Ain’t We Smart?

Our favorite stock indices are up nicely so far this year. Investors are reaping the reward of risking capital. Investors have employed skills. Ain’t we all smart?

I won’t go over the litany of bogus government data that the financial networks repeat endlessly. The truth is that the indices are up this year because Ben Bernanke’s Federal Reserve and Mario Draghi’s ECB have pushed them there. In so doing, they have pushed priced of everything higher. Readers may have noticed that gasoline and food prices are rising almost daily. This is the power of money creation. Sure, the goal of the central bankers is to enrich their big banker friends. Of course they have to create a financial crisis and then solve the same crisis by manifesting money from thin air of which they then ‘lend’ to bankers and gooberments alike. All participants are glad to accept the apple from the serpent as they deceive the populace into thinking the new money will benefit all. But even a US Congressperson would eventually recognize that this is nothing but a con if the central banks only gave money to big banksters. So, the central bankers splatter money everywhere including the stock casinos.

Most investors are so busy deluding themselves as to their investment prowess that they fail to recognize that the true fuel to their wellbeing is getting stolen right out from under their noses. That is, as long as the casino keeps registering gains. This is the strategy of the central bankers. They keep investors fooled with stock gains.

True stock gains should reflect reality. There are winners and losers and investors should profit from knowledge of both. Winners are more valuable than losers. But what happens when value gets stripped out of the equation? What happens when all stocks are simply chips on the roulette wheel? Who determines the value of the chips? The central bankers do. Yet, investors still believe in the game.

I would like to enter the chart below into our consciousness. This is Exhibit A in the argument that all value has been lost in what used to be a market. The chart shows two indexes with year-to-date performance. The gold line is the Dow Jones Industrials and while it has done well this year, the other line in the chart has done better. What does the other line represent? I think most readers will be shocked to learn that the line representing the better of the gains is actually a Greece ETF - the ATG. Yes, the Greek indexes have outperformed the Dow so far this year. Still feeling smart?

Neither line represents true value, Both are merely prices and prices can be manipulated by the people that dispense the currency. Greece is likely entering a depression.Their economy is in ruin and their leaders have surrendered to ECB control. For perspective, Greece just agreed to harsh economic austerity measures in exchange for another $130 billion in loans. The Greek GDP is only about $300 billion.This is the second loan of such amount in the last year. In other words, this would be like the US needing about $13 trillion in bailout money as its GDP is around $15 trillion. This kind of economic destruction will not cease until the central bankers are recognized by the common man as the great Andrew Jackson recognized them - as ‘a den of vipers and thieves’. 

Anyway, the chart tells the story. If we were all so smart, we would have had our money in Greece since the bankers are working hard to sell their lies on economic solutions. Yes, it is nice to see the Dow up this year. But, it doesn’t mean a thing and worse, the gains can dissipate in the blink of a central banker paper jam! Ain’t we all so smart?

YTD - ATG in red/black, DJIA in gold

Chart courtesy StockCharts.com

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. Advisory services offered through BMF Investments, Inc.

The Ali Shuffle

Over the passed few weeks, there really hasn’t been much to say about the stock casino. Bernanke and his boys have been there to goose it when needed and we are all still waiting on Greece to formalize their surrender of sovereignty in exchange for the debt enabled illusion of solvency. Same old story. All Greece has to do is agree to fire a bunch of government workers (they are no longer needed since sovereignty will be turned over to the ECB), cut minimum wages by 20% (no need to pay high wages for workers with nothing to do as GDP contracts by 6% or more), and cut pension obligations (they were all based on fantasy anyway). Once Greece submits, the ECB will pump just enough euros into the Greek banking system to avoid any runs on the big banks and most importantly, to avoid any calamitous disintegration of all the credit default swaps tied to Greece’s debt held by banks in Germany, France, and the US. Will Greece be any better off? Of course not. Will their economy ever recover? Of course not. Will Greece ever pay off its debt? Of course not. The Zimbabwe moral of this story? Never give up your monetary printing press! Like Zimbabwe, like the US, like other nations who still guard the printing press like the Holy Grail, countries that still have ink and paper can simply print their way out of debt. Of course, I am being facetious here but Americans do enjoy their fantasies. They still believe in the Fed.

Those who believe in the Fed must still believe in the Tooth Fairy and the Easter Bunny. But give the Fed their due. They are indeed amazing! This cartel of central bankers still believe they can orchestrate economic prosperity by starving the savers with zero interest rates and engorging the spenders with expanding credit. This strategy cannot possibly succeed because zero interest rates hurt both savers and spenders equally. The savers are never rewarded for their intelligent frugalness in saving money to grow assets. The spenders are never rewarded for their wasteful acceptance of credit because they never aspire to own anything - only to rent it. A savers assets can be passed on. A renter never has an asset from which to pass.

But the amazing Fed continues to keep this strategy in place because they themselves benefit greatly. Their balance sheet is almost at $3 trillion and all of their paper is guaranteed by the assets of the US taxpayer. One would think that the peons would realize that a nation’s assets are slowly being syphoned away but the Fed uses an amazing ploy of misdirection.

Boxing fans might remember Muhammad Ali in his prime. He employed a maneuver in the midst of a fight in which he would shuffle his feet back in forth with such quickness the motion created the illusion of levitation. Ali would generally wear footgear with tassels attached to the top of the shoes to accentuate the movement. Of course, the idea was to induce the opponent into taking a look at Ali’s feet so they would not see the right hook coming in for the knockout. 

The Fed has a similar maneuver. It is called the Dow Jones Industrial Average shuffle. They know that as long as the Dow is moving higher, the peons will not question any of their activities. Of course, the Fed’s main activity is directing the Dow higher with their index manipulation programs of quantitative easing, operation twist, Permanent Open Market Operations (POMO), and PPT activity. As for PPT activity, we were all granted a Valentine’s Day present from the Fed on February 14 as the Dow rocketed up 100 points in the final 30 minutes of trading. Thanks, Ben! You are the investors’ Valentine! The chart below shows this pop very nicely. And of course, I have been writing about the ‘microwave’ rallies that the casino pundits refer to as ‘trends’. I just find 30-minute bursts of buying for no reason whatsoever to be more manipulative on someone’s part rather than trendy on investors’ part. But, if the Dow goes up every day, the peons will not rebel when the Fed pretends that there is no inflation even though gasoline prices are way up, no one can afford to send their kids to college anymore, and the shoppers in the chicken section of the grocery store resemble window shoppers at a Ferrari dealership. General Mills just warned that demand was slowing for their cereals as grocery store chains must contemplate encasing this ever-increasingly expensive product in a locked display. The Ali shuffle has us mesmerized. As for Greece, they have just been decked by the right cross.

The Fed also has the help of the, for lack of a better word, ‘media’. This is one group that has decided to get in line with the current regime and repeat rather than report. It is one thing to manipulate the stock casino but data needs to underpin the rise. That’s where the liars in government come in and the repeaters that write about the lies are complicit in the ruse. Here is a case in point. From the 2/17/2012 edition of Investor’s Business Daily, page one has a story about the wondrous news from the housing world. Like everything, housing is up in the world of fantasy but the story also states that according to MBA, the shares of mortgages that are delinquent ‘slid to 7.58% in Q4 from 7.99% in Q3’. Read on my friends. On page A10, there is a story by the AP that reads, ‘Credit reporting agency TransUnion says 6.01% of mortgage holders were behind on their payments by 60 days or more in the fourth quarter of 2011, up from 5.88% in the third.’ Now, I have no idea as to the truth as actual numbers and mathematics have been vanquished by the current regime. The point is that we are all on our own. We no longer have a government that consists of people who represent us as their allegiance is to the regime in power. We no longer have access to information as the data gets sanitized before it ever crosses our attention. Does anyone really care? The Dow was up again today. Isn’t the Ali shuffle just mesmerizing? 

Monday will be a holiday and the casino will be closed. As per the Fed’s POMO schedule, the Fed is selling notes on Tuesday so that will be a negative day. But then, five of the last six days of the month are Fed buying days. That means we will blow through Dow 13000 like the National Defense Act blew through the Fifth Amendment! Of course, this ‘blowing’ will take place on five-minute bursts so place your bets! See the chart below.

DJIA - 5 days (02/13/12 - 02/17/12) 5 minute bars

Chart courtesy StockCharts.com

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. Advisory services offered through BMF Investments, Inc.

Rallies or Bursts?

The chart below is a chart of the Dow Jones Industrials for Thursday and Friday using 1-minute bars. With the Friday morning pre-market announcement that the economy added 243,000 new jobs in January, the stock indices burst higher at the open. The Dow jumped about 100 points in the first few seconds of trading. It tacked on 156 points total by the close of trading. So, if two-thirds of the day’s gains come in the first 30 seconds of trading, do we call the gains a rally or a burst? Or, does it really matter? 

I only include the chart so we can all understand that while the stock indices are in rally mode, they are in effect a microwave rally mode. Big moves come in short bursts of buying. Check out the huge volume in the first minute of trading in the volume bar. Very simply put, if investors want to participate in index gains, they have to been in the day before a micro-burst of trading lifts the indices at the open. To make Friday even more impressive, the POMO action was a net seller. Now, just imagine what kind of index bursting we will see when the EU settles on a Greek debt deal! The show always starts at 9:30 AM. Don’t be late!

DJIA - 2 days (02/02/12 - 02/03 12) 1 minute bars

Chart courtesy StockCharts.com

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. Advisory services offered through BMF Investments, Inc.