Stock Truths

8/24/12

Before I get to stocks, I must admit that I am a bit angry. Since Mr. Obama told us business owners that we weren’t really responsible for building our own businesses and the government was really responsible for our existence, I have been doing some thinking. A toilet handle broke in one of my businesses and I did what any business owner totally indebted to the government for my existence would do. I looked up the White House on the Internet so I could report the breakage of my toilet handle. Surely since government is responsible for my business, it seems they would have a link on their web page so we business owners could get government personnel out to fix things like toilets. But no, there weren’t any links for toilet repair. There weren’t any links for repairs of any kind. There weren’t any marketing tools to help with advertising. There weren’t any links for help with signage. Mr. Obama, if you are going to take credit for my business existence, shouldn’t you also provide services for things like toilet repair? You did say you were responsible, right? Then where are you when I need you? I am now getting more angry that government started my business for me but now I can’t get a little help with toilet repair? This is part of running businesses Mr. O. Nevermind. I’ll stick my hand in the toilet and fix the arm myself. Just like I do, and have done, everyday since the inception of my business. I do it all myself!!!!! Well if I start my business and maintain my business all by myself, is it too much to ask of government types like Obama to say the hell out of my life and my business??? Jerks!

Now for stocks.

Wednesday, US gasoline prices hit an all-time high for August 22. The reason reported was a shortage of product. In truth, the central bankers have injected inflation into the markets my serially proposing further ‘stimulus’ efforts. They have inflated stocks. They have inflated bonds. They have inflated corn prices. 40% of US corn supplies go to make ethanol for gasoline. As corn prices rise, so too do gas prices. In addition, an accepted figure is that some 75% of everything we buy in the grocery store is affected by the price of corn. Prices rise when currencies weaken and fed ‘stimulus’ weakens currencies. The idea of gas prices rising due to ‘shortages’ is just a ploy to divert attention away from the cause and effect of Fed ‘stimulus’. Readers come here for the truth so there it is.

The Dow lost ground everyday this week except Friday because central bankers downplayed the injection of more bond buying. And as we all know, when the Dow drops, Bernanke comes to the rescue. As the Dow threatened to break below 13,000 on Friday morning, news that Bernanke was considering more stimulus hit the tape. Up went the Dow. Sure the pundits all postulated all kinds of reasons for the movement in stocks. With almost all of the economic news continuing to show weakness, and almost all of the corporate news continuing to show weakness, we should all expect stock weakness. But Bernanke cannot tolerate that. Everyone is guessing right now when the next magical injection might occur. Want the truth? The next Fed announcement of action won’t occur until the Dow drops into the mid-12k range. Who cares about trivia like corporate earnings or economic data? The Dow is now the Fed’s to drive. They own it.

On Friday, economic data showed that capital goods orders fell 3.4% - the biggest drop since November. Durable goods rose 4% but that rise was due solely to transportation orders. Ex-transportation, durables fell. Seems bad, right? Well, on this same day, Bernanke released a letter to Congress saying that his stimulus gun was still loaded and he was ready to act if the economy didn’t show some more strength. Guess which story made the Dow rise? Yep, economics no longer matter and neither does a ‘market’. The Fed controls the stock indices and the indices react to every Fed flinch. 

So the question is very simple. When will the Fed announce their new stock manipulation program? Again kids, don’t try this at home. Conspiring to manipulate stock prices is a crime. But not for central bankers. It is their job!

I have enlisted the chart below for some help on the timing of the next Fed intervention. The chart is a picture of the Dow over the passed 7 years on a weekly basis. The wavy blue line is the approximate 200-day moving average. The straight blue line is my interpretation of what I call the ‘quantitative easing bull market’ support line. Of late, central bankers only bluster and threaten intervention. I suspect should the Dow be allowed to fall to the straight blue line, the Fed will spring to life and the next bull run will follow. If the Dow should fall to 12800 (the support line), buyers should step in quickly to beat the Fed to the draw. If there is any risk in stocks, it is the waning power of the bull runs. If we were to draw a line connecting the tops, our line would start to look like an arc. Each bull run seems to exert less power than the previous run. And, the volume continues to wane as well. But that stuff is only for worry-worts. We have the illustrious Mr. Bernanke to protect us from any nasty bear market tendencies that used to be a normal part of stock behavior. But no more. They are not allowed. So ideally, we would like to see the Dow pull back to 12800 at which point Mr. Bernanke would jump out to announce the next bond purchase program. Otherwise, stocks could fail and so too would the ‘recovery’. We all know Mr. Bernanke no longer has a choice. The only question is when. Maybe the chart below is telling us what we need to know.

DJIA - 7 years weekly

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.

Telling Tall Tales

Stock indices are driven and controlled by central banker action. Everything else is either minor or insignificant. For instance, the current rally is all based on anticipated central banker ‘stimulus’. The ECB’s Mario Draghi talked (manipulated) world indices higher a few weeks ago as he announced his bank was ‘ready to act’. He also said that his bank could do plenty. In concert, the Fed’s Ben Bernanke announced that his bank was willing, able, and ready to do anything necessary to keep the Dow up. Uh, I mean he said his bank was willing to do anything to manipulate stock prices higher from now on. Uh, I mean he said some kind of blabber about helping the economy but we are all adults here. We know that Mr. Bernanke and Mr. Draghi care nothing about economies or citizens. They only serve to manipulate stock indices higher. Thus, they ‘jawbone’ about committing more ‘stimulus’ as long as they get away with it. Then if needed, they furtively filch some money from unsuspecting and woefully ignorant citizens. They then give the cash to their bankster partners who goose the stock and bond markets. This works to keep the ignorant public distracted as to the real con game. But the point is simple. The only thing that matters to stock index direction is central banker intervention. And, right now, we have plenty of that.

At the same time, we do have some economic data that should arouse suspicion. The ‘data’ is most likely just more of the tall tale that government likes to tell because they want to control the citizenry. Since the central bankers are manipulating stock indices higher, they of course need some corroborating economic evidence to justify the rally. Enter government ‘statisticians’. 

This week, we were told of an ‘unexpectedly strong’ rise in retail sales in the US. Really? Then the biggest retailer of all should be doing great, right? Walmart sells more than the next four or five biggest retailers put together. Yet Walmart has reported that in the second quarter, same-store sales actually fell by over 2%. 

We have been getting inundated by the ‘improving’ real estate picture news. Housing is in ‘recovery’. Yet, housing is hardly even making a blip of a bounce from its multi-year descent and mortgage delinquencies are again on the rise. This week unemployment claims rose across the country yet consumer confidence ‘unexpectedly’ rose. What? More people are getting more behind on their mortgages, more people are applying for unemployment, yet we are supposedly spending more money and our confidence is rising? Really? Maybe confidence is rising because citizens know an election is coming in which we get a chance to oust the disrespectful condescending business hater who sleeps in the White House. Anyway, none of the ‘data’ makes any sense. 

A byproduct of central banker manipulation is most stock indices are rising together. Spain may be broke, insolvent, and entering a depression but it matters not when it comes to stock indices. As I pointed out last week, the EWP rises along with the Dow. Weeeeeeee!!!!!

The tale tales the government tells are simply the narrative the central bankers need to mask their manipulative efforts. We should ignore the complete fantasy that comes from government. Not that any ‘data’ matters. It could all be bad and the indices would still march higher. Only bad data and higher indices would eventually raise the suspicion of manipulation to even the stupidest investor. It might even raise the suspicion of an amerikun. Nah, as long as the Dow moves higher, they are happier than they are dumb.

Finally, the government claims that inflation is tame. Really? Gee, just in the month of July, corn prices rose 22%. I have read that 70% of what we buy in the grocery store is corn related. In addition, 40% of US corn production goes into ethanol that in turn goes into gasoline production. So, the price of corn went up 22% in a month and inflation is still tame? Yes, gasoline prices also moved up about 5% for the month of July as well. None of us should ever pay any attention to the government’s CPI numbers ever again. They are a bogus lie. 

Seeing is believing. Below is a chart of the price of corn. Nothing else needs to be said. The US government is simply a liar. This chart shows first how preposterous the US regime is for trying to sell the ‘no inflation’ tall tale. The corn chart shows the effects of central banker manipulation. Their money creation machine, while it enriches their bankster friends, creates inflation. Corn prices have risen four-fold since 2006 and look poised to make new highs very soon. Thank you Mr. Bernanke! Can I have another?

Oh yeah, the indices are rallying on the prospects of more Fed manipulation. I just hope none of my readers like to eat corn! The chart does not lie.

Corn - last 10 years ending 8/17/12

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.

Investment Bubbles

8/11/12

The current economic picture is rather gloomy. Europe is a mess. They are drowning in debt. Central banker Draghi is offering a lifeline that is inflated with more debt. Somehow believers want to believe more debt is the answer. China is slowing and almost no one believes Chinese data. Most pundits believe China is slowing precipitously. Their government is offering more debt a stimulus. Most believers want to believe more debt will perk up the economy. Of course, China exports heavily to the US and while the US regime claims all is well and recovery is taking hold, only worshippers of the regime share this belief. Just this passed week, we learned that mortgage delinquencies were rising again. It does not seem plausible that the Chinese economy could slow while the US economy strengthens. We should take note that only the current regime claims that things are getting better. Economic growth data from previous quarters is getting revised lower and expectations are getting reduced. Stocks?

Well, stocks are riding the bubble of central banker inflation. Every time indices threaten to weaken, a central banker somewhere pops out to offer ‘stimulus’. What they mean of course is more debt. These central bankers are trying to prop up equity markets by manipulating interest rates to zero. Sure, they can get rates to zero. All they have to do is buy up all the sovereign debt in the world. Then who owns these supposedly sovereign nations? Right - the central banks. That is the goal. But the populous has no understanding of pure evil or economics or almost anything that doesn’t involve some ridiculous reality TV character. And, as long as the stock indices continue to churn higher, no one will complain of lost liberties or lost capitalism. 

But given the overall economic weakness of world economies, and given the enormous debt loads of governments and individuals alike, and given the risk of imminent financial collapse at the twinkling of a derivative deal gone bad, the case of the rising stock indices would surely indicate that we are in bubble land. I believe we have entered into the greatest bubble ever blown and when this one pops, everyone is going to lose everything. In a sense, investors have already lost everything. They have surrendered capitalism. They have surrendered the ability to control currency valuation. They have accepted debt that can never be repaid. They have surrendered intellect. And, they have surrendered their future. Central bankers have all that stuff and they alone control the currency. When they say the currency is no longer valid, it will all be gone regardless of what investors see on their monthly statements. That day is coming soon.

The chart below is a look at this passed week. The Dow is in candlestick and we can clearly see that every time the Dow threatened to roll over, central banker manipulation propped it back up. I don’t know that there is any significance to the 13,000 level on the Dow, but the central bankers sure look head strong to defend it. Even Friday was a curious day. China announced very poor export numbers. That would seem to indicate that they were not exporting much to the US. Global economic expectations were again ratcheted down. Yet, it didn’t seem to matter. The Dow stumbled around until the last hour of the day when it lurched higher by over 40 points. A quarter of the days volume came in during the final thirty minutes of trading. To this, I say, ‘Good job Mr. Bernanke’. Of course, this little rally was instigated on this day by a Fed member saying more stimulus was needed. The bubble kept expanding. 

Oh, just one more thing. That red line is the EWP - the Spanish ETF. Readers may want to brush up on Spain but they are most likely entering into their own Greek-style debt depression. Didn’t matter. As we see from the red line in the chart, the EWP pretty much tracks the Dow. How’s that? Yep, regardless of solvency, almost all indices move together these days. Bubbles tend to play out like this. And of course, there is a lot of money to be made in bubbles. We just don’t want to be there when they pop. Bubbles Bernanke will surely declare ‘bank holidays’ when this happens to give his fellow robbers time to pilfer whatever is left of American savings. So, please don’t confuse whatever it is we are doing these days with investing. We are just riding the bubble while the central bankers inflate everything together.

5 days 8/6/12 - 8/10/12, 30-min bars: DJIA in candlestick, EWP in red

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.