Monday, May 19, 2014

May 23 Market volume on NYSE advances is now at a low level not seen since the President George Bush’s first administration. The thin volume picks up now on market declines and is evident that the collateral used to leverage record levels of bank debt and corporate and raider speculation cannot support even a small contraction. In reality the corporations have squandered all their original cash on corporate bonuses and current cash is now negligible in comparison with the corporation debt and obligations that will remain when this stock market based collateral bubble bursts.

This is a game corporation executives play each economic cycle to line their pockets using cash from their stock price bubble which they falsely claim is due to good management.  It is an economic flaw which enables a concealed fraud to be perpetrated on the stock holders who stay invested long term.  Not only have corporation management, activists, and raiders pilfered corporate cash, they have used the cash to bid up the bubble stock prices to record highs providing bubble assets to further raise corporate cash by going into additional debt. Any small disturbance now could set off cascading bankruptcies and bank collapses. 
The new temptation will be for the poorest developed nations to return to inflation because deflation will only exacerbate the burgeoning corporate, bank, and international debt problem.  The higher this market goes the more disastrous the collapse of the stock market liquidity bubble will become.  In summary the corporation, hedge fund, and bank, excesses of this current bubble are much closer to the speculative 1929 stock market bubble than any since that crash. 

 Forty veterans died while waiting on the VA socialized medicine waiting list.
Obama knew veterans died waiting 11 months to be admitted to a VA Hospital just like socialized medicine in Canada, France, and Great Britain.  Obama was told of the Veterans Affairs health care debacle as far back as 2008.  But Obama continues to lie and he says he only just found out from the news media the same way he found out about his Benghazi ambassador, the IRS harassing conservatives, and his NSA spying on Americans.  Nancy Pelosi repeatedly put the blame for the Veterans Affairs scandal on former President George W. Bush, arguing that her party has worked hard for veterans in recent years, for a red line in Syria, for Israeli safety, for Ukrainian nationhood, to end leaks and administration criticism, and to end gun ownership in America.  
 
May 23  Hewlett-Packard Co results marked the 11th straight quarterly revenue decline for the world's largest maker of personal computers.
 
Sears first-quarter loss widened as sales declined.  “It will take almost an act of God at this point for them to turn this around,” was heard on the street.
 
The Energy Information Administration cut by 96% the estimated amount of recoverable oil buried in the Monterey Shale.
 
May 22  Today Dick Kovacevich told Squawk Box that  the Obama administration attacks and fines on banks are politically motivated to punish the S&P and banks that have executives like him who point out the incompetence of the Obama/Holder administration.
http://www.frontpagemag.com/2014/arnold-ahlert/revenge-obamas-targeting-of-standard-and-poors/
 
Best Buy Co. (BBY), the world’s largest consumer-electronics retailer, posted first-quarter Total revenue declined 3.3 percent amid soft demand for mobile phones and other devices. That marked the ninth straight quarterly drop and trailed analyst’s average estimate by 5.5%.
 
May 21 The Economist magazine said sound the retreat.  Profits in America are declining for this cycle. The lead-up to the first-quarter results season on Wall Street was marked by an unusually large number of profit warnings.  Morgan Stanley, an investment bank, earnings estimates for S&P 500 companies were revised down by 4.4 percentage points in the first quarter.  But by lowering expectations they can beat them and the Obama statisticians can continue to pretend the economy is recovering and Wall Street can proclaim a “successful” season. But the Economist says when one removes the effect of exceptional items (such as write downs the year before), American profits are now falling.  That is also why Obama likes to reduce the previous quarter’s GDP results so the current quarter always looks better than it actually is.
 
The Obamascare Cadillac tax goes on private citizens who pay for their own higher quality healthcare.  It does not apply to unions that historically contribute to socialist candidates, nor to Congress, nor to Obama and his family who get quality health care much better than all other Americans but get unfairly better tax treatment. 
 
In Monday's issue of "The Gartman Letter," Gartman wrote, "With each passing day, we are more and more fearful too that a correction of some very real magnitude is hard upon us as the broader market indices such as the Russell and the NASDAQ have now 'failed' well below their previous highs and as upward sloping trend lines cast back into last year have been broken through to the downside." CNBC
 
Nearly 10 million homeowners remain underwater on their mortgages. Making matters worse, the most affordable homes for first-time homebuyers are also the most likely to be kept off the market because their current lenders have negative equity and the banks that filed those 10 million “list pendens” if they foreclose would fail their stress tests because the house sales would all be losses. 10 million losses of just $10,000 each would be a $100,000,000,000 banking system write down.
 
May 20  Today, Christopher Flowers said banks are still invested in houses that have been filed under “list pendens” where people are still living free in their houses for over four years because the banks would otherwise have to recognize their losses and pay delinquent taxes if they foreclosed.  This problem exists inside and out of America and if banks and investment firms were forced to recognizes these losses it would show that they actually have no net liquid assets to cover a run on the banks or on the stock market.   In other words if the delinquent mortgages in the world were foreclosed tomorrow most banks and investment firms would show they are broke. 
Quantitative easing has pumped up the credit markets to keep the banks and investment firms functioning but only inflation and a true economic recovery will solve the problem because the banks and investment firms have hidden their losses.  They are almost broke just as most small investors who only still show paper profits on the books.  But neither inflation nor a true economic recovery have occurred under Obama and European socialist wealth redistribution systems. 
Once the Fed begins to remove the more than $4 Trillion in accumulated QE this summer, the squeeze on banks and investment firms will begin in earnest.  You must remember that QE is only now being reduced gradually to zero.  Very soon QE will go negative and could become a -$80 Billion drag per month by the end of 2014.  Obviously there will be a crisis soon and they may never be able to liquidate the $4+ Trillion in accumulated QE.
 
World Economy
May 23  China’s new construction has fallen 22 percent and sales have slumped 7.8 percent this year, testing its reluctance to enact broader economic stimulus. The slowdown’s depth affects everything from demand for Australian iron ore to land sales that provide income for local governments repay what has grown to $3 trillion of debt, a large number relative to local incomes.
 
May 22  In China, the manufacturing PMI contracted at a rate of 49.7. Anything less than 50 is a manufacturing contraction and is not good.  It was reported at 48.1 in April and the current decline in production is the smallest decline in five months as production in China is usually best this time of year.
 
May 21  BoE Deputy Governor Charlie Bean said his fellow central bankers would face the tough challenge as the time approaches to wind down extra support for their economies this summer.  He said, "I do not expect central banks' collective management of the exit from the present exceptionally stimulatory monetary stance will be easy."
"The bottom line is that we may yet encounter a few potholes on the way to the exit."
BoE Governor Mark Carney last week said he expected volatility in financial markets would grow as the time came to return monetary policy to more normal levels this summer.
 
May 20  The biggest Philippine money manager Fitzgerald Aclan, a vice president in the money management unit of BDO Unibank Inc., which oversees about $18 billion is reducing equity holdings on concern the rally that drove valuations to the most expensive level ever in Asia… is poised to end soon.
Deutsche Bank AG increased its sale of subordinated notes to $4.75 billion as Germany’s biggest lender seeks to bolster capital ratios to maintain liquidity to cover unrealized losses.
May 19 After a four-month rally in euro-region debt, Italian and Spanish bonds had their biggest one-day dump in almost a year last week as a selloff spread. With bids evaporating and prices sliding, traders poured into derivatives to protect against losses. Italy’s and Spain’s bonds extended that slump today and the FED is today quizzing US banks and investment firms on the rush for exit recalling the crisis of 2007.
Incoming Indian leader Narendra Modi said the new India finance minister will ease gold import curbs. China overtook India last year as the world’s biggest gold buyer due to high India taxes on gold imports.  “India looks positive” a Geneva-based refiner, said by e-mail today.
The European FTSE is at the highs of 2000 and 2007 but MSNBC/PRAVDA is still saying buy-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.
 
The French market is 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=
 
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 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. The Obama socialists are trying to legally confiscate everything people earn while lining the pockets of their friends with Ambassadorships and $billions in contracts for inept management of socialized medicine.  Look for world economies to soar when the socialists are no longer running America.
http://finance.yahoo.com/q/bc?s=%5ESSMI&t=my&l=on&z=l&q=l&c=
 
American Economy


May 23
New Home Sales Apr 433K up 8% from wintery April’s 407K 

May 22
Initial Claims 05/17 326K up substantially from 297K ----
Continuing Claims 05/12 2653K down slightly 2667K hides thousands
Existing Home Sales Apr 4.65M up slightly from 4.59M
Leading Indicators Apr 0.4% down sharply from1.0%
 
There has been no net improvement in non-farm employment since 2007 when the Obama-Dodd-Frank Liar- loan scam fell apart.  That was when banks and realtors were sued for red-lining if they did not give high-risk mortgages to people who claimed but did not prove they could afford the mortgages.  Typically they could only afford the payments for 3-yrs at a reduced interest after which a higher normal rate reset kicked in.  But if they were denied that of mortgage the bank was sued for discrimination because Obama-Dodd-Frank stupidly claimed they could flip the house in 3-yrs and unload the house so technically they could afford it and therefore were discriminated against.  As you know the market values dropped and all the liars who could not afford the higher rate after 3 yrs defaulted.  What is worse, nearly 10 million homeowners now remain underwater on their mortgages today because the banks would have to take 25% losses if they foreclose and therefore they would not have the capital to stay in business and there could be a banking collapse. 
 
May 21 During the disastrous Jimmy Carter administration about 50% of the stock market investors decided to buy houses instead of stocks.   Citizen participation in the Stock Market dropped sharply then. That turns out to be a good decision for when there are weak minded mediocre American presidents creating one international disaster after another.  Later Americans got back into stocks when Reagan and Bush made free-enterprise and exceptionalism the national objective again.
 
MBA Mortgage Index 05/17 down to 0.9% from 3.6%---  
Contradicts previous bullish housing report when there is a 70% drop in mortgages.
May 19 The world is losing confidence in Obama’s economic statistics which are now about as truthful as Comrade Brezhnev’s USSR statistics were when the USSR disintegrated.   We have had at least six years of Obama blaming Bush and reporting Obama’s economic recovery beginning every quarter and yet every Obama policy has failed.  This is the “equality of poverty” that Winston Churchill said comes with socialist government redistribution of wealth.  Too much government money is going into electronics designed to pacify the uneducated.  America now has an unemployable class of people created by Obama’s socialist policies.  How many poor people have the latest 55” flat screen TV, stereo electronics, are addicted to their cell phones and games, and are up to their ears in debt paying between 19% and 26% interest on their debt?  If you don’t know any such people you obviously are a liberal racist and avoid associating with them because they are now our fastest growing population.  This is why socialists want art, music, twitter, and beach combing to qualify as jobs that receive government subsidies and grants (not that degrading compassionate free-enterprise welfare).
 
The Markets
May 23  Market volume on NYSE advances is now at a low level not seen since the President George Bush’s first administration.  Volume picks up now on market declines but still it is evident that the small individual investor is on the sidelines and the market is being manipulated upwards for the sole reason that it is being used as collateral to leverage record levels of bank debt and corporate and raider speculation.  In reality the corporations have squandered all their original cash on corporate bonuses and the current cash and collateral is now negligible in comparison with real corporation debt when this bubble bursts.  This is a game corporation executives play each economic cycle to line their pockets using cash from their stock price bubble which they claim is due to good management.  It is an economic flaw which enables a concealed fraud to be perpetrated on the stock holders who stay invested long term.  Not only have corporation management, activists, and raiders pilfered corporate cash, they have used the cash to bid up bubble prices to record highs providing bubble assets to raise debt and additional cash. Any small disturbance now could set off cascading bankruptcies and bank collapses.  The new temptation will be for developed nations to return to inflation because deflation will only exacerbate the burgeoning corporate, bank, and international debt problem.  The higher this market goes the more disastrous the collapse of the stock market liquidity bubble will become. 
In summary the corporation, hedge fund, and bank, excesses of this current bubble are much closer to the speculative 1929 stock market bubble than any since the 1929 crash.  
 
May 21  The bull spin continues and although China is still contracting the seasonal warming means China is now contracting at a slower rate than last winter.
May 20  The world wide public stock markets no longer exist.  The banks and investment firms have been managing the markets to elevate prices to try to prevent their liquidity from going to zero.  The future question is do you want to sell out and later buy back in 50% after the market drops 25% to take advantage of a rally and then sell out on any rally?  Or is it better to wait and only buy back in when the market is down more than 50%?  Or another possibly is to never get back in.    Each investor has a unique risk tolerance.  There are pros and cons to any investment decision. 
May 19 Today on Squawk Box the Fed rep said it is now polling financial institutions about their decision practices for liquidating assets to estimate how fast a collapse reminiscent of 2007 could occur.
Remember when AOL was the hottest tech stock?  This poetic video explains why the social business model is another AOL type stock market bubble about to pop as the boom box mania and AOL bubbles popped.  It has become a ridiculous addictive industry that Anthony Weiner used to expose himself thinking it would make him popular.
 
May 7  The market is in the stratosphere and has no breadth.  Sell in May and stay away may be the best advice around.
May 5  Throwing money at the stock market no longer makes it go up relative to the highs of 2000 and 2007.  And here we are at the same relative highs seven years later at the end of another seven year business cycle in 2014.
 
World trade is down 55% for the year to date and near a 15 year low down 80% since 2007.  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.
 http://www.bloomberg.com/quote/BDIY:IND/chart
 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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