Wednesday, January 30, 2013

Arigato Gozaimasu

The New Year and the month of January are off to good starts as evidenced by stock index gains so far. Since all stock indices now are products of manipulation and not valuation, we owe a big ‘thank you’ to whomever the key manipulator might be. At this point in the year, that manipulator would be the Japanese central bank the BOJ. They announced a new ‘Zimbabwe’ style strategy to boost their listless economy. The BOJ is going to devalue the Japanese yen and they are going to do so by selling yen and buying other currencies. 

Given that they need Europe to buy their products, the BOJ is specifically going to buy euros and euro debt. Currencies are not valued in vacuums. Their value is relative to the value of other currencies. Devaluing a currency necessitates the selling of that currency and the purchase of another currency. The BOJ strategy will devalue the yen and raise the value of the currency they buy. What if they picked the US dollar to purchase? That would have appreciated the dollar and of course since the Dow is nothing more than a product of US dollar currency depreciation and thus inflation, the stock index would have crashed. 

Instead, Japan needs Europe to buy Japanese products. Of course, Europe is drowning in debt. So, the BOJ announced they would consume a great percentage of that debt by selling yen and purchasing the euros necessary to buy that debt. That makes the euro increase in value and the US dollar decrease in value. Since US indices are now simply inflated or deflated by manipulation programs, the falling dollar inflates stock prices higher. So to the BOJ and the Japanese people, we should spell out a big ‘Thank You’ in chemtrails over their skies. Or, in a more respectful ‘thank you’, we should use the Japanese words for ‘thank you very much’ - arigato gozaimasu. 

But hey, don’t get too excited. Almost all indices have risen since the BOJ took the lead in currency manipulation. The chart below shows the S&P 500 in the black line and the Spanish ETF, EWP in candlestick. They, like almost all other indices in the world, are both up about 5% at the close on Friday, January 25, 2013. Just look at the chart below but keep in mind a few thoughts. 

One, when the world gets flooded with money, garbage floats like everything else. And, everything tends to float at the same water level. 

Two, Spain’s unemployment level is 25% and the under 25 year old unemployment rate is over 50%. Spain’s  most powerful economic region, Catalonia, is mulling succession. Spain used to lead the world in home ownership. Most of that was based on adjustable rate mortgages. Their real estate continues to worsen as Spain’s largest bank, Bankia, declared what I interpret as a de facto bankruptcy in that they asked for government bailouts. Bad loans continue to mount. Does any of this matter? Absolutely not. In this new era of central banker manipulation, Spain, Greece, and probably Zimbabwe go up with everything else. It’s not about stock selection. It’s not about allocation. Making money these days is all about trusting central bankers to bailout the stock indices. That has been their pledge.

Three, the world has entered another seductive bubble. Like all bubbles, it will eventually pop and ruin those who have been seduced. It is important that we recognize this period as a bubble. However, a lot of money can be made in a bubble and my guess is the central bankers are almost playing chicken with each other to see who can blow the bubble bigger.

Four, the bubble keeps expanding on devalued money. Who would have known that the way to fix any broken economy is to devalue the currency? After all, that is the current strategy of every central bank on Earth. Zimbabwe took the lead with this strategy and look what it has done for them! 

Five, where do central bankers get the money to manipulate stock indices? Well, they simply steal it from the ignorant populaces and then give some of it to their banker pals. Where, for instance, did the Federal Reserve get $3 trillion dollars to buy $3 trillion dollars worth of US assets? Yes, I know they had the money printed. Where did it come from? The answer is to go stand in front of a mirror. While readers are there, they might as well assume the position and hold their hands up in the air. Brace yourself for the truth because this is possibly the only source on the planet. Printed money is debt. After all, it says so right on the currency. Our money is a ‘Federal Reserve Note’. That’s debt. Who pays for the debt? Citizens do with higher taxation. In order for the evil Fed to confiscate all of our assets, they must hopelessly indebt us. Enter their conspirators or what we call ‘Congress’. We are now all alone.

Six, on a short term basis, almost all markets look to be a bit over-bought. They are due for some selling but there is no need to panic. The central bankers will be there to back stop the falling indices. There is no question in my mind that Ben Bernanke is not going to stop until the Dow at least makes new all-time highs. Yes, we may have a brief period of selling as we turn the calendar to February. Remember, Ben seeks to fluff up the monthly brokerage statements so we all go out and spend our money. He will make sure to keep January strong but then will take a break in early February. Hey, pushing up the stock markets of the world is a tiring task.

But fortunately, Bernanke has help from his central banker brethren in Japan. Who will manipulate the indices higher in February? I don’t know. Let’s just enjoy January and give a loud shout out to Japan. Arigato gozaimasu indeed!!  

Before we close, let’s remember that US fourth quarter GDP contracted slightly. This is the latest from the National Department of Pathological Lying. Some people still refer to them as the Commerce Department but I think my title is a bit more applicable. This department is an extension of the regimes propaganda machine and their reports are always comical. For instance, they tried to sooth investors by trying to play off the entire drop on a decrease in government spending. They tried to reduce worries by including a few lines about business spending rising 12% due to software and equipment increases. Really? The same report says that business inventory build slowed greatly. What did they need the equipment for? Further, if businesses increased their software spending, it certainly was not reflected in the reports from tech companies that reported earnings recently like Intel, Microsoft, HP, Dell, and every other tech and software company. Well, we are talking about the gooberment propagandist.   

But worry not, my friends. Ben Bernanke does not need an economy to support higher stock prices. He has our money. He does not need corporate earnings to support higher stock prices. The Fed sets all prices for everything asset related anyway. He does not need the plunging consumer confidence to support higher stock prices. Stock ownership is declining amongst citizens so fewer and fewer citizens actually own stocks anyway. No, all Bernanke needs is an ever lower value of the US dollar. For that, we can say, ‘Arigato gozaimusu’ indeed!

YTD 01/25/2013 - S&P 500 black line, EWP candlestick
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, January 18, 2013

New Year For Stock Price Manipulation

For stock investors, a new year brings hopes for capital gains. The US government is hoping for capital gains so they can generate more taxation. Central bankers just see the new year as more opportunity to manipulate the stock price higher so investors stay happy, the US government gets more tax money, and the average person on the street stays blissfully ignorant of the new elite order that dominates their lives. Same story, same worries, same stock game. Push the Dow higher and no one will question the price to be paid for that push. Except for me.

The fourth quarter of 2012 was a downer so the Fed saw to it to get the new year started with a bang. The Dow leapt 200 points in the first few moments of trading on the first trading day of the New Year. This was not a surprise. The economic data that the government puts out would justify a stock price rally. Home sales and prices are improving, unemployment is falling, bankers are richer than ever, and the fiscal cliff was averted by a tax increase. Yippee! Everything is great again! Well, except that the US has again run out of money and needs to borrow another trillion to pay her debts. Congress remains completely infested with mental midgets of mendacious motivation. They answer every challenge with tax increases. They fill their constituents with fallacious blabber. They continue to destroy the country from the inside out with each stroke of their profanely stupid legislative pen. So to keep the oafs in line, the Fed has to work their black magic by pushing higher the ultimate barometer of economic deception - the Dow Jones Industrials. 

2013 will no doubt be another superior year for stocks. Mr. Bernanke will see to it. Meanwhile, the assets of the US continue to be stolen from under the ignorant noses of the populace. For instance, a solution to the debt ceiling was bantered about in that the Treasury could issue a trillion dollar coin, give it to the Fed, and they could buy a trillion in debt. Say what? No one on the planet raised this question but me. But here is what we should realize. The Fed is once again in the equation as the buyer of US debt. With what are they buying the debt? Their own money? Ha! Don’t be preposterous. No one on the planet wants to buy US debt yielding 2% or less with their own money. The country is broke. There is no way it will ever repay the current $17 trillion in debt. And, the Treasury is in a race with the rest of the world to devalue its currency so whatever debt it does repay is with cheaper dollars. So, the Fed has to buy the US debt to keep interest rates down. Clearly, higher rates would put an end to the Fed con game and the rigged stock indexes. Most assuredly, the faux economic recovery would vaporize with higher rates. So at the end of the day, should this option come to fruition, the citizens of the country would be another trillion in debt, the Fed would have another trillion in assets that it did not pay for, and the idiots of the world would cheer the rally in stocks. The Federal Reserve currently has $3 trillion of assets on their books. Did they pay for any of it with their own money? Of course not. That used to be called ‘stealing’. Not when the Fed does it. It is called stimulus. 

This behavior will continue. There is no political intellect available to stop it. But, this will aid the stock indexes. Yippee! Get on board or get destroyed.

The word of the new era is ‘manipulation’. There aren’t any real ‘markets’ any more. We are not allowed to set our own prices for anything - stocks, bonds, nothing. I call the current era the ‘Age of Insanity’. One reason is the manipulation and influence from the hands of the central bankers. For instance, every central banker on the planet is printing currency, manifesting electronic currency, and ballooning the money supply of their country of dominance. Who would have known? This is one for future economic books. Apparently, the way to fix an economy is to destroy the value of the currency used in that economy. How about that? 

But again, please remember the real reason for increasing the monetary supply. GDP equals money velocity times money supply. Money velocity is the turnover rate of currency as it buys goods and services during a year. Money velocity across the world is at all-time lows. That means that the true state of economics is lousy. A low money velocity rate would also serve to lower GDP. Uh-oh! Falling GDPs might alert the dope on the street that one, the data that governments put out is a ruse, and two, the dopes on the street really can’t live as lavishly as they hoped. And three, government can’t bring economic utopia to the masses without bankrupting the rich people. Reality bites! Truth burns the soul of fantasy lovers. 

So here is the truth. A falling money velocity (bad economy) can be offset by a rising money supply (the deception) so that the GDP can rise (the con). The end result is that sovereign debt must increase as an excuse to inject more currency. A depreciating currency spikes inflation. Inflation pushes prices higher for everything including stocks. Yippee! Food prices are up. Insurance rates are up. Cable prices are up. The currency buys less and less. Stock prices are up. Yippee!!

How insane are we? How much manipulation is there? I would like to answer both questions with a chart of Intel. Intel makes chips that go into PCs. PC makers are struggling to keep the doors open. It makes sense that Intel would suffer along with PC makers. So, let’s look at Intel on a two-day basis on the day they announced earnings, January 17 after the NYSE close and the day after. The chart below shows the action for every two minutes of trading. Take a look at the end of the day in the last five minutes of trading on the 17th. Everyone knew earnings would come at the close of trading. Everyone knew PC sales were very slow. Yet, Intel’s stock price moved higher at the open of trading. At the very end of the day, some selling began to pull the stock price down. Suddenly, at 3:54 PM a massive buy program (as evidenced by massive volume at the bottom of the chart) jolted the price higher. Who in their right mind would have been buying this stock with such conviction? Maybe someone who wanted to ensure stock gains for the day. Intel is, after all, a Dow stock. At 3:58, a strong sell program took advantage of the higher price afforded by the previous two minutes of trading. The exchanges closed for the day. Intel announced their earning results. They were terrible. The next morning, the stock price caved in. Who could have guessed? More importantly, who was manipulating the price of Intel higher at the end of the day on the 17th? I refuse to believe that anybody was stupid enough to think that Intel would report good earnings. 

But give the Fed some time. They will have Intel higher by next week. The indices will comply and follow. Yippee! Enslavement is enslavement. Only the Fed uses velvet shackles. Most likely, the stock indices will rise until the realization that the US is broke and must again raise its debt ceiling. Until then, enjoy!

INTC - 2-min bars, 1/17/13 - 1/18/13
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.