The End of Democracy?

E.J. Dionne who writes primarily for the Washington Post had an editorial entitled It Could Be the End of Democracy as We Know It . LINK

What Dionne is referring to is an upcoming Supreme court decision that threatens to overrule a 1990 decision that upheld the long-standing ban on corporate money in campaigns.

Yes, McCain/Feingold legislation made it much harder for corporate giving and it still got through. However this legislation would open the floodgates.

HAVE WE so quickly forgotten the #1 lesson of the 2008 economic meltdown-that Greenspan as he admitted was wrong and “free markets” could not regulate themselves ? This week US corporations may be given unfettered access to buy politicians. Indeed as Dionne explains “President Barack Obama’s health care speech on Wednesday will be only the second most consequential political moment of the week.”

Quantum Shift in Savings

Another unheralded event is not making headlines. That the quantum shift of Americans from net borrowers to savers . Since Reagan took office and reversed the trend of diminishing national deficits (see last Thursday’s blog for data on deficits as part of GDP) The shop till you drop,go into debt up to your eyeballs era is coming to a close for the American consumer.  MSNBC reports that in July “Americans cut debt by $21.6 billion in July; $4 billion was expected” LINK

Some conclusions from this data:

  • How is there a quick economic recovery if American’s save more?
  • Saving more is obviously a good thing and increasing debt bad.
  • Real Organic growth is going to come from outside the USA (countries like China who were huge net savers and are saving a little less now)

Financial flows like this reinforce the concept that in the USA any recovery in GDP is going to be slow to materialize and real organic growth is going to be led by emerging markets whose middle classes are growing and don’t have huge deficits.  Even countries like Germany who have been net savers and whose businesses do not worry about paying health care costs are at a distinct advantage over the USA.

This is why Investors411 focuses on foreign ETFs that have organic growth and growing economies/middle classes – Invest in where the money is and will be flowing



Index Percentage % Volume
Dow +0.59% up
NASDQ +0.94% up
S&P500 +0.88% up
Russell2000 +1.03% -

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

Major US indexes rose again.  This time volume rose,but was still below average.  Stocks are rising because the dollar is falling. It took a massive hit yesterday.

This week , FEARLESS FORECAST - is for an up week .


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 has leveled off and started to rise over the last two weeks, +33 yesterday.

Each day this looks more like a base has been formed above a key support level – Bullish short term outlook for BDI and we have certainly recovered from the devastating lows of Dec./Jan.

The BDI is 41% off its high (early June) Before that it gained almost +170% from early April to Jun e


$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 dropped of the table and through its major support level. It fell a whopping-1.16% % yesterday. Dollar closed at $77.26. Its  major support level is @$77.5 . Short term Bullish for stocks

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

Bottom Line – Both the BDI & the Dollar are forecasting at least a short term rally. Key to look for is can the dollar get back over its $77.5 support level.


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

Sold 1/3 (or 6% total stock) position in FXI (China) last week A Mistake . With both the dollar falling and the BDI finding technical support and rising China again looks like the place to be invested in. Investors411 has only 12% of its portfolio invested in China. Looking to now add to this position.

Individual stocks-Another reason I hate individual stocks is because an event like a big conference can impact the stock. Apple has one of those today.  Will Steve Jobs show up? How will he look, what new product will they feature? – I have no idea on how to answer these questions that will move the stock. All I know is technically it outperformed the major US markets and like NVS is at a new high.

Taking advantage of falling dollar. There is a downside to a falling dollar, especially a currency that falls like a stone. However for most American companies that rely on exports for real organic (not cost cutting) growth benefit from this.  It also inflates the prices of commodities. Its no accident that as the dollar reaches a yearly low commodities like gold, oil, and copper reach highs. So any country or commodity play looks good right now.

Right now Investors411 is caught with its pants down because we are not more fully invested in countries & sectors where the money is flowwing.

Have to update positions section (away all weekend) Investors411 problem is that we are under invested in equities. The predicted 5 to 10% correction this month almost happened last week (-4+%), but close doesn’t count.


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


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