The worse things are the more things appear to improve.

The worse things are the more things appear to improve. Take an extra $100 profit. Two years ago when you and your neighbor typically made $1000 that additional profit was only 10%. But last year your profit declined over 90% to just $100 but your neighbor still made $1000 so your stocks took a big hit and your neighbor's took a hit too because everyone expected his sales would soon take a hit too. But this year your profit doubled to $200 and your neighbors profit stayed the same at$1000. Now your stock is soaring because the wizards of Wall Street say you are having a "V" shaped recovery of 100% and your neighbor is stagnating.

So you can see how Wall Street makes large judgement errors based on the numbers bbecause they fail to understand the mathematics. Basically the more crippled a corporation is without running completely into the red, the more Wall Street thinks it is a growth stock, and the worse the recession becomes the more Jim Cramer and GE/MSNBC/PRAVDA can hype and say the recovery is "V" shaped. And hence stocks right now are significantly overpriced because those 100% growth rates mean those companies are very nearly worthless. The junk stocks are selling at a premium. Alcoa still reported a loss but when it reports a small profit the future profits will be distorted as huge because Alco had fallen so far into losses. Beware of the many many stocks like PALM and BOOM where bad management is sucking out the last lifeblood of those stocks. Insider selling is not the only problem. At BOOM the insiders are buying but at zero dollars a share therby diluting the stock the more they buy.


World Outlook

Brazilian billionaire Eike Batista cancelled his planned initial public offering of holding company EBX Group Ltd. after raising $3.9 billion less than he first sought from the sale of shipbuilding unit OSX Brasil SA.
Doubts remained as to whether the weakest of the European currency's 16 members would actually get the bailout fund much less be able to manage its 300 billion euro debt. A similar situation exists for the states of Kalifornia and New Yawk.

Week's Economic Calendar
Fear of the stock and bond markets increased demand for safe treasuries consequently the Treasury Department auction of $26 billion in three-month bills ran at a discount rate of 0.155 percent. That's down from 0.175 percent last week and the lowest in two weeks. Another $27 billion in six-month bills was auctioned at a discount rate of 0.240 percent. That's below last week's 0.265 percent and the lowest since March 8.
On the other hand inflation continues to drive up rates on longer-term securities. The Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, rose to 0.47 percent last week from 0.43 percent the previous week.

The National Federation of Independent (small) Business’s optimism index dropped to 86.8 last month from 88 in February indicating that confidence among U.S. small businesses fell to the lowest level since July 2009. Executives grew more concerned about earnings and sales and seven of the index’s 10 components declined from February with only one advancing. The measure of earnings expectations showed the biggest decline in March, dropping 4 points to minus 43 percent. Thirty- four percent of respondents cited “poor sales” as the top business concern, the same as in February, and the net percent of owners projecting higher sales, adjusting for inflation, fell to minus 3 percent.

Yesterday:
The U.S. trade deficit, which measures the gap between national exports and imports, is up by 7.4% over the previous month. The trade deficit climbed to $39.7 billion as both imports increased at a greater rate than exports. This means the great projected American productivity increases that have been reported may not be real because if American productivity improved faster than the rest of the world the deficit would decline.

Wednesday, April 14:
Consumer Price Index
Retail Sales
FED's Beige Book

Thursday, April 15:
Unemployment claims
NY St Manufacturing Index
Industrial Production

Friday, April 16:
Housing Starts
Consumer Sentiment


Market Outlook April 14
Alcoa reported continuing losses as cutbacks in costs are no longer effective and could cause longer term corporate losses. Revenues continued to fall.
Palm hired lawyers yesterday to take it through bankruptcy court and possibly a buy-out or dismemberment.
Morgan Stanley, which once ran the biggest property-investment arm among Wall Street banks, expects to lose $5.4 billion, or 61 percent, of its $8.8 billion global fund from 2007, said a person familiar with the situation. However things were so bad last year that the profit gains this year are exaggerated to be up 55%,

The NYSE closed down yesterday on increased volume again confirming the topping out of the American stock markets. The Dow index did not take off when it broke through 1000. On a volume-adjusted basis the market has not had a new top since the end of September. On a volume adjusted basis it is still more than 1% lower than last September.

Obama and the democrat-socialists have set the stage for short sellers of every breed to sweep in and attack American markets. It is very hazardous right now because individual popular stocks like PALM show just how badly an investor in Jim Cramer's favorite growth sector can be savaged. Other stocks such as Boom are being savaged internally with management literally buying Boom stock at 0$ per share and selling it to hide mushrooming Administrative salary increases by diluting the value of the stock instead. The management of BOOM is slowly milking that company dry.

The fact that George Soros funded the Obama campaign should have been enough cause for every American to vote against the Obama regime. The new chairman of the Republican National Committee is yet another big spender and is destroying the Republicans from the inside as GOP big spending on nude bar scenes turns off contributors. Now leftists claim he is being picked on because of his color not because he has not been raising money for candidate. Candidates are now soliciting for themselves. The Republicans are broke and the leftist loonies love it.

World Markets
Asian markets were flat over night; Shanghai up 0.2%, Hong Kong up 0.1%, India down -0.2%, and Japan up 0.4%.

European markets are currently up in the range from 0.8% to 1 % this morning about half way through their day.

Today US pre-market futures are up 0.2% to 0.4% at 8:30 AM EST. We expect the markets to crack soon under the uncertainty of higher taxes to cover socialist spending of $trillions on vote buying corruption rather than infrastructure. Most of the government spending is on false starts like uneconomical wind and solar power and unaffordable things like battery powered GM cars and GM union benefits. The purpose of socialists is to first create a class society to divide the nation and then fuse the criminal, corrupt, and indolent segments into a permanent subclass. Next they encourage the growth of the subclass by boosting illegal immigration from Haiti, Mexico and other failed welfare states with the promise of citizenship and a comparative life of luxury on the dole.

We have noticed that the greatest impediment to stock market profits is a portfolio under $100,000. Beyond $100,000 the investor costs go down and diversification begins to work. Below $6000 it is almost impossible for an investor to make money other than in an index fund (at best) and that has performed close to a net zero for the last ten years (even ignoring trading commissions). Now is a good time for smaller investors to buy a home and participate in the next housing bubble. Back in 2006 we advised that the housing bubble was peaking. It will take five more years for the bubble to begin expanding faster and up to 2020 to 2025 for the housing market to peak again. We believe that under leftist regimes the stock market will not rise more than inflation during this period.