Increasingly high interest rates under Jimmy Carter killed the stock
market in the 1970’s and lead to record high gold prices. Gold and interest rates rise together with inflation
and the stock market generally goes nowhere until supply side economics of
cheap energy is restored.
The CFTC formally charged former governor Jon
Corzine and former assistant treasurer Edith O’Brien for corrupt practices in violating
regulations relating to segregated customer accounts at MF Global. While it is obviously good for Americans to conserve
resources and not waste or pollute, socialists would rather create and profit
from a highly emotional fraud on the public to line their pockets with
government wasted dollars from such as Solyndra and other shadow businesses like MF Global and
causing job losses by preventing pipelines and gas exploration needed to keep
energy prices reasonable and America growing and independent of the al Qaeda
influenced Arab oil cartel.
China is on the verge of an uncontrolled financial collapse of their credit system
due to loans corporations get from the Bank of China and then turn around charging high
interest rates on high risk shadow loans to ventures that can’t and should not get the
loans. The risks of defaults and a
collapse of credit are now much higher as a result.
For over a year trade has been down sharply and
Greenspan said that the problem with QE3 is that the FED has
no control over free markets and the market not the FED will end QE3. The FED has not begun cutting it’s buying of US
The Obama-Bernanke “spend our way out of debt plan” has
clearly failed. As you can see this
decline may not be over yet even if we do get a bounce. And if it is like 2012 or worse yet 2011 it
could go two or three times lower than it has gone thus far.
Stocks suffer with higher interest rates because debt cost
and inflation cut profit margin and make stock buy backs expensive. The end of the bull market always comes with
higher interest rates and a decelerating economy.
That is what happened under Jimmy Carter when gold prices
soared over 1000%. Inflation not
deflation causes gold to increase in relative value. The guest on MSNBC Squawk Box on Wednesday had that
backwards and no one on the show corrected him. We in 2013 are entering a situation similar
to the end of Jimmy Carter’s last term.
We need a real leader like former President Reagan to get us out of the
socialist swamp Obama put us in. We may
have another sharp Obama recession and inflation (a high Jimmy Carter type
misery index) before the dust settles. The Fed also stands to lose 60% or more
of the value of their QE3 balance sheet assets sharply increasing American
national debt as interest rates rise.
Three weeks ago the Hindenburg Omen was confirmed. The Hindenburg Omen is an indication that the
market became contrived (polarized) not necessarily illegally but in large part
because of a type of group-think advice that evolves. Suddenly a particularly large wealthy group
acts systematically and small investors get clobbered. Jim Cramer is currently a primary agent in
the creation of stock market group-think and he himself has become the ultimate
Hindenburg Omen. When Jim Cramer ever
becomes bearish you know the stock market is up in flames.
World Economies
http://www.foxbusiness.com/index.html
Jiangxi Copper Co. China’s biggest producer of the metal,
dropped 4.6 percent in Hong Kong . Copper prices are a portal for seeing what
lies ahead. Guangzhou Shipyard
International Co., a unit of China
FTSE 100 Index is close to its upper resistance level
reached previously in 2000 and 2007.
The German market is close to its upper resistance level
reached previously in 2000 and 2007.
The French market indicates stagnation since year 2000. It still is down 50% from 2008.
The Swiss market indicates stagnation since 2007.
The NYSE is similar
to the British and Swiss and indicates stagnation since 2007 given in excess of
15% inflation since then and no similar market advance.
http://finance.yahoo.com/echarts?s=%5ENYA+Interactive#symbol=^nya;range=my;compare=;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
The SandP is
parabolic at old inflation adjusted resistance levels which were set in 2000
and 2007 and at this level it has not even matched inflation. Simple mathematics says that after a 66.6%
drop in value it has to go up 300% from the low to get back to breaking
even. The market (accounting for
inflation) was lower in 2007 than in 2002 and is lower now in 2013 than in
2007. And MSNBC/Pravda says we are
recovering because we are at the same stock market level we had in early 2000
before the Clinton
American Economy
Jun 25
Durable Orders May 3.6% unchanged from 3.6% -
Durable Goods -ex transportation May 0.7% down from 1.5% ---
Case-Shiller 20-city Index Apr 12.1% up from 10.9% +
FHFA Housing Price Index Apr 0.7% down from 1.3% ---
Consumer Confidence Jun 81.4 up from 76.2 + Is much hyped but actually not very high. In the 1990’s it was over 140 or about 60%
higher, See:
New Home Sales May 476K up from 466K + Also much hyped but
still terribly low.
Jun 26
MBA Mortgage Index 06/22 -3.0% down from -3.3% ---
GDP - Third Estimate Q1 1.8% down sharply from 2.4% ---
GDP Deflator - Third Estimate Q1 1.2% up from 1.1% --
Crude Inventories 06/22 0.018M down from 0.313M
Jun 27
Initial Claims 06/22 346K down from 355K +
Continuing Claims 06/15
2965K up from 2951K -
Personal Income May 0.5% up from 0.1% ++
Personal Spending May 0.3% up from -0.2% +
PCE Prices - Core May
0.1% up from 0%
Pending Home Sales May 6.7% up from - 0.4+++
The Markets June 27, 2013
Obama is employing the same near sighted policies that Carter
employed but for different reasons. Carter
thought we were running out of fossil fuels and Obama thinks we are just burning
too much fossil fuels. One thought there
was too little and we had to conserve.
The other thinks there is too much and we need to cut back. Both have
been wrong and apparently understand very little about energy and thus created unemployment
and misery during their terms in office.
The myth that the collapse of bonds will inflate the stock
market is about to be shattered. The
great increase in wealth exists in paper like shares of stocks and bonds. When the bull market ends the wealth effect
ends. This Bernanke QE3 is not
sustainable it is another bubble phenomenon that pops when it deflates. And as Greenberg suggested the market
determines when it pops and it appears after a small recovery it will be ready
to pop. The net drop we estimate will be
two to three times as large as the initial drop similar to 2011 in magnitude
and timing.
Anyone getting into the stock market will take a hair cut
soon.
This market appears to be both polarized and topping due to
systemic churning of small investors by market manipulators like MSNBC’s Jim
Crammer who is their primary cheer leader.
The manipulators rotate in and out telling small investors to buy and
then sell right after they buy and sell.
The recent Bulls- Bears indicator. More bulls than bears means more exuberance
or topping. It is still a bearish sign
that as the market breaks down small investors have remained bullish!
World trade has been dead for four years (flat lined). Look at the last 5 years! It still looks close to zero growth.
Earnings have stagnated and do not support current prices.
Bernanke is pushing on a string. The FED has run out of leverage at close to
0% short term interest rates.
The VIX indicates the worst is about to come. The VIX would normally top out above 30 or
even 70 before the bear market ends.
World market updates:
http://finance.yahoo.com/intlindices?e=asia
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