Sunday, July 14, 2013

Nature & Deep Pockets Winning...L&C

Would you venture into a game that was rigged at 75% to 25% out of 100% against you? Probably not, yet that is exactly the percentages in the stock market in the battle between the bulls and bears. Human nature seeks positives. No one wants to wish ill will toward a company and its employees. If you short their stock, that is exactly what you are saying.
This aspect to our inner make-up is reflected in the fact that the market goes up three days for every down day. When you add to this to the present market make-up of central bank support, hedge funds and the very wealthy, it is easy to understand why analysts in the media shout to buy equities. Oh, did I mention that lack of truth in reporting?
Alcoa Aluminum(AA)
started the earnings season last Monday. They lost .11cents a share or $119m in the quarter versus a loss of $2m in the same quarter yoy. Guess what? It is reported as a beat. A win! A great start to the earnings season. The company made .07cents in one division, the aerospace unit, when it was estimated to only make .06cents a share in this section. By the way this estimate of company share earnings is another rigged aspect to the market.
83% of S&P 500
gave warnings or lower guidance for this quarter. So, the company only makes .05cents a share when six months ago they stated that they would make .10cents a share doesn't matter. Worse than that is this: they lose money, but less than they thought. All these cases are reported as positives by the financial media and general media.
How can the bears win? One more aspect to AA. The company closed 149,000 metric tons of production in the quarter after closing 531,000 metric tons last year. The industry itself is closing capacity in China, Europe and wherever there is a plant. Prices are declining and yet this bell weather of the global manufacturing is described as part of the recovery. The refs are throwing yellow and red cards at bears, holding on bears, three seconds on bears, icing on bears, on-and-on.
I want to remind you, dear reader that last year at this time, analysts were predicting that the global community would grow GDP to the tune of 6.5% and in the US, the Fed and IMF stated our GDP would be 2.7% or more.
Didn't Happen!
Our growth slowed to .04% in the final quarter of the year 2012 and that was a revision from negative. GDP for the first quarter was less at 2% and declined to 1.7% in the second with a projected .07% for this quarter. So, explain these market results to me because I see a way overvalued stock market. The Dow is up 18%, S&P is up 17.8% and NASDAQ is up 19.23% for 2013. How can prices be rising when the overall economy is grinding by because it receives life support from the Fed and our government? There is one truth in Helicopter Ben's statements, the economy is weak!
Consider what my losing bear team understands. Consumer Confidence is declining. Three manufacturing indexes declined with no job improvement - Philly, New York and the Mid-West. Corporate Insiders are selling 9x more than they are buying. Housing interest rates jumped by  one and half percent in one month. Twenty-three million Americans have no job and 48m collect food stamps. In fact there are more Americans on food stamps than are working full time. More than half of the EU member nations are in a recession. China is slowing and is possibly facing a real estate bubble. Violence is beginning in Spain and Portugal, and continues in Greece. Sadly, I can see the first rock being thrown in our nation(see L&C) and those cameras will be hated more than anything else.
Liars and Crooks: Goes to our Congress. They cannot do anything right. This week the immigration bill was in the news. Can you explain to me how does national defense, farming subsidies, national deficit, jobs and many other fields all be within the parameters of immigration overhaul? One other note in regards to the food bill addition. Congress will vote for stimulus, subsidies even the use of federal lands for farmers, but no to helping people with food stamps. Yeah, government for the people!
In my unpublished book I noted that is fallacy in government bills should end with the bill writer. No one should be allowed to add pet causes, pork barrel, etc. to some one's bill. Vote for one bill, one at a time. "Stop in the name of love..." thank you Supremes.