As kids we worried much more about nuclear annihilation of the human race than about social security.

As kids we worried much more about nuclear annihilation of the human race than about social security.

As kids we saw many people who paid little or nothing into Social Security getting SS. We didn’t begrudge them those benefits. Many of them had risked their lives for us in the two world wars. We worried instead that the world would end in a nuclear holocaust before we could retire. Later we saw liberals giving welfare mothers money from Social Security by having their children deemed damaged goods so they could get free behavior control drugs and extra cash from SS. That was wrong because SS was supposed to be for retirement not for wealth redistribution. Now the acts of the liberals have bankrupted the system. But young liberals today are such babies and they want to rob their parents SS. Old liberals are even worse and they want to bankrupt their grandchildren with debts so their lazy liberal children can get free health care and a house they cannot afford.

Churchill is credited with saying:
If you are under 30 and not liberal you have no heart. If you are over 30 and are liberal you have no brain. Liberals may argue about who actually said it to divert attention because regardless… it is a great truth.



World Markets:
We believe the worst of the current market decline is just about spent. Volume on this last decline was still quite low showing the decline is losing momentum fast.

However the bursting China bubble is starting first with minor ruptures and will likely combine with Obama's idiotic socialist programs to cause a major economic lapse in America next year when higher Obama socialist wealth redistribution taxes remove the incentives of entrepreneurs. We believe the corrupt socialists are already using entrepreneur programs to funnel taxpayer cash to other incompetent socialists the way millions were funneled to the place Obama's wife worked when Obama first became a Senator. The socialists are already corrupting all their socialist economic programs the way they corrupted the mortgage industry with Ginnie Mae and Freddie Mac. All the Obama economic programs are corrupt phony programs intended to steal money from taxpayers and redistribute it to their socialist and communist rising gangsters the way the Russian gangsters stole money and whole national industries in the 1990s. Ultimately they will bring to America the murders and kidnappings we already see in our socialist banana republic neighbors in South and Central America. That is why Americans need to throw these socialist bums out as soon as possible. Remember Obama loves Ortega.

Economic Calendar
Last week
Retail Sales - Again they dropped last months number by 0.2% from its original 2.1% increase. Therefore instead of the increase being just 0.2% this month they could lie and report it better by 0.4%. Retail sales actually contracted sharply from a 2.1% increase to a 0.2% increase. That is a rapid slowdown in retail sails growth and not good news. However the GE/MSNBC/Pravda " Obama propaganda machine" ignored the slower growth and just reported it as good news lying and saying retail sales increased 0.4%.

Industrial Production was also slightly distorted but it was still good news. GE/MSNBC/Pravda reported it as up 0.8% and it was probably up about 0.7%.
Consumer Sentiment, Mich.: Definitely improved to 73.3 from 72.2.

This Week
May 17
Net long-term TIC Flows Feb

May 18
Building Permits Apr
Core PPI Apr
Housing Starts Apr
PPI Apr

May 19
Core CPI Apr
CPI Apr
Crude Inventories

May 20
Continuing Claims
Initial Claims 05/15
Leading Indicators Apr
Philadelphia Fed


Market Outlook May 17, 2010
The markets dropped on low volume Friday indicating that investors are still very cautious now and reluctant to buy or short the market. Risk is perceived now as very high. Most stock and index gaps were closed and Friday was perhaps the best buying opportunity we will see for at least six weeks. For example look at the gaps filled in these sectors which clearly have many gapped stocks involved. For example EDC, DZK, and TNA had even their gaps closed. If you examine their price history you see that 90% of the time they close their gaps within 3 to 8 days, and that was again the case on Friday (just four days.

Why does that happen? In this particular case the gaps were downward overshoots that were so large that they pulled down the averages at an accelerated rate, so fast that a few days later the 50 day moving average was penetrated triggering computer driven sell-offs down closing the gaps. That usually provides a great buying opportunity

With the gaps closed a gradual advance to near previous highs could occur in from 4 to 8 weeks. The average investor (who cannot use volume) thinks the bull market had successive highs and held above the necklines during the declines. They therefore expect the next market high can be higher than the last one. That is what the average investor thinks.

But then since the average investor will be told by socialist GE/MSNBC/Pravda and Jim Cramer to expect a new high… we expect the market will now rise close to the previous highs (in 4 to 8 weeks when we want to sell everything). The average investor will expect a new high but we expect this time the raw price history as well as the volume corrected history will both fail to have a new high. Our volume adjusted NYSE price information will not likely even come close to its previous high. That advance should happen probably over 4 to 8 weeks. Then we expect a 1 to 2 week second downward market plunge. The average investor will expect that decline to be supported at the lows of last week. We however expect that resistance will be like butter cut by a hot knife perhaps with inter-day low averages as bad as last week. The Chinese and Indian industrial shakeout problems should become clearly visible by then as well. The new market lows that are likely this summer probably be the best buying opportunities of this year.


World Markets

Asian markets were down sharply, especially China last night; Shanghai down -5.1%, Hong Kong down -2.1%, India down -1%, and Japan down -2.2%.

European markets are recovering today in the range from 0.5% to 1.4% this morning about half way through their day.

US pre-market futures are flat this morning. But with last weeks gaps now closed the market downside risk is reduced significantly.

The new danger is the eventual China bubble problem on the horizon.

John P. Hussman, Ph.D. this week reports:
Two Choices: Restructure Debts or Debase Currencies
Monetary policy is only as good as fiscal policy. A central bank does not have wealth of its own. It is a zero-sum entity that can only enrich those from whom it purchases debt by debasing the relative wealth of people who hold the existing stock of currency. If a government insists on running deficits, engaging in wasteful spending, and dissipating public resources to bail out private bondholders, it has to find somebody willing to buy its debt. If it does not, the central bank buys it, and dilutes the currency by doing so. The situation is particularly insidious when the central bank buys low-quality debt, because there is no taxing authority behind it to provide a basis for confidence in the currency.

Street Smart this week reports
Saturday, How Not To Create Confidence!
" Jean-Claude Trichet, President of the European Central Bank, is quoted by the German Newspaper Der Spiegel, with the quotes spreading globally, that Europe’s economy “is in its most difficult situation since World War II or perhaps even World War I.” And that the current debt crisis is similar to the 2008 collapse of Lehman Brothers, after which “the markets didn’t work anymore.”