Things are really picking up speed in what could be a very bad way.  There is a lot of government manipulation going on in all of the markets of the industrialized world, so this may very well simmer down.  However, the international banks seem to have tightened their “credit death grip”, so we could see some financial fireworks over in Europe.

Greece, Spain, and Portugal are set to implode.  Ireland and Iceland already have – even though Ireland is a corpse that is being propped up as if nothing is wrong.

The US dollar is gaining speed quickly in the upwards direction now.  The deflationary storm that is the “name that shall not be mentioned” amongst governments is ready to make itself very well known to the world.

Precious metals got destroyed today.  Look for that to continue if this economic storm truly takes off.

The employment report comes out tomorrow.  I fully expect them to report a positive number to try and take the edge off of things and take a few steps back from the cliff.  A positive report will mean nothing.  What’s happening right now is far bigger than the employment situation.  It’s a debt and currency crisis.

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Watch for these indexes to drop:

Chinese Shanghai Composite Index: 2,995.31 (change of 8.31% from July 20, 2009 base value of 3,266.92)
Shenzhen Stock Exchange Component Stock Index (SSE): 12,169.48 (change of 9.06% from July 20, 2009 base value of 13,381.22)
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Here are today’s numbers for the economic indicator:

1) Gold = $1,063.20
2) Silver = $15.26
3) Dollar Index = 79.97
4) Oil = $73.08
5) S&P 500 Index = 1,063.11
6) 3-month Treasury Bill yield = 0.08
7) 3-month OIS = 0.15

HEI = 32.19

(A value of under 100 indicates deflation, while over 100 indicates inflation – as referenced to Sept. 12, 2008…the day before Lehman Brothers collapsed)



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Here are the numbers for the day:

Dollar Index adjusted indexes:
Dow = (10,002.18) x (0.7997) = 7,998.74
S&P 500 = (1,063.11) x (0. 7997) = 850.17
Nasdaq = (2,125.43) x (0. 7997) = 1,699.71

3-month Treasury: 0.08

2-year Treasury: 0.80

10-year Treasury: 3.60

30-year Treasury: 4.54

2-yr vs. 10-yr Spread (Target > 273): 280 basis points – (Danger Zone)

2-yr vs. 30-yr Spread (Target > 369): 374 basis points – (Danger Zone)

3-month LIBOR: 0.25

3-month EURIBOR: 0.66

3-month OIS: 0.15

TED Spread: 17 basis points

LIBOR/OIS Spread: 10 basis points

Dollar Index: 79.97

Volatility Index: 26.08

JPY-EUR Exchange Rate (Target < 115): 122.1648

JPY-GBP Exchange Rate (Target < 145): 140.1202 – (Danger Zone)

JPY-USD Exchange Rate (Target < 90): 88.985 – (Danger Zone)

USD-EUR Exchange Rate (Target < 1.25): 1.3729

USD-CNY Exchange Rate (Target > 7.0): 6.8268

Warmly,

Brad

Comments or questions?  brhamill@hamill.com

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