Friday, May 25, 2012

Plunge Protection Team, Plunge Protection Team - Where For Art Thou?

Why on Earth would anyone be buying stocks these days? The European Union is the second largest economic collective in the world and it looks like they are headed for a recession or worse. The Greek debt debacle is alone going to count for a trillion in bank losses when they default. That will be followed by defaults in the other sorry excuses for countries that thought they could live far beyond their means. Eventually, the chickens really do come home to roost. 
China’s economy is slowing a bit and that is a story by itself. China exports of course to the rest of the world so if an export driven economy is slowing, what does that say for the rest of the world? Yes, in spite of the propaganda issued by the US regime, the world is experiencing weak economic conditions. Sure, the US economy and gooberment was captured years ago by the Federal Reserve and sure, the average amuricun is far too ignorant to notice a different master has mounted them and now controls the reigns. Slip an oat sack over their head and these people just keep plowing. Freedom, liberty, dignity, respect, and courage are the last thing on the peoples’ minds. Europeans have awakened to central bank domination and they don’t like it. At least they know something has changed. What can they do about it? The answer is revolution requires the intelligence to recognize dominance and the courage to demand liberty.
This is the message in the world of stock investing. The central banks have seized complete domination over what was once a capitalistic market. The Fed has now exerted so much domination over the investing process as they have determined winners and losers with bailouts for lenders that they have infected investors with a sense of dependence. The Facebook IPO is a perfect example. Facebook is a completely unnecessary web portal that was hyped more than the Super Bowl. Everyone was clamoring to own it and Wall Street investment bankers were more than happy to sell the stock to the suckers. Uh, I mean ‘investors’. The stock immediately took a nose dive in price and the buyers immediately lined up to sue anyone involved for supposedly misleading the public. Excuse me while I fall out of my chair laughing at these fools. What do they think Wall Street does every day? What do they think the US regime does every day? Step right up, one and all. Get a piece of this brand new stock. What? Stocks can actually fall in price? Since when? I thought Ben Bernanke told the world several years ago that the Federal Reserve’s sole function was to support the stock market? I thought he lived to drive the Dow higher? 
Then look what happened when JP Morgan reported $2 billion in derivative losses. Yes, the number will likely balloon because if JP Morgan said anything, it has to be a lie. There, if the Facebook buyers read articles like this they would know all of Wall Street and all of the US regime to be the pathological liars that they are. That’s their job. They cannot tell the truth. Anyway, the FBI has been called in to investigate the bank. When did a public company losing money become a crime? Answer - in the Ben Bernanke era. Do we all think stocks like Facebook should rise in price everyday and companies like JP Morgan can never lose money? After all, this is just one of many banksters that bankrupted themselves a few years ago trading derivatives. They just aren’t that smart. Without a lot of help from the Fed, they could not make it as a business venture.
And so eventually investors get on to the scam. Bernanke’s Fed has been rigging the indices to rise with constant stimulus programs aimed at giving money to stupid bankers and lowering interest rates to record lows. Meanwhile, they have to keep the economic recovery ruse going lest the oafs with oat sacks over their ears might get rowdy. When one of these programs comes to an end, so too does any stock rally. The stimulus ends in June and the stock rally ends in May. Duh? So everybody sold when the calendar turned to the month of May. Not only was stimulus ending, the world economic fabric was fraying. Investors had plenty of reasons to sell stocks. Other than the insidiously ludicrous data put out by the US regime, prudence dictated an exit. 
But we all know what happens when it looks like a stock route might actually reflect economic disintegration. We cry, “Plunge Protection Team - where for art thou?” And like a Jack-in-the-box, out they pop! On Monday of this week, the PPT tried to arrest the stock decline of the previous three weeks with an immediate rally. That was pretty impressive given JP Morgan had just reported major losses and Europe was careening toward destruction. I’m sure the US regime put out some wondrous economic news to spark some buying but even the greediest Facebook buyer would have to admit that it is strange that the US is the only place on the planet Earth where everything is wondrous just because the fellow sleeping in the White House said so. But then the Fed rally faded on Tuesday after another Fed jolt in the morning (that coincided with the scheduled POMO activity). On into Wednesday the Dow plunged. ‘Oh Bernanke, oh Bernanke. Where for art thou?’ Presto! The Dow look poised to fall towards 12500 as the head and shoulders bear pattern suggested it should. But alas, our hero can’t stomach capitalism. Suddenly the Dow changed course and proceeded to gain some 200 points by the close. The PPT goosed the Dow again on Thursday morning but investors were having none of it. Down again until midday. Again, the Dow got a 100-point jolt from someone with a lot of money, no risk of losing that money, and the stupidity it takes to buy stocks when there is so much risk to the downside. Friday continued the meltdown until the final thirty minutes of trading when that same someone no doubt stepped forward to put some lipstick on the growing pig. Or should I say bear. Have a look at the chart below. It tells the story. Without the Fed, there will be no rally. Without the Fed, there will be a bear market. Isn’t that kind of sad? What does it say for us as a people? 

DJIA - 15 minute bars 5/21/12 thru 5/25/12
Chart courtesy

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.

Friday, May 18, 2012

Fighting Rehab

The week that just ended, May 18, 2012, had the feel of some sort of intervention. It seems that we are all strung out on leverage and debt and we need to go to rehab and sober up. Banks in Europe are buckling at the knees in the face of bank runs as they can no longer function as proper businesses. Every other minute a news story would pop up that Greece would exit the Euro zone and that would be followed with a news story that they could not exit the Euro zone. It would seem that the leaders of Europe are so drunk on debt that they cannot think straight. Across the Atlantic, JP Morgan’s admission of a $2 billion dollar trading loss grew to possibly $5 billion and counting. Does anybody really know? In a world where tens of trillions of dollars in derivatives are exchanged everyday, no one has a clue as to the real vulnerability of the financial sector much less any idea as to the real value of a few billion dollars. It is just paper. Can we all just ignore this stuff and continue to bid up the Dow? In a word, ‘no’.
Well, not forever. This was a week in which the US propaganda regime continued to pump the good news. Everything was getting better and the economy was getting stronger. Yet, Europe has surely slumped into a recession and China has slowed markedly. Australia and Latin America sell heavily into these markets and their economies are feeling the effects of the debt binge and the inevitable contraction. We euphemistically call this contraction ‘austerity’ so we don’t alert the world to the inevitable bear market that will evolve. Or, in my opinion, resume. It ain’t over until the world sobers up. The world must reduce debt, cut government spending, and learn to live with less. The only way to do that is in rehab. 
We have all been living far beyond our means for far too long. Investors have been lured along by the interventionist and manipulative Fed who has made it a priority to continually goose the stock indices higher thus making investors think of their gains as ‘skill’ and not the result of a manipulated con game. Much like three-card Monty, winners are manufactured to lure in the suckers. The more investors win, the more loopy they become. When a suggestion is made to sober up and face reality, the normal reaction is one of defiance. But in truth, there is no way out for Greece. There is no way out for Spain. There is no way our for the US. In truth, we all must go to rehab, get sober, and learn how to live within our means again. This of course will be catastrophic for the big banks. This is precisely why the central banks are fighting so hard to keep the party going and to avoid rehab. 
So here we are. The Fed is constantly feeding the world the drug of debt. We are strung out. We need help. We can’t afford the drug anymore. But the Fed will not give in to rehab. Look at the chart below and notice the red rectangles I have drawn on the SPX 4-year chart. They are the months of May through July basically. These are the months that the central banker stimulus programs terminate. Coincidentally, so too do the indexes of the world. The takeaway is obvious. Without the Fed dumping their debt drug into the vein of the economy, the indexes collapse. We are in the month of May. The Feds Operation Twist ends in June. The indexes are collapsing. The chart would tend to indicate that this may go on until July when the Fed introduces a new rescue program. We don’t want to go to rehab so we let the Fed keep us doped up. That just makes us dopers. Of course, we should look for patterns in trading that we can take advantage of like the chart below. Only this pattern takes guts, skills, and the ability to deal with heightened risks. Rallies end with the Fed and they start with the Fed. Extreme caution is advised.

SPX - 4 years weekly
Chart courtesy
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.

Saturday, May 12, 2012

Same Old Story

What an interesting week we just experienced navigating the new gambling medium we used to call a stock market. Clearly the idea of a ‘market’ has been dead for some time now. Investors no longer ‘set’ stock prices nor do they ‘discover’ prices or values. They are not allowed to do so. The reason is very simple. Let’s look at the week that just passed. 
The previous week ended with a report that the US economy only created some 115,000 new jobs. Supposedly. Like we can believe anything what-so-ever that the US regime says. A look inside that report listed 23,000 new retail jobs. Great! Minimum wage jobs generally make up retail work so we are expected to believe in an economic ‘recovery’ built on 20% of new jobs being retail. Sounds a bit nefarious to me especially considering that retailers just reported a weak month of April. So, the indices appeared to be resting on quicksand as the new week began.
Then the bomb shell. Greek and French voters ousted austerity-minded leaders in favor of less austerity-minded leaders in weekend elections. The very idea threatened to unravel all of the hard work over the past year or so of the Germans and the ruling elitists to enslave the rest of Europe. The austerity plan is really nothing more than a plot to enslave nations with debt that they cannot repay while engorging big banks with bailout money. The key is the banks loan the money to the sovereign nations, the nations can’t repay the debt, the central bankers steal money from the oafs that live in the land, and then the central bankers peel off a fee and hand over the booty to the banksters. Only, the citizens of these countries are beginning to clue in. They voted against their politicians that fed the citizens to the central bankers. Why are the voters so mad? Because no money is getting funneled to the people or the economy. All of it is going to banksters who simply perpetuate debt while suffocating prosperity. So on Monday, the indices looked poised to fall off a cliff given that European austerity had suddenly become more vulnerable. Without ‘austerity’, the broke banks will soon be revealed as simply broke. And of course, a failed banking system in Europe would surely leap across the ocean and take down the US Ponzi-banksters and then the stock indices would fall. Egad! What to do?
Well, we all know the Plunge Protection Team (PPT) has been very aggressive in arresting stock plunges but like vampires, they had a preferred time of the day to go to work. It used to be the magical and wondrous 3 PM hour but I think too many people became aware that the interventionists would always give the indices a boost in the last hour of the day if it looked like the bear was on the prowl. Now, the stock indices look weaker than ever before and traders bail out of positions immediately on the open of trading. The PPT can’t wait until 3 o’clock every afternoon to intervene or 1) they would have to arrest gigantic triple digit plunges and, 2) eventually even the dumbest of dumb would catch on and recognize that the US of A no longer functions as a free market system and capitalism has been extinguished. When the economy becomes over indebted, over leveraged, and over inflated, the banksters are the ones that really suffer. The Fed can’t tolerate stock price discovery amongst the big banks as most of them would be in the junk heap. So, the Fed now steps in at 11 o’clock every morning to intervene in the indices. Of course, we know they are busy with the current bond and interest rate manipulation plan known as ‘Operation Twist’ as they post their schedule of intervention on their website. They commence every morning at about 10:30 AM in their plan to manipulate bond prices. Now, I think we can all agree that the PPT comes to work at the same time given the weakness of stocks.
Sound crazy? We must ask ourselves a question. Given what we knew on Monday morning, who would be buying stocks at 11 AM? Greece is still a basket case and will either become an orphan EU member or they will receive perpetual life support. France has broken from its alliance with Germany and spending cuts will not come as easily as the previous leaders pledged. That means debt will only grow. Spain has unemployment of better than 20% and bond yields above 6%. Operation Twist ends in June. What reason is there to buy stocks? What reason is there to step in front of a falling index? Of course, the indices got a jolt higher at the eleven o’clock hour. Of course, the PPT doesn’t have to use its own money.
A quick look at the chart below shows us that traders still had great fear that the indices would further melt and that Monday’s trend re-direction was fake. Presto! The Dow sold off from the open at 9:30 until 11 AM. Right on time, a small rally ensued. 
Wednesday was a repeat of Tuesday. The Dow was sold in force until the Fed started its activity at 10:30. The index went straight up for the next hour. Again, in the afternoon, no Fed - no rally. Down went the Dow until someone came in in the last five minutes of trading and boosted the Dow by better than 50 points.
Thursday was greeted with more news of economic contraction in that China reported very weak numbers. So did India. The US regime just continued to lie about their numbers but no one believes the regime anymore. Down went the Dow. Well, at least until 11 o’clock. Poof! A rally started. It died at the end of the day.
The Fed didn’t wait around on Friday. JP Morgan announced on Thursday evening that they had lost some $2 billion trading derivatives and the losses could mount. By announcing on Thursday evening, they gave the PPT time to print up some buying cash. They would need it. They hit the indices with a strong buying bias. Of course, traders dumped stocks in the first five minutes but no matter. The Fed has a printing press. Apparently they wanted to take the afternoon off as they clearly went to lunch at noon and never came back. The Dow continued to melt and lost everything.
So let’s recap. Every piece of real economic data points to a worldwide slowdown. The tech giant Cisco warned that tough times lie ahead. Q1 GDP looks like it will have to be revised downward. Most of us knew it was a lie when it was first reported a few weeks ago with the sole reason to give the Dow a boost. How did we know the original number was a lie? Because the regime’s lips started moving. The US unemployment rate is listed at 8.1% and everyone on the planet knows this to be a lie. The number is produced by eliminating 300,000 workers from the roles every month. And now JP Morgan bank has lost another $2 billion trading derivatives. Same old story. Banksters do what banksters do. They game the system and they are never held accountable for their offenses. What would happen if the PPT stood down and stopped intervening? What would happen if the Fed let investors determine bond prices and therefore yields? I’ll tell you what would happen. We would clean out the garbage and the excesses and we would eventually heal and return to true growth. But that’s not going to happen. Just look what happens every day at 11 AM.

DJIA - 10-min bars 5 days 5/7/12 - 5/11/12
Chart courtesy
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.

Friday, May 4, 2012

Lies, Preposterous Lies, Ridiculous Lies

The headline basically describes the US regime. Anyone with a single vibrant brain cell should be outrageously offended by anyone or any body constantly telling a lie and expecting the listener to believe. If we are to be a respected people, we should demand respect from those who supposedly represent us in government. I use the word ‘supposedly’ because the US government is a failed institution. The supposedly elected people that hold office are common traitors and have no interest in representing the people of the land. But, sorry to say, the populace is too stupid, too ignorant, too apathetic, and too brainwashed to understand what has happened to the world. Present readers are of course excluded from the populace of which I am referring. The vast majority of the oafs don’t want to know anything and they are content in their cognitive dribble. Intelligence has dissolved to a point that it cannot be fathomed but can be illustrated.
‘Amendment One’ is floating around to get the populace involved in legislating marriage. Everyone seems to have an opinion as to whether or not marriage should be solely reserved for a partnership of a male and a female. Most people feel strongly one way or the other. Everyone knows about this issue. Yet, the traitors in Congress passed the National Defense Act a few months ago and there was no debate nor protest. Not a peep! The NDA gives the regime in control of government the right to order the military to  evict any of us from our property, seize anything they want, imprison us, and even torture us with no right to legal counsel. Crickets. Nothing. Not a peep. We surrender. Gay marriage? Hold on there. We are willing to march and protest that one. America does not deserve to be free. We don’t have the courage for it. Clearly we no longer are. Just ask Ted Nugent.
Uncle Ted made a few remarks at an NRA rally and the regime sent the CIA out to scold the guitar player. Disagree with the regime and punishment will be forthcoming. The fourth amendment has been stricken. The first is becoming a bit of a joke. Ted’s mistake is in believing the military is on his side. 
And now, back to the lies. The month of April was negative for the most part as the Dow struggled with the reality that the world economy was still very weak. Just in time to prop up the monthly statement, the Bernanke popped out of his hole and promised to keep the stimulus propellers turning underneath the Dow. Presto! The Dow recovered all losses of the first three weeks of the month in the last furious rally week. Ain’t he special? 
As May started, the ISM numbers out of three regions of the country came out very negative. Especially weak was the Chicago ISM number. It was the weakest in years. Why is Chicago important? One, of lot of the nation’s manufacturing is located in the Chicago region and two, much of the nation’s manufactured goods travel through Chicago thus giving the region a pretty good proxy for the health of overall manufacturing levels. Of course, the liars countered this development with preposterous lies that manufacturing was really okay. In fact, a day after this regional ISM report came out, the lying gooberment issued a report that manufacturing was the strongest in April that it had been in a year. Every category was up. Not that anyone cares to but if we were to read all the government disclosures, we can see that none of the regional ISM numbers were included in the official government lie. Uh, I mean report. In other words, the manufacturing report that the gooberment put out was just some numbers they wrote down to make us feel better and of course to drive the Dow higher. It did. Then a few people sniffed the ludicrous lie with the initial ADP jobs report. ADP reckoned that April enjoyed a mere 115,000 new jobs. This was quite a disappointment to the brainwashed community. What with manufacturing picking up so strongly in April and all, it would seem that somebody is telling a lie. I think we all know who that might be. So the Dow stumbled a bit on Thursday. 
Friday simply saw verification of the weak job creation number and the Dow plunged. How can manufacturing be so strong and job creation so weak? How can consumer spending be so strong (as reported by gooberment liars) and reports from retailers like Target and Macy’s be so weak? In fact, retailers had the worst month of April in three years. Yet, a peak into the gooberment employment propaganda report showed that of the 115,000 new jobs in April. 23,000 of them came from the retail sector. In case readers don’t keep up with retail, those would be minimum wage type jobs. These gooberment reports are just ludicrous lies. To get an explanation, the Labor Secretary was interviewed on the financial networks Friday morning. She gave some kind of babbling nearly incoherent blabber about how the jobs report was actually pretty good and pointed out that the official unemployment rate had fallen to 8.1%. Granted, I have covered this phenomena countless times but again, when there is a weak job creation number, the gooberment will always report a lower unemployment number. This is the way the propaganda machine works in third world dictator-run regimes and this is the way it works here. What do we expect. We don’t demand the truth. Why? Because as we saw Friday, the truth might make the Dow Jones Industrial Average fall. Lies give way to preposterous lies that give way to just ridiculous lies. And the reason the unemployment rate fell to 8.1%? Another 300,000 dropped out of the work force. In other words, almost thee times as many people quit the labor force as joined it. How is this a good thing again? The US now has slightly less than two people supporting every one that does not work. There is the truth!!! Sooner or later the stock indices will feel this burden.
The chart below is a five-year look at the Dow in red/black and the gold miner ETF, XAU, in gold. All of us with at least one functioning brain cell should know by now that the stock indices are now a function of inflation and not valuation. The Fed’s coup de etat in August of 2007 locked in this relationship. The chart below clearly shows that gold miner index tracks very closely with the Dow. Both are inflation measures. The XAU actually tends to foreshadow overall trends with the Dow being a laggard. Clearly, the XAU has been signaling for some time now that something was wrong. XAU has been selling off over the past year or so while the Dow has enjoyed a Benjamin Bernanke bubble ride higher. Either the Dow must fall or the XAU must rise. Here is the rub. Gold miners are seeing the price of inflation as mining costs are making gold extraction more expensive. The XAU has been weakening to coincide with this fact. Clearly, the XAU is breaking lower over 2012 while the Dow has been rising like the bubble that it is. May is here. The Fed’s latest manipulation program is ending in June and it is time for the Dow to crash. Will it follow XAU lower? For whatever my opinion is worth, the Dow will crumble into the beginning of summer when Benjamin Bernanke will announce the next manipulation program. God forbid we ever be exposed to the truth! Head to the sidelines and wait for QE4. That’s all we have. Unless of course we are willing to embrace the truth. Nah!! 
Lies, preposterous lies, and ludicrous lies. That’s all we deserve anyway. That’s all we expect from our overseers. 

DJIA in red/black, XAU in gold - past 5 years, weekly
Chart courtesy

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.