Senator Ted Kaufman (D DE)

Financial Reform

Sadly, financial reform of greed based capitalism, shadow banks, and greater market transparency continues to deteriorate. At times it seems  as if  the 2008 meltdown never happened

Steve Forbes, this AM on CNBC proudly announced the list of the world’s richest billionaires has significantly grown in size and money, as real unemployment is the USA has fallen to near 20% (The billionaire, obviously, did not offer the last 1/2 of this comparison) Forbes, of course, does not want “big” government to regulate greed based capitalism. Outside of a few voices within the Obama administration (Paul Volker, Elizabeth Warren etc.) both the administration and the lobbyist that dominate congress seem to agree – Let business take all the risks it wants and us taxpayers plus our kids will pay trillions to fix all their mistakes

Senator Ted Kaufman (D-DE) is one of the people who is not afraid to stand up for rules based capitalism. On his website is the speech he plans to deliver today.

One legacy of the Great Depression was we built a rules based capitalist system that endured and dominated the world until a few decade ago. Here’s a summary of his ideas from The Baseline Senerio

  • Excessive deregulation allowed big finance to get out of control from the 1980s – but particularly during and after the 1990s.  This led directly to the economic catastrophe in 2007-08.
  • We need to modernize and apply the same general principles that were behind the Glass-Steagall, i.e., separating “boring” but essential commercial banking (running payments, offering deposits-with-insurance, etc) from “risky” other forms of financial activity
  • We need size caps on the biggest banks in our financial system, preferably as a percent of GDP.
  • We should tighten capital requirements substantially.
  • And we must regulate derivatives more tightly – on this issue, he likes at least some of the steps being pushed by Gary Gensler at the CFTC.

The stock market will rise because Senator Kaufman’s speech is NOT impending legislation. But unless we do something we will continue to repeat the mistakes of the past and every taxpayer and their child will continue to pay an enormous price - “socializing the risk and privatizing the gain”

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage Volume
Dow +0.o3% down
NASDQ +0.78% down
S&P 500 +0.45% down
Russell 2000 +0.79% -

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See PositionsStrategy , and Overview for changes made over weekend. (No changes this weekend)

Another melt up day in decreased volume. Right now it seems, even though US markets are overbought, they are poised to move higher on any piece of good news.

As suggested yesterday the XLF (ETF for financial stocks) was one of several possible catalysts for continuing the rally. As the chart shows, its broken out to new highs over the last two days in increased volume.  Basically, any meaningful attempt to shadow institutions and bring transparency to related markets is getting crushed. Therefore, it sure looks like the shadow financials  will add fuel to the stock rally

Shorter term traders - Even though we are overbought, it sure looks like the McClellan will reach above 80 sooner rather than later. You might want to go long with TYH(3X technology) or FAS (3X what financials do) Buy a dip and keep tight stops.

Significant Indexes

  • McClellan Oscillator rose a bit to +64.63 yesterday. We are still well above +60 or Overbought territory. StockCharts has a better version of the McClellan chart ($NYMO) LINK.
  • BDI - The Baltic Dry Index, which measures the cost of world trade (also a good indicator of how China is doing since they are huge exporters/importers) has exploded higher in the last few weeks = Bulls rule BDI has flattened out in the last tree days

Positions

The  Positions Section = latest buys and sells – (Revised positions last weekend) - These are positions I actually own

IMAX – has exploded higher in HUGE volume.  It has “gaped” higher three days in a row.  In short, its going elliptical. That means expect a pull back. IMAX also reports earnings today.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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