{"id":8522,"date":"2013-09-14T13:06:41","date_gmt":"2013-09-14T17:06:41","guid":{"rendered":"http:\/\/www.pgm-blog.com\/?p=8522"},"modified":"2013-09-14T13:06:41","modified_gmt":"2013-09-14T17:06:41","slug":"highlight-of-the-week-of-september-9th-2013","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/highlight-of-the-week-of-september-9th-2013\/","title":{"rendered":"Highlight of the week of September 9th, 2013"},"content":{"rendered":"<p><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/DOW-Exit-2013.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-8528\" alt=\"DOW Exit 2013\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/DOW-Exit-2013.jpg\" width=\"383\" height=\"125\" \/><\/a>\u00a0<a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/Exit.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-8529 alignright\" alt=\"Exit\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/Exit.jpg\" width=\"126\" height=\"102\" \/><\/a><\/p>\n<p>Dear<strong>\u00a0PGM Capital<\/strong>\u00a0Blog readers,<br \/>\nIn this weekend&#8217;s blog edition, we want to discuss some of the most important events that happened in the global capital markets, the world economy and the world of money in the week of September 9th, 2013:<\/p>\n<ul>\n<li>The DOW-30 Index announced changes on September 10th, 2013.<\/li>\n<li>The USA Fiscal Deficit and Debt Ceiling.<\/li>\n<\/ul>\n<p><span style=\"color: #0000ff;\"><strong>The\u00a0DOW-30 Index Changes announced changes on September 10th, 2013:<br \/>\n<\/strong><\/span><span style=\"font-size: 13px;\">On, Tuesday September 10th, 2013, the Dow-30 Index, announced its biggest change in nearly a decade, Alcoa Inc. (NYSE:\u00a0<\/span><span style=\"font-size: small;\">AA<\/span><span style=\"font-size: 13px;\">), Hewlett-Packard Co. (NYSE:\u00a0<\/span><span style=\"font-size: small;\">HPQ<\/span><span style=\"font-size: 13px;\">), and Bank of America Corp (NYSE:\u00a0<\/span><span style=\"font-size: small;\">BAC<\/span><span style=\"font-size: small;\">)<\/span><span style=\"font-size: 13px;\">\u00a0are being dumped from DOW-30-stock index.<\/span><\/p>\n<p>Changes will come into effect at the close of trading on September 20th. The reshuffle was prompted by the low stock price of the three companies slated for removal, and the Index Committee&#8217;s desire to diversify the sector and industry group representation of the index,&#8221;\u00a0S&amp;P Dow Jones Indices said in a statement.<\/p>\n<ul>\n<li>Alcoa, trading around US$8.08, is down from US$40 in 2007. Its elimination is especially symbolic. The aluminum company joined the Dow in 1959.\n<p><div id=\"attachment_8550\" style=\"width: 486px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/AA-Chart.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-8550\" class=\" wp-image-8550\" alt=\"AA Chart\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/AA-Chart.jpg\" width=\"476\" height=\"274\" \/><\/a><p id=\"caption-attachment-8550\" class=\"wp-caption-text\">ALCOA Jan 2002 &#8211; Sept 2013 Chart<\/p><\/div><\/li>\n<li>HP, at US$22.36, is less than half the US$50 it was trading at in 2010. An attempt at a turnaround, overshadowed by the revolving door in its chief executive officer&#8217;s office, has been slow going.\u00a0 When added to the Dow in 1997, it was only the second computer company in the Dow (after IBM).\n<p><div id=\"attachment_8551\" style=\"width: 491px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/HPQ-chart.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-8551\" class=\" wp-image-8551\" alt=\"HPQ chart\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/HPQ-chart.jpg\" width=\"481\" height=\"274\" \/><\/a><p id=\"caption-attachment-8551\" class=\"wp-caption-text\">HPQ Jan 2002 &#8211; Sept 2013 Chart<\/p><\/div><\/li>\n<li>Bank of America, at US$14.48, is down from $50 in 2007. It became a Dow member in November 2008. Since the financial crisis, Bank of America, has been plagued with lawsuits stemming from its mortgage dealings, and it has been trimming business units.\n<p><div id=\"attachment_8552\" style=\"width: 489px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/BAC-chart.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-8552\" class=\" wp-image-8552\" alt=\"BAC chart\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/BAC-chart.jpg\" width=\"479\" height=\"270\" \/><\/a><p id=\"caption-attachment-8552\" class=\"wp-caption-text\">Bank of America Jan 2002 &#8211; Sept 2013 Chart<\/p><\/div><\/li>\n<\/ul>\n<p>Athletic gear maker Nike Inc. (NYSE:\u00a0NKE) steps into the place of Alcoa, a Dow component for 54 years. Payments company Visa Inc. (NYSE:\u00a0V) will unseat HP, which joined the blue-chip benchmark in 1997. And Goldman Sachs Group Inc. (NYSE:\u00a0GS) replaces Bank of America, which joined the index five years ago.<\/p>\n<ul>\n<li>Visa shares have been on a tear, and the company is growing on the strength of new payment technology.\n<p><div id=\"attachment_8553\" style=\"width: 488px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/VISA-Chart.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-8553\" class=\" wp-image-8553\" alt=\"VISA Chart\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/VISA-Chart.jpg\" width=\"478\" height=\"266\" \/><\/a><p id=\"caption-attachment-8553\" class=\"wp-caption-text\">VISA Chart from IPO date &#8211; Sept 2013<\/p><\/div><\/li>\n<li>Nike continues to grow revenue and shareholder value thanks to a loyal worldwide following.\n<p><div id=\"attachment_8554\" style=\"width: 487px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/NKE-Chart.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-8554\" class=\" wp-image-8554\" alt=\"NKE Chart\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/NKE-Chart.jpg\" width=\"477\" height=\"271\" \/><\/a><p id=\"caption-attachment-8554\" class=\"wp-caption-text\">Nike Jan 2002 &#8211; Sept 2013 Chart<\/p><\/div><\/li>\n<li>Goldman recently reported that earnings doubled in the latest quarter.\n<p><div id=\"attachment_8543\" style=\"width: 488px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/GS-chart.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-8543\" class=\" wp-image-8543\" alt=\"GS chart\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/GS-chart.jpg\" width=\"478\" height=\"269\" \/><\/a><p id=\"caption-attachment-8543\" class=\"wp-caption-text\">Goldman Sachs Jan 2002 &#8211; Sept 2013 Chart<\/p><\/div><\/li>\n<\/ul>\n<p>Created in 1897, the Dow has undergone a number of changes since its inception. General Electric Co. (NYSE:\u00a0GE)\u00a0is the sole surviving original member.<\/p>\n<p>The blue-chip index is price-weighted, and the performance is based on a company&#8217;s stock price, and not market capitalization. Stocks are selected by editors of the Wall Street Journal, which is owned by New Corp, which owns stakes in the indices.<\/p>\n<p><span style=\"color: #0000ff;\"><strong>The USA Fiscal Deficit and Debt Ceiling debate:<br \/>\n<\/strong><\/span>The United States is set to run out of borrowing authority in mid-October, leaving the government at a high risk of not being able to pay for Social Security checks, military salaries and other operations, the Obama administration said Monday September 9, 2013.<\/p>\n<p>As can be seen from below chart, since 1940, Congress has effectively approved 79 increases to the debt ceiling. That&#8217;s an average of more than one a year.<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/130911145338-debt-ceiling-increases-620xa.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-8537 aligncenter\" alt=\"Debt Ceiling Increases since 1940\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/130911145338-debt-ceiling-increases-620xa.jpg\" width=\"477\" height=\"285\" \/><\/a><\/p>\n<p>This past February, lawmakers decided to\u00a0temporarily &#8220;suspend&#8221;\u00a0the debt ceiling,<\/p>\n<p>The debt ceiling was reset at US$16.699 trillion on May 19, up from the US$16.394 trillion where it was before the suspension.<\/p>\n<p>Since then, Treasury has been forced to use &#8220;extraordinary measures&#8221; to keep the country from breaching the limit.<\/p>\n<p>Under this scheme, Treasury was able to continue borrowing to pay the country&#8217;s bills until May 19th. At that point, the debt limit automatically reset to the old cap plus whatever Treasury borrowed during the suspension period.<\/p>\n<p>Republicans are demanding significant new spending cuts in exchange for increasing the nation\u2019s US$16.7\u00a0trillion debt limit, with some GOP lawmakers insisting on a delay or the scrapping of\u00a0President Obama\u2019s signature health-care law.<\/p>\n<p><span style=\"color: #0000ff;\"><strong>PGM Capital comments:<br \/>\n<\/strong><\/span>By removing ALCOA from the DOW-3o index, the DOW is losing its pacesetter for earnings season, as well as another \u201cindustrial\u201d company.<\/p>\n<p>ALCOA\u00a0was added to the Dow Jones Industrial Average in June of 1959, when it was called Aluminum Company of America.<\/p>\n<p>The most notable thing about ALCOA, was its position as the DOW component that kicked off earnings season, and not just for the index. While there have been debates about how much Alcoa\u2019s aluminum business is a harbinger for corporate America, it stayed in the discussion only because it reported before everybody else.<\/p>\n<p>Regarding the USA debt and fiscal deficit, in\u00a02012 fiscal condition of the United States suffered its worst annual deterioration in the history of the country. Based on generally accepted accounting principles (<a title=\"Generally Accepted Accounting Principles (United States)\" href=\"http:\/\/en.wikipedia.org\/wiki\/Generally_Accepted_Accounting_Principles_(United_States)\" target=\"_blank\">GAAP-based accounting<\/a>), the actual \u00a0federal deficit hit a record US$ 6.6 trillion in the year ended September 30, 2012, a level that was fully 42 percent\u00a0of the nation\u2019s annual GDP.<\/p>\n<p>China and Japan the two mayor foreign holders of US Treasuries, led an exodus from U.S. Treasuries in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record US$ 40.8 billion of net foreign selling of Treasuries.<\/p>\n<p>Below chart gives an overview of mayor foreign holders of US Treasury Securities.<\/p>\n<div id=\"attachment_8574\" style=\"width: 398px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/us_debt_foreign_holders_2013.gif\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-8574\" class=\" wp-image-8574   \" alt=\" MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/us_debt_foreign_holders_2013.gif\" width=\"388\" height=\"315\" \/><\/a><p id=\"caption-attachment-8574\" class=\"wp-caption-text\">Oil exporters include: Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.<\/p>\n<p>Caribbean Banking Centers include: Bahamas, Bermuda, Cayman Islands, Curacao, British Virgin Islands and Panama<\/p><\/div>\n<p>The sales were part of US$ 66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S.\u00a0<a id=\"itxthook0\" title=\"At 3.5% for U.S 10Y Yields, All Hell Will Break Loose In The Financial World Read more at http:\/\/investmentwatchblog.com\/at-3-5-for-u-s-10y-yields-all-hell-will-break-loose-in-the-financial-world \" href=\"http:\/\/investmentwatchblog.com\/bloodbath-coming-us-margin-debt-reaches-danger-levels-china-japan-lead-record-investor-flight-from-us-bonds-hindenburg-omen-looms-over-sp-treasury-yields-keep-rising\/#\" target=\"_blank\" rel=\"nofollow\">Treasury Department<\/a>\u00a0data showed.<\/p>\n<p>China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to US$ 1.0834 trillion. Combined, they accounted for about US$ 40 billion in net Treasury outflows.<\/p>\n<p>Based on the same official GAAP numbers, the federal government\u2019s\u00a0total obligations as of September 30th, 2012, stood at US$ 85.4 trillion, or 5.5 times the level of fiscal-2012 GDP, as can be seen from below chart.<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/USDebt-GAAPbased.gif\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-8542 aligncenter\" alt=\"USDebt-GAAPbased\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/USDebt-GAAPbased.gif\" width=\"505\" height=\"368\" \/><\/a><\/p>\n<p>For 2012, the gross federal debt of the USA totaled US$16,185 billion, composed of<br \/>\nUS$ 11,332 billion public and US$ 4,853 billion intra governmental debt.<\/p>\n<p>The following graph of Gross Federal Debt versus GDP plots the level of the government\u2019s fiscal-year end debt level, versus the average nominal (not adjusted for inflation) GDP level for the same fiscal-year ended September 30th.<\/p>\n<p>In 2012, the\u00a0actual debt level overtook the nominal\u00a0<span style=\"font-size: 13px;\">GDP, as can be seen from below chart.<\/span><\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/Debt-to-GDP.png\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-8548 aligncenter\" alt=\"Debt to GDP\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/Debt-to-GDP.png\" width=\"488\" height=\"364\" \/><\/a><\/p>\n<p><a style=\"font-size: 13px;\" title=\"U.S. Government GAAP-Based 2012 Financial Data\" href=\"http:\/\/www.shadowstats.com\/article\/no-500-special-commentary-us-government-gaap-based-2012-financial-data.pdf\" target=\"_blank\">Source:<\/a><span style=\"color: #333333; font-size: 13px;\">\u00a0<\/span><\/p>\n<p>By mid-October, the US will have reached its debt limit again. Most have lost track of the exact debt limit and of the number of increases. Give or take a trillion, the limit currently is between 16.5 and 17 trillion US dollar.<\/p>\n<p>In accordance with the official <a title=\"USA Debt Clock\" href=\"http:\/\/www.usdebtclock.org\/\" target=\"_blank\">USA Debt Clock<\/a> Site, at the moment we are writing this article the USA Debt is approx. 16,938 Trillion US Dollars.<\/p>\n<p>The question most investors should ask themselves are:<\/p>\n<ul>\n<li>What are the risks associated with the increasing debt burden?<\/li>\n<li>Should we act before it is too late or believe that the government will take care of us?<\/li>\n<li>How could this debt story end up?<\/li>\n<\/ul>\n<p>In order to answer the three aforementioned questions, we should go back to the roots of today\u2019s monetary system. The underlying question is: where does money come from in the first place?<\/p>\n<p>Below documentary video entitled &#8220;How Our Monetary System Works And Fails&#8221; might give an explanation on the above questions.<\/p>\n<p><iframe loading=\"lazy\" src=\"\/\/www.youtube.com\/embed\/JUFxsZF5E48\" height=\"315\" width=\"480\" allowfullscreen=\"\" frameborder=\"0\"><\/iframe><\/p>\n<p>Due to this, it is not\u00a0<strong>IF<\/strong>\u00a0but\u00a0<strong>WHEN<\/strong>\u00a0will the current Debt crisis lead to an imploding of the current FIAT Currency system and when we will return to a fixed asset backed monetary system.<\/p>\n<p>History has proven that every time a FIAT currency collapse the word has returned to gold back monetary system.<\/p>\n<p>Since Gold reached a recovery of half this years losses at the end of August, signals for sentiment have forecast the potential for a profit taking sell off and for the market to correct 50 percent of the improvements from June&#8217;s bottom. This would take prices to US$ 1,307.00 a troy ounce.<\/p>\n<p>The fact that on Friday, September 13th, 2013, Gold didn&#8217;t broke below this US$ 1,307.00 an oz, price level, but managed to close the day up US$ 4.90 an oz or 0.37 percent, is technically very bullish for the price of Gold going forward.<\/p>\n<p>Please see below chart for details.<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/Gold-Chart-September-13-2013.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-8567 aligncenter\" alt=\"Gold Chart September 13 2013\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2013\/09\/Gold-Chart-September-13-2013.png\" width=\"541\" height=\"201\" \/><\/a><\/p>\n<p>Before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Gold, Silver and other precious metals as well as the stocks of their producers can be very\u00a0volatile and that sharp corrections may happen in the short term.<\/p>\n<p>Yours Sincerely<\/p>\n<p>Eric Panneflek<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0 Dear\u00a0PGM Capital\u00a0Blog readers, In this weekend&#8217;s blog edition, we want to discuss some of the most important events that happened in the global capital markets, the world economy and the world of money in the week of September 9th, 2013: The DOW-30 Index announced changes on September 10th, 2013. The USA Fiscal Deficit and<a href=\"https:\/\/www.pgmcapital.com\/nl\/highlight-of-the-week-of-september-9th-2013\/\">[&#8230;]<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,8,24,10,19,20,12,13,15,16,21,22,1,17,32,18],"tags":[],"class_list":["post-8522","post","type-post","status-publish","format-standard","hentry","category-commodities","category-debt-crisis","category-energy","category-eric-panneflek","category-financial-news","category-general-information","category-inflation","category-market-volatility","category-pgm-capital","category-precious-metal","category-technology","category-the-week-in-review","category-uncategorized","category-us-dollar","category-video","category-world-economic-outlook"],"_links":{"self":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/8522","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/comments?post=8522"}],"version-history":[{"count":0,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/8522\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/media?parent=8522"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/categories?post=8522"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/tags?post=8522"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}