But extricating himself from the Bernanke mess (ending QE3)
will drain the stock market swamp of liquidity at the same time as it devalues
all fixed rate bonds. As it turns out
putting the good paper on the balance sheet to support foolish deficit spending
backfired because while food stamps, welfare, and silly pseudo-investments were
quadrupled on the spending side the bank balance sheets were drained of low
risk notes for investment in useful research and new job markets. The WSJ says Bernanke’s QE purchases of Treasuries
are leading to collateral shortages in the vital, $4-trillion repo market.
In the mean time very little has been done to unravel the
mess of the liar loan mortgage crash of 2008 that reduced home ownership in
America by 4% and instead of helping poor people afford homes it bankrupted
many working families.
The Internal Revenue Service was auditing constituents after those
constituents made critical comments about the administration. That is a violation of the US Constitution and all the principles that America is built upon.
The Attorney General's harassment, dirty tricks, and violation of other American Constitutional rights such as privacy has been undermining confidence in America’s government with simultaneous Fast and Furious gun running to impugn innocent gun owners, IRS harassment (based on names such as patriot and constitution), and wire tapping of what had been an American free press. He and his agents need to remove themselves from office ASAP or they may drag down the administration. He is still in contempt of Congress.
Wednesday morning the Japanese stock market was down more than
7.3%, and the German DAX is down more than 2.7%. As we had been saying for weeks, most
industrial world equities markets are near their 20 year highs (resistance
levels) when you adjust for inflation.
At the same time the FED is allowing treasury interest rates to creep
up. That means we are faced with
possible simultaneous corrections to the bond and stock markets. The FED policy has destabilized the economy
by making contractions of different markets coincident. And continuation of QE will kill just as all
addictive stimulants eventually kill.
Monday MSNBC’s guest reported that QE3 has only helped
the stock market increase the average wealth of the richest 7% of Americans by
an average of 23% relative to when he was elected. But the other 93% of poorer working and
middle class Americans are still down an average of 4%. The number without jobs, using food stamps or
on welfare has more than doubled because the 7% unemployment figure only
includes those unemployed who are still looking for work. The only economic sector that has legs after
five years under the Obama presidency is the stock market.
President Obama intended that healthcare be managed by the
IRS but recent reports indicate that the IRS discriminates against the more patriotic working
and middle class who have no entitlements, no tax advisors and tend to be
conservative thinking . These are the working Americans who also make up most of our security forces (military, police, firemen). Is
that the kind of agency that should be making decisions on who gets life saving
help? And now the press was wire tapped
on the Attorney Generals orders without a court order. These are the same people who criticized President Bush for
setting up the computer system to detect terrorist planning.
The progressive breakdown of the traditional stable core American
family has resulted in as many as 1 in 5 children ages 3 to 17, with attention
deficit hyperactivity disorder or a more serious mental illness. According to the latest report by the Centers
for Disease Control and Prevention the rate of children hospitalized for mood
disorders rose 80 percent from 1997 to 2010.
Tim Cook has lurched from one reputation-threatening Apple
predicament like from faulty mapping software to spite Google, to the marred
the release of the iPhone 5 to cooking the books to avoid paying taxes on
repatriating $100Billion to the USA Europe .
The bank making the loan gets to keep the profit overseas and avoid US
taxes too.
Attorney General Eric Holder in his first public
acknowledgment said Wednesday that the administration drone strikes have intentionally
targeted and killed four American citizens overseas since 2009.
Ford Motor Co. will halt auto production in Australia
Fox reports that twelve months and one incredibly-rocky IPO
later, it’s now clear that Mark Zuckerberg’s social network failed to even come
close to its unrealistic expectations.
Beware, there appears to be little underlying value in any
of the exchange traded funds (ETF’s).
They appear to be unpredictable (uncorrelated with underlying stocks)
derivative securities. While shares of
stock are shares of ownership in corporations that have intrinsic value and
create wealth, many ETF’s merely are derivatives that pit buyers against
sellers or sometimes novices against market manipulators. They go up when there are more buyers than
sellers and the amount of change is not anchored to underlying value, or a
sector of the economy or commodities like gold.
Many on Wall Street know ETF’s could be a latest ticking derivative time
bomb and novice investors who are flocking to them could eventually be hurt
when that system collapses. Even Jim
Cramer still said to buy the underlying gold.
Beware also that the Wall Street Journal reported Monday
that the regulators have subpoenas out for a Goldman Sachs partner that sells
“so called Fixed annuities” that are high risk and not suitable for retirement
applications.
It looks quite possible that this latest stock market run-up
is a consequence of hedge funds cutting short positions at a loss and other funds
eliminating their 10% cash position and pushing ETF’s up on low volume and
triggering the fever (greed) to stop normal fund short selling that keeps the
market in balance and let prices climb with no change underlying values. Add to that all the small investors going
into debt. When the current bubble
bursts they will find many of the new ETF derivatives are worthless just like
the mortgage base derivatives that brought down the banks in 2008. Consumer debt is again in record territory.
The European and Asian currency declines against the dollar
hurts American sales abroad and the declining currencies mean foreign profits
will decline faster when converted to dollars.
It is the reverse of the double whammy of the recent foreign profit
gains that were realized this past year.
World Economies
http://www.bloomberg.com/news/
HSBC says Europe is not even
half way through this economic crisis yet.
The Polish government plans to require that shale oil
producers take a state-run company as a production partner and has also
proposed raising taxes to almost 80 percent of profit and let the explorers
absorb all their losses. The measures, announced in October, haven’t become law
yet. Only two wells have been drilled
thus far and both failed. Socialists can
do nothing right it seems. They want to
divide up and eat the elephant first before they start the elephant hunt.
Bloomberg reported that U.K.
According to Zheng Zhijie the president of China Development
Bank China
Taiwanese lenders led by Bank of Taiwan are getting margins
of 1.56 percent over the London interbank
offered rate on syndicated deals signed this year in Asia . Interest rates are beginning to rise
in-spite-of quantitative easing.
The German market just set a new all time high with a sharp
spike in prices. But if inflation is
considered it is at its old resistance level.
http://in.finance.yahoo.com/q/ta?s=%5EGDAXI&t=my&l=on&z=l&q=l&p=&a=&c=
The Greek market indicates stagnation since year 2000.
http://in.finance.yahoo.com/q/bc?s=AEX.AS&t=my&l=on&z=l&q=l&c=
The French market indicates stagnation since year 2000.
http://in.finance.yahoo.com/q/bc?s=%5EFCHI&t=my
The Swiss market indicates stagnation since 2007. But once again look at the spike up in stock
prices with Bernanke’s $85,000,000,000/month gift from America
http://finance.yahoo.com/q/bc?s=%5ESSMI+Basic+Chart&t=my
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 S&P 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
http://www.google.com/finance?q=INDEXSP%3A.INX&ei=l_-LUejREeO_0gHwwQE
American Economy
May 22
MBA Mortgage Index 05/18 -9.8% down sharply again from -7.3%---
Existing Home Sales Apr 4.97M tepid again 4.92M --
Bernanke Testimony said they will begin reducing QE ----
Crude Inventories 05/18 -0.338M shrinking raising pump
prices -0.624M-
May 23
Initial Claims 05/18 340K down from 360K +
Continuing Claims 05/11 2912K down from 3009K+
Ben Bernanke thinks the US
FHFA Housing Price Index Mar 1.3% up from 0.7% ++
New Home Sales Apr 454K up from 417K +
Natural Gas Inventories 05/18 89 bcf down from 99 bcf
May 24
Durable Orders Apr 3.3% up from -5.8%
Durable Goods -ex transportation Apr 1.3% up from -1.5%
Bulls think cautious treasury debt holders are going to still jump into the stock market when rates begin to increase. But 2% consistent income during a world economic depression may look better to fixed income investors than another 30% stock market hair cut like they took in 2008. After all they take no losses at all if they hold and theUS
Durable Goods -ex transportation Apr 1.3% up from -1.5%
Bulls think cautious treasury debt holders are going to still jump into the stock market when rates begin to increase. But 2% consistent income during a world economic depression may look better to fixed income investors than another 30% stock market hair cut like they took in 2008. After all they take no losses at all if they hold and the
The Markets May 24, 2013
Monday MSNBC said in a poll, 20% of lower level managers and
40% of senior managers said that in the last year they have seen cooking of
their corporate books. Time to lighten up.
Lately MSNBC is using the term Frothy a lot. When the market drops Cramer exposes frothy
stocks. The next day it goes up he
pretends he never said it the day before.
No matter where the market is… the television stars have an explanation
for the record highs or record lows.
Obviously if these people were right they would be very wealthy investing
their own money and not working in a news room.
There are also people out there losing money long and losing money
short. The only ones making money tell
others to buy after they have already invested and to sell after they have already
sold short. But the TV commentators
unfortunately don’t know anything and continue to tell people to buy even when
it is too late. The market typically goes up three or four years
for every down year. So if they only guess they chose to be bullish. But in that one bear market all the gains were lost in 2000 and 2008.
We expect some ETF’s will be blamed for the losses in the next
market collapse because they are not understood by the people using them and
are complicated and vulnerable derivatives not unlike the ones Goldman and
others marketed to the unsuspecting in 2005-2008. Some ETF managers are so arrogant they think their ETFs lead the market in their underlying category.
Gold is not in a bear market but its ETF is being manipulated lower that the commodity itself. It is only reacting to the
current slowdown and the administration attempting to inflict maximum damage
for the sequester by making the most juvenile choices of what government
spending to cut. That infantile
administration strategy of spite is angering businessmen and their
customers. It is also a victim of the
ETF manipulation where most of the money has been going recently.
Look at the recent Bulls- Bears indicator. More bulls than bears means more exuberance
or topping. That is a bearish sign!
http://www.martincapital.com/index.php?page=graph&view=investors_intel
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
Bernanke is pushing on a string. The FED has run out of leverage at close to
0% short term interest rates.
The VIX behaved this way in 2006 and 2007when the bubble
began to unravel but the market did not collapse until 2008. Again look at 5 years and you see the worst
is yet to come. The VIX would normally
top out above 30 before the bear market ends.
World market updates:
http://finance.yahoo.com/intlindices?e=europe
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