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12.01.09
20% rally good for nothing.
Well based on one of
our last posts we got a huge rally well today as Gary Cooper said in Sergeant York,
"I reckon the Lord be a givin and the Lord be a takin it back". So we had
a little correction today. The biggest one day decline since 1932. I have to
say I added a little money to the market today. From here believe it our not,
I'm bullish on the stock market for the next 4 to 6 months. I, however, am a raging
bear on the economy. With Obama coming out as a centrist initially a better tone to
the market seems to be coming. Don't get this initial rationale to be long
lasting. It's only an excuse for him to grow government and slowly erode your
constitutional freedoms. For the first few months I think he'll be a wolf in sheep's
clothing.
Long term he'll trash the dollar. I can't be more emphatic about buying gold mid
next year. With all the printing of money the outcome has already been set, but for
the next year we are looking deflation in the face. Everything you own will be
declining in value but the buckets of fallout money will eventually get their way.
Hyper-inflation.
For the record, did you ever think that every ounce of gold that has been produced in our
history is still here and all of it stacked together only equals a 66 square yard high
cube. I think the pre-war German currency was a lot bigger than that. Think
about all the fiat currencies that have disappeared, but not gold. It's still
here. Think about it. Comment
For the record.
I've stopped giving the date because
I can't tell the difference between today or tomorrow. BTW, the 3 month treasury
yields zero. That's scary. Comment
2002 levels
The Dow is basically trading at 2002
levels. Ask yourself is the economy better or worse than then. If it's worse,
then we have nothing but a guess about how low it will go. Stocks are trading at
below 2002 levels so again I ask, what the hell is out there? Comment
Oversold rally overdue. I hope.
Reader's I really can't emphasize how low stocks are trading. No
question stock prices are discounting some major calamity we're not seeing. I still
think it's the dollar but what do I know. I just really urge you to have some assets
in gold or silver. They may not got up in value but my bet is they'll hold their own
against the dollar long term. I'm thinking of betting on a little rally in the
market, maybe a sharp huge rally. If I make any money I'll take the invested money
and profits out and buy gold or silver. I'm still thinking gladiator games with
Obama. The real economic scenario want play out for a couple of years. If I
were a betting man I'd say everything will look like it's getting better over the next 6
to 9 months, but having said that, I think this time next year we'll see gold close to
2000 if not higher. With China starting a major infrastructure build industrial
metals are due to start up sometime next year. The question you have to ask yourself
is how are they going to finance it. The only thing I see is selling dollars.
About 500 billion of them. Then who's left to finance or debt. Maybe Willy
Wonka (who can make the sunshine ) the candy man can, or maybe the tooth fairy.
Seriously guys stocks are signaling something I've only heard of. You've got stocks
trading below cash. Trading at one times earnings. I'm just saying something
is wrong. Freeport Copper and Gold is trading at the same price it was when I became
a broker in 1980. This company has basically no debt and is the largest miner in the
world. What can this price mean? Can you say, well I'm not going to say
it. Comment
Hail Caesar or Robbing Peter to pay Paul.
After the Obama election there should
be a grace period for him and the economy. Stock market weakness, however,
will be the excuse to implement his socialist ideas. His first couple of
years, will no doubt, be similar to the Caesar 's son in
"Gladiator". Basically he will be holding two years of money
games. Continued..
The cards just keep on falling.
Let's start at the very beginning a very good place to start. When you sing you
begin with do, re, me. When you count you begin with one, two, three. When you
speak you begin with A,B,C. When you invest you begin with buy, hold, sell. In
the beginning god created man, then man created a house, then the banker's created
debt. That's were we started to get in trouble. This current fiasco didn't
start with housing but with the 30 year mortgage. The problem grew with the advent
of leverage and that's were the problems got worse. Given the short term memory of
most investors, they view the problem beginning with the housing crisis. Let's
assume that is true. This was the first card to fall in a house made of cards.
The second card was financial sector, then the banking sector, then the insurance sector,
then the investment sector, then the auto sector, then the retail sector, then commodity
boom and crash, then the employment sector, then the global recession, then the emerging
market crisis, and now the energy sector. What is the next sector? How about
the job sector or the commercial real estate sector, or the city government sector or who
knows? We've tried bailing out everyone and where has it got us? The
government is reactionary and their response to the major economic crisis is at best
worthless if not the catalyst for more dire unintended consequences. In the last
week we've backstopped banks, insurance, autos, and the homeowners and it seems to be just
getting started. Next we'll have to bailout the farmers and the oil companies.
Despite oil and gasoline prices declining, which are being called a huge tax cut, that
doesn't seem to matter. The unfortunate thing about declining energy prices is that
it was the only sector that was creating jobs, but that seems to be over. The cards
keep falling. I am sure you can see the domino theory is just getting started and I
only know one way to stop it. The same way we ended the great depression. A
good ole war. I'm not advocating war to heal the economy but given the government's
bravado for saving the economy at any cost, well let's not rule it out. Comment
By the way, as we write this CNBC is announcing the pension system is needing time or help
from the government because given the economic slowdown, their positions are unattainable. Can you say, ouch.
Are we getting polls or polecats?
Being a news hawk, I will emphatically say that media with all their
polls and pundits skew the election outcome. All day and all night coverage
and projections destroy one's own opinion as to how to vote. No one wants to
bet on a looser and given this if you are at all plugged into the media hype you
can't help but vote for Obama or not vote at all. This 24/7 election coverage
has got to be altered. I use to think that election day banter really didn't
make much difference but I was wrong. With the pollster's chirping all day
long that it's an Obama landslide, why would you bother with voting if you support
someone else. The fact is you wouldn't. Normally you could count on the
apathetic Obama supporters to stay home and bask in the glow of their candidate's
victory, but not this time.
If you believe the press the election is over if Obama wins Virginia.. So the
election could be called 3 hours before the polls even close.
Comment
11.01.08
Ok, now we backstop the banks, carmakers, homebuyers, insurance companies, the
money markets, and now the emerging markets.
The Illuminati is alive and well. The capitalist country and world is now in hock to
the central bank.
Who is not allowed to fail? Only the solvent. Continued..
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Maybe it's the ETFs.
Although I don't understand it all but the ETFs maybe what cracks this market
even lower. Think about it. You buy say the RTH, which is the ETF for the
retail sector. It is designed to reflect a group of retail stocks. Let's say
some of the retail stocks start another major down move. Their stock price would be
reflected in the RTH and it's price would drop, but then let's say people want their money
out of the RTH because it's price is falling. Well the only way the RTH can raise
funds is by selling stocks in the RTH, which would be basically like pouring gas on the
fire. Selling begets selling. Just a thought. Comment
Missing the real problem
I listen to all the pundits call for this or that for an economic
solution, they are immature. The only real problem is fiat currency. Restrict
the government by something, whether it be gold or rocks, just some control. That's
about all I really have to say. Comment
Plugging in a few numbers. The clock us ticking.
Well I've been working on a website but find myself
uninspired, so I'll write a little about this economic fiasco.
I got to messing around with a few numbers and if you can see a way out I'd love
hear from you.
Conservatively, let's assume that the national debt is only 1 trillion
dollars. It may be much more but let's be optimistic. The interest rate
on this is say around 5%, well that equals 50 billion dollars a year or around 13.7
million dollars a day in interest, not compounded, simple interest only. Well
these loans are allegedly to be paid off in ten years. Well simple interest
makes this 500 Billion dollars. Yes supposedly we are getting interest on the
trillion but come on that money will be spent before the ink dries on the
check. Assuming that the loans will be paid back is at best folly. So
without spending another penny in 10 years the debt on the loans we just made will
be 1.5 trillion. This debt is only on this year and does not include the real
national debt. Our debt is no about 60% of our gross domestic product and rising
everyday just because of an economic slowdown in progress. A
recession/depression will inevitably decrease our tax base which will again increase
the deficit. With a falling tax base how on earth can we finance the interest
on debt much less run government. So in just ten years based on the way we are
going we'll be running a deficit equal to GDP. This basically means we have to
continue to debase the currency, can you say inflation. On the other hand we
have bankruptcy. With slowing GDP, and growing deficit, well let's just say
that's not a good thing. With initial deflation starting, which means
everything you own is going down. Growing unemployment, declining real estate
continuing to accelerate at a heart stopping pace and all the stuff you know that is
going on out there, well as we enter deflation the government, other than stopping,
has no choice but to turn on the printing press. Short term deflation will
insure that the fed pumps will be running at 110 % and no way to stop without
stopping the government, which as I've said before, no way. We will have to
overshoot the creation of money to try and shore up the economy and can you spell
hyper-inflation. I've said for sometime that the price of gold, whatever it
is, will exceed the price of the S&P five hundred, well it just happened.
When gold was $600 the S&P was almost 1400, now they approximately the
same. In hyper-inflation I'll suggest that the price of gold will exceed the
price of the Dow Jones.
Where are the spending cuts? Comment
BTW, GDP does not include Medicare, social security or any other
programs. Given the above what will happen to them?
If all that doesn't worry you check out the debt just a month ago. Now add what
we've loaned this month.
The Outstanding Public Debt as of 20 Nov
2008 at 01:35:48 AM GMT is:
$10,664,989,554,210.62
The estimated population of the United States is
305,125,597
so each citizen's share of this debt is
$34,952.74.
Election Day 2008
Clinton revisited.
Well the cards stack up again for a democratic moral and economic victory. It's
not that they will do anything different but the stars are aligning for them.
Think about it, Clinton came into an economic disaster that was due for a macro economic
resurrection. The economy was scheduled for a rebound regardless of what he did
but given "the winner is who's standing mentality" of the American public,
Clinton was given the credit for a robust economy. Then as cycles would be, as he
was ending his term, the economy was due for a recession. So even if George Bush
inherited the recession from the excess of Clinton policies the buck still stops with
who's sitting in the chair. Now we have one of the worst economic environs that
for all practical purposes has reached it's low point. Along comes Obama at just
the right moment for an economic rebound and of course this rebound will happen on his
watch. Once again the right things happen with the credit being given to the wrong
"chair"
Comment]
11.02.08
Socialism vs. Capitalism.
The election is already over and the winner is the socialist Bernake/Paulson
ticket.
Some people think the election is between McCain and Obama. My question is
what will change with either of them. Honestly, what difference does it
make. The Federal Reserve is the winner. People just think there's a
election for leadership of America. Ok, just to satisfy your curiosity about the
vote coming Tuesday, we'll make some sort of insincere comment. With Obama you
get change, yeah you might have a little change in your pocket. With McCain
you get a maverick that is part of the heard. Continued..
10.22.08
Stocks look like the government is going to nationalize the world.
As I look at stock prices I'm overwhelmed. From the industrials to
the financials to the drugs to the tech's, I'm seeing prices that are truly Armageddon
levels. There is something out there that is bigger and scarier than what we've seen
so far. I'm seeing stock prices that are truly signaling more than a
depression. They look like capitalism as we know it is coming to an end. Continued...
10.24.08
The dumbest thing I've ever seen.
The short sell rule ends today. In case you weren't paying
attention this was the brilliant idea of our head of the SEC (Chris Cox) that stopped
people from selling stocks short. This came into being about 3 weeks ago and of
course it created illiquid markets and caused the stocks to basically crash.
Unintended consequences rears it's ugly head. Continued..
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