Monday, June 15, 2015

June 19, 2015 Yesterday the NASDAQ hit a new high on a price and cash flow basis. That was quick and a surprise! We had given that a 10% chance. It was no doubt because the FED will raise rates by tiny increments so like we suggested so they do not panic the stock market. That has introduced some new stability that we did not plan on, but it was a good idea never the less. The Russell 2000 managed a new high in price but not in market cash flow. In other words there was a growing preponderance of lower volume on the advances relative to declines although the volume was normal yesterday.

            The MBA Mortgage Index last week was -5.5% compared to 8.4% previously indicating a likely slowdown in housing sales coming within a month.
            The SEC charged 36 muni-bond underwriting firms with making falsified optimistic statements or omissions of alarming information.
            Greece needs to cut retirement pension plans or else make government employees pay more of their salaries into the plans.  Greece should encourage foreign duty free zone investment for a set time period such as 10 years in which there are no government taxes.  That would bring in cash also.  The Greek people are intelligent and hard working.  But they should privatize because government jobs are often a boondoggle.  But as money is now being withdrawn from its banks, Greece looks like it will go bankrupt similar to the way Cyprus did.
            China has become alarmed by the large volatile flows of money into and out of their stock and bond markets.
 
June 18, 2015    On April 29 we said the FED should raise rates incrementally, “The FED must bite the bullet and raise the FED rate at least 0.05% and then incrementally grow the rate of increase so that the stock market collapse is not blamed on the FED. “  Yesterday the FED said they will do what we suggested and the market reacted positively.  On April 29 we also said, “The collapse will come because the stock market bubble must eventually burst and $Trillions of loan collateral will disappear resulting in a collapse of loan liquidity.”
The corporations will collapse under their own weight of debt because they leveraged up because loans were cheap.  When the collapse occurs we said, “The Fed must then put more actual dollars in circulation to prepare for credit defaults.”  That is because we now have a credit bubble and a stock market bubble.  If and when the stock market collapses later this year it will destabilize many corporations and banks.  We predict this collapse will result in computer attacks and fraud that will bring commerce to a crawl as credit defaults are amassed.  The timing may be slower but this scenario is probably as fast as it can happen.
  
June 17, 2015   Every index we follow is showing an exhausted USA stock market unable to break out to any new highs in any sector.  But unlike 2007-2008 many advisors are apparently reading this blog and passing the information along and are taking precautions and some are shorting the market for the first time in three years.  Only Jim Cramer is still confident but then again the stock market was down over 25% before he said “they’re nuts! Sell! Sell! Sell! Then he blamed the collapse on incompetent administration.  Then he sheepishly apologized over the next week because he likes the “Stupid Party.”  So we still hold to our prediction that Cramer will not capitulate until after September.  However, many advisors could do better predicting this time.  We believe with 95% confidence that the market highs for all the major US indices except the NASDAQ are behind us.  The NASDAQ has perhaps a 10% chance of making a new high.  Therefore we believe we are now about 2% to 3% below the market highs for this cycle and we officially announce this markets high was hit within the last month.  We are not doing this to advise anyone but only to keep a public record so that later we will see how accurate it is.  As one would expect many world markets also seem to have peaked.  While China also seems to have peaked we did not anticipate their recent run-up in prices as novice Chinese suddenly became capitalists.  The Russian market seems entirely manipulated and we would avoid both China’s and Russia’s markets.
            An analysis of China’s stock market indicates small short term amateur investors account for most of the recent trading and they hold a stock for an average between a week and a month.  Most analysts say China has a stock market bubble that is about to bust because exports and their economy have now stalled.  So what is new?  All the major world stock markets are bubbles ready to pop, including even Russia’s market.
            Greece’s central bank warned that failure to obtain desperately needed funding could lead the country into an “uncontrollable crisis.”
 
June 16, 2015   On a cash flow basis all the major US stock indices peaked before June 2015 and some like the Russell 2000 and NYSE already peaked by June of 2014.  On a price basis they all have peaked now and today the WSJ shows that the DJI and SandP prices have peaked for their 65 day moving averages.  It has nothing to do with Greece or Britain talking about leaving the EU.  It is the world economy cash flow peaking.  GAP, once the fastest growing trendy store, announced it is closing 25% of its stores.  Our predictions last October are on track for the next stock market meltdown.
 
Apple was dumbed down when its founder died and now has created a generation of dumbed down educationally retarded students that are well on the road to permanent unemployment.  That is growing worse just as the generations of Werner Von Braun’s rocket science students and Einstein’s nuclear physicists are retired and beginning to draw down their 401K plans as required by law by age 71.   The hedge funds are now faced with what will likely be at least twenty years of continuous cash withdrawals until a smarter generation of students comes along.  Voice to text translation is probably the only net economic value of the broad band surge.  Mind numbing games for the current ”Stupid Generation” will have a lasting negative legacy for at least ten more years until the ”Stupid Generation” is seen for what it is and they only begin careers when past generations became millionaires.  In the mean time single family housing will stagnate and apartment tenements will rise everywhere for housing the dumbed down Apple generation.
 
June 15, 2015   The Wall Street Journal showed Warren Buffet’s stock market indicator on the bottom of page C2.  The indicator said the market is more dangerous now than in 2008 at the end of the Obama Liar_Loan housing bubble and almost as bad as it was in 2000 at the end of the Clinton DOT_COM bubble.  Both bubbles were based on stupid theories of value.  Both DOT_COM bubbles equated high value to high activity not to profit or even revenue.  But this bubble is worse in that the IQ of the people today using Twitter, Facebook, and Apple products is about 82 while in 2000 the IQ of people using AOL, Microsoft Office, and Apple products was about 117.  We now have a generation of incompetent CEOs who inherited their jobs and cater to immature, unmotivated, and economically dependant product users looking to amuse themselves, hit on somebody, and to avoid studying or anything else that feels like personal responsibility or work.  When the DOT_COM bubble broke their stock holders went broke.  Some CEOs and investor’s never learn.   The Twitter CEO apparently knows reality and quit last week.
 
Christian and family values have been the target of all communist governments, the stupid party, the first Clinton administration, this Obama administration and the CEO's of the following companies.  Apple, Walmart, Yelp, Salesforce, Angie's List, Eli Lilly, Gap, Levi's, Twitter, Anthem, and Nike.

The New York Federal Reserve survey shows that manufacturing activity in New York State dropped to its weakest level in more than two years as new orders fell.  The New York Fed's Empire State general business conditions index fell from 3.09 in May to -1.98 in June, hitting its lowest level since January 2013.
The Federal Reserve said Monday that American manufacturing output declined 0.2 percent last month, as productivity has been flat.   Industrial production and manufacturing have been hurt by the stronger dollar and lower orders.
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