With over half of the S&P 500 companies reporting, earnings are going to be down almost 6%. The media shills constantly remind you that the market is within 2% of its highs. They shrugged off the first quarter GDP of 0.5% due to weather, holidays landing on the calendar, playing on turf at night, all the BS. I see a different picture.
Oil Bulls
I see them pushing oil higher than reality dictates. I predict a pullback between $34 and $36. Then, a slow consolidation at around $40 until something triggers a different response. I also see the market declining because many indicators that I look at are flashing danger. This earning season will be the fourth straight with declining revenues with each quarter getting worse. We have multiple industries that are under stress.
COAL
is suffering the most. The industry has lost 125,800 jobs to date and 66 coal powered plants are about to close. This is not all supply and demand aspects. Many CEOs just overspent like Congress. Peabody bought Macathur Coal for $5.1B, 'cause money was cheap. Alpha Resources CEO made the same mistake and put his company in debt of $7.1B for Massey Energy. Now, both companies can't service their debt. You can add a host of other companies like Walter Energy and in the first four months of 2016, there are 45 defaults. This is reflected in the ETF(KOL). It is down from 2012 of $33.47 to now, at $8.73. Consider this: while many companies went to bankruptcy court which should cause prices to rise, the opposite has happened. The only demand is for lawyers and a court date. Just ask Patriot Coal as they turn to see Peabody standing behind them in line. I almost forgot. Hard core energy segments aren't the only casualties. The alternative power sources felt the bankruptcy of Sun Edison and a few in China like Trina, however the Chinese court has the invisible hand of the state to help companies.
My Suggestions
on stocks are rare because I hate the idea of adding to anyone's pain. It is bad enough that I made a mistake. I don't want to add to anyone else's pain, but I feel for the people who purchased Alpha Resources which once sold for $60 a share and today, it is .02cents. Ouch! And yes, they are standing in the court room line.
Coal has its place in our economy, but the demand side is declining due to cheaper, cleaner burning, natural gas. Coal once accounted for 50% of our electric needs. Today, it is down to 33%. It will probably stabilize at 20%. Not good.
This large industry is passing and the oil industry is also under duress with many small firms in the court line and many more seeking not to fall to that level. In addition, many retail outfits are closing stores from Sears to JC Penny from GameStop to Aeropostale. This will eventually force many malls to close and loss of jobs. Not good. By the way, did I mention that Apple declared a loss? This is why I see a market pullback and a test of the August 2015 lows. When I was in high school, this would be a circle 65. This meant that I failed, but I was so close the teacher passed me, but circled the number to let me know that I needed to do better. Now you know what I mean by my title.
News Flash: Ultra Petroleum just pulled into the court room's parking lot and it took the last parking space as a few other cars circle the lot looking to park. Another car with a door sign, Midstates Petroleum is blocking the lane as it double parks, waiting for a space to open.
Across town, lobbyists from the Puerto Rican government seek to find a loophole to "stick" bondholders with their $70B in debt. Maybe a circle 65 was to high a grade?
Wednesday, May 4, 2016
Tuesday, April 26, 2016
Fed's Idea for the Economy: Tax Money
- "The care of human life and happiness, and not their destruction, is the first and only object of good government."
- Thomas Jefferson
- "Negative rates is a destructive principle."
- Sebastian
The Yellen Fed has kept its key rate at 0.38%. Do you know what the normal average rate is? Here is a clue. It is the same rate that every bank use to give passbook savings. The answer is 5%. Yelling, Yellen has already screamed that negative rates are "on the table." The seed is in the ground.
What will you do
My first thought was CDs or Money Market Funds. However, they both have problem. CDs tie up your money for nothing in return. Money Market Funds dropped below a buck during Bernanke's tenure. Liquidity can effect this passive market. He made a temporary fix, but no real solution was developed. There is a danger and the problem has not been fixed. Not good.
I think Americans will just pull their money out of the banks which will produce another problem. The capitalization of the banking system, but first things first. Because the word will spread that people are taking their money out of the banks and putting it in the cookie jar or under the mattress, home invasions will grow. The doom and gloom movies that Hollywood creates will become a reality. We will live in fear. Gun sales will soar. This is not a society that I would want to grow old.
America
and I'm talking the philosophical concept, could die.
Italy, Spain, Mexico and Russia have already banned large cash transactions. You can't just go to the bank and ask for your money, 'cause they won't give it to you. Can you see your local branch bank refusing to give you your money? At best, they will offer you a check to which you have to find another institution to cash without a fee.
We have allowed the Federal Reserve, which really is socialism for the banking industry, to control our way of life. This is where it is leading us.
At present, there are $7.67T worth of negative interest rate bonds in the world with Japan leading the charge. In this fiat world, your central bank works with your treasury. One creates a bond and the other buys it. The Fed claims deflation must be stopped. They suggest a 2% rise in inflation, when in reality, they are creating deflation.
Corporate Bonds
are joining the party. Who is buying this crap? Probably, central banks and their shills. Royal Dutch Shell PLC and Siemens AG, both had bonds that dropped below zero and according to Bloomberg, another $16B of euro-corporate bonds are trading with yields below zero.
Where does this leave you? You can leave your money in the bank. It will be a digit in the banking system and a credit for the government. You see, dear reader, they control your money and with negative interest rates, they will tax it. What ever happened to, "No taxation, without representation!" End the Fed!
- Thomas Jefferson
- "Negative rates is a destructive principle."
- Sebastian
The Yellen Fed has kept its key rate at 0.38%. Do you know what the normal average rate is? Here is a clue. It is the same rate that every bank use to give passbook savings. The answer is 5%. Yelling, Yellen has already screamed that negative rates are "on the table." The seed is in the ground.
What will you do
My first thought was CDs or Money Market Funds. However, they both have problem. CDs tie up your money for nothing in return. Money Market Funds dropped below a buck during Bernanke's tenure. Liquidity can effect this passive market. He made a temporary fix, but no real solution was developed. There is a danger and the problem has not been fixed. Not good.
I think Americans will just pull their money out of the banks which will produce another problem. The capitalization of the banking system, but first things first. Because the word will spread that people are taking their money out of the banks and putting it in the cookie jar or under the mattress, home invasions will grow. The doom and gloom movies that Hollywood creates will become a reality. We will live in fear. Gun sales will soar. This is not a society that I would want to grow old.
America
and I'm talking the philosophical concept, could die.
Italy, Spain, Mexico and Russia have already banned large cash transactions. You can't just go to the bank and ask for your money, 'cause they won't give it to you. Can you see your local branch bank refusing to give you your money? At best, they will offer you a check to which you have to find another institution to cash without a fee.
We have allowed the Federal Reserve, which really is socialism for the banking industry, to control our way of life. This is where it is leading us.
At present, there are $7.67T worth of negative interest rate bonds in the world with Japan leading the charge. In this fiat world, your central bank works with your treasury. One creates a bond and the other buys it. The Fed claims deflation must be stopped. They suggest a 2% rise in inflation, when in reality, they are creating deflation.
Corporate Bonds
are joining the party. Who is buying this crap? Probably, central banks and their shills. Royal Dutch Shell PLC and Siemens AG, both had bonds that dropped below zero and according to Bloomberg, another $16B of euro-corporate bonds are trading with yields below zero.
Where does this leave you? You can leave your money in the bank. It will be a digit in the banking system and a credit for the government. You see, dear reader, they control your money and with negative interest rates, they will tax it. What ever happened to, "No taxation, without representation!" End the Fed!
Wednesday, April 20, 2016
Time To Call Out the BLS and Its CPI
- "Amen, amen, I say to you, man does not live by bread alone." The Master was referencing to our soul. The BLS sold its soul to the devil and that is why it does not need or count food and energy as an inflation component.
- Sebastian
Everyone in the Bureau of Labor Statistics should be fired and any work benefits that those workers were to receive should be revoked due to the corruptness of their economic and labor stats. They are all misleading, full of lies and hypocrisy.
Today, I won't get into the unemployment section with its "U" boat system. Yes, it too needs to be addressed, but first things first. I rant against the CPI and I ask you to join me.
The BLS released its latest report of the Consumer Price Index. It said prices in March only rose 0.1%. Get out of town!
That lie only helps to serve the lies of government and the Federal Reserve. The Fed uses that lie to steal from savers and the government uses it to steal from seniors. The Fed says it has no justification to normalize rates because inflation is below their 2% target. The government uses it to justify no increase to social security under COLA(Cost of Living Adjustment). The BLS lies mask their schemes. If the government gave correct COLAs, the deficit would swell. The Fed keeps rates low so the government can hide the dangers of our national deficit which would burst under normal rates. It also allows our two corrupt political parties to spend recklessly. It allows the military to wage continuous wars with no positive results. With that said, I had Sebastian look into necessary items across the country that we all need and use everyday.
Energy and Food
First off. let me show you by having you answer your own life as to what the real inflationary number should be. The BLS says 2.2% year over year, but they constantly shrink that number lower.
We begin: If you lived in Colorado or a mid-west region last weekend, you put the heat on because it was cold and snowy. When you awoke, you had maybe coffee or juice? Dear reader, the government has none of the above and thus, it does not include the cost of energy or food. We continue. Did you drive to work? Work at home? Later, did you have lunch or dinner? Did your kids have to catch a bus for school? How can you measure inflation, if the life that we live requires food and energy every day, and this is not in the equation? Each of us is unique, but we all need food and energy and a place to call home. Which leads to -
Shelter
The BLS says it includes rent. Sebastian's results says they are lying again. He was able to secure info on three locations. It is not thorough in scope, but it points one in the right direction.
Home prices are up 6.5% nationally with 14 states up even higher. Only 3 states(W. Virginia, Louisiana and Wyoming) had less than 1% gain. Many places lost population like Youngstown, OH. which has lost 60% of its people since the 1950s. There are a lot of vacancies in many locations. Listen up, Baltimore and Detroit, you are not alone. With the outsourcing of quality jobs, Americans were forced to move to find work. Most of us went south and we found out the hard way that the pay is less. As such, new homes are not affordable and existing homes are not much better. Sebastian found out this: a new home in Seattle costs $536,700. You need to win the lottery to buy a house there. You see, dear reader, it is not just New York or San Fran that is off the charts. However, let us turn to rents and the BLS. We will show the figure for a one bedroom and two bed units in three locations for last year and 2016. We also have a list of necessities.
1-bed: $1399.(2015) $1587.(2016). (no info) $849.(2015)$983(2016)
2-bed: $1899.(2015) $2114.(2016). (no info) $994.(2015)$1200(2016)
Seattle, WA. Nome, AK. Orlando, FL.
*2% milk(half gal): $2.29 $4.79 $2.50
*apples: $1.69 lb. $5.99 lb. $2.15 lb.
*tomatoes: $1.79 lb. $5.49 lb. $3.00 lb.
*lg. bread loaf: $1.25 $2.59 $2.89
*12 large eggs: $2.29 $2.59 $2.89
*corn flakes: $1.88 $3.79 $290
*unleaded gas: $2.19/ gal. $4.99/ gal. $1.93/ gal.
*electricity: 7.2 cents / kWh. 34.6 c/kWh 10. c/kWh
Did you compare your area to the above? Do you remember what you paid last year? Years ago? In any event, these are the items that we all use and need every day. We do not go out and buy a new phone or computer on a daily basis. The BLS, apparently do. In fact, they say we are deflationary because their new phone and computer is so much better than their old model. This allows them to be more efficient and for anyone who also buys new. Doesn't matter what the price you paid because the gadget will make your overall life less expensive. So much BS!
I say that we have a large country and Sebastian's research shows the vast differences in prices paid by consumers. Won't you join me in a new meme that calls for the firing of everyone in the CPI division. Let us demand a new formula in which food, energy and shelter costs are the only aspects to be investigated. We divide the nation into regions. We add up the results and divide according to the number of regions. No high or low figures excluded. The mean average will give a more honest conclusion to our inflation figure. We sing, "Everybody around the nation, let's hear what you have to say..."
- Sebastian
Everyone in the Bureau of Labor Statistics should be fired and any work benefits that those workers were to receive should be revoked due to the corruptness of their economic and labor stats. They are all misleading, full of lies and hypocrisy.
Today, I won't get into the unemployment section with its "U" boat system. Yes, it too needs to be addressed, but first things first. I rant against the CPI and I ask you to join me.
The BLS released its latest report of the Consumer Price Index. It said prices in March only rose 0.1%. Get out of town!
That lie only helps to serve the lies of government and the Federal Reserve. The Fed uses that lie to steal from savers and the government uses it to steal from seniors. The Fed says it has no justification to normalize rates because inflation is below their 2% target. The government uses it to justify no increase to social security under COLA(Cost of Living Adjustment). The BLS lies mask their schemes. If the government gave correct COLAs, the deficit would swell. The Fed keeps rates low so the government can hide the dangers of our national deficit which would burst under normal rates. It also allows our two corrupt political parties to spend recklessly. It allows the military to wage continuous wars with no positive results. With that said, I had Sebastian look into necessary items across the country that we all need and use everyday.
Energy and Food
First off. let me show you by having you answer your own life as to what the real inflationary number should be. The BLS says 2.2% year over year, but they constantly shrink that number lower.
We begin: If you lived in Colorado or a mid-west region last weekend, you put the heat on because it was cold and snowy. When you awoke, you had maybe coffee or juice? Dear reader, the government has none of the above and thus, it does not include the cost of energy or food. We continue. Did you drive to work? Work at home? Later, did you have lunch or dinner? Did your kids have to catch a bus for school? How can you measure inflation, if the life that we live requires food and energy every day, and this is not in the equation? Each of us is unique, but we all need food and energy and a place to call home. Which leads to -
Shelter
The BLS says it includes rent. Sebastian's results says they are lying again. He was able to secure info on three locations. It is not thorough in scope, but it points one in the right direction.
Home prices are up 6.5% nationally with 14 states up even higher. Only 3 states(W. Virginia, Louisiana and Wyoming) had less than 1% gain. Many places lost population like Youngstown, OH. which has lost 60% of its people since the 1950s. There are a lot of vacancies in many locations. Listen up, Baltimore and Detroit, you are not alone. With the outsourcing of quality jobs, Americans were forced to move to find work. Most of us went south and we found out the hard way that the pay is less. As such, new homes are not affordable and existing homes are not much better. Sebastian found out this: a new home in Seattle costs $536,700. You need to win the lottery to buy a house there. You see, dear reader, it is not just New York or San Fran that is off the charts. However, let us turn to rents and the BLS. We will show the figure for a one bedroom and two bed units in three locations for last year and 2016. We also have a list of necessities.
1-bed: $1399.(2015) $1587.(2016). (no info) $849.(2015)$983(2016)
2-bed: $1899.(2015) $2114.(2016). (no info) $994.(2015)$1200(2016)
Seattle, WA. Nome, AK. Orlando, FL.
*2% milk(half gal): $2.29 $4.79 $2.50
*apples: $1.69 lb. $5.99 lb. $2.15 lb.
*tomatoes: $1.79 lb. $5.49 lb. $3.00 lb.
*lg. bread loaf: $1.25 $2.59 $2.89
*12 large eggs: $2.29 $2.59 $2.89
*corn flakes: $1.88 $3.79 $290
*unleaded gas: $2.19/ gal. $4.99/ gal. $1.93/ gal.
*electricity: 7.2 cents / kWh. 34.6 c/kWh 10. c/kWh
Did you compare your area to the above? Do you remember what you paid last year? Years ago? In any event, these are the items that we all use and need every day. We do not go out and buy a new phone or computer on a daily basis. The BLS, apparently do. In fact, they say we are deflationary because their new phone and computer is so much better than their old model. This allows them to be more efficient and for anyone who also buys new. Doesn't matter what the price you paid because the gadget will make your overall life less expensive. So much BS!
I say that we have a large country and Sebastian's research shows the vast differences in prices paid by consumers. Won't you join me in a new meme that calls for the firing of everyone in the CPI division. Let us demand a new formula in which food, energy and shelter costs are the only aspects to be investigated. We divide the nation into regions. We add up the results and divide according to the number of regions. No high or low figures excluded. The mean average will give a more honest conclusion to our inflation figure. We sing, "Everybody around the nation, let's hear what you have to say..."
Wednesday, April 13, 2016
Prediction of a Guanteed Crisis
- "The beauty of compound interest is that it keeps growing even without water."
- Old Jewish proverb.
When Eastern Airline got killed by deregulation which was signed into law by Bill Clinton, not only did he murder the pension program of all the employees of that airline, but thousands of others across the nation. How soon people forget. Anyway, the government used a back-up plan for these people. It is called the Pension Benefit Guaranty Corporation. It takes over failed pension plans of private companies. They have $168B in liabilities and $88B in assets. Not looking good. Anyway, for many workers, something is better than nothing. Just ask the 20,000 A & P Grocery chain workers who worried that they were going to be ripped off. Well, in a sense they were, but they will now collect most of what they were due.
Now, I predict this program will be expanded and probably will add a new feature, taxpayer revenues. You see, by the kindest of some legislatures to cover the lying, greedy executives of many of our private corporations, this plan has saved millions of workers and fulfilled the promise of a pension with their employment and loyalty to a company. These executives never paid into their employees retirement program as promised and so, the government came to the rescue.
National, State, Local and City
government agencies are doing exactly the same thing as the private executives did in the private sector. They are not paying into their respective pension programs. Dear reader, both the Democrats and Republicans are guilty and corrupt!
At present, the unfunded liabilities for various federal employee programs and military benefits is around $3.5Trillion. This figure equals 20% of all US GDP. Think that is bad, read on!
Then, combine that number with state and local government pension plans and the percentage of GDP increases to 40%. It gets even worse than that.
Now, add the elephant labeled social security to the entitlement scenario. By the way, dear reader, it pains me to include social security to this mess because in reality the benefits from the social security program has already been received by the agency. It is complied and returned based on the redemptions over the person's working years. The money forms the individual beneficiary retirement supplement. Social Security was never intended to be a pension, but in reality it is. Back to the equation. In addition to the elephant, there is the gorilla called Medicare. Together, these two programs raises a debt that needs to be paid every year and it balloons the estimated yearly liability to $13.4T or 75% of all GDP. Now, how can the government do anything constructive at all because with our national deficit that needs to be paid there won't be any money left for anything! This, by the way is the real reason for low interest rates around the world. Fiat money is a corrupt policy that devalues money in circulation and this inflationary aspect is classified as a positive economic indicator. BS!
That's Not All, Folks!
there is also other obligations on the books like hospital insurance component of Medicare which will add another $3.2T to the pending disaster which will bust any budget and this crisis is coming to us all sometime in 2018. I also predict that Chicago will be the next major US city to follow Detroit. In fact, it will be a double-dip as Illinois will be the first state to stare at bankruptcy. We'd better start protecting whatever we got left and put tariffs on anything that is imported. Screw all the opposing shills! He may not have any tack, but Trump is right on that call. Keep in mind this is all due to both political parties that have not lived up to their obligations to do what is best for America caused by their overspending and the Federal Reserve who backs up their recklessness by printing money. End the Fed!
- Old Jewish proverb.
When Eastern Airline got killed by deregulation which was signed into law by Bill Clinton, not only did he murder the pension program of all the employees of that airline, but thousands of others across the nation. How soon people forget. Anyway, the government used a back-up plan for these people. It is called the Pension Benefit Guaranty Corporation. It takes over failed pension plans of private companies. They have $168B in liabilities and $88B in assets. Not looking good. Anyway, for many workers, something is better than nothing. Just ask the 20,000 A & P Grocery chain workers who worried that they were going to be ripped off. Well, in a sense they were, but they will now collect most of what they were due.
Now, I predict this program will be expanded and probably will add a new feature, taxpayer revenues. You see, by the kindest of some legislatures to cover the lying, greedy executives of many of our private corporations, this plan has saved millions of workers and fulfilled the promise of a pension with their employment and loyalty to a company. These executives never paid into their employees retirement program as promised and so, the government came to the rescue.
National, State, Local and City
government agencies are doing exactly the same thing as the private executives did in the private sector. They are not paying into their respective pension programs. Dear reader, both the Democrats and Republicans are guilty and corrupt!
At present, the unfunded liabilities for various federal employee programs and military benefits is around $3.5Trillion. This figure equals 20% of all US GDP. Think that is bad, read on!
Then, combine that number with state and local government pension plans and the percentage of GDP increases to 40%. It gets even worse than that.
Now, add the elephant labeled social security to the entitlement scenario. By the way, dear reader, it pains me to include social security to this mess because in reality the benefits from the social security program has already been received by the agency. It is complied and returned based on the redemptions over the person's working years. The money forms the individual beneficiary retirement supplement. Social Security was never intended to be a pension, but in reality it is. Back to the equation. In addition to the elephant, there is the gorilla called Medicare. Together, these two programs raises a debt that needs to be paid every year and it balloons the estimated yearly liability to $13.4T or 75% of all GDP. Now, how can the government do anything constructive at all because with our national deficit that needs to be paid there won't be any money left for anything! This, by the way is the real reason for low interest rates around the world. Fiat money is a corrupt policy that devalues money in circulation and this inflationary aspect is classified as a positive economic indicator. BS!
That's Not All, Folks!
there is also other obligations on the books like hospital insurance component of Medicare which will add another $3.2T to the pending disaster which will bust any budget and this crisis is coming to us all sometime in 2018. I also predict that Chicago will be the next major US city to follow Detroit. In fact, it will be a double-dip as Illinois will be the first state to stare at bankruptcy. We'd better start protecting whatever we got left and put tariffs on anything that is imported. Screw all the opposing shills! He may not have any tack, but Trump is right on that call. Keep in mind this is all due to both political parties that have not lived up to their obligations to do what is best for America caused by their overspending and the Federal Reserve who backs up their recklessness by printing money. End the Fed!
Wednesday, April 6, 2016
Near-Term Dollar and Gold
- "If Liberty means anything at all, it means the right to tell people what they don't want to hear"
- George Orwell
Using my hybrid approach to the market(fundamental & technical), I see two trends emerging in the dollar and gold. There are many aspects that can change the course to my conclusions from external, geopolitical surprise to here at home with the Federal Reserve among others. Having said that, the price movement and volumes behind those movements indicate the following.
Quick Recap
If you recall, the US dollar was selling in the low .70s from 2007 to 2012. During that period the Federal Reserve increased its balance sheet from $one trillion to over $five trillion. Now, common sense would say that the dollar should fall. In my unpublished work, The Evolution of Democracy: The Book of Multiple Ideas and Predictions, I stated that the dollar would fall to $.52 cents. How wrong can one be? Only time will tell on that one. Nevertheless, the dollar rose to a new range of $.75 to.80 cents. Then, in 2014, the dollar proved that it was the best dog amongst fleas. It touched one-dollar repeatedly and word spread that it would soon be on parity with the euro. Didn't happen, but again, time will tell on that one too. After repeated market tests, the strength in the dollar's surge
(number of up-contracts) is slowing. Outside influences like slower global economy and lower US exports are not suppose to effect those decisions. BS! Together, market forces are pushing the dollar lower. The first downtrend came in February of this year. The dollar broke to a new low. Since then, it broke resistance at $.98.5cents. In fact, the dollar lost 4.2% in the first quarter. Currently, it rests at $.94.62cents. The next level of resistance is $.92.5cents. Then, nothing until $.85cents. This is where I see the dollar going.
Gold Time!
On the flip-side of fiat money is gold. It is the leading asset of 2016. It has fought off the repeated attacks by the fiat institutions and it just had its best quarter since 1986. In my quick recap, I do not go back that far because gold had been in a downturn then, after its prior surge in 1980. This return to gold began in 2001. This is the point of reference for gold in my indicators.
The pundits put down any gold guidance in 2015 for the current year. Do they ever admit their errors? Don't waste your time listening to those shills, dear reader because the important aspect is this: Gold is up on high contract volume. It had over one million when it reached the recent high of $1287.80 and only 371k contract on its pullback to $1223.20 on Friday. By the way, that day is always the worst for gold because all the world markets are closed except the US and it allows the fiat people to attack the precious metals. Anyway, the charts and world demand point gold to $1392 and possibly $1423 in the near-term. Yea!
Other Aspects
In other news, the US employment figures came out last Friday. It said that 215,000 jobs were created, but a closer look reveals the real problem with the US economy.
*Retail jobs=48K
*Construction jobs=37K
*Healthcare jobs= 37K
*Food service jobs=25K
The above are low wage employment. After a few years in these fields workers will realize no wage increases and that they are older with no real outlook for quality work. They will find out the hard way that they are only existing and not living.
Now, no news print mentioned this crucial loss to our economy. The US lost these high-paying, quality jobs last month'
*29K=manufacturing
*12K=mining
In addition, an article in the New York Times, by Neil Irwin who based his work on a report pointed out another serious flaw in US employment numbers. It stated that of all the jobs created under President Obama's administration, over 9-million were either temporary or contract employment. These jobs generally do not come with worker benefits like unemployment insurance. So, if they get laid off or do ot receive contract work, they won't be eligible for unemployment and they will not be counted on any unemployment rolls. They will just disappear. Bottom line: don't put too much faith in GDP to increase with the BEA's numbers.
- George Orwell
Using my hybrid approach to the market(fundamental & technical), I see two trends emerging in the dollar and gold. There are many aspects that can change the course to my conclusions from external, geopolitical surprise to here at home with the Federal Reserve among others. Having said that, the price movement and volumes behind those movements indicate the following.
Quick Recap
If you recall, the US dollar was selling in the low .70s from 2007 to 2012. During that period the Federal Reserve increased its balance sheet from $one trillion to over $five trillion. Now, common sense would say that the dollar should fall. In my unpublished work, The Evolution of Democracy: The Book of Multiple Ideas and Predictions, I stated that the dollar would fall to $.52 cents. How wrong can one be? Only time will tell on that one. Nevertheless, the dollar rose to a new range of $.75 to.80 cents. Then, in 2014, the dollar proved that it was the best dog amongst fleas. It touched one-dollar repeatedly and word spread that it would soon be on parity with the euro. Didn't happen, but again, time will tell on that one too. After repeated market tests, the strength in the dollar's surge
(number of up-contracts) is slowing. Outside influences like slower global economy and lower US exports are not suppose to effect those decisions. BS! Together, market forces are pushing the dollar lower. The first downtrend came in February of this year. The dollar broke to a new low. Since then, it broke resistance at $.98.5cents. In fact, the dollar lost 4.2% in the first quarter. Currently, it rests at $.94.62cents. The next level of resistance is $.92.5cents. Then, nothing until $.85cents. This is where I see the dollar going.
Gold Time!
On the flip-side of fiat money is gold. It is the leading asset of 2016. It has fought off the repeated attacks by the fiat institutions and it just had its best quarter since 1986. In my quick recap, I do not go back that far because gold had been in a downturn then, after its prior surge in 1980. This return to gold began in 2001. This is the point of reference for gold in my indicators.
The pundits put down any gold guidance in 2015 for the current year. Do they ever admit their errors? Don't waste your time listening to those shills, dear reader because the important aspect is this: Gold is up on high contract volume. It had over one million when it reached the recent high of $1287.80 and only 371k contract on its pullback to $1223.20 on Friday. By the way, that day is always the worst for gold because all the world markets are closed except the US and it allows the fiat people to attack the precious metals. Anyway, the charts and world demand point gold to $1392 and possibly $1423 in the near-term. Yea!
Other Aspects
In other news, the US employment figures came out last Friday. It said that 215,000 jobs were created, but a closer look reveals the real problem with the US economy.
*Retail jobs=48K
*Construction jobs=37K
*Healthcare jobs= 37K
*Food service jobs=25K
The above are low wage employment. After a few years in these fields workers will realize no wage increases and that they are older with no real outlook for quality work. They will find out the hard way that they are only existing and not living.
Now, no news print mentioned this crucial loss to our economy. The US lost these high-paying, quality jobs last month'
*29K=manufacturing
*12K=mining
In addition, an article in the New York Times, by Neil Irwin who based his work on a report pointed out another serious flaw in US employment numbers. It stated that of all the jobs created under President Obama's administration, over 9-million were either temporary or contract employment. These jobs generally do not come with worker benefits like unemployment insurance. So, if they get laid off or do ot receive contract work, they won't be eligible for unemployment and they will not be counted on any unemployment rolls. They will just disappear. Bottom line: don't put too much faith in GDP to increase with the BEA's numbers.
Wednesday, March 30, 2016
The Bounce Is Over!
The market rally has been in a classic bear market rally mode, and whether you are a fundamentalist or chart watcher, the facts speak for themselves. Dear reader, I will place my thoughts for your digression. I use by the way, a hybrid approach of the two main market techniques.
Earnings
continue to decline. Company revenues are reaching new highs or should I say, new lows, quarter after quarter but the government has laid out its proof that the economy is growing. The BEA revised the GDP upward last Friday from 1 percent to 1.4%. The Fed speaks. Basically saying it will continue cheap money to keep things on the right path that they envision, but never admit that errant results are by their doing.
Who is right?
Consider this: A report by CNBC that covers a period back to 1990, has shown that the Bureau of Economic Analysis has continually misrepresented the true GDP numbers by an extremely wide range of 1.3%. By that measure the last quartet of 2015 would be .01 percent. Now, I think that would be an exaggeration of the real number. I think that the original 1% is correct. Nevertheless, we now have proof that the BEA numbers are no more accurate than China's. How about this for an example. On 30th of April in 2008, the BEA stated that the economy was growing by .06%, when in fact, the recession had already started. Years later, they revised it lower to negative 2.7%. This is what they do. It is like I have been saying all along that these people are appointed shills. Their revision's are done quietly and then, it has little effect on the stock market. Mark Twain said it so well, "There are three kinds of lies. Lies, damn lies and statistics."
My Proof
lays in corporate profits which plunged 11.5% in the fourth quarter from a year-ago period. For the entire year, profits are down 3.1% and I predict that the first quarter of 2016, GDP will fall to .05%. In addition, S & P 500 profits declined by 8.3%.
Dear reader, oil has led this market, whether down in January or up in February. Now, if you understand support and resistance levels or study Fibonacci retracement ratios, the dead cat bounce is ending. Oil has rallied 49% and only has one more percentage point upward to reach its Fibonacci 50% retracement. The next move is down to test the lows of $26 oil. The oil glut is not going anywhere. Yes, small oil firms are in line at bankruptcy courts, but even in bankruptcy, they still are pumping oil. This catch-22, leads to their ultimate collapse unless a miracle happens. GM was still making cars in bankruptcy. They received a miracle, a bailout. There is a difference between one major firm as opposed to hundreds of small oil firms with taxpayer support. Consider these facts: oil revenues are down 97% in the fourth quarter of 2015. Rig count in the US is down from last month from 476 to 464. In Canada, it is down from 69 to 55. It will take along time to end the glut because Iran is looking to grab market share and they will. They and others will cover the US decline.
Another Aspect
of the oil bust is the effect it has in the economy as a whole. A closer look at one of the premier oil formations provides the answer. In the Eagle Ford oil formation, oil companies added "man towns." These communities established by oil firms for their workers made building and trailer manufacturing companies go full blast. Now, they don't. This is all across the nation from Williston, North Dakota to the Marcellus shale formation in the East. Boom towns are going bust and they take down housing, small stores and all the trickle down companies that service the oil industry. Quality jobs and real wealth producing entities are in a down swing. It will take the market with it.
Back to Retracement Levels
All three major market indexes still have a little more upside, however many have exceeded their bounce levels. Sometime, after the "April Fool," a switch will flip, and a new test will begin. The S & P 500 has reached my projection of 2054, however the Dow still has more upside and with "window dressing" on the last day of the month, the top should be reached in this bounce. I thought that the $COMPQ would close the gap at 5000, but it will fall to 4000 when the turn comes. The S & P should test the February lows of 2014 and the Dow sink to 15,750, however only time will tell who is right. I'll add this important reminder, if I'm correct and the market drops its second leg, the volume at the lows will indicate the next journey in 2016. If you read my Market Forecast 2016, I am leading the league in batting, shooting percentage and touchdowns. Someday I'll get some recognition, but the blog will always be free. Of course, if I'm wrong, I beg your pardon. If I'm right, what will or who will the Fed blame?
Earnings
continue to decline. Company revenues are reaching new highs or should I say, new lows, quarter after quarter but the government has laid out its proof that the economy is growing. The BEA revised the GDP upward last Friday from 1 percent to 1.4%. The Fed speaks. Basically saying it will continue cheap money to keep things on the right path that they envision, but never admit that errant results are by their doing.
Who is right?
Consider this: A report by CNBC that covers a period back to 1990, has shown that the Bureau of Economic Analysis has continually misrepresented the true GDP numbers by an extremely wide range of 1.3%. By that measure the last quartet of 2015 would be .01 percent. Now, I think that would be an exaggeration of the real number. I think that the original 1% is correct. Nevertheless, we now have proof that the BEA numbers are no more accurate than China's. How about this for an example. On 30th of April in 2008, the BEA stated that the economy was growing by .06%, when in fact, the recession had already started. Years later, they revised it lower to negative 2.7%. This is what they do. It is like I have been saying all along that these people are appointed shills. Their revision's are done quietly and then, it has little effect on the stock market. Mark Twain said it so well, "There are three kinds of lies. Lies, damn lies and statistics."
My Proof
lays in corporate profits which plunged 11.5% in the fourth quarter from a year-ago period. For the entire year, profits are down 3.1% and I predict that the first quarter of 2016, GDP will fall to .05%. In addition, S & P 500 profits declined by 8.3%.
Dear reader, oil has led this market, whether down in January or up in February. Now, if you understand support and resistance levels or study Fibonacci retracement ratios, the dead cat bounce is ending. Oil has rallied 49% and only has one more percentage point upward to reach its Fibonacci 50% retracement. The next move is down to test the lows of $26 oil. The oil glut is not going anywhere. Yes, small oil firms are in line at bankruptcy courts, but even in bankruptcy, they still are pumping oil. This catch-22, leads to their ultimate collapse unless a miracle happens. GM was still making cars in bankruptcy. They received a miracle, a bailout. There is a difference between one major firm as opposed to hundreds of small oil firms with taxpayer support. Consider these facts: oil revenues are down 97% in the fourth quarter of 2015. Rig count in the US is down from last month from 476 to 464. In Canada, it is down from 69 to 55. It will take along time to end the glut because Iran is looking to grab market share and they will. They and others will cover the US decline.
Another Aspect
of the oil bust is the effect it has in the economy as a whole. A closer look at one of the premier oil formations provides the answer. In the Eagle Ford oil formation, oil companies added "man towns." These communities established by oil firms for their workers made building and trailer manufacturing companies go full blast. Now, they don't. This is all across the nation from Williston, North Dakota to the Marcellus shale formation in the East. Boom towns are going bust and they take down housing, small stores and all the trickle down companies that service the oil industry. Quality jobs and real wealth producing entities are in a down swing. It will take the market with it.
Back to Retracement Levels
All three major market indexes still have a little more upside, however many have exceeded their bounce levels. Sometime, after the "April Fool," a switch will flip, and a new test will begin. The S & P 500 has reached my projection of 2054, however the Dow still has more upside and with "window dressing" on the last day of the month, the top should be reached in this bounce. I thought that the $COMPQ would close the gap at 5000, but it will fall to 4000 when the turn comes. The S & P should test the February lows of 2014 and the Dow sink to 15,750, however only time will tell who is right. I'll add this important reminder, if I'm correct and the market drops its second leg, the volume at the lows will indicate the next journey in 2016. If you read my Market Forecast 2016, I am leading the league in batting, shooting percentage and touchdowns. Someday I'll get some recognition, but the blog will always be free. Of course, if I'm wrong, I beg your pardon. If I'm right, what will or who will the Fed blame?
Wednesday, March 23, 2016
Can You Say Vacancy?
- Listening to Goldman Sachs, is like listening to your wife's divorce lawyer.
- Sebastian
The institutions and talking heads have plenty to talk about as the year's losses in the Dow and S & P have been recovered. Don't listen to their siren calls, dear reader. Last week, I gave you an insight into the consumer and this week, the locations where the consumer shops.
Two Pillars
of the US economy is under severe duress. Sadly, the beauty and convenience of our strip centers, regional shopping locations and malls are closing. Why, you ask? As I pointed out last week, sales and revenues at these locations have declined quarter after quarter. Whenever a solid earnings quarter filters into the equation, the media shills pound on it like a dog walking past a flea. It is in their interest that you stay in the market until they can get out. It is why they always claim there is light at the end of the tunnel. I rode my bicycle past all the cars stuck in traffic. Do you know what is waiting at that point of light, a traffic crash. You will sit holding some stock that doesn't know what you paid for it until the crash site is cleared and things start moving again.
Refresher
Last week I mentioned many retail companies are closing stores because with declining sales, they are losing money with no upturn in sight. For new readers a quick refresher. The following is just a sample of store closings: Sears, Macy's, Men's Warehouse, Gameboy, WalMart, Dillard's and John Deere.
Now, we need to look at the effects of those store closings to commercial real estate. Looking at the list, you notice the big brand names among the group. Sears, Macy's, Dillard's and WalMart are anchors in shopping locations. They are cash cows for the owners of the real estate. However, when things turn south, they become an albatross to the owners and an evil omen for the small businesses that make up the shopping location.
First and foremost, these retail giants are magnets that attract shoppers to a location. It is why the small businesses follow the herd. In this situation, two smaller companies on the list, Men's Warehouse and Gameboy are examples of this retail axiom. When the lease is due, there is no extension. Instead, the owner of the shopping center has a boarded up wall that graffiti artists attack which results in constant maintenance costs to keep clean. These graffiti artists do brighten up many locations around the country when commissioned or asked to design a mural, but by and large, they are a blight on most terrains and add a cloud of depression to the areas that they place their tag lines.
Back to the commercial landlord and the loss of the anchor...
Stability
The owner not only losses his biggest asset, but now, fears his smaller retail clients will also seek a new place. There is a real fear that shoppers will find another, more appealing location. His vacancy clients will look at the center. They will want better terms as the large vacancy makes the shopping center appear to be a dangerous location. Why else would the anchor leave? In a booming economy, these same retail owners would have no trouble finding a new tenant. News flash: this is not a booming economy and if WalMart or Macy's can't make a go of it, good luck trying to convince or find a new anchor.
Second Pillar
In addition, the oil patch has laid off thousands of high paying jobs that will effect business park locations who have service industries that provide the oil patch. They too, are suffering. The latest casuality number of oil bankruptcies is 67. This is up from the 48 in January. This rising tide of bad loans will affect the financial industry with a flood of non-performing loans. By the way there are 150 more oil firms getting caught in traffic in the tunnel.
In fact, the early tally of commercial real estate loans that need to be rolled-over or reconstructed is approaching $43 billion. This pending trouble is reflected in the government report last week in the confidence level of small businesses. It is down. These people can see that their shopping centers are getting over-loaded with vacancies. As for the chances of the $43 b getting new financing, that too is in trouble because the new rules under the Dodd-Frank Act makes new lending more stringent.
Adding everything up, things aren't quite as positive going forward as the media would have you believe. Not good. By the way, all that easy money that the commercial developers needed and provided by the Fed is another example of their boom and bust policies which is why I say, End the Fed!
- Sebastian
The institutions and talking heads have plenty to talk about as the year's losses in the Dow and S & P have been recovered. Don't listen to their siren calls, dear reader. Last week, I gave you an insight into the consumer and this week, the locations where the consumer shops.
Two Pillars
of the US economy is under severe duress. Sadly, the beauty and convenience of our strip centers, regional shopping locations and malls are closing. Why, you ask? As I pointed out last week, sales and revenues at these locations have declined quarter after quarter. Whenever a solid earnings quarter filters into the equation, the media shills pound on it like a dog walking past a flea. It is in their interest that you stay in the market until they can get out. It is why they always claim there is light at the end of the tunnel. I rode my bicycle past all the cars stuck in traffic. Do you know what is waiting at that point of light, a traffic crash. You will sit holding some stock that doesn't know what you paid for it until the crash site is cleared and things start moving again.
Refresher
Last week I mentioned many retail companies are closing stores because with declining sales, they are losing money with no upturn in sight. For new readers a quick refresher. The following is just a sample of store closings: Sears, Macy's, Men's Warehouse, Gameboy, WalMart, Dillard's and John Deere.
Now, we need to look at the effects of those store closings to commercial real estate. Looking at the list, you notice the big brand names among the group. Sears, Macy's, Dillard's and WalMart are anchors in shopping locations. They are cash cows for the owners of the real estate. However, when things turn south, they become an albatross to the owners and an evil omen for the small businesses that make up the shopping location.
First and foremost, these retail giants are magnets that attract shoppers to a location. It is why the small businesses follow the herd. In this situation, two smaller companies on the list, Men's Warehouse and Gameboy are examples of this retail axiom. When the lease is due, there is no extension. Instead, the owner of the shopping center has a boarded up wall that graffiti artists attack which results in constant maintenance costs to keep clean. These graffiti artists do brighten up many locations around the country when commissioned or asked to design a mural, but by and large, they are a blight on most terrains and add a cloud of depression to the areas that they place their tag lines.
Back to the commercial landlord and the loss of the anchor...
Stability
The owner not only losses his biggest asset, but now, fears his smaller retail clients will also seek a new place. There is a real fear that shoppers will find another, more appealing location. His vacancy clients will look at the center. They will want better terms as the large vacancy makes the shopping center appear to be a dangerous location. Why else would the anchor leave? In a booming economy, these same retail owners would have no trouble finding a new tenant. News flash: this is not a booming economy and if WalMart or Macy's can't make a go of it, good luck trying to convince or find a new anchor.
Second Pillar
In addition, the oil patch has laid off thousands of high paying jobs that will effect business park locations who have service industries that provide the oil patch. They too, are suffering. The latest casuality number of oil bankruptcies is 67. This is up from the 48 in January. This rising tide of bad loans will affect the financial industry with a flood of non-performing loans. By the way there are 150 more oil firms getting caught in traffic in the tunnel.
In fact, the early tally of commercial real estate loans that need to be rolled-over or reconstructed is approaching $43 billion. This pending trouble is reflected in the government report last week in the confidence level of small businesses. It is down. These people can see that their shopping centers are getting over-loaded with vacancies. As for the chances of the $43 b getting new financing, that too is in trouble because the new rules under the Dodd-Frank Act makes new lending more stringent.
Adding everything up, things aren't quite as positive going forward as the media would have you believe. Not good. By the way, all that easy money that the commercial developers needed and provided by the Fed is another example of their boom and bust policies which is why I say, End the Fed!
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