Monday, February 29, 2016

The stupid party is equally immoral

The stupid party went along with debt-enslaving the students.  It is because they never want to lead.  They go along to get along to maintain their second place position.

Do you realize that domestic students are at a competitive wage disadvantage to foreigners right out of the shute if they have debt to service and need a higher wage because of it?  Do you realize that American students cannot get their student loans discharged in bankruptcy?  Do you realize the Federal Government is the loan shark?  Do you realize the very same people who put American students at a competitive wage disadvantage, don’t allow Americans to discharge their student loans in bankruptcy, and support the government being the loan shark, are the same people who push for more H1B visas to come into this country at lower wages than Americans.

These people are both the leaders of the Democrat and Republican parties.

But the education cartel will not throw one single vote to the Republicans for their supporting this immoral disgusting travesty of eating the youth of society.


There really is no justification for the existence of the Republican party.

Liberals brought us

Liberalism brought us:

Victimhood
Identity politics
skyrocketing healthcare costs
skyrocketing education costs
Kangaroo courts in college to railroad boys
The Deep State

Youth as indentured servants

Shut down the universities

I do strange things like reading federal government financial statements.  The 2015 federal government statements are just out.  I noticed on a quick scan that the government has an accounts receivable of 977 billion dollars for education loans.  That is right. Almost a trillion dollars.

What kind of a perverse society do we have?  One that would make their young indentured servants to the government created and supported education cartel?

Burn it all down.

Newspapers and their dot com counterparts must divest

Newspapers must divest themselves of ownership that is a conflict of interest.  The New York Times is owned by a Mexican billionaire who influences the newspaper to do propaganda for his interests.

The Washington Post is owned by the billionaire owner of Amazon and uses the newspaper to promote his interests.

Liberals want journalists to be certified by the government.  That is, they want the New York Times and the Washington Post to be the only media that has freedom of speech.

Ok.  This is your comeuppance you filthy stinking white liberal pieces of shit.

Texas manufacturing - China is cleaning our clock

You think it is all low oil prices.  No, China is unrelentingly taking industrial business from the US. That is, they are supply the US with industrial products.  The only reason China hasn't lowered the yuan to the dollar is they are afraid of Trump.  Well, to be fair, everyone is afraid of Trump.  But his support doesn't seem diminished.

Liberalism brought us - added to the list

Victimhood
Identity politics
skyrocketing healthcare costs
skyrocketing education costs
Kangaroo courts in college to railroad boys

The Deep State

Repeal NAFTA

Mexico needs to be punished for human trafficking.

Sunday, February 28, 2016

Bingeing on debt then too little spending – it is so simple – the answer to everything – in the end we’re screwed

In reference to the last post below which shows massive spending by consumers and businesses then a reduction of spending thereafter.

The problem first was spending too much relative to income.  Then the crisis.  Then spending too little.  It makes perfect sense.

Other countries like China and Germany spent too little relative to their income.  In other words, they saved too much.  And, thus they had the capital structure to invest and export the product of their investment.  Now of course their customers are saving too much and not buying their products as much.

The money the US sent to China came back to buy US bonds.  That lowered interest rates making the whole problem worse. The sin of low interest rates.  It was a loop.

So now, the US is forcing China and Germany to overspend by underspending.  That is how things will get back to equilibrium.  Good luck with that.

Actually, the US voluntarily overspent in face of China and Germany underspending.  The US really liked their low interest rates and newly found debt spending wealth creator.  The only way for the US to force China and Germany to spend more would to have been to spend less.  But nobody in the US wanted to do that.  We liked our low prices.

Like I said, the US is forcing China and Germany to overspend by underspending.  That is how things will get back to equilibrium. But here is the problem.  The central banks don’t recognize anything I said above as having anything to do with anything.  Central Banks are all talking printing more money and going to negative interest rates with some CBs actually doing it.

It appears the only thing an economy can do is:

Lower interest rates
Print more money
Supply side reforms which increase productivity and real wages
Inflation
Devalue the currency against other currencies

Not considered a good idea is:

Raise interest rates

Have spending be appropriate to income.  Which of course to do that you have to have normal interest rates.

Debt liquidation is off the table.  It is the last thing they want to do.

I think we are screwed.

Reduced credit expansion reduced economic growth

These numbers are borrowings.  It is the amount of money each category borrowed.  And of course spent.

Period one is from 2000 to 2007, the seven years from the peak just before the dot com bust to the peak just before the bank bust.

Period two is from 2007 to 2014, the next 7 years.

The figures are in trillions of dollars and are rounded for ease of reading.

Federal
Governmt Consumer Business Total
First 7 year period 2 7 3.5 12.5
Second 7 year period 8 -0.3 2 10
2nd minus 1st 6 -7.3 -1.5 -2.5

As you can see, the consumer borrowed and spent a lot less money in the second period.  So did businesses.  Federal government spending is shy 2.5 trillion dollars from making up for the reduced borrowing and spending in the private sector.  Thus we have had slower economic growth.

The Finance Sector including foreign banks here as well, increased their borrowing by $10 trillion in the first period,  During the second period they deleveraged $1 trillion of it.  That deleveraging also has an impact on the economy.  So the total reduced borrowing that the Federal government failed to cover in the second period was $3.5 trillion.

It is a no wonder that the economy is growing more slowly as credit expansion is just about everything.

Source: Federal Reserve Bank Z.1 table D

By the way, the borrowing and spending by the Federal Government is terribly inefficient.  But that doesn’t matter in Keynesian theory.  Just borrow and spend it into the economy on anything, especially on those who vote for you.

Saturday, February 27, 2016

G20 Finance Ministers come to the conclusion that structural economic reforms are necessary

That is what I have been saying for years.  It is the only thing that will offset stagflation.

http://apne.ws/1KSk02t

A repeated theme from officials was that governments need to speed up economic reforms because multiple rounds of stimulus by central banks and treasuries used since the 2008 global crisis are no longer effective.

The governments promised to avoid "competitive devaluations" of their currencies to boost exports - a key concern of global markets following turmoil over China's yuan.

What each country does will be dictated by its circumstances, Lou said. He said some can afford stimulus while others where debt is high have to move faster on structural economic reforms.

Global growth is at its lowest in two years and forecasters say the danger of recession is rising. The International Monetary Fund cut this year's global growth forecast by 0.2 percentage points last month to 3.4 percent. It said another downgrade is likely in April.

A previous G-20 meeting in Australia produced a list of some 800 promised reforms aimed at simplifying regulation and boosting trade, technology and job creation, but many have yet to be carried out.
On Friday, Germany's finance minister, Wolfgang Schauble, said his government would refuse to take part in any new joint stimulus in the event of falling global growth. He insisted governments had to embrace reforms instead.

Friday, February 26, 2016

S&P 1950 remains the battle line

Fed should raise rates in March. What does this do for the stock Market?

Based on this as the Fed says they are "data dependent":

Incomes up.  See table in last post.
Spending up.  See table  in last post.
Jobs continue to improve.
Wages continue to rise.
Inflation is apparent.  See table last post.

Do they have a choice but to raise rates?

They believe the economic slowdown is "transitory".  And look at this.  ADS is back up.  The Atlanta Fed real time projection for the first quarter GDP is 2.5%.





What does this do to the stock market?  I don't know.

Core PCE 1.7% inflation. We are almost saved.

Janet Yellen's magic inflation figure of 2% in core PCE is almost met.  We will be soon saved.  Only .3% to go.



I know I know.  Deflation is the problem.  You read it everywhere.  But seriously, these are what is actually being reported.  I can't help that.

Here is the table I posted on February 19th.  From the Cleveland Fed.



This is a Rubio "landed blow" on Donald Trump?

How can Rubio think it is bad that Trump hired some polish workers on a construction site once since Rubio is fine with illegal Mexicans getting green cards to work.  Oh, that's right.  After the border is secure.  Then it is ok.

Liberalism has brought us

List:

Victimhood
Identity politics
skyrocketing healthcare costs
skyrocketing education costs

Kangaroo courts in college to railroad boys

Norway voluntarily destroyed itself

The USA voluntarily elected a Muslim for president.

“In response to the infidel group Soldiers of Odin patrols, we Muslims have chosen to create a group that will patrol the streets, first in Oslo, to prevent evil and encourage the good,” a source within the Islamist environment told VG. 

Aren't these people lovely?



I am sure you didn't miss this:

http://www.thelocal.no/20160226/soldiers-of-allah-pop-up-in-norway-to-counter-soldiers-of-odin

Thursday, February 25, 2016

Liberals have brought us

Liberalism has brought us:

Victimhood

Identity politics

Skyrocketing health care costs

Skyrocketing education costs

Goal Seeking

With 4 minutes to go the goal of S&P 1950 was reached.  It didn't go much above that.  Goal tending I guess.

Inflation is what they want but negative rates will backfire


https://mises.org/library/where-negative-interest-rates-will-lead-us

The real pity is that the busts and crackups could all have been avoided if central bankers recognized that falling prices eventually create the conditions for a normal economic revival. Deflation is not a death spiral as the Keynesians believe. In a functioning market, the public’s demand to hold money will be satisfied when their reserves of money balances are sufficient in relation to the price level, when they are once again confident of the future, and when they are willing to invest for the long term.

Wednesday, February 24, 2016

New Single Family Home Sales for January 2016

Seasonally adjusted at an annual rate:




Not seasonally adjusted actual sales:




A little history of actual monthly sales in the thousands:

2014-01-01    33
2014-02-01    35
2014-03-01    39
2014-04-01    39
2014-05-01    43
2014-06-01    38
2014-07-01    35
2014-08-01    36
2014-09-01    37
2014-10-01    38
2014-11-01    31
2014-12-01    35
2015-01-01    39
2015-02-01    45
2015-03-01    46
2015-04-01    48
2015-05-01    47
2015-06-01    44
2015-07-01    43
2015-08-01    41
2015-09-01    35
2015-10-01    39
2015-11-01    35
2015-12-01    38
2016-01-01    37



Year over Year percentage rate of actual sales.

Liberals have brought us

I have started a list.  Liberalism has brought us:

Victimhood

Identity politics



Bad news stopped the stock market carnage

Services PMI dropped a lot and went below 50.  New home sales dropped a lot.  And oil turned up from being down due to inventory reports.

Bad news is good news for the stock market today.


Tuesday, February 23, 2016

divergent stocks and bonds

When bond yields and stocks diverge, I generally think bonds are the leader.  But there is not real prediction value form it beyond the short term unless the divergence gets large.

I really hate the thought that the S&P won't rally more.  I want it to go to at least 2000.  Going to 2000 will give me confidence that the subsequent slide in the market will be a rout the likes we haven't seen since 2008.

little guy scaredy-cats

When the little guy gets out of stocks he goes to cash.





Institutional players take their cash and buy bonds.





Since the end of QE3 going to cash is evident.

oil and stock correlation

Algorithms are programmed to track oil.  Oil is down this morning and so are stocks.  It doesn't have to make sense.  There is also high interest in taking profits at 1950.




Black line is SPY and the line with red in it is oil.

Monday, February 22, 2016

Remember, increasing rates will increase money velocity

which will increase inflation.

I said the goal of the Fed is serious inflation – Peter Schiff agrees

I also said we are headed for stagflation.

But the real nightmare for the Fed is not the extra body blow higher prices will deliver to already bruised consumer, but the knockout punch that will be delivered to its own credibility. The markets believe the Fed has a duel mandate, to promote employment and to maintain price stability. But it is currently operating like it has just a single unspoken mandate: to continue to shower markets with easy money until asset prices and incomes rise high enough to reduce the real value of our debts to the point where they can actually be serviced with higher rates, regardless of what happens to employment or consumer prices along the way.

In the past I argued that even a tiny, symbolic, quarter point increase would be sufficient to prick the enormous bubble that eight years of stimulus had inflated. Early results show that I was likely right on that point. The truth is that the economy may be entering a period of “stagflation” in which very low (or even negative) growth is accompanied by rising prices. This creates terrible conditions for consumers whereby prices rise but incomes don’t. This leads to diminished living standards.  




Peter thinks stagflation will be a disaster.

New S&P target

I lowered my S&P target from 2020 to 2000.

Today, after nicely breaking through resistance at 1940 was stalled at resistance 1950.  I think it may have also been a report that the Swiss National Bank, after a nice run up, has hedged their S&P 500 exposure.



{click for clarity}

Korean Lives Matter

I think black people should stop shooting Korean convenience store clerks.

150,000 penguins have disappeared in Antarctica. Thanks, climate change!

From the filthy scum lying environmentalists :

http://grist.org/science/150000-penguins-have-disappeared-in-antarctica-thanks-climate-change/



From the Christian Science Monitor:  They didn't find 150,000 dead birds from starvation:
But some scientists aren’t buying it. Michelle LaRue, a penguin population researcher at the University of Minnesota who was not involved in the study, told Live Science that 150,000 Adélie carcasses have not been found so no one can know for certain what happened to these birds.
“Just because there are a lot fewer birds observed doesn’t automatically mean the ones that were there before have perished,” said Dr. LaRue. “They easily could have moved elsewhere, which would make sense if nearby colonies are thriving.” 
And as for the Adélie skeletons found by the researchers? Easily explainable, says LaRue. Because of the cold weather, carcasses don’t decompose: Adélie penguin colonies are always scattered with dead birds.

Friday, February 19, 2016

The Supreme Court 4 – 4

I have been saying for years that we have to find a way to do without the Supreme Court.  The leftists on the court are purely political.  Law, constitutional or otherwise means nothing to them.  John Roberts is a scam.  Have you ever heard of anything so ridiculous that the Federal Government has the right to force you to buy medical insurance as part of its taxing authority?


There can no longer be settled law.  There can only be political winning and losing in congress and the presidency.  May there never be another nominee to the court.

Inflation or stagflation are the choices

Or do you think the economy is on the verge of renewal as a third choice.

Money supply growth faster than real GDP growth causes inflation. Here is M2 money supply divided by RGDP.  The upward sloping line represents inflation.

{click to see better}



But but but we have deflation, they say.  Here is the latest on inflation from the Cleveland Federal Reserve Bank.  {click to see better}



No deflation by a long shot.  The lagged effects of a rapidly growing money supply are having its effect.  CPI includes energy which has pulled this down.  CPI less food and energy at 2.2% actually seems low from my personal experience.  Median is theoretically very sound.

Conclusion:  The Federal Reserve Bank wants serious inflation. The government wants serious inflation.  It is the only acceptable way to reduce the burden of historic debt levels without hurting the banks.  A helicopter money drop, a QE for the people, is not an option.  One, it has moral hazard beyond imagination.  Two it can produce out of control inflation  Oh, and a third, it will hurt the banks to have debt paid off which is a possibility they have to take into consideration. Can you imagine the government saying we are going to give you all this money but you are not allowed to pay down your debt with it?  What are they going to do?  Have an Obamacare mandate to have debt?  Charge you a fee, ops, sorry Justice Roberts, I mean a tax, if you don't?





The next president could be illegitimate due to low turnout

A friend commenting about how the DNC was rigging the nomination for Hillary said she was thinking that Bernie supporters might not vote for Hillary in the presidential election. Unfortunately, it holds true that Trump supporters may not vote if he isn't the nominee.

Both parties would of course come out with the tried and true campaign tactic that the other guy is evil in order to bring in those potential non-voters.  But it might not work all that well this time.

Thursday, February 18, 2016

Stock market today

"For those that were waiting to take profits or hedge at 1950 resistance on the S&P, keep in
mind that this is not an exact science and everyone that is not under a rock knows about that
resistance."

Elliot Spar from Stifel

Blacks over represented at Harvard Law, Asians under represented

Because Blacks scream and threaten and Asians don't.

Shut the whole place down.

Negative rates out – helicopter money drops in

Helicopter money drops is called the people’s QE.  Meaning the money is going to go to the people instead of the banks.

It is unlikely that the Federal Reserve Bank would sent out money to everyone.  It will go directly to the US Treasury where they will give it out via congress for the crumbling infrastructure otherwise known as giving it to special interests.

This was done by Obama’s 800 billion dollar fiscal stimulus.  A lot of it went to temporary jobs for teachers and cops who are Democrat party voters.  But it didn’t involve the Fed directly providing the money.  It was the old way of the Fed buying Treasury bonds from banks.  That won’t happen this time.

This time they will not make the same mistakes, of course. They will find a way to get it to “the people” and there will be incentives to spend it and not save it or pay down the debt.

This helicopter drop could actually work if the powers that be would see it as a debt jubilee.  Make incentives for everyone to pay off their debt.  Sure that will hurt the income of the banks, but a debt free country can start all over again building debt.

But that is not what they want.  They want to drop a lot of money and for it to be spent.  This is ultimate Keynesianism.  It is to stimulate aggregate demand.  No one ever mentions that creating money in excess of demand creates inflation which is inevitable from doing this.  Well, they do mention it and it is a desired outcome.

It is through inflation that they will reduce debt.  Debt becomes less of a burden as you pay it off with cheaper money.  Just what the Federal Government needs and the banks stay profitable.

the Pope condemns human trafficking

As you have read, the Pope's speech in Juarez, Mexico, the Pope condemned human trafficking in the most vivid terms, criticizing the countries that created conditions that "forced" people to flee. I should be grateful that he spoke that truth.

I think there is a special place in hell for those who wear halo and hurt people.  The Pope is the biggest human trafficker on earth. Second is Merkel.  Third biggest is Obama.  But the later two don't sport a halo.


Again, the Pope is an evil evil man

Borders provide stability.  Like in my recent post where Russia, if they can get control of the Syrian / Turkey border, they will create a Shia state, a Kurdistan, and a Sunni state.  To have states you have to have borders.  Borders are lines you don't cross.

The Pope wreaks havoc.  Just like Obama.  Just like Merkel.  Just like liberals.





http://hosted.ap.org/dynamic/stories/E/EU_REL_POPE_TRUMP?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT

BORDERS ARE THE FOUNDATION OF STABILITY

Keynesian vs New Keynesian – you never get off the hamster wheel

Both Keynesian and New Keynesian theory require the government and central bank to intervene in the economy.  NK just adds a little more justification for doing so.  NK says the market place for wages and prices is imperfect and causes sticky wages and prices which doesn’t allow for sufficient downward adjustment during recessions.  So recessions actually fail to do their job.  So the government through fiscal policy and the central bank through monetary policy must step in to provide stimulus.


Get it?  This means it is a permanent state of affairs.  Recessions are too weak and stimulus is always required.

Wednesday, February 17, 2016

Car bombs

are the way to go.

When first reporting of 5 people dead in Turkey from a car bomb was accompanied by photos, I said there is not way only 5 people died.  The explosion was massive.  Now I am reading it is up to 28.

It is a good thing that the US has such great accountants.  Dynamite companies keep track of every gram of explosive they produce and where it goes.

Of course, bringing it in from Mexico is ignored by President Hussein, Hillary, Democrats, Liberals.

Bernie Sanders' USA Venezuela

The measures devalue the strongest official exchange rate by 37 percent

The price of premium gasoline will rise by 1,329 percent, but fuel is so heavily subsidized that fueling a small car will still cost about half the price of a soft drink, or about $0.23 based on the black market exchange rate

Nevada and South Carolina are soon – culture will win

If Trump does well, I would have to say the GOP doesn’t get it one little bit.  I don’t watch Fox News on TV.  I went to someone’s house tonight and watched it.  The GOP doesn’t get it.

It is cultural.  Muslims have been accommodated in the U.S.  It is amazing to see how much accommodation they get all the while Christians are belittled and defiled.  Islam has made big inroads.  I will find an article that lists a lot of those most amazing co-ops of Western Civilization right here in River City.

When Trump said he would suspend Muslim immigration until we figured it all out, I said he probably has won the nomination.


Like Yogi Bara said, “We will see.” Just kidding about Yogi Barra.

Don't get me wrong.  I was never a Trump supporter.  I am being a humble analyst here.  The GOP is on the verge of FAIL.

another anti-Trump argument goes down the tubes



{click to enlarge}

Scientists as liars

Since every prediction from every climate model has been false I have to believe climate scientists are dirty filthy liars.

Amazing rally

1,000 point Dow Jones Industrial rally and a 100 point S&P 500 rally in three days is not unheard of but rare.  The market has blown past resistance lines with ease.  The real serious resistance is at 1940. Just ahead.

Founding fathers, liberty, freedom, constitution, 10 commandments, reduce spending, eliminating the deficit, the rule of law, excessive regulation, national security, Ronal Reagan.

GOP hype meet mass immigration reality.

The GOP could get a chance to make good on all the iconic phrases if they get a conservative president elected.  Instead, they may get Trump, all because of immigration.  South Carolina may be a big clue.

Republican elites could have their cake and eat it too.  Just not the full cake.  Automation is economically killing the middle class so wages will continue to go lower and lower.  And suicide, liver disease, and drug addition will put a dent into the population of this demographic. More and more middle class will move into servant industries to serve the Republican elites.  This is inevitable due to automation.  So why not get everything they want, just not 100% of it, just cutting back on their insistence for unlimited immigration?


Answer: The stupid party.

Rip roaring dip buying

It’s the fund managers.  They are indexed.  Which means they can’t get any alpha.  Except buy getting out at tops and getting back in again at bottoms.  Once they see the market going back up again they rush in because they need the ride up to make their alpha.

Tuesday, February 16, 2016

Wow. The slowdown is over

Atlanta Fed projecting Q1 2016 GDP growth at 2.7%.  I guess the 21 PE ratio for the S&P 500 is justified.

Israel and Russia

Russia has gotten Israel support.  Israel will not help those trying to kill Assad.  Russia achieved this with the promise of not letting Iran via Syria put pressure on Israel.  In this way, Russia has secured its southern flank in Syria.  Jordan will go along.  Hezbollah will be diminished.


Who do you think Israel trusts more? The United States of America or Russia?

Obama/Clinton war has escalated

Russia wants to control the Syrian/Turkey boarder.  If they do that they cut off Turkey support for ISIS and the rest of the so called rebels.  Russia will then create states.  There will be a Shia state under the control of Assad.  There will be a Kurdistan.  And Russia will create a Sunni area, also a state.

Turkey is furious.  They fear the Kurds.  And Turkey wants to be the Caliphate.

Where is the confused United States of America on this?  We support some Kurds and don’t support others.  Sometimes we bomb “rebels”, the same ones as Russia does.  Sometimes we don’t bomb “rebels” because they are moderates.  Or something.


In my opinion, creating states can lead to stability.  And Russia will be the grand influence in the Middle East and the confused United States of America will be irrelevant.  As it should be.

Monday, February 15, 2016

The Fragile GOP - Jeb Bush edition

Jeb Bush went on enemy MSNBC this morning and reiterated he is in support of a path to legalization of illegals.

They they wonder why Trump.

Paul Ryan on the uneducated lazy Americans - and the GOP wonders why Trump. Oh, and Sanders.

Paul Ryan points out that the participation ratio is really low.  It is because Americans are on welfare. They don't have an education. They aren't entrepreneurial. He says.  And no, he says, he will not consider a cap on green cards.

And he says this the week of Ford announcing doubling their production in Mexico.  Carrier announcing they are moving 1400 jobs to Mexico.  And the announcement that the first US factory has been approved for opening in Cuba.

http://video.foxnews.com/v/4755228049001/house-speaker-ryan-outlines-top-five-priorities-for-congress/?#sp=show-clips






Not enough cheap labor in Mexico? - try Cuba- are you perplexed about Trump?


Cleber LLC, an Alabama-based company that builds tractors for small farms, was notified by the Treasury Department that it could open a facility in Cuba.

Yea yea that's right, more US factories in Cuba:  Berenthal said he was proud to get the approval, but it means even more for the future relationship between the Cold War foes.
"Being first is great," he said. "But for certain, we should not be the only ones. We're hoping and expecting many more will follow."
Yeah.  More.  Many more factories in Cuba.

Of course Trump has been popular.

http://www.usatoday.com/story/money/2016/02/15/cuba-us-factory-approved-cleber-tractor/80400968/

The GOP knows this and it is why they want mass immigration

Why can’t we simply adjust to a smaller GDP if the population actually declines?  Why can’t we adjust to a slow growth economy if the population is growing slowly?


Because debt.


We have a system of ever increasing debt incentive by ever lower interest rates to promote growth.  The flaw is that this model requires infinite growth.  At zero interest rate policy it seems the model has broken down at the same time as population growth has slowed.

If things really break down such that we go into a phase of deleveraging, stocks and real estate will get nailed.

The GOP knows this and it is why they want mass immigration

Why can’t we simply adjust to a smaller GDP if the population actually declines?  Why can’t we adjust to a slow growth economy if the population is growing slowly?


Because debt.


We have a system of ever increasing debt incentive by ever lower interest rates to promote growth.  The flaw is that this model requires infinite growth.  At zero interest rate policy it seems the model has broken down at the same time as population growth has slowed.

If things really break down such that we go into a phase of deleveraging, stocks and real estate will get nailed.

Saturday, February 13, 2016

Job of the bible – Job the Republican Party

Job asks God why have you made me suffer.  God said, sorry Job, it’s a test.

Middle East war – social engineering

In overthrowing Saddam Hussein, George W. Bush and the neo-cons were actually operating from idealism, and, felt they were protecting Israel.

Barack Obama and Hillary Clinton operated from idealism too.  But from liberal idealism of social engineering.  We have seen it domestically for decades.  Liberals have an ideal society in mind and work towards it.  This is what their entire foreign policy is about.  They have decided what the Middle East society should look like and have set out to achieve that.

Iran should have Iraq, but not Syria, for some reason in their weird liberal minds of how things should be.

George W. Bush made a horrible mistake upsetting the balance of power.  Obama and Clinton, with Obama continuing it, have created the greatest humanitarian disaster since Mao and Stalin.

I don’t think there is a greater big picture plan at work here.  I don’t think they are up to something like a strategy to hurt China in the long run, other than the liberal idealism of integrating Muslims into the Western world.  Today’s actions somehow fit into that goal.


Twisted little minds, all.

Friday, February 12, 2016

Very good day

For a Friday this was a very very good day.  The S&P was stalled at its first line of resistance but managed at the end of the day to close just above it.  If the market opens even on Monday the price is above it enough to give some room on the down side.




Dollar Gold correlation

Interesting.  USD is the candlesticks.  Gold is the black line.



Of course we knew about oil and the dollar.  Higher dollar lower cost of oil.  Lower dollar higher cost of oil.



There are many reasons for capital flows around the world.  Way too many for me to track and if I could I wouldn't have any idea of what the impacts are.  I read people who seem to know about a particular flow at a particular time.  Mostly I don't think anyone knows. It would require a computer model and a staff to track many variables and input them into the computer.

Maybe the BIS Bank of International Settlements knows.

Turkey - Europe's greatest enemy and member of NATO

Greece is going to get caught holding the bag.

Thursday, February 11, 2016

The Japanese Yen - my favorite lockstep

The Yen lead the US bond market by an hour this am.  Maybe this was the cause of the flight into bonds.


















Stocks as usual seem to be coincidental.  But if the Yen does lead it saved stocks today - see the detail on the bottom chart.



















 

This is what panic looks like








Oil was saved by a rumor that was called a news report.

Good day in the market but not rejoicing yet

What we needed was for the market to go below 1812 and end up sharply higher.  It did go below by 2 points.  I think I would have liked it a little lower but it did go below.  It rebounded nicely.  A would have liked it to close a little higher.  But the day qualifies.

Now for Friday.  Fridays have been bad for the market as people don't want to be in the market over the weekend and be subjected to bad news, particularly from China.  Friday needs to be relatively strong.

One advantage is the gap down today.  The market likes to close gaps.  I guess I am grasping for straws.


Wednesday, February 10, 2016

Quote

If the European Central Bank is purchasing bonds, QE, from Spain, Portugal and Italy, why are their bond yields rising?

“We all know that QE2 is not really going to work but the feeling in the market is ‘I’m a smoker, I know it kills me, but so long as I can get cigarettes, I’m happy,'” he said.

http://www.telegraph.co.uk/finance/economics/12149114/Europes-doom-loop-returns-as-credit-markets-seize-up.html


Europeans demanded George W Bush be tried for war crimes at the Hague

Yet they are silent about Obama and Hillary Clinton whose actual unauthorized wars have damaged Europe beyond hope of repair.

Did I mention Europe is toast?

One more down day needed

The stock market needs to go down one more day to shake out the last of the sellers.

Yes, if the S&P closes below 1812 it is bad.

Jeb Bush is a fail - Flint Michigan – why I am against governors now

When Jeb Bush was shamed by the media for using the term anchor babies and Trump turned it around and humiliated the media, I knew this kind of guy, I’m talking about Jeb Bush, is a serious detriment to our side.

He was spectacularly a failure on the Flint Michigan water crisis.  The Democrats went on a rampage smearing Republicans for the crisis and particularly blaming the governor who is a Republican.

What did Jeb Bush do?  He vehemently said to stop all the finger pointing and blame and get on with the job of fixing the problem; that there was plenty of blame to go around.

Jeb the Fool was talking about good governance.  Republicans are about good governance.  The stupid party is about good governance and it is irrelevant.  You can’t go and govern well if you can’t get elected.

I used to think that Republican governors were automatically the best candidates for president.  I no longer see it that way.  It is all about policy.  It is all about advancing your ideology.  If you can’t do that you don’t get a chance to govern at all.


In fact, Democrats don’t govern well.  And they don’t care.  It is all about advancing the dependency of the American people.  Ideology rules.  We don’t need naïve fools like Jeb. 

Tuesday, February 9, 2016

Oil down 6% and the S&P flat

This was a very good sign today.  Oil being down 6% and the stock market holding flat.

I would really like to see a nasty sell off testing 1812 then having a good comeback.  Perhaps the sellers will be exhausted from it.


Outsiders Trump, Cruz, & Sanders regarding and foreign policy

There is a massive foreign policy institution in Washington D.C.  Obama didn’t think up the Iran deal by himself.  They are up to something.  The big picture goal is totally secret.  As is the strategy for getting there.  But at least you can see what they are doing and infer.

It is strange to pump up Iran while at the same time pumping up our traditional Ally Saudi Arabia.  Iran has complained that the US is provoking Saudi Arabia to a war footing with the Shite Middle East.

It is never direct.  There is something beyond Iran and Saudi Arabia.  Probably the goal is to hurt China somehow.

Who knows?  We don’t and never will.


Trump, Cruz, and Sanders are not liked by the insiders in their respective parties.  It isn’t just over domestic policy.  It is because that foreign policy power in D.C. doesn’t like them and partisan politics has nothing to do with it.  They want a president who will go along with their plans and the three outsiders might not do that.

No president of mine would be elected on the basis of race or gender

Monday, February 8, 2016

I know I sound like a broken clock so I will eventually be right.

Regarding the S&P.  The peak was 2132 on the close.  A 15% correction takes it to 1812.  Nice place to start a rally.  John Hussman said after an about 14% initial “compression” there is a 1/3 to 2/3 retracement. At 1828, todays low, the “compression” is 14.3%

A retracement of 1/3 from 1812 takes it to 1920.  A retracement of 2/3 takes it to 2025.

I can only eyeball the point I think the market peaks on this rally on my weekly chart.  A quick rally looks like 2000.  A not so swift one to 1950.  Only time will tell.  Eyeballing is pretty inaccurate.

1950 is just above 1940 where the last rally turned down on a dime.  Not a nice thought.

As 1950 is approached, I will want to see if market internals improve sufficiently and sentiment as felt by my readings has improved sufficiently to take the market up above 1950.


This time can be different because of the Federal Reserve.  But this rally can fool the Fed into thinking their wealth effect mantra is alive and well.

Federal Reserve Bank taking orders from Obama

I have said it many times.  Be afraid of a government agency with a name like the 'protection bureau'. It resides within the Federal Reserve Bank and is funded by them.  The Federal Reserve Bank extorted 98 million dollars from Ally Bank.

http://nypost.com/2016/02/07/obama-bullied-bank-to-pay-racial-settlement-without-proof-report/


Looking for the bottom. Or bottoms.

There was consolidation between S&P 1880 and 1900 then some decent buying moving up to 1940.  It is these buyers that the market makers are want to flush out and get some really good prices.  Given the degree of really really poor sentiment, they want really really good prices. Let us say the average price was 1920.  A 5% stop loss puts the S&P at 1825.  1800 would be 6.3%.


If buyers at 1920 will hang in there for a 10% drop that brings the S&P to 1725.

Germany leads Europe down

In November, Europe, mainly Germany, paid Turkey to stem the flow of migrants coming to Europe through Turkey.  Turkey has blocked a lot of true Syrian refugees fleeing war but continues to allow “economic” migrants into Turkey.  There are a couple million of them in Turkey and Turkey doesn’t particularly want them.

The PM of Turkey, Erdogan, is extorting more money from Angela Merkel.  And to secure his further help he also wants her to help get Turkey into the EU.  For Extortionists, there is never enough extortion.  Strange, Turkey is a member of NATO.


There is a growing movement in Germany to stop all immigration.  They feel the only way to stem the flow is backlogging people all the way back to the sources.  But these people are considered far right and when they protest they are met with equal big pro-immigration protests.

Friday, February 5, 2016

The stakes are higher for the market makers

The stakes of the market makers is higher than it has been in many many years.  They don’t turn the market back up so quickly.  They need better prices before they commit to do that than they needed before.

The market makers get good prices by trolling for stops.  They know where the stops are and how deep the book is.  How?  Simple.  Every time you place a stop loss order it shows up on their computers.  Goldman Sacks, the biggest player, has the best exposure to it.  Even if you are a client of TD Ameritrade, your stop loss price and how many shares are known and used.

As sentiment deteriorates and more and more of you place stop loss orders, the further down the market has to go for the market makers to buy your stop loss orders at better prices for them.


The house runs the games and they know your limits. When they see a thinning out of stop loss orders and at fewer shares, they start buying which then becomes the bottom.

Negative interest rates - my thoughts

The theory is that if rates go negative, money becomes a hot potato.  Everyone with cash will want to get rid of it quickly as possible to unload the burden to someone else.  Keynesian theory says consumers will spend their money rather than keep it in deposits where it loses value as if it were taxed.  Then business will respond by increasing services and production.

First of all, there is no data in history what so ever to know if this will work.  None.  Nada.  It might work.  It might not.  Nobody knows, including the central bank masters of the universe.

I think it is totally reasonable to think it won’t work.  Consumers may retrench and retrench really hard in order to save more to make up for the loss of their savings.  Businesses may simply retrench rather than borrow and deal with the hot potato.

Labor Market Conditions Index leads by a lot.  Private Non Farm jobs follow and confirm.



Up close look.  I added a blue zero line for the right scale which is the change yoy of private non farm jobs.  The thick black line put in by FRED obscures that job growth is above 2% a year.



The LMCI (red line)  has not dropped in a way to give concern about an impending recession.  But there is no doubt that it has not performed well recently and job growth has been slowing.



Actually, job growth is now just below 2% year over year.

Wednesday, February 3, 2016

Nice come back

I would prefer the battle line be at 1950 rather than 1900.

{click for clarity}

S&P 500 earnings

quarter                  earnings        last 12 months earnings


09/30/15 23.22 90.66
06/30/15 22.80 94.91
03/31/15 21.81 99.25
12/31/14 22.83 102.31
09/30/14 27.47 105.96
06/30/14 27.14 103.12
03/31/14 24.87 100.85
12/31/13 26.48 100.20
09/30/13 24.63 94.37
06/30/13 24.87 90.95
03/31/13 24.22 87.70
12/31/12 20.65 86.51
09/30/12 21.21 86.50
06/30/12 21.62 87.92
03/31/12 23.03 88.54
12/31/11 20.64 86.95
09/30/11 22.63 86.98
06/30/11 22.24 83.87
03/31/11 21.44 81.31
12/31/10 20.67 77.35
09/30/10 19.52 71.86
06/30/10 19.68 67.10
03/31/10 17.48 60.93

It is conventional wisdom that the energy sector is responsible for the decline in the earnings of the S&P 500 stocks.  And, there are optimists who see the bottom for energy as they see a bottom in oil prices.

Materials sector earnings are way down.  Telecommunication Services are poor.  Most the other sectors are doing ok with some doing well like consumer stables and discretionary.  Industrials leveled off while Information Technology is down some.