A sharp decline is possible if the markets do not break out on the upside very soon. Caution is advised.

We visited Ireland and France and there is no visible hardship in those two nations. Ireland is experiencing an influx of Germans, French, and Eastern Europeans who seem to be doing well and are very positive. One Irish Diner in three seems to be run by foreigners who sound just like they lived there their entire lives. This is a good trend similar to the mixing of cultures in the USA. France aerospace seems to still be thriving. The Toulouse economy is thriving. In general the people like socialism. It only takes 10 years to be vested in a worker retirement plan. One Ryan Air director I talked to said that he received social security payments from Britain, France and Ireland and pensions from Airbus and General Electric. One retired German in America said he received social security from Germany, Switzerland, and the USA. This is the new trend where people have no loyalty to anything anymore and milk the socialist social programs of every country they can. As the milkers grow in number the socialist systems get more like China, India, Russia, and Greece. The problem with socialism is that competence and creativity is not rewarded, but rather knowing all the regulation loopholes is what is rewarded. In the USA many retired military personnel who have been abroad know how to double, triple, and even quadruple dip into the socialist programs as well. You find many “C students” living retired early on golf courses where the maze of social programs lets them live like millionaires. No country can afford such a system very long.

Central banks in developed nations are facing the limits of their ability to aid economic recovery as their government efforts to strengthen their finances continue to fall short. Central banks prolong monetary stimulus as governments drag their feet on cutting the size of their governments. Both conventionally and unconventionally accommodative monetary policies are no longer working. Government workers and force arbitration with unions must be let go. The ECB and the US FED are close to exhausting their tools after cutting its benchmark rate to a record low and flooding the world banking system with cash which is now weakening currencies.

The Rasmussen reports daily Presidential Tracking Poll for Saturday shows Mitt Romney attracting 48% of the vote, while President Obama earns 43%. Six percent (6%) prefer some other candidate, and four percent (4%) are undecided. The president picks up support from just 35% of white voters overall. That’s eight points below the 43% of the white vote he won in 2008. The gender gap is now at 11 points. That’s little changed from the 12-point gap in 2008. Romney leads by 11 among men, and the candidates are even among women. Currently, 23% of the nation's voters Strongly Approve of the way that Obama is performing his role as president. Forty-five percent (45%) strongly disapprove, giving him a Presidential Approval Index rating of –22.

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll



World market this week

It is time to begin buying emerging markets on bad news. The emerging markets, whose economies grew more than four-fold in the past decade, have posted their biggest declines since at 1998. The real, ruble and rupee have weakened the most among developing-nation currencies and the yuan has depreciated more than in any other period since its 1994 devaluation. International corporation profit forecasts are falling due to the exchange rates.

Bloomberg belatedly reports that investors have been fleeing the four biggest emerging markets, and Brazil’s consumer default rate rose to the highest level since the recession began in 2009. Prices for Russian oil exports hit an 18-month low, India’s budget deficit widened and Chinese home prices have slumped. But this has happened over the last two years while many advised that the BRICs were good investments. Just look at China the one everyone else said to buy two years ago:
http://finance.yahoo.com/echarts?s=000001.SS+Interactive#symbol=000001.ss;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;


Now we say that it is time to selectively invest a small amount in the Emerging markets again as others panic and react to what we have seen and told you for two years. While other stocks peaked and slumped this year we see China seems to have bottomed out (though still to be confirmed):

http://finance.yahoo.com/echarts?s=000001.SS+Interactive#symbol=000001.ss;range=6m;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;



Emerging markets showed strength.
http://finance.yahoo.com/echarts?s=^BVSP+Interactive#chart1:symbol=^bvsp;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefine

Germany is showing strength: Choose 2 or 5 years

http://finance.yahoo.com/echarts?s=%5EGDAXI+Interactive#chart2:symbol=^gdaxi;range=2y;indicator=ema(200,100)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on

The Swiss are showing strength. Choose 2 or 5 years http://finance.yahoo.com/echarts?s=%5ESSMI+Interactive#chart1:symbol=^ssmi;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

The world crisis will continue as long as a socialist and former member of small communist leftist groups is the president of the USA.


American Economy

Last week

Generally the USA economic indicators were poor the last two weeks. The polls indicate that while Mitt Romney is the leading presidential candidate, most voters still think Obama will be re-elected and hence they think the economy will not recover in the next four years.

This Week

Jun 25 10:00 AM New Home Sales May

Jun 26 9:00 AM Case-Shiller 20-city Index Apr -

Jun 26 10:00 AM Consumer Confidence Jun -

Jun 27 7:00 AM MBA Mortgage Index 06/23

Jun 27 8:30 AM Durable Orders May

Jun 27 8:30 AM Durable Orders -ex Transportation May

Jun 27 10:00 AM Pending Home Sales May

Jun 27 10:30 AM Crude Inventories 06/23

Jun 28 8:30 AM Initial Claims 06/23

Jun 28 8:30 AM Continuing Claims 06/16

Jun 28 8:30 AM GDP - Third Estimate Q1

Jun 28 8:30 AM GDP Deflator - Third Estimate Q1

Jun 29 8:30 AM Personal Income May

Jun 29 8:30 AM Personal Spending May

Jun 29 8:30 AM PCE Prices - Core May

Jun 29 9:45 AM Chicago PMI Jun

Jun 29 9:55 AM Michigan Sentiment - Final Jun



Market outlook June 25, 2012

A sharp decline is possible if the markets to not break out on the upside very soon. Caution is advised.



The imminent US Supreme Court decision on Obama's health care morass is expected as early as Monday, two years after Obama signed into law an act to insure 32 million indigent Americans already given free hospital services. It also prevents coverage from being refused on the basis of patients' medical histories such as from high risk San Francisco lifestyles. However, if you drink too much soda and get too fat you are allowed to be penalized. At the heart of the “Unaffordable Care Act,” dubbed "Obamascares us" lies the individual mandate that requires every US citizen to take out health insurance or be subject to a fine. Constitutionists argue that Congress overstepped its constitutional prerogatives in requiring individuals to buy insurance, while the Obama administration contends that the move is vital to destroying the insurance industry and federalizing healthcare. The nine Supreme Court justices held six hours of oral arguments over three days in late March, the longest time allotted to debating a single issue in more than 45 years. We expect the American Supreme Court will reject nationalized medicine as the EU has continued to reject it for the EU. “Genius” Obama lies or is just stupid whenever he says Europe has nationalized medicine. Britain, France, Germany, etc all have their own systems just as California, Massachusetts and New York have their own systems. Likewise “Genius Obama” lies or is just stupid when he says Europe has a national educational system. The states of the EU can’t even agree on one language. Of course the elite liberal proletariat like “Genius Obama” are too stupid to know any facts about the real world of socialism like Hitler, Stalin, Pol Pot, Mao, Castro, Chavez, and the other “liberal geniuses” that have preceded Obama.



The market volume rose on Friday’s advance but the previous rally did not indicate an upward breakout is immanent. It is likely that the high Court will be split and will throw “Obamascare” back to Congress where nothing will get done until Obama is out of office. In such a case we expect a flat economy until November. We are taking opportunities but quickly taking profits. We are short-term investing, not long-term investing right now. The market is poised to quickly drop as much as 10%. There could even be a panic sell-off soon.

http://finance.yahoo.com/echarts?s=%5ENYA+Interactive#symbol=^nya;range=ytd;compare=;indicator=ema(200,100)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;



The Dow Theory Industrials and Rails sell signal of August 2, 2011 still holds. We expect the “Walker Rally” to run out of steam if Romney does not open up his lead. However the Walker rally could last a month just as it is with some good news from the EU.

http://finance.yahoo.com/echarts?s=%5EDJT+Interactive#symbol=^djt;range=5y;compare=^dji;indicator=;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined;

Obama is such an incompetent boob; a deep depression can only be prevented if this “proletariat genius” is not re-elected.

http://finance.yahoo.com/echarts?s=%5ENYA+Interactive#symbol=^nya;range=2y;compare=;indicator=ema(200,100)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined

The VIX says the market is again complacent and dangerous.

http://finance.yahoo.com/q/bc?s=%5EVIX&t=2y&l=on&z=m&q=l&c=

Baltic Dry Index resumes the decline. The emerging markets may now advance if it rebounds.

http://www.bloomberg.com/quote/BDIY:IND/chart

Stock market update:

Asian markets were down last night. China down -1.6%, Hong Kong down -0.5%%, Singapore down -0.5%, Taiwan down –0.8%, Japan down –0.7%.

European markets were down half way through their day in a range of -0.3% to –2.9%

American market futures are down about –0.7% in after hour trading at 8 AM EST.