Oct 3 The dollar is strong, but it is strong because other world economies are tanking. American construction, manufacturing and consumer confidence have all slumped too, but the diseases of Ebola, ISIS, and Putin socialist totalitarianism are still major world problems that make America look stable in comparison.

Oct 2    Basically there is nothing backing the money pumped in with Quantitative Easing.  There is no physical backing of the QE debt just the Obama administration FED’s good intensions.  That is why a depression could now completely wipe out Obama’s fragile system that based on promises of entitlements.   All the money in uninsured brokerage accounts could evaporate over night and it could take weeks to restart the economies of the world. 

We nave gone from 10% unemployment to 6.1% unemployment, plus a 4% increase in part time employment and a 6% increase in the permanently unemployed. We still have at least a 0.5% minimum interest rate so America has not yet totally lost control of monetary policy.  But the EU has gone to a 0% FED rate.

Remember this entire crisis started with Obama-Frank liar loan entitlements meant to give home ownership to people who previously could not afford the mortgage payments.  The liar-loans were then monetized fraudulently as “investment grade tranches” called derivatives that were sold worldwide.  The collapse of the liar loans crippled America’s housing industry and economy.  But worse yet the socialists have used that disaster to further Obama’s brand of socialism and make matter worse today with people still living in the defaulted homes.  “Never waste a good disaster,” has been the motto of the Obama socialists.  Communists go further.  They thrive on financial disasters to create deadly revolutions where the middle class is generally wiped out and nothing is left but a proletariat mob.

 

Oct 1   Both Europe and Japan have now given up control of their monetary policy by setting their Fed rates to zero.  They are now pushing on a string as they did during the great depression.  They a siphoning American reserves because we allow their international banks to park their money with the fed each night at 0.25% interest rate.  US banks do the same and can borrow from the Fed at 0.1% interest to have a guaranteed profit.  But they are our banks with our money.   Nothing quite like this situation has existed since the Great Depression when it was demonstrated that such a policy could not work because it was "pushing on a string."  Throwing money at the economy only makes rich people richer and inflates the stock market.  Today on Squawk Box a very intelligent business leader and a university professor explained the problem succinctly.  But when asked how long this bubble would last the executive made a Freudian slip.  He said another two months and cleared his throat and said I mean two years.  You see this is a depression cycle not another of the inflation cycles we have seen since 1945.  Inflation ends when inflation of goods and services is stopped via higher interest rates.  But monetary easing ends when the bubble in investment prices bursts.  The asset bubble is self evident in the stock market and the absurd Alibaba IPO we just saw.  Within two months was his slip of the tongue!   We agree with the intelligent guest on Squawk Box that the bubble will be commonly known to have burst in about two months.

 

Sept 29  The stock market crash of 1929 was the most significant crash in U.S. history. Although the crash itself only lasted four days, it led to a catastrophic sell-off. The Dow Jones Industrial Average lost 90% of its value between its record high close on September 3, 1929, and its subsequent bottom on July 8, 1932. That was the worst bear market in terms of percentage loss in U.S. history. It took 25 years for the Dow to regain its September 3, 1929 high.

Free enterprise survived 230 years in America because free enterprise always bit the bullet in the past during declines and rapidly recovered.  America was always the last to enter major wars.  Now, America has socialists and former Moslems in power and is up to its nose in socialist and Moslem initiated wars.

 

The USA FED continues to maintain the same failed Japanese type Quantitative Easing policy that has stagnated Japan since 1990.    Now the administration that refused to investigate “Fast and Furious” blames Bush for that too!  But if that were the case why did they stone wall and refuse to investigate “Fast and Furious” as Congress requested?  Is the IRS corruption and harassment of Republicans and conservatives also the fault of Bush?

http://www.irfi.org/articles/articles_1801_1850/letter%20from%20barack%20obama%20on%20his%20muslim%20heritagehtml.htm

 

World Economy

Oct 3   Apparently the one African who flew to Texas with Ebola has already potentially infected 100 people and the liberals/socialists blame America and in particular the Texas hospital for that.  They also allow terrorists and anyone else cross our borders and say it is selfish of Americans not to share the harvest of our hard earned work with the rest of the insane murder and disease ridden societies who could give a dam about Americans, Christians, Jews, Hindus or anyone else.  Socialism and what ISIS does is theft, imprisonment and slavery of totalitarianism for those who go along with them and murder for those who dare to resist.   North Korea, Russia, and China are still socialist though China is starting to improve after 4000 years of its totalitarianism.  The next two American elections are very important.

 

Oct 2   Fear of slaughter of moderate Moslems by Islamic terrorists is starting to wake up the Middle East to the danger of the Sharia Law imposed by the fundamentalists who by their decapitations and slaughter identify themselves as criminally insane.  In addition, the freedom of travel of terrorists and Ebola carriers exposes the vulnerability of our free enterprise western world.

 

Sept 26  The world economies are in decline again.  The strong dollar should help the world economy but will hurt America making foreign imports cheaper.  Hardest hit now are the commodities because China was stockpiling them before their slowdown.

 

Japan’s stock market has declined since 1990 when it began Quantitative Easing. http://in.finance.yahoo.com/q/bc?s=%5EN225&t=my

 

American Economy

The USA dollar is again strong because both Europe and Japan have now lost control of their monetary policy with their zero FED rates and China is now reeling under an international investment crisis that mirrors the wasteful building boom in China.  The gambling boom in the USA is already collapsing under intense competition.  The Chinese economy is now a crap shoot.  Both the EU and Japan have slipped into recession and are already “pushing on a string.”  China and other emerging economies are already faltering.  Weaker economies are close to default.  Tyranny has raised its ugly head with Putin’s War on Eastern Europe and ISIS Crusade against moderate and liberal Moslems and other infidels.

http://online.wsj.com/articles/chinas-bahamas-project-hits-hurdles-1412092767

 

Sept 29  

Personal Income Aug 0.3% up slightly from 0.2%

Personal Spending Aug 0.5% up from -0.1%  more scatter

PCE Prices - Core Aug 0.1% flat at 0.1%  due to Quantitative Easing

Pending Home Sales Aug -1.0% sharply lower from 3.3% ---

Sept 30

Case-Shiller 20-city housing Index Jul 6.7% down from 8.1% --

Chicago PMI Sep manufacturing 60.5 down from 64.3--

Consumer Confidence Sep 86.0 down sharply from 93.4---

Oct  1

MBA Mortgage Index 09/27 -0.2% continuing its fall -4.1%---

ADP Employment Change Sep 213K up from 204K but low.--  It needs to stay above 300.

ISM manufacturing Index Sep 56.6 down from 59.0--

Construction Spending Aug -0.8% sharply down from 1.8%---

Oct 2

Challenger Job Cuts Sep -24.4% got worse from -20.7% -

Initial Claims 09/27 287K stayed as bad as the rate of job creation 293K -

Continuing Claims 09/20 2398K are far underestimated 2439K ---

Factory Orders Aug -10.1% collapsed from 10.5% ---

 

The Markets

Oct 3   It is still too early to declare a bear market.  The markets continue to slide, but even without a normal Christmas rally most declines are interrupted with an early rally before the final two or three plunges.  We hope that kind of opportunity occurs again before the end of the year. 

 

Oct 2  The stock market topping is now self evident.  But the fortunes of many market players will hinge on a very strong bounce back from the drop this month.  We anticipate that this down segment of stock market decline will last about a month before the next rally.   It could be interrupted by a brief rally.  Volume has to peak before  a selling capitulation is over.

 

Oct 1  Our market cash flow index seems to have topped.   But usually after a sell signal there is one more stock market "leap of death" as the major funds throw money in.  The market could go down another 2-8% before we get a market cash flow sell signal.  It depends on volume action in combination with the price action.  Once the eventual market death leap fails, it could be several months before it finally bottoms.

 

Sept 29   The market continues  to weaken.  The next resistance level is  about 10% off the previous market top.  If that resistance level is broken the next resistance level is down 25% from the high.  That often was a rally point in previous declines.  The earlier prediction of a bear market following the peaking of September is starting to look accurate especially on a market cash flow basis that accounts for accumulated daily trading volume times market price change.

World market updates:

https://in.finance.yahoo.com/intlindices?e=europe

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

https://in.finance.yahoo.com/intlindices?e=americas