The following is part of Pivotal Events that was published for our subscribers Thursday, September 3, 2009.

SIGNS OF THE TIMES

Last Year:

"The hot dollar is melting steel prices." Hot-rolled steel was down 30% from July.

- BNN, September 3, 2008

"Resource Stocks, No Floor So Far"

"Market route resembles financial shares during July."

- Wall Street Journal, September, 4, 2008

"Auto sales tumble, but industry says downturn bottom may be near."

- Wall Street Journal, September 4, 2008

* * * * *

This Year:

"Borrowing in dollars has become cheaper than borrowing in the Japanese yen for the first time in 16 years, a sign that fear in the credit markets, which drove borrowing costs sharply higher, has eased significantly."

- Wall Street Journal. August 27, 2009

"Japan's unemployment rate rose to a record 5.7% in July and deflation worsened."

- Bloomberg, August 28, 2009

"What Happened to the 'Depression'?"

"Despite the rhetoric from Washington, we were never close to 25% unemployment."

- Wall Street Journal, August 31, 2009.
Op-Ed piece by Allan H. Metzler.

Metzler is considered to be one of the leading experts on monetary policy, but his approach seems naïve, or he is making a desperate tout. This year (2009) is the first year after a classic crash and unemployment has been around 9 percent. The number for the first year after the 1929 crash was 8.7%, and it wasn't until the fourth year after the crash that unemployment reached 24.9%.

There could be some difference in the calculation, but those flogging this as evidence of no depression should be more thorough in their research and have more regard for logic. Metzler has not been the only one to use this argument and if it was in a term paper it would be marked "D".

"Greater Than One in Four FDIC Insured Institutions are Unprofitable: Bank Problems List at 15-Year High"

- Mish, August 29, 2009

Base Metal Prices: Our August 20 edition noted that the rush in metal prices had taken the GYX up to the best overbought condition in three years. The high was 353 on August 14, and the next low was 320. The bounce was to 346 and the drift down led to today's 2 percent pop.

Generally, we have thought that as investors revived from summer distractions there would be some buying. And as covered in today's ChartWorks, gold is in a seasonal rally and is pulling other metals up.

Going the other way, credit markets have been expected to deteriorate and corporate spreads have widened a little. Also likely to provide adversity is the probability of a stronger dollar. Mining companies should be aggressive sellers. Pension funds should seek redemption by getting out of commodities. Traders can wait before shorting.

Mining stocks (SPTMN) have been outstanding performers in soaring from 178 in November to 830 recently. This is also at one of the highest RSIs in a couple of years, which suggests the best is in the play. Investors should continue to lighten up - keeping in mind that seasonal forces in this sector have been reliable. As with last year, we look to get long at much lower prices late in November-December.

Traders can await the shorting opportunity.

"When you look at the mistakes of the 1920s and 1930s, they were clearly amateurish. It is hard to imagine that happening again - we understand the business cycle much better."

- Greg Mankiw, Harvard economist and text book author,
Wall Street Journal, February 1, 2000

"The truth is that Fed governors, together with their crack staff of PhD economists and market analysts, are as close to an economic dream team as we are ever likely to see."

- Gregory Mankiw, New York Times, December 23, 2007

Link to September 4, 2009 "Bob and Phil Show" on Howestreet.com: http://www.howestreet.com/index.php?pl=/goldradio/index.php/mediaplayer/1369.