Like any patriot, I do the best that I can in regards to buying American. Since the financial crisis of 2008 the one unexpected bi-product from it has been the awareness by consumers that to find and keep good jobs in America, support our companies. This point has never been lost by the global community as they always buy local over imports. For them to buy American is seen as a luxury.
Further along this train of thought as pertaining to the American economy has been the success of horizontal oil drilling and the concept of fracking in gas wells.
Energy Independence
America is back on the road to providing itself with enough energy, however the same forces that gave us offshoring of jobs is attacking our law that says we need all the oil that we produce and thus, we don't export oil at present. I'm against exporting of oil, however I like the idea to allow the export of natural gas as we have excess and we could develop LNG terminals, shipping and more. This is a source for strong middle class jobs and raise our standard of living which has declined since the 1980s. Dear reader, I just stated that this would help our citizens and economy, but that isn't the truth. The ships that transport the gas aren't made here and no one plans to start making those carriers here. In addition, even the terminals are contracted out to foreign own companies and at best, we only will gain some local construction and employment jobs unless when the law is addressed, someone brings this to light. Next year is an election year, but I predict not one candidate will mention this subject. So much for our democracy. It is run by the wealthy for the wealthy. LNG is a future growth industry that not one leader is trying to make the US the number one country and yet, it is our product that will supply the means to it all. Very sad.
Recovery
The stock market is already higher today than in 2008. Studies reveal that 97% of the lost jobs in manufacturing have returned. In addition, there is talk about restoring of the offshore jobs due to the cheapness of energy which is a high component in the finished product. Sounds great until you look at the prime example: Automobile production.
Ageing Fleet
Back in 2008 a study revealed that the average age of the cars on the US roads was eleven years. This made car people dizzy with anticipation. The concept: New Cars for Clunkers was an easy stimulus for Congress, especially when everyone was upset that the banks which caused the depression were the only ones to receive aid. When President Obama bailed out GM, it was not that risky because he was aware of the same study. Americans had to upgrade their vehicles. Prime Minister Abe of Japan was quick to act with this info. He devalued the Yen so his countries car manufacturers could capture a strong niche in the overall market. Today, GM sells more cars in China than here. However, the bounty of car sales does not and will not help the US economy and our dying middle class because of one important aspect.
US Percentage
When you build a vehicle, you subcontract many parts like air condition, seats, security systems, computer components, LEDs and chips, more chips and still more chips. No, don't buy Dorito's stock. This is how car sales help an economy and the working class. In the US there were almost 16 million cars sold in 2014. The figure for 2015 will be similar. However, like I said the middle class is not capturing a stronger future because the percentage of each car built is pitiful when you see how little is made in the US.
Congress passed the American Automobile Labeling Act(AALA)so consumers could see how much and by how many, together helped to build the car. If you want to buy American, this would help.
Buick Encore
is a quality American car, but people, it only contains 3% American made products. This is a mortal sin to economics. For the public school students that is 97% of the car is made elsewhere! Sorry, couldn't resist. This says so much about how our legislatures failed to protect our standard of living and more.
Ford Fusion
It is 25% American with 50% being made in Mexico. NAFTA is a SHAFTA!
Chevrolet Aveo
It is 2% American.
The sad truth is that not even 10 cars have 75% parts made in America. It is a slow countdown that is on nine and the worse part of this story comes next.
Toyota Camry
is made in the US, but the money goes offshore with each sale. Honda Odyssey falls into the same category, but our government classifies these cars as US because the plant is here. Get Real!
The only silver lining is American citizens are getting work, but only because those foreign car companies chose anti-union states which in itself is anti-worker at its core.
So, at a time when cars are selling, middle class jobs are not growing and this is called a recovery. If one needs to be reminded, we invented the TV, PC, cell phone and solar energy. None of those products are produced in the US. Apple sells phones, but does not create job because their product is made elsewhere. We have solar companies, but the big money in turbines is made offshore. Until we protect American companies and workers we will continue this descending spiral to our economy and standard of living. This is the heart of the wealth gap. When people are depressed, it is easy to see all the bad in society which leads to unrest like in Baltimore and Missouri, especially when you have plenty of time since you are unemployed. Tariffs is one solid answer. It is used by every nation. "Free trade" is just two phony words. Fear not retaliation because at best, we only export 14%, so let's protect the other 86% before it becomes its expression and we all end up in the dumps. Globalization is a lie to mask the outsourcing of jobs which was retaliation against unions and workers seeking higher wages at its soulless soul.
Tuesday, April 28, 2015
Wednesday, April 22, 2015
Corrupt State of Affairs: No Free Market
What is, is no longer what is. What do I mean by that? The intangible web of deceit and market manipulation is so deep, so pervasive and so profound that a picture no longer depicts an answer or has value. It has lost its thousand words. There are many examples in the market. The financial crisis of 2008 showed that the Federal Reserve is really socialism for the banking industry. The big institutions were saved from extinction and now, central bankers everywhere just print to cover loses or governments pass regulations to protect failure under the code word "stimulus." So, why should anyone be surprised that in the past week two Chinese companies went into default and there was no negative reaction in the market. In fact, just the opposite. The Chinese exchange kept rising every other day. In Europe Greece has all but stated that it won't be able to meet payment for loans received. The buzz is already covering this event. It doesn't mean that Greece will be kicked out of the EU. No, dear reader, it means that given more time and maybe a bridge loan, a solution will be achieved. After all, all these central bankers have to do is buy more worthless paper from Greece called a bond, hold it forever and all will be forgiven and to the public these fakes will appear as financial geniuses. So, sorry Rod Stewart, Every Picture Does Not Tell A Story. Take a read.
Kaisa Group Holding
is a huge Chinese real estate developer. I have told you before that they will probably go bust and on Monday, they did. I also warned you about the two largest segments in the Chinese economy that are in trouble which could set off a dangerous chain reaction of derivatives which no one can cover. Well, this company can't pay back its loan. They have stated that they can't raise money, but no damage to the market. No chain reaction of debts, loans and bonds. The Hang Seng keeps rising. Maybe my definition of default is not the same as reality. To me it means that your company goes to court and whatever is left is divided on a hierarchy of liens. I guess I'm wrong and I can't interpret a picture.
I should've realized that failure is no longer absolute. You get another chance if you are big enough to influence the central banker and government. Don't believe that? We both get a second opinion with yesterdays default by a transformer company in China called Baoding Tianwei Group Co. It is a unit of China South Industries Group Co. This is a state sponsored entity.
Again, my understanding is that China South would make good on Baoding's bad moves and obligations. Again, I'm wrong. Apparently, Baoding bonds just went from AA+ to "B." To me, if you don't pay back what you owe that is an "F." You know, a failure, a fools and his money to be departed. The transformer company operates like nothing is wrong to the 30 nations where it does business.
China Debt: Public & Private
China's corporate debt is the highest in the world and many companies are borderline at present due to global slowing. In addition, China's government is in debt to $28T according to McKinsey & Co. This works out to 282% of GDP which is even higher than Greece. If things continue to slow with more defaults on the horizon, stimulus which is code for debt will only add to the horrible figures.
There are many examples of private enterprise failures in China like Kaisa, but this is the first state company to be allowed to fail. Some say this is a positive that China feels secure with its economy to let the market forces dictate results. People, that is shills seeking your confidence and your money to keep playing the game like in every other market in the world. As soon as these defaults multiply, responses that allow time and manipulation will awaken. The first in line will probably be Erzhong Group Deyang Heavy Industry Co. This is a steel equipment maker who is behind on its payments. They are still functioning, but default is looming. However, just like bankruptcy that is just a word. Someone will pay a price and dear reader, we cannot afford to be that someone. My suggestion is this: We now have seen a rapid decline in core economic sectors for the world in oil, steel, copper, lumber and mining. These are statement alerts, red flags indicating something is wrong. The first defaults in China present a picture even if it has been photo-chopped because every picture tells a story.
Kaisa Group Holding
is a huge Chinese real estate developer. I have told you before that they will probably go bust and on Monday, they did. I also warned you about the two largest segments in the Chinese economy that are in trouble which could set off a dangerous chain reaction of derivatives which no one can cover. Well, this company can't pay back its loan. They have stated that they can't raise money, but no damage to the market. No chain reaction of debts, loans and bonds. The Hang Seng keeps rising. Maybe my definition of default is not the same as reality. To me it means that your company goes to court and whatever is left is divided on a hierarchy of liens. I guess I'm wrong and I can't interpret a picture.
I should've realized that failure is no longer absolute. You get another chance if you are big enough to influence the central banker and government. Don't believe that? We both get a second opinion with yesterdays default by a transformer company in China called Baoding Tianwei Group Co. It is a unit of China South Industries Group Co. This is a state sponsored entity.
Again, my understanding is that China South would make good on Baoding's bad moves and obligations. Again, I'm wrong. Apparently, Baoding bonds just went from AA+ to "B." To me, if you don't pay back what you owe that is an "F." You know, a failure, a fools and his money to be departed. The transformer company operates like nothing is wrong to the 30 nations where it does business.
China Debt: Public & Private
China's corporate debt is the highest in the world and many companies are borderline at present due to global slowing. In addition, China's government is in debt to $28T according to McKinsey & Co. This works out to 282% of GDP which is even higher than Greece. If things continue to slow with more defaults on the horizon, stimulus which is code for debt will only add to the horrible figures.
There are many examples of private enterprise failures in China like Kaisa, but this is the first state company to be allowed to fail. Some say this is a positive that China feels secure with its economy to let the market forces dictate results. People, that is shills seeking your confidence and your money to keep playing the game like in every other market in the world. As soon as these defaults multiply, responses that allow time and manipulation will awaken. The first in line will probably be Erzhong Group Deyang Heavy Industry Co. This is a steel equipment maker who is behind on its payments. They are still functioning, but default is looming. However, just like bankruptcy that is just a word. Someone will pay a price and dear reader, we cannot afford to be that someone. My suggestion is this: We now have seen a rapid decline in core economic sectors for the world in oil, steel, copper, lumber and mining. These are statement alerts, red flags indicating something is wrong. The first defaults in China present a picture even if it has been photo-chopped because every picture tells a story.
Tuesday, April 14, 2015
Electon 2016: 82 Weeks of Lies
It began on Sunday when the Democratic Party had a candidate. I lost count on how many Republicans are running. The Beat Goes On as the spins of the previous lies are repackage, reshuffled and dealt to us by big money which is backed by old money and increased in size by new money seeking to become old money.
Isn't it amazing that necessity is the mother of invention and with our future clouded everyone running has the formula to set our nation back to greatness and yet, these same pundits will never say that the country is in decline, ailing or off track. None will speak for peace, cutting the military complex and stop offshoring of jobs. None will mention the great building blocks of America: social mobility, freedom of expression and a sound currency based on histories soundest idea, gold.
What they will recite has been tested with think tanks, approved by the financial donors and is politically correct and lawyer proofed. From time-to-time they will mention studies when it benefits a pseudo issue like on Monday, the IMF stated its study on global growth. It stated the US to be 3.1% in 2015. Six months ago the same agency said 3.6%. The US grew at 2.4% in 2014 when many said 4%. They said Japan will grow at 1%. Last year its economy shrank. They said the EU will gain 1.6% when in 2014 it barely registered a positive digit. They said China would grow at 7.4% just six months ago. Now, they say 6.8%.They always say positive growth because they base their knowledge on fiat money which needs new money to cover old money. This printing of debt to cover credit depreciates everyone's standard of living and they wonder why there is an inequality gap. The US hasn't had real growth since the 1980s, but my definition of growth is to create wealth, a living wage and slowly improve your standard of living. Their definition is expanding debt and credit and by that standard we are out of this world or as Ralph Kamden would say, "To the moon, Alice!"
Debt History
It took 231 years to put our nation in debt to the tune of $8 trillion and in the last eight years we doubled that figure. There is something seriously wrong with the mentality of these fiat people and our federal government.
In the late 1980s with the advent of the internet and cell phones, productivity increased many times over. The thinking prior to this output of work was that companies would expand and provide wage increases. Our companies expanded...overseas and no one saw wage increases. Those were some of the lies in that campaign season. The other big lie was with our national deficit. Republicans said they would cut. They did. They exported our best jobs. They increased our debt, but said growth will provide higher revenues and by 1990s, the deficit will be gone. Clinton said it would be gone by 2000. In 2000 Bush said it would be gone by 2012. In 2008 Obama said it would be gone by 2020.
Promises, Promises
Well, in a way, the money is in the bank because they are bigger now than they ever were, but the money is owed to the bank and it never gets paid. It just rolls over into new debt and credit which they call growth. Greece is the poster child. Whatever the figure, we lend to them and they pay us our newly printed money back. The Beat Goes On.
Anyway, I see the US only "growing" by 1.7% at best. However, our debt and credit will fudge those numbers. Here's the indicator.
Present Debt Picture
For the month of March our national debt was $52.9 billion which is larger than the GDP of many countries in the world. This figure is up from $36.9 billion compared to last March. Six months into 2015 the government deficit is up 6.3% from last years $439.5 billion. Yes, tax collections are up and due today, but good old Obamacare cost more than projected which always is the fact. Programs will always cost more than estimated and our economy is always smaller than projected. The CBO who said revenues will close the deficit this year and next because of "growth." Dear reader, credit and debt are not growth and that is why all of the above and future promises by ding-dongs always get it wrong. One reason why I see our debt going to $20 T sooner than expected is because there are over 500,000 baby boomers on line to collect Medicare and Social Security every month for the next fifteen years! I predict some pundit will speak about it. Whatever is suggested or claimed to save money will then be appropriated for the military. No one gives peace a chance. No one will speak for the workers of America, although they will claim they are with their first words, "My fellow Americans..." The lies aren't really beginning. They are mixed to the old tune, The Beat Goes On. If we ever are going to have a real democracy as envisioned by our founding fathers, we need to return to their thinking and the first change should be End the Fed!
Isn't it amazing that necessity is the mother of invention and with our future clouded everyone running has the formula to set our nation back to greatness and yet, these same pundits will never say that the country is in decline, ailing or off track. None will speak for peace, cutting the military complex and stop offshoring of jobs. None will mention the great building blocks of America: social mobility, freedom of expression and a sound currency based on histories soundest idea, gold.
What they will recite has been tested with think tanks, approved by the financial donors and is politically correct and lawyer proofed. From time-to-time they will mention studies when it benefits a pseudo issue like on Monday, the IMF stated its study on global growth. It stated the US to be 3.1% in 2015. Six months ago the same agency said 3.6%. The US grew at 2.4% in 2014 when many said 4%. They said Japan will grow at 1%. Last year its economy shrank. They said the EU will gain 1.6% when in 2014 it barely registered a positive digit. They said China would grow at 7.4% just six months ago. Now, they say 6.8%.They always say positive growth because they base their knowledge on fiat money which needs new money to cover old money. This printing of debt to cover credit depreciates everyone's standard of living and they wonder why there is an inequality gap. The US hasn't had real growth since the 1980s, but my definition of growth is to create wealth, a living wage and slowly improve your standard of living. Their definition is expanding debt and credit and by that standard we are out of this world or as Ralph Kamden would say, "To the moon, Alice!"
Debt History
It took 231 years to put our nation in debt to the tune of $8 trillion and in the last eight years we doubled that figure. There is something seriously wrong with the mentality of these fiat people and our federal government.
In the late 1980s with the advent of the internet and cell phones, productivity increased many times over. The thinking prior to this output of work was that companies would expand and provide wage increases. Our companies expanded...overseas and no one saw wage increases. Those were some of the lies in that campaign season. The other big lie was with our national deficit. Republicans said they would cut. They did. They exported our best jobs. They increased our debt, but said growth will provide higher revenues and by 1990s, the deficit will be gone. Clinton said it would be gone by 2000. In 2000 Bush said it would be gone by 2012. In 2008 Obama said it would be gone by 2020.
Promises, Promises
Well, in a way, the money is in the bank because they are bigger now than they ever were, but the money is owed to the bank and it never gets paid. It just rolls over into new debt and credit which they call growth. Greece is the poster child. Whatever the figure, we lend to them and they pay us our newly printed money back. The Beat Goes On.
Anyway, I see the US only "growing" by 1.7% at best. However, our debt and credit will fudge those numbers. Here's the indicator.
Present Debt Picture
For the month of March our national debt was $52.9 billion which is larger than the GDP of many countries in the world. This figure is up from $36.9 billion compared to last March. Six months into 2015 the government deficit is up 6.3% from last years $439.5 billion. Yes, tax collections are up and due today, but good old Obamacare cost more than projected which always is the fact. Programs will always cost more than estimated and our economy is always smaller than projected. The CBO who said revenues will close the deficit this year and next because of "growth." Dear reader, credit and debt are not growth and that is why all of the above and future promises by ding-dongs always get it wrong. One reason why I see our debt going to $20 T sooner than expected is because there are over 500,000 baby boomers on line to collect Medicare and Social Security every month for the next fifteen years! I predict some pundit will speak about it. Whatever is suggested or claimed to save money will then be appropriated for the military. No one gives peace a chance. No one will speak for the workers of America, although they will claim they are with their first words, "My fellow Americans..." The lies aren't really beginning. They are mixed to the old tune, The Beat Goes On. If we ever are going to have a real democracy as envisioned by our founding fathers, we need to return to their thinking and the first change should be End the Fed!
Wednesday, April 8, 2015
Why Bear Returns: Misc. Factors
This part may fall under the last reasons, but it is very scary all by itself. There are so many intangible aspects as to why an outside event could disrupt the global economy and thus, find its way to the US stock market that I will probably miss a few. This revelation in itself should send up your red flags. The dominoes are all lined up and the recent fracking worries pertaining to earthquakes could topple the first chip.
Greece
Our western civilization begins there and it is the center for the rollover Ponzi schemes of central bankers. Tomorrow, the Greek government must repay a loan to the IMF which will empty its coffers. Then, they will ask the EU for more money just to keep the lights working and the doors open. You rob Paul to pay Peter and look for some white knighted saint to make amends with Paul.
Ukraine
Then, there is the geographic hot-spot in Europe. It is unresolved. From my perspective I see these hard-luck people having their nation split in two like Korea. This is another Berlin in the making.
Yemen
Then, there is this desert fun spot. You see, dear reader, we could keep saying, "Then, there is..." almost all day. This explosive situation will only get worse. It is a civil war just like our north and south entanglement except its Shite v. Sunni. In the US today, there is still lingering resentment by southerners towards northerners. These situations get their feelings compounded when lives are lost. Healing is never easy or quick.
China
Then, there is the largest economy in the world. We all know that the "Red" Chinese government built "ghost" cities and thus, their real estate is a huge bubble that could burst any day. However, their stock market is just as bad, maybe worse. Their tech stocks are valued higher than NASDAQ 5000, back in 2000. The average P/E ratio is 220 to 1. Are these people insane?
China has two parts of its economy set to implode. If it does, the world economy sinks with it. People, it is baseball season and here is your correlation. China has two strikes on its batter. If you play the percentages, this batter will more likely make an out than get a hit.
Then, there is Economic Instability. No, this is not a repeat of troubled hot-spots like Syria and elsewhere. This is governments that face domestic unrest due to economics. Places like Venezuela, Brazil, Argentina, Nigeria, Kenya, Thailand, all over the world. A common suffering is from the recent currency evaluations and volatility. These nations feel inflation, especially with food prices. This could also find its way in the US with the severe drought in California. Have you purchased any eggs lately? Yes, Virginia, the price is high.
Finally, there is a disconnect within the world which is directly caused by the Federal Reserve. The rise in the dollar while at the same time, low interest rates effect bond prices. The Fed engineered this manipulation of interest rates to save the banking industry and at the same time allow our government to continue to run up deficits. Low financing for our national deficit. Now, Japan and the EU are boarding the same ship of fools. The collateral damage will be felt by merging markets, but they are not liking it. The US could feel a severe backlash if all these nations form trading alliances to circumvent the dollar. If that happens, we will suffer, big time and it will all be the Feds fault which is why I say, End the Fed!
Greece
Our western civilization begins there and it is the center for the rollover Ponzi schemes of central bankers. Tomorrow, the Greek government must repay a loan to the IMF which will empty its coffers. Then, they will ask the EU for more money just to keep the lights working and the doors open. You rob Paul to pay Peter and look for some white knighted saint to make amends with Paul.
Ukraine
Then, there is the geographic hot-spot in Europe. It is unresolved. From my perspective I see these hard-luck people having their nation split in two like Korea. This is another Berlin in the making.
Yemen
Then, there is this desert fun spot. You see, dear reader, we could keep saying, "Then, there is..." almost all day. This explosive situation will only get worse. It is a civil war just like our north and south entanglement except its Shite v. Sunni. In the US today, there is still lingering resentment by southerners towards northerners. These situations get their feelings compounded when lives are lost. Healing is never easy or quick.
China
Then, there is the largest economy in the world. We all know that the "Red" Chinese government built "ghost" cities and thus, their real estate is a huge bubble that could burst any day. However, their stock market is just as bad, maybe worse. Their tech stocks are valued higher than NASDAQ 5000, back in 2000. The average P/E ratio is 220 to 1. Are these people insane?
China has two parts of its economy set to implode. If it does, the world economy sinks with it. People, it is baseball season and here is your correlation. China has two strikes on its batter. If you play the percentages, this batter will more likely make an out than get a hit.
Then, there is Economic Instability. No, this is not a repeat of troubled hot-spots like Syria and elsewhere. This is governments that face domestic unrest due to economics. Places like Venezuela, Brazil, Argentina, Nigeria, Kenya, Thailand, all over the world. A common suffering is from the recent currency evaluations and volatility. These nations feel inflation, especially with food prices. This could also find its way in the US with the severe drought in California. Have you purchased any eggs lately? Yes, Virginia, the price is high.
Finally, there is a disconnect within the world which is directly caused by the Federal Reserve. The rise in the dollar while at the same time, low interest rates effect bond prices. The Fed engineered this manipulation of interest rates to save the banking industry and at the same time allow our government to continue to run up deficits. Low financing for our national deficit. Now, Japan and the EU are boarding the same ship of fools. The collateral damage will be felt by merging markets, but they are not liking it. The US could feel a severe backlash if all these nations form trading alliances to circumvent the dollar. If that happens, we will suffer, big time and it will all be the Feds fault which is why I say, End the Fed!
Wednesday, April 1, 2015
Reason #4: Why Bear = Earnings and Evaluation
The revised GDP came out last week. It's official! We grew at 2.2% in the forth quarter of 2014. Funny thing about that was back in January 2014, the pundits for the government stated GDP would be 3.1%. Not only the "yes man" but the IMF said it would be 3.5%. The EU agreed with that figure and the shills, not to be outbid, called for 4% plus!
Dear reader, we haven't had 4% in twenty years! Reality is that our GDP has only averaged 1.2% for the past eight years. In fact, I can and will make a case that our present stock market record highs is nothing more than funny money and manipulation. Doubt that? Read on!
Debt & Credit
Just prior to the financial crisis in 2007, world debt which is only exercised credit, was at $142 trillion. Today, it is $199 trillion. All we did was rollover our debt to the tune of 42% and this is the only answer central banks offer. The Swizz were smart to unpeg the euro because it has a long way to fall. Of course, Greece holds the poster on rollover debt as they are seeking to do it again for the umpteenth time. It gets worse.
Related
Consider this tidbit. Congressman Paul Kanjorski stated that people withdrew $550b in less than two hours back during the first moments of the financial crisis of 2008. In another 24 hours every bank in the nation would have been bankrupt if the Fed didn't give them money. The first and only purpose that the Fed was created was due to liquidity and this shows it failed. No, you say?! They provided money to cover the problem. I see it different. If people demanded their money instead of credit like with cards, checking and now, with their phones, there wasn't enough money in circulation to cover our needs or demands. We do have a liquidity problem.
Slight of Hand
Now, you ask what does this have to do with earnings and evaluation? Glad you asked.
Companies in the S & P 500 spent $2 trillion on their own stock since 2001. When there is less stock, the company can meet estimates with less earnings which keeps the evaluation high. This gives the stock market a floor. The present market rally is correlated to this buyback money and it equals the S & P earnings since 2009. Many times these same companies borrowed money to use to buy their own stock and or, offer dividends. When you borrow to buy stock even your own, that is MANIA!
Consider this: Since the market peak on 6 March more companies are making a 52 week low than a 52 week high. In addition, the fourth quarter of 2014 saw earnings of only 1.6% on average and I predict that the first quarter of 2015 to be negative. Now, the present P/E is 18.2. What will it be with negative earnings?
NASDAQ
all the pundits talk about Nas...5000. They refer to the index of stocks back in 2000 which was the last time that it was over the 5,000 mark. They say today it is different. They forget to mention that they all had buy ratings just before the crash. Nevertheless, they show the present earnings and evaluation which on first look appear O.K. However, many of the companies in 2000 are no longer in existence. Money gone forever! The prices of the stocks will never get your money back. Do you think Yahoo will be over $300 again? How about Cisco at $75? I could go on and on. So, as you see dear reader, a closer look reveals it is not the same and there is one bubble waiting to pop. The bio segment of NASDAQ, labeled $NBI or Bio-tech has a P/E that is over110. It has tripled in price from November 2013 at 1329 to the market peak on 6 March to 3902. It is not due to earnings or revenues, but hype and speculation. Many of enclosed companies won't even exist in a few years. Do you know what your blood pressure will read when your favorite bio company is delisted? 200 plus!
Bottom Line:
The Fed kept rates so low, companies went into debt to buyback shares and offer dividends because their stock options will make them rich and you will be left holding some paper that says you have so many shares of the billion that they printed. How much is a delisted stock worth? If the Fed didn't entice CEOs with cheap money, maybe they would have actually did some R & D work to develop their company which is another reason why I say, End the Fed!
Dear reader, we haven't had 4% in twenty years! Reality is that our GDP has only averaged 1.2% for the past eight years. In fact, I can and will make a case that our present stock market record highs is nothing more than funny money and manipulation. Doubt that? Read on!
Debt & Credit
Just prior to the financial crisis in 2007, world debt which is only exercised credit, was at $142 trillion. Today, it is $199 trillion. All we did was rollover our debt to the tune of 42% and this is the only answer central banks offer. The Swizz were smart to unpeg the euro because it has a long way to fall. Of course, Greece holds the poster on rollover debt as they are seeking to do it again for the umpteenth time. It gets worse.
Related
Consider this tidbit. Congressman Paul Kanjorski stated that people withdrew $550b in less than two hours back during the first moments of the financial crisis of 2008. In another 24 hours every bank in the nation would have been bankrupt if the Fed didn't give them money. The first and only purpose that the Fed was created was due to liquidity and this shows it failed. No, you say?! They provided money to cover the problem. I see it different. If people demanded their money instead of credit like with cards, checking and now, with their phones, there wasn't enough money in circulation to cover our needs or demands. We do have a liquidity problem.
Slight of Hand
Now, you ask what does this have to do with earnings and evaluation? Glad you asked.
Companies in the S & P 500 spent $2 trillion on their own stock since 2001. When there is less stock, the company can meet estimates with less earnings which keeps the evaluation high. This gives the stock market a floor. The present market rally is correlated to this buyback money and it equals the S & P earnings since 2009. Many times these same companies borrowed money to use to buy their own stock and or, offer dividends. When you borrow to buy stock even your own, that is MANIA!
Consider this: Since the market peak on 6 March more companies are making a 52 week low than a 52 week high. In addition, the fourth quarter of 2014 saw earnings of only 1.6% on average and I predict that the first quarter of 2015 to be negative. Now, the present P/E is 18.2. What will it be with negative earnings?
NASDAQ
all the pundits talk about Nas...5000. They refer to the index of stocks back in 2000 which was the last time that it was over the 5,000 mark. They say today it is different. They forget to mention that they all had buy ratings just before the crash. Nevertheless, they show the present earnings and evaluation which on first look appear O.K. However, many of the companies in 2000 are no longer in existence. Money gone forever! The prices of the stocks will never get your money back. Do you think Yahoo will be over $300 again? How about Cisco at $75? I could go on and on. So, as you see dear reader, a closer look reveals it is not the same and there is one bubble waiting to pop. The bio segment of NASDAQ, labeled $NBI or Bio-tech has a P/E that is over110. It has tripled in price from November 2013 at 1329 to the market peak on 6 March to 3902. It is not due to earnings or revenues, but hype and speculation. Many of enclosed companies won't even exist in a few years. Do you know what your blood pressure will read when your favorite bio company is delisted? 200 plus!
Bottom Line:
The Fed kept rates so low, companies went into debt to buyback shares and offer dividends because their stock options will make them rich and you will be left holding some paper that says you have so many shares of the billion that they printed. How much is a delisted stock worth? If the Fed didn't entice CEOs with cheap money, maybe they would have actually did some R & D work to develop their company which is another reason why I say, End the Fed!
Wednesday, March 25, 2015
Reason #3: Why Bear Returns, Oil
Back in time just prior to the short bear market in 2000, the media shills were down playing the impact of rising oil to the economy. They laid out the narrative that since we transformed our economy from manufacturing to service that oil no longer effected its force. The real translation was don't worry about the millions of jobs lost because they will be replaced with cleaner, better paying jobs. Even the shills wouldn't attempt that drivel today. Instead, they now sell pseudo confidence to America by claiming that the fracking miracle has made America the number one oil producer again, and will lead to a renaissance in manufacturing. Yes, the same manufacturing that in 2000 was no longer wanted or needed because of ill effects to the environment. By the way we have lost 12 million high paying jobs in that sector and as you read, dear reader there are future dangers on the horizon.
No need to recount the present oil situation. We all are saving at the pump and I still stand with my prediction that both the federal government and various states will add gas taxes to the price we pay at the pump. However, in the duration to that time another aspect that I have bought to light is the point that small oil companies are facing financial stress due to low prices for their oil.
US Oil
at present is selling below $50. per barrel. There are many oil loans that are under water now just like the housing crisis in 2008. The price rallied recently with the approaching driving season, but it has not put a dent in supply. The oil build-up is currently at 458 million barrels and rising. Hold the press! Today's report adds another 8 million barrels which has forced prices back into the downtrend. So, small oil producers are hoping time provides a solution. The problem is if we pass the Fourth of July and prices stay in this range, bankruptcies will occur. Not only that, but big institutions and large hedge funds will take a big hit playing the contango game.
Let's Dance
no, not with the stars or even March Madness. This has been a recurring song played by the big boys. The future price of oil is lower than present in particular times. This is one. They buy a load of oil and store it until their profit picture is clear. Their problem is too much oil and lower prices, which will back fire their scheme. Capacity is limited and filling rapidly. If prices continue to decline and I think it will, they will dump more oil which will drive prices even lower. If one sells, the others may all rush for the selling door. This may be good for us as consumers, but bad for the economy.
Rid Count
is down to half of what it was last August. Eventually, there will be less oil produced and this is the thinking of the contango people. They are also hoping that time provides a solution. As you see, dear reader, oil is in the prayers of pagans. In the duration the rails are effected. Commodities are very important to the transports. When oil frackers work, they need sand. The railroads bring them sand and then, take their oil for delivery. The problem is production is stalling. Future spending is down and no one needs sand. The trains arrive empty. The first rule of a restaurant is never come to the kitchen without something like an empty plate in your hands. Trains come empty and leave half full. The Baltic Shipping Index is at all-time lows. Oil is the most important commodity and the US will be hurting as the global community already feels the pain.
At the moment oil refineries are switching from winter blends of gas to the summer stock. It is cheaper form of gas and profits are up, but July looms. What do you do with product not sold and it is time to switch again for the next winter.
By the way less rigs means less employment which affects housing, retail, everything. As I stated many times, things are related. The Fed is the root cause in this pyramid. They provide cheap money. Small under-capitalized firms found ways to borrow to dig. They are now in hot water. Big money placed bets on rising prices with cheap money and derivatives could be effected. They too will suffer losses. Rails will cut back on new cars, engines and lines. More layoffs which will effect local retail and one day another shopping center closes. The shills will get excited about internet sales while you and me feel the effects of a failed fiat system. The bear will be here before you realize the bull is gone which is why I say, End the Fed!
No need to recount the present oil situation. We all are saving at the pump and I still stand with my prediction that both the federal government and various states will add gas taxes to the price we pay at the pump. However, in the duration to that time another aspect that I have bought to light is the point that small oil companies are facing financial stress due to low prices for their oil.
US Oil
at present is selling below $50. per barrel. There are many oil loans that are under water now just like the housing crisis in 2008. The price rallied recently with the approaching driving season, but it has not put a dent in supply. The oil build-up is currently at 458 million barrels and rising. Hold the press! Today's report adds another 8 million barrels which has forced prices back into the downtrend. So, small oil producers are hoping time provides a solution. The problem is if we pass the Fourth of July and prices stay in this range, bankruptcies will occur. Not only that, but big institutions and large hedge funds will take a big hit playing the contango game.
Let's Dance
no, not with the stars or even March Madness. This has been a recurring song played by the big boys. The future price of oil is lower than present in particular times. This is one. They buy a load of oil and store it until their profit picture is clear. Their problem is too much oil and lower prices, which will back fire their scheme. Capacity is limited and filling rapidly. If prices continue to decline and I think it will, they will dump more oil which will drive prices even lower. If one sells, the others may all rush for the selling door. This may be good for us as consumers, but bad for the economy.
Rid Count
is down to half of what it was last August. Eventually, there will be less oil produced and this is the thinking of the contango people. They are also hoping that time provides a solution. As you see, dear reader, oil is in the prayers of pagans. In the duration the rails are effected. Commodities are very important to the transports. When oil frackers work, they need sand. The railroads bring them sand and then, take their oil for delivery. The problem is production is stalling. Future spending is down and no one needs sand. The trains arrive empty. The first rule of a restaurant is never come to the kitchen without something like an empty plate in your hands. Trains come empty and leave half full. The Baltic Shipping Index is at all-time lows. Oil is the most important commodity and the US will be hurting as the global community already feels the pain.
At the moment oil refineries are switching from winter blends of gas to the summer stock. It is cheaper form of gas and profits are up, but July looms. What do you do with product not sold and it is time to switch again for the next winter.
By the way less rigs means less employment which affects housing, retail, everything. As I stated many times, things are related. The Fed is the root cause in this pyramid. They provide cheap money. Small under-capitalized firms found ways to borrow to dig. They are now in hot water. Big money placed bets on rising prices with cheap money and derivatives could be effected. They too will suffer losses. Rails will cut back on new cars, engines and lines. More layoffs which will effect local retail and one day another shopping center closes. The shills will get excited about internet sales while you and me feel the effects of a failed fiat system. The bear will be here before you realize the bull is gone which is why I say, End the Fed!
Wednesday, March 18, 2015
Reasons # 2: Why Bear Market
When you offer multiple reasons for anything like a divorce, the interrelationship of the aspect clouds the point whether each position is separate or already included under intent. This is why I say in my unpublished work that all things are related. So, when I mention earnings, does that imply valuation? Does currency come into play because the company is international? Yes, it does and more. Therefore, dear reader, be understanding regarding this aspect.
To review I already stated that the rising dollar will be a direct cause for a stock market correction. What I failed to address(blog space is limited)was the aspect that the Federal Reserve is more concerned about trade agreements among nations to conduct a transaction without dollars. In addition, countries like China and Russia are selling treasuries. One important reason for this is our national debt. It would be even higher figure, but many items are off the books. This will lower the value of the dollar and thus, cause holders of treasuries to lose money. Therefore, the Fed welcomes a higher dollar and like savers in this country, the collateral damage of inflation to emerging markets, is the price. The Fed understands the importance of maintaining the dollar as the reserve currency. If by their reckless policies, the US were to lose this privilege, inflation would destroy our economy. They would never take the blame, but our citizens would still pay the price.
Rates
This leads to the current discussion, will the Fed raise interest rates. Any raise in rates will bolster the dollar even more. This would export inflation to cheaper currencies. The Fed does not want to cause complaints from the global community. What they are trying to do is turn the clock back to the early 1980s. This would help exports of the global community while killing what is left with our manufacturing. If someone gains, someone is losing. This policy implies a service economy for the US and the higher paying manufacturing jobs will go global. We just past the Ides of March, but Shakespeare had other pearls of wisdom like the tangle web of deception which is the mainstay of politicians and central bankers. The Fed will stall as long as they can because they know one more aspect that they can't control, demographics. This is working against them and in a way, this aspect effects everything. If you offer a great product at a low price, but no one comes to your store, guess what. You don't sell! When the Fed does raise its rates, probably in July or September, it will only be a quarter point which is in itself a joke. It will make no difference. Then, they will play a new game to stall some more.
Bonds
will be the location and truer indication of where rates will be going and when. Keep your eye on the ten year note. If bonds yields fall, so will the market. Then, confidence goes and the Fed will attempt to regain our consciousness with some new game that promises prosperity, but is in fact another tangled web of deception. All the aspects result in the same conclusion: End the Fed!
To review I already stated that the rising dollar will be a direct cause for a stock market correction. What I failed to address(blog space is limited)was the aspect that the Federal Reserve is more concerned about trade agreements among nations to conduct a transaction without dollars. In addition, countries like China and Russia are selling treasuries. One important reason for this is our national debt. It would be even higher figure, but many items are off the books. This will lower the value of the dollar and thus, cause holders of treasuries to lose money. Therefore, the Fed welcomes a higher dollar and like savers in this country, the collateral damage of inflation to emerging markets, is the price. The Fed understands the importance of maintaining the dollar as the reserve currency. If by their reckless policies, the US were to lose this privilege, inflation would destroy our economy. They would never take the blame, but our citizens would still pay the price.
Rates
This leads to the current discussion, will the Fed raise interest rates. Any raise in rates will bolster the dollar even more. This would export inflation to cheaper currencies. The Fed does not want to cause complaints from the global community. What they are trying to do is turn the clock back to the early 1980s. This would help exports of the global community while killing what is left with our manufacturing. If someone gains, someone is losing. This policy implies a service economy for the US and the higher paying manufacturing jobs will go global. We just past the Ides of March, but Shakespeare had other pearls of wisdom like the tangle web of deception which is the mainstay of politicians and central bankers. The Fed will stall as long as they can because they know one more aspect that they can't control, demographics. This is working against them and in a way, this aspect effects everything. If you offer a great product at a low price, but no one comes to your store, guess what. You don't sell! When the Fed does raise its rates, probably in July or September, it will only be a quarter point which is in itself a joke. It will make no difference. Then, they will play a new game to stall some more.
Bonds
will be the location and truer indication of where rates will be going and when. Keep your eye on the ten year note. If bonds yields fall, so will the market. Then, confidence goes and the Fed will attempt to regain our consciousness with some new game that promises prosperity, but is in fact another tangled web of deception. All the aspects result in the same conclusion: End the Fed!
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