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.
Note- Do me a favor, those who read/like
the posts- re-post them on other sites as well as the site you read them on.
Thanks- John. Don’t forget to ‘click’ the note App on my Facebook Profile- I
have posted lots.
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