

The safety net is working, advocates say.

"We're not seeing the hunger we saw in the 1930s because the food stamp program is doing what it's supposed to do," says Florida food stamp director Jennifer Lange.

What's driving the $209 billion increase in benefit costs from a year ago:

•Unemployment insurance. One-fourth of the extra spending covers jobless benefits, a program started in the Depression. The stimulus law, passed in February, increased benefits.

• Social Security. The bad economy has prompted a 10%-15% jump in early retirements, the program's actuary says. A 5.8% increase took effect January 1. Bottom line: $55 billion in new costs.

• Food stamps. Enrollment hit a record 33.2 million people in March, up 5.2 million from last year. The stimulus law boosted the size of the benefit. Average March benefit: $114 per person.

"The increase in social spending is still relatively modest given the severity of the downturn," says economist Dean Baker of the liberal Center for Economic and Policy Research. "We're not France.

Read More:

http://www.usatoday.com/news/washington/2009-06-03-benefits_N.htm

Obama To Sell B-2 Blueprints to China to Pay Off Debt

If true, this is one of the more outrageous things I have heard coming out of this administration. I have been saying for years that the U.S. trade deficit with China was a national security issue mainly due to the fact that China could blackmail the U.S. by threatening to dump the over $1 trillion on U.S. bonds they hold. The result would be skyrocketing interest rates, hyper-inflation and economic collapse. Having them forgive debt in exchange for us giving them military secrets and technology is beyond anything I could have imagined. This is downright scary if true.-Lou

Obama to Sell B-2 Bomber Blueprints to China to Pay Off Debt

B-2 Plans for Sale?
Richard Hogarty
Boston Reviewer
June 1, 2009


Record deficits and a crashing economy appear to be taking a toll on the young Barack Obama Administration. The Administration has been talking about hiking income taxes and perhaps instituting a VAT tax.

China is also concerned with the mounting deficits in the United States budget. China is the single biggest holder of US Treasury Bonds and is one of Washington's biggest trading partners. The People's Republic has had a burgeoning economy, but is increasingly wary of the falling US dollar.

While the exact amount of Chinese ownership of US treasuries is unknown, it is estimated to add up to over a trillion dollars. If China were to call in US guarantees on these bonds, economists fear it could lead to an economic collapse larger than the Great Depression.

China has recently expanded its defense budget, ostensibly to keep up with its economic growth. China is reportedly working on its own version of a stealth bomber (the US has the only functioning model) but is lagged by technological defects.

On April 1st, President Obama spoke to Chinese Premier Hu Jintao during the G20 Summit. During this meeting, Mr. Hu expressed interest in writing off some of the US debt in exchange for military technology. The President has since referred the matter to Defense Secretary Robert Gates.

The Defense Department is reportedly furious with the President's proposal to sell blueprints of the B-2 Spirit stealth bomber to the People's Republic. Gates has flatly rejected the President's plan, but has since been asked to step down if he will not facilitate the process.

Read More:

http://jumpinginpools.blogspot.com/2009/06/obama-to-sell-b-2-bomber-blueprints-to.html

I'm Off To Orlando

Off to Orlando today for the Mega Book Marketing Seminar. This is an intense three day workshop on promoting your book. It's run by Mark Victor Hansen, the most successful author ever, he sold 143 million Chicken Soup For The Soul books. Anyway, since I will have very little free time, the number of posts will be less than usual but I will do my best especially if there is important news that I feel you should know about.-Lou

A Kinder, Gentler Recession for Seniors?

I'm not sure I agree with this article. many seniors I know were struggling before the financial crisis started and are even worse now. My big concern for seniors is that inflation will take off leaving those on a fixed income vulnerable.-Lou

A Kinder, Gentler Recession for Seniors?

Is the Great Recession bypassing seniors? That's the conclusion drawn by a new study looking at the downturn's impact on different age groups. But I'm not buying it.

The Pew Research Center poll reports that Americans over age 65 are less likely to have been forced to cut their spending by the downturn than middle-aged people. Fewer seniors report sharp declines in retirement portfolios than other age groups and are more likely to express overall satisfaction with their financial situations.

I can't argue with the Pew reports, since the findings simply reflect what people are telling pollsters. But polls only answer the questions that you ask. In this case, the questions generated headlines claiming the recession has been "kinder and gentler" for seniors--and that misses a bigger emerging picture that's much less positive.

No doubt, people on the cusp of retirement are in bad shape. Pew notes that Americans age 50-64 are near their peak earning power and net worth, and will need to tap their retirement funds soon--in many cases, before the market fully bounces back. The poll shows this group has been most likely to lose money in stocks or retirement accounts, and has suffered big losses. They're also the most likely to say they won't have sufficient funds to live on in retirement; nearly half of those who are still working say they're considering delaying retirement.

Meanwhile young adults are least likely to say they've been crushed by the stock market, mainly since they don't have as much money invested. About 70 percent of 18-29 year- olds report that they haven't lost money on investments, and 45 percent of 30-49-year-olds say the same. But they're four times more likely than older people to say they have had trouble securing affordable medical care. And they're far more likely to have experienced a job layoff.


Read More:
http://www.huffingtonpost.com/mark-miller/a-kinder-gentler-recessio_b_210057.html

Fears mount that North Korea is preparing to attack the South

This doesn't sound good. The world is getting to be a very dangerous place.-Lou

Fears mount that North Korea is preparing to attack the South

It was obvious that something was up when the Chinese scarpered. One day there were scores of their fishing boats hoovering up the valuable crabs from the richest of the fishing grounds in the Yellow Sea.
Overnight all but a handful were gone.

Anywhere else the locals would have been glad to have the crabs to themselves but this is no ordinary fishing ground. A few yards from here is the maritime boundary between South and North Korea. “The Chinese fish here because the North Koreans allow them,” a coastguard official said. “If they’ve gone it’s because they’ve had some kind of warning.”

An imminent missile launch into the sea? An armed incursion of North Korean ships? A full-scale invasion of Yeonpyeong, the small South Korean island hard up against the maritime boundary? Too much blood has already been shed in these waters for anyone to risk taking any chances, and for the past week South Korea has been dispatching reinforcements.

No one will discuss numbers for security reasons but sailors and marines, as well as members of the Sea Special Attack Team, the coastguard’s commando force, have been arriving to join the several hundred troops already on Yeonpyeong.

These waters, around the Northern Limit Line, have become the most tense and dangerous patch of sea in Asia.

Read More:
http://www.timesonline.co.uk/tol/news/world/asia/article6410160.ece

Gross Says Diversify From Dollar as Deficits Surge

Bill Gross is a smart guy and manager of the largest bonds mutual fund, he knows what he is talking about.-Lou

Gross Says Diversify From Dollar as Deficits Surge

June 3 (Bloomberg) -- Bill Gross, founder of Pacific Investment Management Co., advised holders of U.S. dollars to diversify before central banks and sovereign wealth funds ultimately do the same amid concern about surging deficits.

Treasury Secretary

Timothy Geithner’s plan to bring the budget back into balance won’t be successful as consumers shrink spending and the U.S. growth rate slows, Gross said in a Bloomberg Radio interview today. The budget deficit will be narrowed to “roughly” 3 percent of GDP from a projected 12.9 percent this year, Geithner said June 1.

“I think he’ll fail at pulling a balanced rabbit out of a hat,” Gross said from Pimco’s headquarters in Newport Beach, California. “They are talking about -- once the economy in the U.S. renormalizes -- the move back toward balance or much less of a deficit. I suspect that will be hard to do.”

Higher

savings rates and an increase in the cost to service the national debt will drag on the U.S. economy, likely meaning “trillion-dollar deficits are here to stay,” Gross wrote in his June investment outlook posted today on the firm’s Web site.

Gross, manager of the world’s biggest

bond fund, said on May 21 the U.S. will “eventually” lose its AAA credit rating after Standard & Poor’s lowered its outlook on the U.K.’s AAA to “negative” from “stable” amid an escalating ratio of debt- to-gross domestic product. While U.S. marketable debt is at about 45 percent of GDP, annual deficits of 10 percent will push the amount to 100 percent within five years, a level that rating companies and markets view as a “point of no return,” he wrote.

‘Years to Come’

Government spending will push the budget

deficit to $1.845 trillion in the year ending Sept. 30, according to the Congressional Budget Office.

Read More:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajzmRUMx8Hoo

Hi-ho Silver!

As I was showing you on Wednesday, silver is on fire. It looks like a much needed correction in gold and silver may be at hand, but long-term silver is cheap. -Lou

Hi-ho silver!

White metal looks to outpace gold again, thanks to its industrial uses

NEW YORK (MarketWatch) -- Silver, which has topped gold and platinum to become the fastest rising precious metal this year, has a chance to keep outperforming thanks to its double use as both an inflation hedge and industrial material, analysts are forecasting.
But with higher returns come greater risks. Silver has proved much more volatile than gold, partly because fewer people trade the white metal than gold.

If "prices of precious metals turn higher across the board, silver will tend to move up faster," said Neil Meader, research director at London-based precious metals consultancy GFMS.

"If all the prices come off, you will see silver prices collapse much faster," he said.

The London fixing, a global benchmark for silver's spot trading, have rallied nearly 50% this year to near $16 an ounce, the highest level in 10 months, as investors piled into coins, bars, and silver exchange-traded funds such as iShare Silver Trust. Holdings in iShare Silver hit a record high this week.

The year-to-date gain in silver easily outpaced gold's 12% advance and has also outrun platinum's 30% increase.

Silver futures traded on the Comex division of the New York Mercantile Exchange, another benchmark, surged 27% last month, the biggest monthly gain in 22 years. It's the second-best performer in 26 major commodities tracked by Merrill Lynch's MLCX commodity index, topped only by gasoline futures.

Read More:

http://www.marketwatch.com/story/silver-outshining-gold-as-an-inflation-play