God recently has been blessing America with the best of friends and the dumbest of enemies.

God recently has been blessing America with the best of friends and the dumbest of enemies.

The Moslem terrorists are dumber than dirt. The Moslems once had competitive centers of learning called universities. Now they have only centers of ignorance and hate called madrassas.

Beware now of emerging countries and their stocks. Chinese corporations are beginning to default en-masse on foreigners. The communists can be expected to sting American investors in a professional manner that will cause investment losses two to three times more than their indices indicate. In other words GE/MSNBC/Pravda will once again lie to investors and the pain investors feel will be at least twice what the media reports. Out of the huge investment losses a Chinese tier stock structure will likely evolve with the main indices likely to survive as the Dow's of China while up to 30% of the Chinese firms (mostly over capitalized) can be expected to fail.

If that sounds high to you consider that about one in three new American corporations survive for five years. Americans have bought tons of stocks in mom and pop Chinese corporations that are now ready to collapse as credit tightens, mom and pop cash out, and stung investors flee future dilution of their bloated issues of stock. We can expect many Chinese firms are essentially Ponzi schemes that have continually sold capital stock just to stay afloat. This contagion is spreading around the socialist world.

When Obama is booted out of office it will be difficult for Americans to take back their country. There could be riots like they have every day in Greece where the deadbeats in government, the unions, and on welfare destroy cities and refuse to accept austerity. The weak politicians continually fail to reduce Greek government expenditures to restore financial health. That is why the weak and ignorant liberal GOP politicians such as McCain must also be thrown out of office in America. The Obama $10Trillion disease will either be paid with 50% tax rates on 47% of Americans and handouts to 40+% of Americans or Atlas could shrug and America will have to stop giving handouts and benefits to people who do nothing.

Obama says unemployment is only 9.7%. How can that be when 40% of Americans today pay no taxes and get money back from the government, only 47% of Americans pay all the taxes, and only 13% work tax free the way it was 100 years ago?

Economic Calendar
Earlier this week
Consumer Income & Spending: Personal income in March rose 0.3 percent, but consumer spending rose by 0.6 percent. With the unemployment rate, stubbornly at 9.7 percent, forecasters expect unemployment to remain near 10 percent through at least the remainder of this year. That means that if the recovery is to continue, it will have to be largely based on consumption, not new employment. But if consumer spending continues to increase faster than personal income that would suggest that people are once again going into debt. Indeed, the personal saving rate dropped from 3 percent to 2.7 percent, hitting its lowest rate since September 2008. Economists therefore worry that the gains in consumer spending and therefore a recovery are not sustainable while unemployment remains high.

ISM Manufacturing Index: The ISM Manufacturing Index increased to 60.4 in April, from 59.6 in March. With this index 50 is economic stagnation, less than 50 is economic contraction and greater than 50 is expansion in manufacturing. While the index indicated growth for the 12th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the ninth consecutive month we are still well below where we were in 2007.

Construction Spending: Construction Spending increased by 0.2% to $847.3 billion during March after falling by 2.1% in February, revised downward from a previously estimated decrease of 1.3%. Without that after-the-fact 0.9% downward revision the current figure would be down 0.7% not up 0.2%. Note that the revision is four times bigger than the reported change and makes the reported number completely statistically meaningless. Revising figures downward after they are reported is one way politicians manipulate data to make the next month look better without the American public knowing it was political manipulation. Year over year, construction spending has declined by 12.3% from the March 2009 estimate. The housing peak was in 2006.

Yesterday:
Auto Sales were up 20% from a year ago when they were in bankruptcy but down 9% from March 2010.

Factory Orders: Total factory orders, that is with non-durables and durables combined, rose 1.3 percent, the same as for February. This is truly good and not just hype.

Housing stocks have been hyped to record highs. Pending sales of previously owned homes hit a hyped five-month high in March as buyers rushed to sign contracts before a tax credit expired. That five-month hyped high is actually a double dip. See:
http://www.martincapital.com/chart-pgs/Pg_existinghms.htm

Wednesday, May 5:
ADP Jobs Report
ISM non-manufacturing Index

Thursday, May 6:
Unemployment claims
Productivity

Friday, May 6:
Employment Report
Unemployment rate,
Consumer Credit


Market Outlook May 5, 2010
Volume surged 35% as the NYSE dropped more than 2.7% yesterday. Once again the market manipulators will spin the economic news to draw suckers in at over inflated prices. Once again the volume-adjusted NYSE top continues the decline since last fall. Note that the neckline is the next resistance point. We are now looking to see if the volume adjusted neckline will hold. It can be assumed that the market manipulators will hold the raw index necklines. If our volume-adjusted neckline breaks down then the highs for this year 2010 may already have been established. The smart investors would be about 50% short and 50% in cash and holding. It is now too risky to start shorting. A few weeks of exhaustion of buyers could re-establish market health and present buying opportunities later this year. Only time will tell. The coming correction will likely be the most severe correction of the past 12 months.

World Markets
Asian markets were down again last night; Shanghai up 0.8%, Hong Kong down -2.1%, India down -0.3%, S. Korea down -0.2%, Taiwan down -3%, and Japan closed. Communist China is about to see a surge in defaults and bankruptcies that will cost foreign investors dearly. We are avoiding all the emerging markets of the world.

After -3% to -5% losses yesterday, European markets are down slightly today in the range from +0.1% to -0.8% this morning about half way through their day.

US pre-market futures are too manipulated to be useful today. They are attempting now to calm the US markets but that will make the losses worse later.

John P. Hussman, Ph.D. this week says:
"Over the past few months, the stock market has been characterized by an overvalued, overbought, overbullish, rising yields syndrome that has historically proved unrewarding and often particularly dangerous for investors. It's important to underscore that even in post-war data, and even if we assume that the economy is in a typical post-war recovery, this particular syndrome has been unrewarding, on average,"

This week by Streetsmart's Sy Harding:
Reported that the broader NYSE failed to break above its 21 day moving average last week.
Reported Tuesday that the rising U.S. market (previous weeks) was diverging with the collapsing global markets.