Monday, July 28, 2014

Aug 1 Prepare for us announcing a possible bear market signal in about a week which actually will likely be a short term buying opportunity followed by up to a +10% bounce before getting completely out of stocks (or short) for a period of anywhere from one to eighteen months. The stock market is a house of cards now. The equities have been hollowed out because the analysts like Jim Cramer beat up on companies that did not fudge revenues, income, and earnings projections by playing balance and income sheet games. The 65 day moving averages have been breached but we are not at panic stage.

In 2000 the game was to hide debts and losses in a separate set of books.  Even Greece did it and suddenly they were all in over their head.  Next the crooks came up with a new asset class called derivatives and the one that brought that house of cards down were the Countrywide type mortgage derivatives based on Obama-Frank liar loans. Poor minorities were allowed to buy homes with low initial adjustable rate mortgages.  Home ownership went from 64% to 66% of all Americans until the interest rates popped up three years later and everyone tried to sell their homes at once.  Now American home ownership is under 63%.  Obama made it worse than ever. It is estimated that 30% of all mortgages are still underwater and not foreclosed on because the banks are hollowed out and falsely carrying those houses at full value when in fact they would depress the housing market 30% if they all went on the market at one time.  The losses that would then have to be recognized by the banks would be staggering.  There are many rocks hidden beneath the $4.5+ trillions of QE flowing through the economy.  As that QE cash flow dries up and the QE cash flow turns more and more negative we will see many sectors of the economy going aground.
 
Tesla posted a 2nd Q loss.
 
Former IRS head Lois Lerner claims she was completely unbiased and never harassed any of the conservative assholes even if they deserved it.  That apparently was the only email that was civil enough not to have to be accidentally deleted.
 
July 29   Consumer confidence is finally back where it was just after 9-11 in 2001 and again shortly after Obama was nominated in January 2008.  For Obama’s entire two terms American confidence has been below the confidence level at those two times.  The Obama-Frank effort to give low income people mortgages for unaffordable homes grew to be called the Liar-Loan Scandal because banks who did not comply and give loans to the Obama-Frank deadbeats were framed in setups where people who could definitely afford a home would go to the bank and not show the bank any evidence that they could afford the home.   If the banks denied their mortgages the Federal government sued the banks because the banks could have done a credit check at the bank’s own expense and would have seen the applicants were only deceiving the banks by pretending to be poor to entrap the bank and then make a small fortune suing the bank with the Federal governments backing.  Yes, that is just how corrupt the Obama-Holder government is and that is exactly what Obama’s Attorney General has continued doing to this day. 
http://www.martincapital.com/index.php?page=graph&view=consumer_sentiment
 
Remember also the Obama-Holder gun running to Mexican cartels was supposed to incriminate the American gun shops and American licensed gun holders.  That backfired and the guns Obama and Holder sold to the Drug Cartels were traced to the deaths of one American border guard and over 30,000 Mexicans.  And never forget the more than 30,000 Americans harassed by the IRS and private corrupt insurance firm managers working with the Obama administration to jack up the rates on Americans who thought Obama-Frank-Holder were the most corrupt triumvirate to take power in America.  Yes, Obama is a twin brother of Putin.
 
July 28   Obama with his executive orders is beginning to transition America to something closer to the Putin oligarchy where the president puts powerful czars as heads of multiple departments.  Corporations which contribute to the oligarchy get special favors but those who do not, or who are linked to political opponents and independent thinkers get special investigations and indictments to sully their names.  So far Donald Trump and Standard and Poors have pushed back on Obama’s authoritarian attacks on American constitutional freedoms.   Obama increased IRS staff by over 20,000 so that they could harass over 30,000 Americans from 2011 to 2013.  The IRS this year mysteriously erased all their records back to 2011.  
 
Moms’ marijuana-for-kids campaign seeks to legalize marijuana laws for children for medical use as advocates previously did to open the door completely for adult recreational use.
 
NASDAQ is now near 2000yr highs.  QE3 is still flowing into the economy but is scheduled to go to zero by October.  Then they plan to begin contracting but it is likely the socialists will balk as it could swing the election even further against them.
 
The way to help the bottom 20% of Americans in annual income is not a minimum wage but  with an earnings multiplier (negative tax rate) that would be 25% of income below the poverty level of about $20000/yr and decline to zero credit near the a median income of about $40,000/yr.  That would provide a real incentive to work.
 
World Economy
Aug 1  Socialist Argentina is facing its second default in 13 years. 
Obama continues his quest to follow Castro and Hugo Chavez and make the USA the third greatest banana republic in the western hemisphere.  We will soon have to be reporting Obama’s world vision in this section.
Asian stocks dropped, extending a global selloff that erased this year’s gains and halted a five-month rally in world equities.
 
July 29   On Friday, 09 May, 2014, a repulsive conductor, who just happens to be Muslim, proceeded to give Queen Beatrix of Holland an unsolicited lecture on the "beauty" of Islam at a Dutch Orchestral Concert he was conducting. The members of the Orchestra staged a walkout on their conductor!
http://www.safeshare.tv/w/cqjiYhtiXs
 
An international court in Hague on Monday ordered Russia to pay $50 billion in compensation to the former majority shareholder of now-defunct oil producer Yukos over the expropriation of the company by Putin.
http://uk.reuters.com/article/2014/07/28/uk-russia-yukos-idUKKBN0FX08M20140728
 
Euro-area inflation so low it looks like an impending depression.  The European Central Bank unleashed a stimulus campaign in June, which has had no benefit and is testing Europe’s patience.
 
Orban, in his second consecutive four-year term as president of Hungary, has clashed with the EU and amassed more executive power than any of his predecessors since the fall of the Iron Curtain in 1989 by replacing the heads of independent institutions including the courts with communist cronies, taking control over media and changing election rules to help him retain a constitutional majority in Parliament.  Orban has championed relations with Russian President Vladimir Putin and the leaders of China, Azerbaijan and Kazakhstan since 2010 to boost trade and seeks to ally Hungry with all five of them plus Turkey to build a socialist state closer to communism than free enterprise.
 
The European FTSE is at the highs of 2000 and 2007 but MSNBC/PRAVDA is still saying buy and by-by.
 
If you look at Germany where the people have perhaps the strongest work ethic in the world, their stock market has topped out too but their trend is upward only because the dollar is continually weakening.
 
Japan’s stock market appears to have topped and begun a new decline. It has declined since 1990 when it began Quantitative Easing because their Yen is dropping faster than the dollar.
 
The French market is only about 60% of what it was fourteen years ago. At it most recent highs it is still is still down 50% from 2008 and down 60% from 2000.
http://in.finance.yahoo.com/q/bc?s=%5EFCHI&t=my&l=on&z=l&q=l&c=
 
The Swiss market still indicates stagnation since 2007. It has hit the highs of 2003 but could not make it to the highs of 2007. Obama has destroyed Swiss banking by attacking Swiss confidentiality that had protected people from the Hitlers and Stalins of the past.
http://finance.yahoo.com/q/bc?s=%5ESSMI&t=my&l=on&z=l&q=l&c=
 
American Economy
Jul 28
Pending Home Sales Jun slumped -1.1% after and outlier +6.1% reported last month.---
Case-Shiller 20-city Index May fell to 9.3% from 10.8%  --
July 29  
http://www.martincapital.com/index.php?page=graph&view=consumer_sentiment
Jul 30
 MBA Mortgage Index 07/26 -2.2% down from 2.4% ---
ADP Employment Change Jul 218K down from 281K ---
GDP-Adv. Q2 4.0% 3.7%  up from -2.9%  more Obama nonsense
Chain Deflator-Adv. Q2 2.0% up from 1.3% --
FOMC Rate Decision Jul 0.25% unchanged
Jul 31
Challenger Job Cuts Jul 24.4% rose from -20.2% ---
Initial Claims 07/26 302K up from 279K --
Continuing Claims 07/19 2539K up from 2500K --
Employment Cost Index Q2 0.7% sharply higher 0.3% ---
Chicago PMI Jul 52.6 sharply lower from 62.6 ---


Aug 1

 Nonfarm Payrolls Jul 209K down from 288K ---

Nonfarm Private Payrolls Jul 198K down from 262K ---

Unemployment Rate Jul 6.2% up from 6.1% --

Hourly Earnings Jul 0.0% stagnant 0.2% -

Average Workweek Jul 34.5 flat 34.5 -

Personal Income Jun 0.4% flat 0.4% -

Personal Spending Jun 0.4% up slightly from 0.2% +

PCE Prices - Core Jun 0.1% flat 0.2% -

Michigan Sentiment - Final Jul 81.8 up slightly from 81.3 +

ISM Index Jul 57.1 up from 55.3 +++

Construction Spending Jun -1.8% down sharply from 0.1% ---


The Markets
Aug 1  The market drop yesterday was sharp and brought it to its first resistance level.  The cash outflow more than doubled and the momentum could take the market 10% lower sometime next week.  If it does the market will hit the bull market resistance level for the past two years the declines stopped near or just below that level and the cash outflow was never quite enough to  give an all out sell and go short signal.  Even if it does give a sell signal that resistance level will very likely be followed by the market bouncing up about 10% before it plummets below the resistance level and the selling gets heavy.  That scenario is very possible this time. 
 
Jul 29  Beware that volume in all financial securities is at record lows and therefore it takes only a few fools to drive prices higher and then drain all the value out of the company’s cash.  At one time Apple had a stock price floor under it because it had a pot of gold in the bank.  Even the pot of gold Apple had is now gone and when its stock  price drops the stock will be worth much, much less.  And when the FED raises interest rates, all the companies that sold their  stock to raise cash will find interest expense eating up all the future profits.  This artificial profitability is from the ability to borrow a lot of money at 0.25% interest and if you only make 0.5% interest you have 100% return on investment and look like a very smartly run corporation.  In the Obama economy the idiots who have nothing to lose have everything to gain.  It is wealth redistribution, Obama’s socialist style.  When the market collapses we will see volume triple for a few days in the first sell-off.
 
Jul 28  Communism is a power grab that takes all legitimately acquired wealth and gives it to the few communists in power to redistribute to their friends creating an oligopoly similar to Russia’s.   Since the oligarchs got special favors to begin with they are under Putin’s control.  Russia begins to resemble the power structure of the old aristocracy before all the princes and princesses intermarried and created a broad alliance.   All socialist dictators rise out of humanitarian and economic crisis.  And coincidentally the dictators do their best to create crisis after crisis.  Look how Obama undermines Israel, the Ukraine, American borders, the Mid East, Northern Africa, and political opponents etc.  A world depression is what Obama needs to accomplish his goal of equality.  Unfortunately Obama’s socialism means equality of poverty.  Obama seems to want the next economic bust to take down all the free societies.
 
Now the volatility index below is starting to rise.
Volume and volatility indicators are also increasing on market declines.  The sharpest declines during the Obama Administration since his election occurred during summers and the worst was in August 2011.
 
China’s Rongsheng Heavy Industries Group Holdings Ltd. said it expects losses in the first half to widen after customers canceling orders forced it to cut production.
World trade is now down 68% for the year to date and down 38% in the last year and at a 15 year low.  It is down 88% since 2007 before Obama.  Look at the last 1+ years of world trade! Use the graph or snapshot option. Unfortunately they do not show back to 2008 when world trade was more than five times higher than it is today.
 
 Look at the volatility index and you see that the market could fall much faster. This market has little volume or volatility.  So when volume picks up past history says the market will plunge.  This is not a good moment in time for holding equities.
 
 World market updates:
http://finance.yahoo.com/intlindices?e=europe
http://finance.yahoo.com/intlindices?e=asia http://in.finance.yahoo.com/intlindices?e=asia
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