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    Daily Digest 1/25 – Home Prices Declined, U.K. Economy Shrinks in Winter Freeze, CA & EPA Work on Auto Standards

    by DailyDigest

    Tuesday, January 25, 2011, 4:00 PM

  • The Great Debt Shift
  • Silver Coin Sales, ETF Outflows Show Divergence In Market
  • Home Prices in U.S. Declined 1.6% From Year Earlier
  • US Stocks Open Lower As Blue-Chip Earnings Weigh
  • January Consumer Confidence Jumps
  • U.K. Economy Unexpectedly Shrinks in Winter Freeze
  • California, EPA to Work on Joint Auto Standards

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The Great Debt Shift (pinecarr)

While this socialization of private debt has created deep citizen resentment, it remains to be seen whether political pressure is enough to hold back the tide. In the US, the forces of fiscal restraint appear to have the upper hand at present; but, this late in the game, it is far from certain that the newly elected fiscal hawks will be able to avert civil unrest and debt default. It is worth noting that the debt shift has offered some near-term benefits. Relieved of repayment anxiety, many companies have posted very promising earnings reports in recent months (one needs to only glance at Detroit). Despite continued demand weakness, these companies have worked hard to improve their balance sheets and raise operating margins. The resulting rally in share prices has given rise to a belief that recovery is at hand.

Silver Coin Sales, ETF Outflows Show Divergence In Market (doug)

So, investors need to eye the pace of coin sales, especially if ETF holdings continue to soften. “If the mint sales and exchange-traded product sales slow, as well, prices will fall dramatically because of the poor fundamentals. Investment demand is key,” Cooper said.
Coin Sales Mostly Retail-Based, ETFs Appeal To Broader Class Most market analysts said while the funds have both retail and institutional investors in them, coin sales are almost always retail-based. Because of that, trying to use one to infer what might happen in the other isn’t always realistic.

Home Prices in U.S. Declined 1.6% From Year Earlier

Mounting foreclosures will probably throw more properties on the market this year, further depressing prices, homeowners’ equity and construction. The lack of a sustained housing rebound and unemployment above 9 percent are among reasons theFederal Reserve may announce this week it’ll complete a second round of stimulus that will pump $600 billion into the economy by June.

US Stocks Open Lower As Blue-Chip Earnings Weigh

The Dow Jones Industrial Average fell 39 points, or 0.3%, to 11941, one day after the measure surged to within striking distance of the 12000 level. The Dow has not closed above 12000 since June 19, 2008. The Nasdaq Composite shed 0.4% to 2707. The Standard & Poor’s 500-stock index declined 0.2% to 1288, weighed by its technology sector. Investors were treading warily Tuesday as the Federal Reserve’s policy committee kicked off a two-day meeting and ahead of the president’s State of the Union address, which begins at 9 p.m., EST. A rush of fourth-quarter earnings reports from Dow components and data showing declining home prices also weighed on the market.

January Consumer Confidence Jumps

A barometer of consumers’ expectations rose to 80.3 in January from 72.3 in December. Among respondents in January, 11.4% said they expect increased income in six months, compared with 9.9% who said so in December. Most expect the same income. Also, 16% expect more jobs, up from 14.2%, while most expect the same number.

U.K. Economy Unexpectedly Shrinks in Winter Freeze

The pound dropped after the report, which shows the U.K. recovery faded even before Prime Minister David Cameron’s government increased sales tax to 20 percent this month, which may damp consumer demand this year. The data may reinforce calls for the Bank of England to hold off increasing its key interest rate to curb inflation. Governor Mervyn King, who leads the bank’s divided policy committee, delivers his first public speech of the year later today.


California, EPA to Work on Joint Auto Standards

In an announcement Monday, the U.S. Environmental Protection Agency said California officials have scrapped their plans to issue state-specific standards in March. Instead, the EPA and California Air Resources Board will now issue standards jointly by Sept. 1. The news was applauded by auto makers, which said California is now more likely to issue the same greenhouse-gas standard as the federal government, thereby reducing the risk that the state would adopt more stringent standards than federal officials.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the “3 Es.”

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