Aug 9 There is good news because Obama has proposed a “wind down” of Fannie Mae and Freddie Mac. The two gigantic socialistic crony government mortgage-finance companies were privileged and run by government appointees. Private enterprise banks were run out of the business. The Bush administration had tried to cork them in 2006 but the democrat controlled congress thought the lax credit rules would increase home ownership beyond the traditional 66%. Instead, home ownership has dropped to less than 62% and credit markets froze and bankruptcies surged. Fannie Mae and Freddie Mac encouraged the liar loan business to boom when private enterprise firms were vigorously prosecuted because they did not approve loans to a few credit worthy minorities who did not give sufficient proof of being credit worthy. That trumped up harassment of anyone conducting due diligence forced all levels of the RE market to drop credit standards to avoid harassment by socialists.

The liar loans quickly ballooned and worked their way into CDOs and other derivatives and insurance paper.  The discovery of worthless mortgage backed paper triggered the financial freeze-up and the current seven year recession.  The socialist Fannie Mae and Freddie Mac agencies were then bailed out by the government when they failed.  The harassment of prudent RE ventures and the concentration of the mortgage business in Fannie Mae and Freddie Mac had made a recovery almost impossible.  The government appointees running them make fantastic salaries, get great benefits, and retire like kings.  It is good news if Obama truly ends these socialistic quasi-government institutions that made mortgage fraud a government policy. 

 

Earnings have now clearly peaked and do not support current prices.

 http://www.martincapital.com/index.php?page=graph&view=div_earns_payout

 

Major indexes are on track for their worst week since June, as investors found few reasons to buy with equity prices near record levels.

http://www.sify.com/finance/us-stocks-futures-slip-pointing-towards-worst-week-since-june-news-art+and+culture-nijrElhggga.html

 

The Wall Street Journal today said, “Stocks start to look overvalued.”

http://worldnewsandwire.com/stocks-start-to-look-overvalued/

 

Aug 8   The Obama Quantitative Easing (QE) addiction comes with a price.  There is no such thing as a slow withdrawal or phasing out of an addiction, even the addiction of over spending.  It comes with a price, either the current slow present death of the economy failing, or sudden economic heart failure from an overdose with subsequent damaging collapse of the financial system.  The traditional free enterprise quick recovery requires that the nation bites the bullet and faces “cold turkey” in order to let non profitable business and socialist concepts fail so there can be lasting economic recovery.  Japan got addicted to socialistic quantitative easing in 1990 and has paid the price ever since then.  It is so bad that their stock market has declined ever since 1990. 

http://finance.yahoo.com/q/bc?s=%5EN225&t=my&l=on&z=l&q=l&c=

 

America’s opportunity to withdraw from QE may already have passed and they may still be talking about withdrawal after Bernanke retires.  Normally there is only one safe way to withdraw: cold turkey.  A series of cascading stock market declines are on the horizon as long as socialist government officials think we can spend our way out of debt and into prosperity.  We have not yet seen the bottom of Obama’s growing economic depression and will not see it until entitlements are addressed. 

 

Aug 6   Obama’s economic recovery has been pure poppycock.  It has been a few months since we pointed out the Hindenburg Omen which indicated the polarized pump and dump ending phase of a bull market.  In that phase the hedge funds select stocks that can be manipulated via large purchases to pump up price enough to give technical buy signals.  They then dump those stocks when other investors get on board.  Then they begin shorting other stocks that they know will result in technical sell signals.  That is what causes the polarity at the end of a bull market because there are an abnormal number of stocks at new highs and new lows.   Sometimes a Hindenburg Omen also occurs on the first market upturn after a bear market ends as it did after the last bear market.  Then on July 8 we pointed out that net cash was flowing out even though small investors were putting their money in.  That is because the Obama pseudo-economist’s measure of cash flow does not account for all the cash being parked on the sidelines as risk increases. 

 

We have a proprietary market cash flow analysis (MCFA) and found and fixed a problem so it can now handle long term variations in stock market volume.   It is not a service and we give no advice but share our observations from time to time just as we do for other indicators we watch, none of which are completely reliable.  It often gives a month and sometimes longer to pick a time to sell out.  And sometimes it gives very little warning at all to sell.  Often it is too quick and inaccurate picking the exact bottom.   MCFA also finds corrections that last only a year.   But the Hindenburg Omen would imply we are entering a long bear market not a short one, and both stocks and bonds are about to cascade downwards causing loss of equity and forced selling and panics.  At the same time industries that are irresponsibly leveraged with debt will collapse when they are downgraded and their 30 day debt interest rate skyrockets.

 

It will take years to unwind the Obama debt spree and his QE and Obama himself will go down in history for at least one or two lost decades with a shrinking middle class and growing poverty.   Obama’s economic recovery has been pure poppycock.  The US debt limit could be reached Oct. 11, the last day Congress is in session before a Columbus Day recess.

World Economies

http://www.bloomberg.com/news/
http://www.foxbusiness.com/index.html
Mushrooming Chinese non-performing local-government and corporate debt/equity now exceeds the magnitude that tipped other Asian nations into crisis in the late 1990s and preceded Japan’s lost Quantitative Easing decades is putting pressure on top leaders to map out a strategy to tackle the threat.  The decline will accelerate and as risk grows money will flow out of the economy into shelters or cash.  Ultimately that will cause a credit squeeze, bankruptcies and possibly China’s first uncontrolled panic.  The Chinese and American governments have been lying in order not to frighten people but world bulk trade and rail shipments show no sign of any recovery much less real growth.  Corporate cannibalism makes it look like growth when in fact the big fish are eating the little fish to grow.  No one notices all the dead fish that way.

 

Japan’s stock market appears to have topped and begun a new decline.  It has declined since 1990 when it began Quantitative Easing.  Obama is the first American to use QE to suppress the interest rates on national debt to allow America to take on debt until the economy collapses when as Greenspan predicted the market will force up interest rates in spite of QE.

http://finance.yahoo.com/q/bc?s=%5EN225&t=my&l=on&z=l&q=l&c=

 

 The German market has begun to form the second shoulder of the Head and Shoulder sell signal after failing to reach its last high.  It also failed its upper resistance level reached previously in 2000 and 2007.

http://in.finance.yahoo.com/q/bc?s=%5EGDAXI

 The French market has continued to decline since year 2000.  At it most recent highs it is still is still down 50% from 2008 and down 60% from 2000.

 http://in.finance.yahoo.com/echarts?s=%5EFCHI#symbol=^fchi;range=1y;compare=;indicator=sma+volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

The Swiss market indicates stagnation since 2007.
http://finance.yahoo.com/q/bc?s=%5ESSMI&t=my&l=on&z=l&q=l&c=
 

  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. The NYSE index is too big to manipulate legally. It has 300 stocks just starting with the letter A.

http://finance.yahoo.com/q/bc?s=%5ENYA&t=my&l=on&z=l&q=l&c= 

 

American Economy

It wasn’t enough that our socialists in government now manipulate America’s economic statistics almost as much as they do in socialist China, so MSNBC/Pravda this week has literally been openly lying and actually said initial claims were at a 4 month low when it was up 2% from last week!

 

Aug 5

ISM Services Jul 56.0 53.1 53.2 52.2 -

 

Aug 6

Trade Balance Jun -$34.2B trading deficit continues -$45.0B --

JOLTS - Job Openings Jun 3.936M flat and part time increasing  3.828M  --

 

Aug 7

MBA Mortgage Index 08/03 0.2% stagnant or worse -3.7% - -

Crude Inventories 08/03 -1.320M NA NA 0.431M -

Consumer Credit Jun $13.8B declined from $19.6B --

 

Aug 8

 Initial Claims 08/03 333K up from 326K -

Continuing Claims 07/27 3018K up from 2951K  --

Pravda/MSNBC was blatantly lying about these statistics this morning.

Natural Gas Inventories 08/03 96 bcf up from 59 bcf +

 

The Markets Aug 9, 2013

The US debt limit could be reached Oct. 11, the last day Congress is in session before a Columbus Day recess.

 

The broader US indices like the NYSE that are difficult to manipulate are saying American industry is no better positioned than the dismal European indices.  The USA has three manipulated indices with the worst being the DJI avg. which is based on only 60 carefully selected stocks which are at what looks to be the end of this bull market.  The NYSE is a broader and hence more difficult American index to manipulate. 

 

We got our market cash flow sell signal July 8. About half the time it happens near the start of the stock market’s last-gasp rally so it is possible to get out before the plunge.

 

 World trade has been dead for four years (flat lined). Look at the last 5 years! It still looks close to zero growth.

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

 

The VIX indicates extreme complacency with the worst about to come. The VIX would normally top out above 30 or even 70 before the bear market ends.

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

 

 World market updates:

http://finance.yahoo.com/intlindices?e=europe

http://finance.yahoo.com/intlindices?e=asia