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After just getting back in and checking on what markets did in late trading, I couldn’t help but notice that the Sprott Physical Gold ETV (NYSE:PHYS) took a shellacking today.
Surely there’s some explanation for that latest nosedive that, hopefully, is just temporary, but even so, since the May mania, it’s been mostly underperforming boring old GLD.
Full Disclosure: Long GLD, no position in PHYS at time of writing
Well, it looks like those California government worker pay cuts to minimum wage are not going to go through as Governor Arnold Schwarzenegger had hoped.
Last Friday, a judge ruled that the Gubernator could not make Controller John Chiang reduce the paychecks of tens of thousands of state workers to $8.25 an hour to help out with the current $19 billion budget hole – at least not right now. Apparently, the court is still looking into the matter.
The Sacramento Bee reports that workers are angry at all the cuts, quoting the governor as follows, a passage that should be read with your best Schwarzenegger accent (but, please, don’t do it out loud).
When it comes to state employees, let me make one thing clear, that I appreciate very much the hard work that state employees do. But at the same time, we have had a drop because of the economic crisis worldwide … People had to take reductions in their salaries and all of those things and so the public sector also has to take a haircut.
Of course, this does little for the outgoing governor’s approval ratings that, according to this LA Times story, have now reached the depths of his predecessor, Gray Davis.
Schwarzenegger’s poll numbers are now exactly the same as Gray Davis’ numbers in August 2003, two months before he was recalled by California voters.The poll found about one in five voters (22%) currently approves of Schwarzenegger’s performance as governor, while 70% disapprove.
As should be clear after the last 15 years, California is impossible to govern without an asset bubble of some sort that is in some stage of inflating.
The dismal set is likely sharpening their pencils at this very moment, readying lower estimates for housing starts and new home sales to be released in the days ahead after this morning’s plunging Housing Market Index from the National Association of Home Builders.
After a brief “sugar high” from this spring’s expiring homebuyer tax credit, the outlook from home builders is back to a level last seen around the middle of “The Great Recession”, casting more doubt on where the U.S. economy is headed during the second half of the year.
The folks in the nation’s capital will likely shrug off reports that some in China think they should hold more gold and less U.S. debt as easily as they’ll shrug off stories about how different the view of the world is inside Washington D.C. and outside it.
China should cut U.S. Treasury holdings: economist
Yu Yongding, a former academic adviser to the central bank and now a professor with the Chinese Academy of Social Sciences, said Beijing should invest in assets denominated in other currencies as well as other financial instruments and real goods.
“Although assets in other currencies and forms are not an ideal replacement for U.S. Treasury bonds, diversification should be a basic principle,” Yu wrote in the China Securities Journal.
“When demand for U.S. Treasury securities is strong, it’s a rare opportunity for us to gradually pull back. That way, it will not have a big impact on prices and China will not suffer too much,” he said.
Zhang Monan, a researcher with the State Information Center, a think tank under the powerful National Development and Reform Commission, told the paper that China should invest more of its $2.5 trillion of foreign exchange reserves, the world’s largest stockpile, in hard assets such as gold.
What at they waiting for?
Politico files this report about the booming economy in the nation’s capital where confidence is high after the “massive expansion of government under President Barack Obama”. Based on an online poll, a striking difference in perception now exists about how the country is doing – depending upon if you live in Washington or outside it.
Wouldn’t it be nice to live in a place where unemployment is low, home prices are firm, the restaurants are full, and the stores buzz with activity as workers spend their hard earned money? The polling data on the Tea Party movement is particularly interesting.
MUST READS
Hungary Debt Risk Soars as IMF Halts Talks – Bloomberg
Moody’s downgrades Ireland on loss of financial strength – MarketWatch
Delta Air Expects 65,000 Applicants for 1,000 Job Openings – Bloomberg
Comparisons to the Great Depression keep popping up – USA Today
Obama’s Tally Omits Jobs Killed or Thwarted – Baum, Bloomberg
China should cut U.S. Treasury holdings: economist – Reuters
Reality gap: U.S. struggles, D.C. booms – Politico
The Pundit Delusion – Krugman, NY Times
MARKETS/INVESTING
Gold eases below $1,190 – Reuters
Oil prices move above $76, traders eye equities – AP
PIMCO Total Return fund ups US govt debt weighting – Reuters
What’s this big finance-regulation overhaul really do? – McClatchy
Friday’s close leaves one bull queasy – MarketWatch
Don’t Take the Bait – Hussman Funds
ECONOMY/WORLD/HOUSING/FED
Real Jobs, Fake Jobs – Mises
Fighting deflation – EconBrowser
Obama gets tough on jobless benefits – Washington Post
Countries upbeat on bank tests but some doubts linger – Reuters
Housing outlook clouded by expiration of tax credit – MarketWatch
Fannie Mae gets tough on ’strategic’ mortgage defaults – USA Today
The Real Reason Geithner Is Afraid of Elizabeth Warren – HuffPo
Holding Bankers’ Feet to the Fire – NY Times
Ben Bernanke: The New Maestro? – WSJ
By Tim Iacono, Since 2005
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