Hedge Funds struggle now to avoid the updraft of an impending short squeeze.

Hedge Funds struggle to avoid the updraft of an impending short squeeze. They can engender no volume on the down side anymore. China's news is still good news, but is being misinterpreted by funds to try to kill the budding economic recovery. Yes, they bet against the USA, China, and the EU and they are so obnoxious they think they can talk us into a double recession.

Hedge funds are spreading miss-information about China to try to unsettle markets that they shorted and are losing big on. WSJ reported that hedge funds already are down 6% because they shorted too late and the market is above the point they shorted. They will fail at their attempt to drive the markets down now. So take advantage of declines as a buying opportunity. When the hedge funds are forced to cover their shorts the world markets will surge.

Personal income of Americans dropped everywhere in the USA last year with the exception of places with a high concentration of government workers. That is how socialism spreads. Government workers are part of the coalition obama is advancing. Never before have we been faced with a president advancing the causes of his coalition of leftist, trial lawyers, "community activists", the lazy, the incompetent, the illegal alien voters, drug abusers, the perverts, and government workers. And they would like to become the leftist majority that democratically approves the laws to allow them to legally steal from you the way Hitler stole from the wealthiest 2% in Germany. Fascism is nationalistic socialism while communism is international socialism. They are the two flavors socialism comes in when they stop experimenting with free enterprise.

World Markets:

China continues to do the right things first. China has discovered the way Goldman Sucks and others cheat and lie on their balance sheets by moving bad loans to fictitious independent entities so they do not appear on the books and deceive people. Goldmansucks advised even Greece on how they could bend the rules and deceive the EU about their runaway debt. But China sees that Goldman tactics truly suck and are the worst type of economic corruption that ultimately makes corporations into criminal organizations based on lies and deceit not ideas and productivity. Goldman Sucks sold their customers defective derivatives and then bet against their customers. That is like a Japanese car dealer selling cars that accelerate uncontrollably and then taking out life insurance on the driver. Then collect upon the driver's death. That is how Goldman Sucks made most of their money… not on selling derivatives but on buying insurance that paid them when the derivatives collapsed.

That is why China is forcing Chinese banks to cover off-the-book loans to 150%. That will discourage hiding bad loans and expose corrupt and incompetent Chinese bankers who wish to imitate Goldman Sucks.

Chinese exports are surging and China needs to prevent an economic bubble. But it is false for hedge funds to say they are entering a slow down. The hedge funds are selling commodities now and making an incredibly bad mistake. One thing is absolutely certain… shortages are on the horizon. Now is the time to prepare for the shortages that always accompany inflation.

German exports also surged in Jun to pre-recession levels.

Economic Calendar

Friday was great:
All great news for the economy.
Nonfarm Payrolls Jul dropped much less. -131K vs. -221K last month. This includes government jobs. Good
Nonfarm Payrolls - Private employment in Jul increased 71K vs. 31K the previous month. Great
Unemployment Rate Jul remained at 9.5%. Doomsday hedge fund shorts wanted an increase. Good it is stabilizing so it can finally go down again.
Hourly Earnings Jul rose 0.2% vs. losing 0.1% the previous month. Good indication of hiring improving and wages stabilizing.
Average Workweek Jul increased to 34.2 vs. 34.1 last month. Good sign of economic pick-up.
Consumer Credit Jun decreased -1.3B vs. -5.7 last month indicating consumer spending may have finished bottoming.

Yesterday:
We are seeing manipulated obama government statistics again with wide data scatter and correction as big as the reported changes.

Productivity-Prel Q2 down -0.9% after being up 2.8% but then corrected (manipulated) upward another 1% last month. This appears to be manipulation of the figures buried in 2% data scatter. If we used the early numbers in both months the productivity change would still be positive. Obama's pretended productivity increase of 3.9% last month was absurd and no one believed it or the market would not have gone down.

Unit Labor Costs Q2 went up 0.2% after an absurd manipulated decrease of 2% between last months initial and final figures. Last month the initial value was -1.3% corrected downward to -3.7% in the final base value used to compute the +0.2% this month. Again the manipulation is almost as bad as the data scatter.

Wholesale Inventories Jun increased 0.1% better than the unmanipulated +0.5% last month.
FOMC Rate Decision Aug 10 was kept flat at 0.25% but Bernacke did manage to instill world confidence in the administration's incompetence. Every word out of Bernanke's mouth makes the markets shudder with fright.

Today:
Aug 11 8:30 AM Trade Balance Jun
Aug 11 10:30 AM Crude Inventories 08/07
Aug 11 2:00 PM Treasury Budget Jul

This week:
Aug 12 8:30 AM Initial Claims 08/07
Aug 12 8:30 AM Continuing Claims 07/31
Aug 12 8:30 AM Export Prices ex-ag. Jul
Aug 12 8:30 AM Import Prices ex-oil Jul
Aug 13 8:30 AM CPI Jul
Aug 13 8:30 AM Core CPI Jul
Aug 13 8:30 AM Retail Sales Jul
Aug 13 8:30 AM Retail Sales ex-auto Jul
Aug 13 9:55 AM Mich Sentiment Aug
Aug 13 10:00 AM Business Inventories Jun


Market Outlook Aug 11, 2010

Once again the bleeding hedge funds attempted unsuccessfully to panic the markets on top of an Asian overnight decline. But the markets recovered almost everything during the day. They will likely try it again today. But when they give up we will see hedge fund short covering that could take many stocks to new highs.

We would not buy Apple at this point as it is now valued higher than 95% of the nations in the world. It is a bit overpriced.

Bernacke told the world that the USA will use treasuries to buy bad mortgage loans. The hedge funds pretend it is something worse than using treasuries to finance $38 billion in underfunded California and NY teacher's pensions. Again this is disinformation spread ignorantly by the media at the behest of the hedge funds that are trying desperately to cover their shorts at lower prices where their losses will be lower. Investors should beware and not be duped into selling and helping the cause of the hedge funds by bailing them out.

The stock market's upward advance penetrated the 100-day moving average line and still did not retreat. False negative market analysis is being propagated today possibly from the losing hedge funds that are about to be caught in a major short squeeze that will devastate many of them as margin calls will force them to acknowledge their hidden losses. Commodities should be bought on weakness because they are the one profitable area that hedge funds must sell to raise money to unwind their losing bets in expectation of a double dip recession.

A sharp advance later yesterday occurred as predicted. You know it is a breakout when it surges and does not retreat immediately.

The leftists are going to be thrown out in November. That will cause an improving market through November.

The cash infusion from corporations is beginning to let loose a bull market and a fresh cash influx for acquisitions and expansion of the economy.

The American Markets held again and seem ready to surge and say recovery is under way. Hedge funds including Goldman Sucks have recently lost money betting against the economy and market strength.

Corporations have cash and are beginning to warm to acquisitions. Inflation looms in the future and will make short term interest rates rise and short term debtors insolvent. They will be the big losers. Homeowners will be the big winners as long term rates are depressed. Bondholders will be big losers in the end and there will be bursts of money leaving bonds for stocks. Commodities will be the big gainers again.

Corporate spending of their massive accumulated cash reserves is beginning to surge. That will come in three forms. Corporations that think they are undervalued will buy some corporate stock back. Secondly, corporations will upgrade their data processing to improve employee productivity. Thirdly, acquisitions will boost the markets and this will appear suddenly and be an upside propellant.

Fear of Obama National Socialism and corruption still has people buying treasuries and not stocks. Socialist obama and his socialist in congress are attempting to make the Federal Government bigger than the private sector. The US government already employs more people than the top 500 corporations combined.

We expect a bigger rally to follow if the corrupt socialists are voted out of office in November. Then obama socialism can be stopped in its tracks. The imperatives are no new taxes, no new federal programs like obamacare, and cut state and federal do-nothing jobs. State and federal government job cuts are needed and no new taxes.

World Markets
Asian markets were down last night. Shanghai up 0.5%, Hong Kong down -0.8%, India down -0.8%, and Japan down -2.7%.

European markets are down in a range of about -1.7% to -0.9% this morning about half way through their day.

US pre-market futures are down about -1% to -1.4% this morning. We expect a partial recovery later in the day. We look at China and think it shows the world market trend is up after all the disparaging double dip false criticism the hedge funds laid on China these past months. China's markets reflected the slowdown months ago as we have. But it is time to look to the future.