December 12 The specialized stock market indices (DJI, NASDAQ, SandP) all have apparently put in their tops for this economic cycle this past week. We pointed out at the end of September that the broader generic NYSE put in its top on July 3. By specialized, we mean that some indices are continually removing maturing corporations and replacing them with the most rapidly growing corporations. Therefore they do not represent the real world stock market mixture of small, growth and mature corporations that make up the economy. The distortion is further exaggerated because the “select” index stocks run up much higher PE ratios because they are a select group overloaded by novice investors who believe almost anything CNBC Jim Cramer and Steve Liesman have to say. Rick Santelli is good as are the Squawk box hosts.

The general incompetence of the Obama administration and Obama’s attempt to “lead from the rear” has removed America from its leadership role in the world.  World and American disorder is consequentially on the rise.  In fact the incompetent Obama administration is fanning the flames by attacking American law enforcement which is among the fairest in the world.  In addition the Democrat party is moving farther left with the rise of Elizabeth Warren from Massachusetts who is more appealing than Pelosi and Reed but even further to the left.

Chinese stocks are now obviously manipulated in an attempt to prevent the down side by the Communist government.  Since February of 2009    The communists put an upward linear floor under the price swings and while it limits downside volatility it is increasing the probability of a cataclysmic crash of China’s corporation stock prices when the artificial floor is soon to be broken by market forces.  That floor is about to be broken on the down side because they lake the power to create growth and a rising floor will not create the growth they need (see chart below).  You can see that the floor will be broken very soon.

http://finance.yahoo.com/echarts?s=%5EHSI+Interactive#%7B%22range%22%3A%22max%22%2C%22scale%22%3A%22linear%22%7D

 

American economy

Dec 9

Wholesale Inventories Oct increasing at 0.4% ---

Dec 9 10:00 AM JOLTS - Job Openings Oct  4.834M up slightly from 4.735M ++

Dec 10

MBA Mortgage Index 12/06 7.3% up from -7.3% --- an absolutely absurd doctored number give the fall &winter slowdown.

Crude Inventories 12/06 1.454M up from -3.689M there is little storage capacity left.

Treasury Budget Nov -$56.8B American consumption slowdown dropped deficit of -$135.2B --

Dec 11

Initial Claims 12/06 294K remain high -

Continuing Claims 11/29 2514K 2350K 2350K 2372K 2362K

Retail Sales Nov 0.7% 0.7% 0.4% 0.5% 0.3%

Retail Sales ex-auto Nov 0.5% 0.5% 0.2% 0.4% 0.3%

Export Prices ex-ag. Nov -1.2% NA NA -0.8% -0.9%

Import Prices ex-oil Nov -0.2% NA NA -0.2% -

Business Inventories Oct 0.2% -0.1% 0.2% 0.3% -

Natural Gas Inventories 12/06 -51 bcf NA NA -22 bcf -

Dec 12

PPI Nov -0.2% down from 0.2% -- possible deflation coming

Core PPI Nov 0.0% -0.2% sharply lower down from 0.4%--  possible deflation coming

 

December 9  The irresponsibility of the Obama Administration knows no bounds and puts all Americans at risk while traveling abroad.   Obama took credit for the killing of Bin Laden and now claims he did it without the CIA use of their interrogation procedures they continued to use after he took office.  Both the CIA and the Republican Congressmen disavow the Democrat report and its release.   The CIA methods were reviewed ages ago when deciding to close Guantanamo in 2007 and were made public back while Obama was running for president.  They even showed the procedures in the movie Zero-dark-thirty about the assassination of Bin Laden for which Obama took full credit!  The information has just been released again formally by Obama.  The terrorists in Syria say Obama is the terrorist.  And they say they understand him completely.

http://www.syrianews.cc/lie-qaeda-fsa-terrorists-exposed/

 

Obama’s politics is now a prime catalyst for the collapse of the American economy.  He is now fanning the flames of protests against city police, and authority figures.   His followers even hate their teachers and make an education or a career virtually impossible. Obama is inciting people to riot and burn America down.  The American electorate and now even the Democrat Party leaders are fed up with Obama’s insipid gross stupidity in fanning flames of hated against the American systems of freedoms, values and enterprise from within and without. 

Obama’s arrogance and hatefulness is public now and Obama knows he has been rejected by Americans and he appears to now be working to deliberately damage America.  He could seriously disrupt the economy earlier now as he spreads his hatred of America in our cities.  And it is not a black vs. white threat it is a red vs. dead threat.  The leftists have taken to the streets and attracted unemployed youth and the bored professional students to their mobs.

 

December 8    As we pointed out on December 1, 2014, declining oil prices are caused by a declining economy and do not help until the economy begins to recover and experiences an increased demand for energy.  We showed then that a steep oil price reduction occurred early in every major bear market going back to the Great Depression.  A decline in oil prices has been the forerunner to major stock market pullbacks because it is the symptom of economic stagnation.  MSNBC Jim Cramer and others have it all backwards and do not realize the collapse of oil is in response to the collapsing world economies and not the immediate economic boost they think it is.  They are not too smart and should the check economic history of oil price declines.

In the November 14 commentary we pointed out that Herbert Hoover did not give America the Great Depression.  President Hover was like Obama and gave us a 60% market decline in 1929.  Americans then voted Hoover out of office.  Unfortunately foolish left wing Americans voted Obama back in as they had voted in  Franklin Roosevelt who then gave the world the Great Depression where stocks then ended up down 90% from their 1929 highs.  That is what we potentially face in this second chance the left wing voters have given Obama to destroy American Free enterprise.   A normal bear market can result in a 60% stock market decline but a depression can result in a 90% decline.

A stock market failure during Obama’s last two years in Office caused by a $4+ Trillion collapse of the infusion of Quantitative Easing credit on top of a second Obama recession could take the stock market down 90% from the current highs.  And Obama would love that dire FDR situation because it allowed FDR to rule via Executive Order fiats.   Obama says never let a good crisis go unexploited.  At least that is what his first chief advisor said.  FDR got many former slaves of the democrat south to switch from being liberated working Lincoln Republicans to being FDR democrats favoring a cradle to grave welfare state.  That is how cradle to grave welfare states like the old USSR and the N. Koreans got and maintain power.  Putin still controls the rich oligarchs who have replaced the old communist party leaders.

Today MSNBC began hedging their bets and lowering economic estimates for this year.  Often that is done so that they can pretend the poor results are much better than were predicted.

Higher interest rates will clobber fixed rate assets so if one cannot short stocks or get into growing investments cash may be the best investment to park in.  Bullish ETFs are a disaster in declining markets.  Bearish ETFs may do well but all EDFs require close attention.  Right now we have seen some bearish sectors beginning to bottom out and become attractive as the bullish ETFs are peaking.