Investors 411 Blog

The Second Maine Militia

Second Maine Militia leaders from Time Magazine

There are three excellent comments that you should read to the right. Let’s focus on Popeye’s reference to the forming of the Second Maine Militia . – They open their yearly meeting by blasting fake TV with smiley faces and phony slogans painted on them with AK 47′s and old cannons. Article from Time magazine  LINK

They get it.  They share the view that the US government has lost its moral authority. The problem is not right vs. left, Democrats vs. Republican , but “up vs. down.” Money quote – both political parties have “ degenerated” …“into whores for wealth and arbiters of empire.”

Something the Maine 2nd militia would be up in arms about is how Tim Geithner as NY Fed chair (now Obama’s Sec. of Treasury) sold out the taxpayers by over compensating the shadow banks (or in Maine Second Militia terms “whores for wealth”) in the AIG bailout. Lead story in NYT business section LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals, Fundamentals & Analysis

KISS = Keep It Simple Stupid – The dollar rules

Dollar broke down through its $75.00 support level and the benchmark S&P 500 broke out to new yearly highs.

Volume our usual #1 confirmation factor was up, but still below average . Volume, therefore, did NOT confirm the price move. In fact over the long term the rise in stocks and decline in volume almost always signals a major reversal. But, for the last few months the Dollar rules and little else matters.

Bernanke spoke yesterday and overall he was very negative on the US economy. This is bad for Main Street and Jobs. But good for Wall Street because interest rates will remain low for a long time (Lots more on this, but limited time this AM)

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI is @ 1+% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI rose a  significant +109 points yesterday and closed at 4220. Up 13 days in a row . The BDI’s growth did slow down a little as it approaches its major resistance level at 4291 . (This years high)  The BDI has rallied about 2000 points since late September. =  Bullish for stocks & world trade right now. Especially good for our positions in FXI & EWZ

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The Dollar is currently the #1 forecasting tool .

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

US dollar was down a  significant  -0.47% yesterday. The dollar closed at $74.88 . The $75 support level has fallen . If the dollar closes below $75 today it will confirm the breakdown

Which ever side the Dollar breaks out through will set the momentum for it and the opposite will happen for US ( and most world) equities.

CAUTION – The first breakout (up or down) is often false. Right now the momentum (since the long term trend is down) is with the Dollar bears and consequently stock bulls

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$NYMO The NY Stock Exchange McClellan (EOD) Index measures how much the NYSE is oversold or overbought .

The index closed at +35.50 . This indicates stocks are overbought and The McC rose +28.62 yesterday  If we get another rally this big stocks will be clearly overbought and its definitely time for long term investors to take some profits.  No one should be adding to long positions now. Traders and shorter term investors should be considering taking profits sooner.

Even though the Dollar Rules consider overbought levels (60+) on this index a point to lighten up on stocks)

Key to chart – Zero  is roughly  neutral and roughly when you approach to @ +60 you are overbought and approaching -60 you are oversold . Buy at oversold and sell at overbought. Nothing is absolute in this chart. In fact using the moving averages as a central point is better than using zero. Nothing is absolute about the minus or plus 60 number either.

Oversold conditions = buy, Overbought positions = sell

Positions

The  Positions Section (top of blog) to see all the latest buys and sells

Sorry have not had a chance to update Positions section in well over a week – see past updates

Investors

Comments – NOT the time to buy or add to recommended positions. (FXI, EWZ, GLD )  Enjoy the rally. Shorter term investors may want to sell part of the 3 major positions while they are at highs.

Traders (short term plays) These are not ETFs, but individual stocks

Long Term Outlook – The dollar looks like it may break down through major support and the benchmark S&P 500 is on the verge of a yearly high – Outlook will change to CAUTIOUSLY BULLISH if/when this happens. But subject to further change back to neutral since breakout was weak.

Long Term Outlook = CAUTIOUSLY BULLISH

China

CHINA RULES (or at least is beginning to) – The Shanghai stock exchange has dropped over - 20% from its summer high (You have to be Chinese to invest) Monday it dropped -6.7% and had slight gains overnight. This plunged commodity prices lower (example oil down -3.82% Monday) China imports lots of oil.

Here’s CNBC’s Jim Cramer on why China rules LINK Here’s another analyst CNBC LINK – “I don’t think China is driving the rest of the world, I think that’s a little bit of an over exaggeration,”

Bottom line – China’s economic power is growing and becoming more crucial to the world each day.  To put it bluntly their managed capitalism is kicking the butt of our “free market” system relative to growth and has been doing it for almost a decade. These short three paragraphs are an oversimplification, but the China is kicking our butt part is very real.

Stop Escalating in Afghanistan

Conservative columnist George Will is calling for a serious draw down in Afghanistan. Obama – Afghanistan is a “necessary war.” It may have been one back when it started, but there is a lot of logic in what Will proposes.

To start, The elections in Iraq were less than honest, but it sure looks like the elections in Afghanistan were an outright fraud.  Times of London LINK

Here’s Will’s editorial in the WaPo LINK

His conclusion (the military industrial complex dominates the Obama administration will never allow this) below

“So, instead, forces should be substantially reduced to serve a comprehensively revised policy: America should do only what can be done from offshore, using intelligence, drones, cruise missiles, airstrikes and small, potent Special Forces units, concentrating on the porous 1,500-mile border with Pakistan, a nation that actually matters. ”

Iraq/Iran

The Green Revolution has been pretty much crushed, but still smolders in Iran. An emerging power struggle between the Supreme Leader and Ahmadinejad seems to be taking place. NYT & others have run front page stories on this recently.

Perhaps the first three entities to recognize Ahmadinejad as the “legitimate ” president in Iran were Iraq, Hamas, and Hezbollah. Iraq is looking more and more like Iran’s best friend rather than what it used to be – its worst enemy.

History repeating itself – Remember Russia depleting itself economically and militarily trying to Nation Build in Afghanistan. As my favorite philosopher Yogi Berra would say, “Déjà vu all over again.” – The USA is spending trillions trying to nation build in the mid east and quietly but very successfully China is rising. Teach your kids Mandarin .

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Volume decreased as stocks fell.  The lack of volume is a sign that the predicted correction (see yesterday’s update) might not be upon us yet .

The 5 deeply trouble bailed out institutions (AIG etc) had major corrections yesterday. AIG chart link . Volume decreased significantly. These shadow institutions obviously have some more volatile days in front of them. But for now falling in lighter volume is what bulls want to see.  Even though the Obama administration & Fed are not going to allow these institutions to fail & they do not have to use mark to market accounting (no transparency) the fundamentals simply do not justify the run up in price.

If you prefer gambling to investing, I’d wait another day or until prices get closer to 200& 50 day moving average before putting bullish chips on the table.

Therefore , FEARLESS FORECAST – is for a down week .

The  jobs report for August comes out Friday most important fundamental of the week. ISM (manufacturing ) report out today.  What’s key here is  we get a good number (above 50 would mean manufacturing growth) If market does not move higher on good number, it is a strong indication that market correction underway.

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S significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern .

The BDI Retreats – What are its drivers ? From Seeking Alpha LINK

“Remember almost every country has based their recovery on exporting their way out of this mess” The infotainment financial channels and analysts used the BDI when things were going well and are now ignoring it. The #1 factor behind the BDI’s retreat is China seems to have stopped or seriously slowed down buying commodities.

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$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

The dollar was rose -0.19 % yesterday. Dollar closed at $78.15. Its  major support level is @$77.5 & it has 2 major resistance levels – a falling 50 day moving ave. at @$79.20 and the August highs of @ $79.5 .  If it breaks down through support stocks should rise, if it breaks up through resistance stocks should fall.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

This is the index to watch because its impact is immediate.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

The BDI and Shanghai Stock Index’s fall are cause for concern in our Brazil  & China positions. China has turned off the stimulus spigot and its impossible to tell just how much further these ETF’s positions will fall.  We have made some huge profits that are getting eaten into.

Investors411 has slowly tuned more toward US equities because of this (XLF & SPX) and cut some foreign positions.

In the long term China Rules, but shorter term expect further losses . Considering taking some more profits.

Your Comments

Both privately and in the comment section of the blog you are asking for individual stock recommendations. OK I have a few. Stay tuned.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Paul Krugman

Armed with the Nobel Prize & a NYT column, the Chair of Princeton’s economics department, the vocal Paul Krugman, is perhaps the world’s most talked about economist.

Today he not only spanks Reaganomics or the free market capitalism that got us into the worst recession since the Great Depression, he goes after “All the President’s [Obama's] Zombies.” LINK Excellent editorial and well worth the read.

“Reaganomics has failed to deliver what it promised, yet people still believe that government intervention is bad, and leaving the private sector to its own devices is good.”

Health Care

Even though there has been 11,000 health care events in 2500 towns and a huge 280,000 people Obama internet event (Thursday) occurred I don’t have the foggiest idea of the specifics behind the different competing plans for health care reform. Dozens of the “Town Halls” have been invaded by angry protesters and dominated the media attention. The waters are muddy and people are throwing more mud.

One point is clear – the skyrocketing costs , denied claims, & huge amount of uninsured are growing. The future is going to be one huge mega disaster – Costs up 100% in last 7 years and lots of folks age going to loose coverage because its going to go up a whole lot more in the next 7 years .  If health care costs you, your employer, or the government $13,000 for your family this year will we be able to afford $26,000 seven years from now?

The total cost for just my wife and I now run at @ $18,000+ a year not including dental. (Her employer, deductables, out of pocket expenses)

Republicans are going to do nothing. They’ve done nothing for decades.  However, this whole process is in need of leadership that can only come from the President. So far all that’s happened is the waters have been muddied and lots of people are throwing mud.

Financials – Driving Stocks Higher

This whole week is devoted to why US markets are moving higher – financial stocks or the shadow banks. The long term results may not be desirable economically, but in the short term this is the trend that is leading US equities and the world’s stock markets higher.

While the health care debate is almost the only focus of the media the fundamentals behind the financial trend higher  is becoming firmly established. There’s the good, the bad, and the ugly behind this, but now its just time to mark the fundamentals and change investment strategy to take advantage of the trend

• We no longer have the transparency of mark to market accounting. Bad assets can and are being hidden.
• The administration and the Fed have flooded financials with low interest loans
• Almost nothing has been done to fix the too big to fail shadow banks

These banks are not be loaning out money at the rate they should. But when the big shadow banks do loan out money they are making killer profits.

Bottom Line for YOUR investments – Investments in financials should continue to outperform despite other economic problems.

(more below and throughout the week)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Both the NASDQ and the S&P 500 had gains in increased above average volume.   The volume was not earth shattering, but enough to confirm the gains.

The one fundamental that is the driving force behind the stocks surging is financials – Lets take a look at the price charts worst of the worst.

• AIG
• C
• FNM

These are the companies (AIG, CitiGroup & Fannie Mae) that were among the leaders on the downside and the trend is clearly higher.  (See above editorial) The trend is your friend and let’s ride it.

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Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern .  The BDI fell - 78 on Friday . We’ve again broken a support level and formed another lower low. Four days in a row down between 70 – & 90 points. The mid term trend since early July is clearly bearish, with a series of lower lows and lower highs. @ 2298 is a major area of support and the BDI has fallen since early June from 4291 to 2468.  This is just 170 points away from a major support level.

In a nut shell the BDI is

• short term - Bearish pattern
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Bottom Line – This is NOT looking good . While we are still a long way off from major support levels but the mid term (since June) bearish trend is growing. T he case for trade barriers between nations and a growing worldwide recession is getting stronger.

While this index does not have as immediate impact on stocks, as the Dollar does, it is very significant to long term worldwide economics.

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$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

The dollar fell -0.44% Friday and, you guessed it, stocks rallied. The Dollar is in a range between $79.5 and $77.5 . A breakout to either side will seriously impact stocks. Dollar closed at $78.04.  Its getting closer to its major support level of @$77.5

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

A gradual reduction in the price of the dollar is part of the solution to global worldwide recession

This is the index to watch because its impact is immediate.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

Investors411 will become more involved in the financial sector. – ETF’s – XLF. UGY (2x financials) & FAS (3X financials) Investors411 will also be taking profits in some.  – Even though its not a dip lets start small and reopen the  position in financials.

Do not think we are too late to join this rally train, because the fundamentals (see editorial above) still support it.  There will be dips and Investors will buy those dips up to a 20% total position.

Because the Republicans, Democrats and especially the Obama administration are unwilling or too distracted by health care to go after shadow banks this trend will continue.

This move to add to financial sector is going to be a major change in investment strategy

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

We’re moving -  Downstairs in a two family home – So Investors411 may not go out a few times this week

Guest Editorial by

Sugar Free Bob/Bob Sadinski

Bob is a former artist and who now farms in North Carolina. He is a frequent contributor to the comments section of the blog .

Is it possible that despite our excitement at seeing this historical fight played out before our eyes that this is NOTHING NEW!

Is it possible, ney, is it probable that because Winners Write History, that we have swallowed American Mythology  as History and that this dirty fight we are witnessing is not something really special but,…Just more of the same. Teddy Roosevelt first called for it. Can we imagine the War the corporations waged then was any less vigorous or disingenuous then as now? Or the titanic struggle against Unionism or against the New Deal? We have seen this struggle before,..many times. It’s about time that we viewed it not as partisan politics having a debate over public policy. It is class  against class, funded and led by corporate interests that will stop at nothing to get their way.

Under our legal system,a defendant is innocent until proven guilty. The Defense has to create a window of doubt  about the guilt of the client to avoid a guilty verdict. They don’t have to prove innocence. They only have to create doubt in some of the jurors minds to avoid losing.

Same with the health care fight. The corporate interests are free to lie and distort. They can intimidate discussion of the issues and the corporate interests that own the MSP are free to promote the impression that they are right to be angry. They are promoting doubt about the Obama plan and doubt leads to clinging onto the known rather then take a chance on the unknown. They are being sleazy and on ethical but,they have taken over the media focus and message and appear to be winning.

The question is: Are the corporate interests so Large and in Charge that we can’t beat them?!
Is this new or something we sadly had not learned from our history?!

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Volume fell dramatically as US stock’s posted very modest losses.  Volume is the #1 confirmation of a price move and when bulls see stocks fall they want volume to fall with it.

Fed meeting Tuesday & Wednesday this week.

AIG -Up another +5.75% in declining, but still huge volume.   Scroll down to weekly chart here.

Why AIG is so important -  it was the last in the long line domino shadow banks that insured/bet on credit default swaps. They received 10′s of billions from the US government or the taxpayers to keep the company afloat starting almost a year ago.  If AIG had fallen both the insurance and credit industries would have gone over the edge of a cliff in cascading debt obligations. This would have started a economic collapse.

It’s starting to look like we may get all our money back, plus interest. On the surface this would make these bailout programs a financial success for US taxpayers .  AIG stock is now at $28.70

The entire financial sector is up almost 200% since the lows. See chart of XLF here (scroll down to weekly chart) Both the Fed and the Obama administration have continued to insure that the shadow banks remain solvent through TARP bailouts, discounted Fed loans, simply printing money and doing nothing about the factors that caused the problems in the first place.

Simple reality is banks need to loan to make the economy grow. But if we leave shadow banks to regulate themselves inevitably the same lack of oversight will create the same problem. We all seem to have forgotten what happened last September and are moving forward using even less regulations – not even using mark to market accounting rules.

Bottom Line – History repeats itself.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 2689 - down last eighth days in a row. 

In a nut shell the BDI is

• short term – Bears rule
  
• mid term -  Bearish pattern
• long term - Bullish pattern

The BDI has formed a series of  lower highs &  lower lows – a bearish chart pattern since early June. BDI fell 135 points Friday and 8 3 on Monday. So, the rate of decline/change is diminishing. Since the BDI chart flows more smoothly than stock prices we could be seeing a turn around because the rate of decline is diminishing. However, clearly still = Bears Rule

Simply put – if the cost to trade is breaking down between countries, so is the amount of goods that flow between countries.  One of the greatest dangers to a worldwide economic recovery is the breakdown of buying and selling goods between countries.

$USD - The dollar rose +0.32% Here’s a multi year chart of the US dollar Dollar up usually = stocks down. That correlation returned yesterday. However, we have established a series of lower lows and lower highs  on the chart pattern and that is bearish . If the dollar could rally above its resistance level (see chart 50 day moving average and an old recent high – both less than +0.50% higher then the rally could have some legs.  This would be in the short term bearish for stocks.

Positions

The whole Positions Section has been revised (Click on "Positions" at top of blog). Check it out

Adding to EWZ (Brazil)

Bought SPX yesterday (@5% of portfolio) (see yesterday’s post)

Would treat any dip in prices as a buying opportunity.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Sob stories of the Rich

Photo from Hasbro.com

The me first – Screw Everyone Else Crowd

The following comes from an editorial by David Sirota and you can find it here

What They Will Scream: We can’t raise business taxes, because American businesses already pay excessively high taxes!

What You Should Say: The Government Accountability Office reports that most U.S. corporations pay zero federal income tax. Additionally, as even the Bush Treasury Department admitted, America’s effective corporate tax rate is the third-lowest in the industrialized world.

What They Will Scream: But the rich still “pay close to 60 percent of this nation’s taxes!”

What You Should Say: Such statistics refer only to the federal income tax. When considering all of “this nation’s taxes” including payroll, state and local levies, the top 5 percent pay just 38.5 percent of the taxes.

What They Will Scream : But 38.5 percent is disproportionately high! See? You’ve proved that the rich “contribute more than their share” of taxes!

What You Should Say: Actually, they are paying almost exactly “their share.” According to the data, the wealthiest 5 percent of America pays 38.5 percent of the total taxes precisely because they make just about that share—a whopping 36.5 percent!—of total national income. Asking these [rich] folks to pay slightly more in taxes—and still less than they did during the go-go 1990s—is hardly extreme.

Obama Caves into Drug Companies

Four major financial factors contribute to our heath care mess and Obama has caved in on one.

• The uninsured get free hospital care and you end up paying the bill.
• Insurance companies make huge profits
• Waste  and inefficiencies
• Drug companies make huge profits.

Obama has made a deal with the drug companies that promises if public health care becomes reality he will not use their buying power to lower the costs of drugs for everyone. Story here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Surprise the fall in unemployment numbers from 9.5% to 9.4% was not a bigger headline on Saturday.  In Jan & Feb. we were loosing a little under 700,000 jobs a month and now a little under 250,000 a month. This is a clear positive fundamental trend. It looks like the coordinated Fed (Bernanke) and administration (Obama stimulus) plan is working.

Stocks fell into the close on Friday, but still had significant gains on the employment numbers.  There seems to be a ready pool of investors, who have been on the sidelines or not fully invested ready to buy any dip. – The S&P 500 ( a lot of this gains is financials) is beginning to lead.

AIG – We bailed this company out to the tune of 10′s of billions of dollars. In early July it rose @ 100% and last week it took another massive 100% gain in huge volume before and after its earnings report.  Scroll down to weekly chart here.

It’s starting to look like we may get all our money back, plus interest. On the surface this would make these bailout programs a financial success for US taxpayers.  AIG was , by far the worst of the lot of bailout shadow banks/companies. Problems at AIG and other shadow banks are still disguised because we no longer use mark to market accounting, but as far as the investment community is concerned AIG is a risky but increasingly positive bet.

Obviously the issues that created these problems have not been addressed in any significant way.

Other shadow banks should follow this path.

The Obama administration has a lot to crow about, but they should keep their lips sealed since stocks are overbought and due for a correction.

• Shadow banks/companies are returning to stock market stability. (see AIG above)
  
• S&P now up +5% this year
• Unemployment number have been reduced from Jan.’s almost 700,000 to July’s 250,000.
• Only part of the stimulus package has been spent and the rest should help over the next year or two.
  

Friday’s NYT article now confirmed by jobs data – Experts See Some Lift From Stimulus ” Story link here

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 2772 down last seven days in a row. 

In a nut shell the BDI is

• short term – Bears rule
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Warning - The BDI falling through its support level at 2975 is very bearish. It ha s That breakdown was confirmed Friday with another significant drop. BDI fell 109 points 3 days ago, 144 points 2 days ago and 135 points Friday. We broke through a major support level and Friday confirmed that breakdown.   The impact of these numbers are more long term than short term. However clearly this = Bears Rule

Simply put - if the cost to trade is breaking down between countries, so is the amount of goods that flow between countries.  One of the greatest dangers to a worldwide economic recovery is the breakdown of buying and selling goods between countries.

$USD - The dollar rose a health +1.25% Yesterday. It also moved back above its broken support level.  Here’s a multi year chart of the US dollar Dollar up usually = stocks down. That inverse correlation got crushed yesterday as both the dollar and stocks moved higher. The dollar moving higher shows both worldwide confidence in both the USA and stocks= Extremely bullish move

Fearless Forecast

Last week forecast - “It looks like another rally week” came true.

Markets are way overbought and technically we are due for a pullback.  This would be healthy for the market.  Hope and predict a flat market or slightly down market.- +0.5% to – 2.0%

The dollar and stocks rose Friday. An unusually combination.  The BDI is in what looks like free fall.  Our major indicators are moving in opposite directions. Something has to give.

Bottom line – At least in the short term things look might good for US relative to rest of world right now since both dollar and stocks are rising.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

Going to build a large position in the S&P 500. (SPX) This will be kind of a default position instead of cash.  Starting with @5% of portfolio and adding 5% chunks on dips till we reach 25+% of portfolio.

Added to EWZ (Brazil) on Friday (more later)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Obama in the Matrix – Everyone is taking shots at Barack/Neo, but…. Military budget gets announced to fearful Americans fighting the Evil Empire. The two, Two Cows – understanding AIG and Market to Market accounting with humor. They are back – after 101 years of trying – will they succeed?

photo from About.com: political humor

Obama in the Matrix

Obama is being totally dissed by the right that wants him to fail. Even lefties like Nobel Prize winners like Krugman  &  Stigletz as well as this blog are taking some shots at his administration. But his poll numbers remain high and USA Today headlines Obama’s trip to Europe as a “Success”

Military Budget

Today’s the day the Pentagon budget gets announced.

Lots of us hoped our paranoid country that spends what the entire rest of the world does on weapons would cut back just a wee bit this year. But alas our 3% of the population has to be armed and ready to fight the rest of the world. You thought only the NY Yankees were the Evil Empire, but to fearful Americans the rest of the world is still the Evil Empire. Well, Obama is giving the Pentagon less than they asked for, but more than last year. Another record budget story

The Two Cows

photo from Clusterstock

John Carney  has some easy to understand, humorous ways to comprehend, both the Mark to Market and AIG using two cows. You can spend hours reading different editorials, like me, and still have a zillion questions, or simply skim his two, two cow stories. 

101 Years

Finally – Spring is in the air and that means the professional game of baseball that started in 1870 will be filling dozens of stadiums with thousands of excited fans. The dreaded evil empire, the New York Yankees, will once again take on the forces of good – the beloved Boston Red Sox.

The major Major league baseball story is about the team that will field nine players as they have for the last 101 years without winning a world series – The Chicago Cubs.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Got stuck in a massive traffic jam late last night. A major wreck on the CT/MA border. So this Investors411 is short and sweet.  

One editorial to bring to your attention is by American Prospect editor Bob Kuttner.  He sees team Obama’ – Rubin +Summers+ Geithner = Paulson = AIG = Wall Street.  The good news in all this – the stock markets in the short run should move higher. The bad news is the taxpayers are going to pay for Wall Street mistakes. 

What, Summers and Geithner have done is “double down” on the Paulson/Bush plan and the recent AIG debacle is just the latest example of this.  He’s disappointed with new TARP plan and offers an alternative that seems to “winning converts through out the political spectrum. 

Kuttner concludes “Barack Obama is a president of great promise, reassurance, and political skill. In the next few weeks, we will learn how he performs in a crisis that is being worsened by his own appointees.”

Long Term Outlook = CAUTIOUSLY BEARISH

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Pakistan the epicenter of terrorism – Wins one for Democracy.  Are stocks on a bull run or a dead cat bounce?; AIG – Follow the money.  Are We All Socialists Now? The financial channel ducks and covers. An uplifting  comment/story by Stewart E. – about hanging together in tough economic times.

Pakistan Wins One for Democracy

The lawyers and opposition leaders “Long March” to have the Supreme Court Chief who was ousted under the former dictator seems to have won a major victory. It was bloody, but the  government caved in as police/army refused to keep beating the demonstrators and Mr Chaundhry (former chief justice) was reinstated. For more see NYT or Times of India

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AIG – Follow The Money

We’ve shoveled $180 billion into AIG to keep he worlds entire financial system from going under. Yet we still can’t find out exactly where the money has gone. No one talked – For five months everyone’s lips have been wired shut. – the company, the Bush administration, the Obama administration  & the Fed. See NYT Saturday editorial

The icing on this toxic cake is the crooks at AIG are being given $165 million dollar bonuses (a “contractual obligation”) including the small division that traded credit default swaps and sunk the company. More from Financial Post

AIG caved yesterday to all the pressure and listed most of the companies who it owed $ to. Hint – the trading of toxic, over leveraged debt with these other mega crooks. Opps, my mistake they are called financial companies. Check out the list or crooks here 

They haven’t caved on the bonuses yet.

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CNBC Ducks and Covers 

After heavily promoting the Jon Stewart/Jim Cramer smackdown. Not a word could be found about it  on CNBC financial channels or blog. Further indication of just how badly Cramer did and how mad  common folks are at the”Fast Money” financial news network. Here’s the LINK to the original Stewart shot across the bow. 

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Are we All Socialist’s Now?

Over the last 4 decades the far right has hammered Americans with how poor our government does thing vs. the wonders unregulated capitalism.

The answer to them is take a look at the socialist systems of public eduction, police departments, fire departments post offices, and libraries. Do you really think AIG, GM Citigroup, Merrill Lynch and Lehman Brothers would have done a better job?

What would have happened if Social Security had been tied to the stock market?

We’re not socialists, but Americans are waking up to the fact that unregulated capitalism is a huge rip off, and government is the only institution strong enough to regulate it.

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Solutions

In the comments section (on right side of blog) you’ll find a comment and a story  submitted by Stewart E. who notes “we are all in this together” The story about Beth Israel hospital and how they are handling the recession. It’s author or a “A Head with a Heart.” is Boston Globe columnist Kevin Cullin

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AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING