Friday, June 15, 2012


1854- WEEKEND WARNING

Before I forget- the odds of the market selling off today are high.

If you are in- and have been for a while- no big deal.

But if you are one of those types that buy and sell every couple of days/weeks.

Then I wouldn’t buy today.

Okay- have a lot to cover and not much space.

I found it interesting to watch the narrative that I have been talking about these last few days to have been so blatant yesterday.

On MSNBC the hosts are now regular telling people that the Euro zone crisis is a direct result of austerity measures [spend less than you have].

This is an outright lie- I wrote about this lots the last few weeks and don’t want to re hash the thing.

The point is the entire network is now saying this- and if you are someone that’s invested in world events- you are being lied to- daily.

I caught the morning NPR show yesterday- I usually catch the early show [sometimes right at 5 am].

I’m an early riser- been up since 3:30 this day.

So- it was interesting- right at 7:05 the report was some bad housing numbers- foreclosures were up from last month.

They were up 16% from this time last year- 9 from last month.

Bad- but not surprising [to me].

Then- at 8:05 am- the report said ‘good news for the housing market’.

I mean- you can’t make stuff like this up.

Why are these bad numbers not a surprise?

Last year many of the banks put a hold on their foreclosures.

You had the Robo Signing scandal [people just rubber stamping foreclosures- using fake names].

And you had the president purposefully do a short moratorium on foreclosures.

Okay- so what would happen when these temporary fixes were over?

Foreclosures go up.

Then why don’t the financial guys tell you this- why do they make it sound like all is well?

I don’t think these guys are purposefully lying [most of them] but when your whole career is based on the market- then you have a natural tendency to hear [say] what you want- not what’s necessarily the truth.

Why am I so negative on the market today?

Yesterday we had a short run up- primarily because the central banks [in Europe and presumably us- the Fed] made it sound like they might help the cash strapped European states and pump ‘liquidity’ [cash] into the system.

Okay- so the Dow went up- not because we had good economic news- but bad.

That is- things look so bad- the world banks said ‘we might help’.

Okay- why does this help the market?

These last few years- our nations bank- the Federal Reserve- has pumped trillions of dollars into the system.

Some think this is bad monetary policy- others say it’s good.

Now- as a matter of simple math- if you put extra money into the system- this money has to go somewhere.

And eventually a large part goes into the market.

This in reality is a fake way to ‘stimulate’ the market.

So that’s what you saw yesterday.

EGYPT

Yesterday the high court disbanded the entire Parliament.

The military are still in control- and it looks like Democracy has failed.

Now- do I think this is a bad thing?

 Not really.

Why?

Look- the Muslim Brotherhood rose to power after the protests.

These guys just had thousands in the streets calling for the destruction of Israel.

They are indeed radicals- and if they run the country you will have another theocracy like Iran.

This is not good for the rights of women- Christians- and many other groups.

The economy of Egypt has been ruined.

For centuries people have been going to visit the pyramids- that whole thing is now dead.

Tourism was a major part of their economy.

We have not helped the cause of these people- we might have meant well by toppling Mubarak- but the aftermath is bad.

GLOBAL DOWTURN

Oil prices are down 12 %- because of a global slowdown.

Asia [China] is slowing down faster than anyone thought- China just took financial action to try and counteract this.

In the beginning of the year many were projecting 3.5- 4 % growth for the U.S.

The Bulls and Bears were just about split [I was- am still a bear].

Half way thru the year- the estimates are now 1.7 % growth- terrible.

There is no way we are going to see an upturn for the rest of the year- not possible.

Now- will the markets go up?

I don’t think so- but people do crazy stuff.

I’m saying the global economic outlook is terrible- very very bad- The E.U. crisis is very bad.

Spain and Italy are in trouble- not just Greece.

Greece is on the verge of exiting the Euro- and many investors have taken their money out of Spain and Italy.

Italy is really ‘too big to fail’.

If the Italian economy crashes- the Euro\zone is over.

Now- Do I think the worst will happen?

I don’t know for sure- but for financial advisors to be telling people that the ‘fundamentals’ are strong is ridiculous.

This has been the mantra the last year.

That U.S. companies [and banks] have much more cash on hand- the price for stock- compared to ‘projected’ growth/income of the company is cheap.

And some paint this rosy picture.

If you own a McDonalds on your block- and your ‘fundamentals’ are strong- but if everyone on the block is going broke- it makes no difference how strong the fundamentals are- the customers are broke.

That’s what the E.U crisis means- they are our number one trading partner- yes- they beat China.

If they are having all these very real problems- then we are in danger of another recession.

Most of the recent numbers seem to be saying this.

The last few weeks we are seeing a rise in the weekly unemployment numbers.

Our economy is softening- and the trend is not your friend.

With all this going on- the message of the president makes no sense.

He gave a speech yesterday- he basically is saying ‘do you want what we had the last 10 years- look what Bush gave you’.

I mean he acts like he has not been in charge for the past 3.5 years.

Look- I’m starting to worry about the man.

One interesting thing to keep note of.

The markets play into what they think might happen.

If the Supreme Court shoots down Obama care this month- markets WILL LIKE THAT.

And- the truth be told- if they think Romney is going to win [the odds look much better for him now than 3 months ago] the markets will factor that in as a positive sign.

All in all- today might be a rough day for stocks.

We do need to batten down the hatches for the rest of the year and realize at midyear- we have made a turn for the worse.

Don’t worry- don’t panic- but make sure your listening to good advice.

I am not a total doomsayer when it comes to this [Beck type]- but I see the writing on the wall- the global economy is slowing down- we are on the verge of a double dip recession- and the Euro Zone looks very bad- despite the central banks action.








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