When will the FED inch up rates?

When will the FED inch up rates?
We have said before that rates need to be raised 0.25% to let banks know the FED is going to stop giving them free money and they had better start loaning it to businesses. It will also tell businesses that the money they hid under their beds is going to be worth less if they don't put it to work.

Banks stash the cash and will not invest their cash in new businesses if they can borrow from the FED at essentially zero interest and use their cash to buy treasuries at higher rates as the banks do. They have guaranteed profits and no risk with the current deal the FED gives them. Businesses will not invest their hoards of cash when deflation tells them it is better to wait for lower costs. So rising rates and QE2 are the right thing to do except it is time for the FED to raise the cost of capital by raising discount window rates to encourage banks to invest in American business.

World Markets:
China's president liked the movie Finding Private Ryan. That was a great movie. Maybe there is hope for China?

China did not raise interest rates this weekend and now risks a more abrupt tightening in monetary policy next year even as inflation accelerated to the fastest pace in more than two years. Consumer prices jumped 5.1 percent in November, a statistics bureau report showed Dec. 11. A measure of wholesale costs climbed 6.1 percent, exceeding all 28 estimates. World crude oil prices advanced after a Chinese government report showed their refineries ran at record rates last month, signaling oil demand will continue to increase in the world’s largest energy user.

Chinese economic data though is likely entirely fraudulent now. There is no way to know anymore. China imprisoned an American with an eight-year sentence because he was in China doing investor research to see if the balance sheets and income statements were truth or a fraud. Seeking truth is now apparently a criminal offense in China. That means that we can no longer trust Chinese financial information because fraud in China cannot be exposed.

This week's news
The FED meets today.

Friday
US Nov treasury budget deficit was $150.4Billion up from the deficit of $120.3Billion last month. That means Obama's deficit is now running at $1.8Trillion per year or more than four times higher than the highest deficit George Bush ever had during his eight years and actually close to the total sum of Bush's deficits over his eight years. And that is why Obama was elected because he was going to fix the deficit... so he said.

This week
Dec 14 8:30 AM PPI Nov
Dec 14 8:30 AM Core PPI Nov
Dec 14 8:30 AM Retail Sales Nov
Dec 14 8:30 AM Retail Sales ex-auto Nov
Dec 14 10:00 AM Business Inventories Oct
Dec 14 3:15 PM FOMC Rate Decision Dec 14
Dec 15 7:00 AM MBA Mortgage Applications 12/10
Dec 15 8:30 AM CPI Nov
Dec 15 8:30 AM Core CPI Nov
Dec 15 8:30 AM Empire Manufacturing Survey Dec
Dec 15 9:00 AM Net long-term TIC Flows Oct
Dec 15 9:15 AM Industrial Production Nov
Dec 15 9:15 AM Capacity Utilization Nov
Dec 15 10:00 AM NAHB Housing Market Index Dec
Dec 15 10:30 AM Crude Inventories 12/11
Dec 16 8:30 AM Initial Claims 12/11
Dec 16 8:30 AM Continuing Claims 12/05
Dec 16 8:30 AM Housing Starts Nov
Dec 16 8:30 AM Building Permits Nov
Dec 16 8:30 AM Current Account Balance Q3
Dec 16 10:00 AM Philadelphia Fed Dec
Dec 17 10:00 AM Leading Indicators Nov

Market Outlook Dec 14, 2010
Obama policy is to abandon the WASP seniors who have paid in all the Social Security funds in favor of his racist policies to help those who have the "be happy" culture that rejects the work ethic. The "be happy" culture comes up to wherever socialists provide an easy life of welfare and $billions in "be happy" housing stimulus benefits for Obama's people. Somebody has to pay for all these people who have liberated themselves from the drudgery of work and who are so creative in how the play and have fun. 40% of Americans now pay no taxes and a little more than half of them (~25%) have been liberated from the WASP (White Anglo-Saxon Protestant) work ethic. Obama is the first president of color and the first to entirely eliminate WASPs from the US Supreme Court.

It is reported that Obama made 80,000 of his "be happy" people millionaires by giving them reparations for years of discrimination by the Agricultural Department which, as with most government jobs, happens to employ mostly "be happy" people who need to pretend to work so they can retire with twice the benefits as the cold hearted workaholics who work real jobs and pay taxes. We also heard that Agriculture Department "be happy" employee tell how she only discriminated against "Whitey" until she discovered that some "honkies" were poor. No one in the Agg Department ever said they discriminated against any other race. Still Obama got his "be happy" folk reparations under the table with no national debate.

Making "be happy" people millionaires is part of Obama's stimulation policy because they spend money faster than they can legally get it. That is called socialism. That is why he wants to raise taxes on people who actually do real work and who create real jobs. None of the kinfolk in the "be happy" Obama voting block want a real job so what good are productive people anyway then they always vote against socialism. When Obama has a 50% "be happy" voting block he can create his own USA Banana Republic like the ones his idols Castro and Ortega created. With the stoke of the pen he can then change the US Constitution and get rid of the American Democracy and allow for succession of power of the ruling family like they have now in Cuba, N. Korea, and no doubt soon in Venezuela.

No longer will "be happy" people be called lazy. No longer will judges apply the cold-hearted justice of WASPs. From now on judges must give special consideration to the "be happy" life stile and the unfair proportions in which they get busted for drug running and homicides. Obviously "be happy" people are not happy that so many of their kin end up in prisons. The new Obama "be happy Justice system" will level the playing field of justice and make sure there are equal proportions of WASPs and Tea Party folk in prisons. The Obama Justice Department upon taking power two years ago let it be known that returning soldiers are a terrorist threat.

The stock market continually hits the wall at the recent resistance level which is virtually the high for the year. The U.S. market continues in a narrow trading range. We continue to test the upper range yet again but any breakout is likely to be a trap of serious proportions. Optimism is high but evidence is lacking that the US economy is accelerating this quarter.

Bonds are still taking a beating from the FED and that beating will go on through much of next year. Usually the first effect of a declining bond market is a rise in stock prices and then is followed with a collapse in stock prices. We expect a sharp collapse of the equities markets in January. The people who lost their shirts on stocks went into bonds after 2008. Now as they lose their pants in Bonds they will want stocks again. So later next year could be good for stocks after the bond losers get back into stocks near the highs this year and lose again by investing high in stocks.

World Markets
Asian markets were up slightly last night. China's market was up 0.1%, Hong Kong up 0.5%, India up 0.6%, and Japan up 0.2%.
European markets are flat this morning in a range of about -0.2% to +0.3% half way through their day.

US pre-market futures are flat again at about +0.1% at 7.30 AM EST.

The court in Virginia decided that forcing people to buy into Obamacare was unconstitutional. Obama thinks he will still be able to force Obamacare down American's throats while we wait for a Supreme Court Ruling but that is because he is an idiot and still does not understand what Americans think about Obomb-duh care for his "be happy" voting block. Giving away America's resources to the lazy Obamafolk will only attract more illegal immigrants, pot heads, and drug dealer making Obama's voting block too big to throw out of power. It may already be too late for Americans to stop the new wave of socialists like Hitler, Stalin, Mao and Mahmoud Ahmadinejad.