Hedge funds succeeded again in putting the markets back in the hole and blame goes to Obama and Bernacke.

Hedge funds succeeded again in putting the markets back in the hole and blame goes to Obama and Bernacke.

Obama's summer of recovery could be correct but people now tend to believe the opposite of what he says. With Bernacke it is the fear that oozes out of his performance that makes his good news look like a startled deer looking into the headlights of a rapidly approaching Mack truck. The general incompetence of the people surrounding Obama is frightening yet all things pass. Home prices are beginning to rise now so the fiscal and monetary policy is now draining the swamp. Foreclosures are now peaking because banks not have a better chance of profiting if that take over homes in good markets, rent and then sell next spring at a profit.

Hedge Funds have unloaded to avoid the updraft of an impending short squeeze. They engender only 11% volume increase on the down side. 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.

Only the private sector generates profits that pay the way of the employees and pay taxes to pay the salaries of Government workers. 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's news is still good news, but is being misinterpreted by funds to try to kill the budding economic recovery.

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.

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.

Yesterday:
Trade Balance Jun deficit approached $50billion as China recovers faster than the USA… not bad yet see chart:
http://www.martincapital.com/chart-pgs/Pg_baltr.htm

Crude Inventories 08/07 declined 3million indicating rising prices, which counters deflation… good
Treasury Budget Jul deficit spending dropped from $181billion to $165billion… good

Today:
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

This week:
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 12, 2010

The bleeding hedge funds attempted unsuccessfully to panic the markets on top of an Asian overnight decline. But the markets did not see any high volume during the day. The hedge fund actually caused the most of the decline over night when no buyers were awake. Then all they had to do was make negative commentary during the day to scare buyers away. They will likely try to panic people again today. But they just cannot get the volume they need to cover their shorts and each time they try to panic the market they go deeper into a net short position. Soon, when they give up we will see hedge fund short covering.
The leftists are going to be thrown out in November. The primaries show democrat centrists defeating leftists already. But that only drives Republicans further toward the Tea Party.

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.

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.

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 down -1.2%, Hong Kong down -0.9%, India down 0%, and Japan down -0.9%.

European markets are up in a range of about -0.2% to +0.4% this morning about half way through their day.

US pre-market futures are flat this morning. 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 a slowdown is not a dip it is just a more sustainable advance. It is time to look to the future.