American Workers/Taxpayers

Inequality and the Financial Crisis

MIT economic Professor Daron Acemoglu, has a fabulous worksheet on the causes of the financial meltdown and long term structural problems in the USA.

American media ignores people like Dr. Acemoglu, and instead almost always uses some paid economist from and industry and/or right wing backed think tank that is in business because to serve their backers.

Thoughts on Inequity and the Financial Crisis excerpts below from his science based analysis.

“who rules today… The rich elite like in the Gilded Age….

In the aftermath, consistent with the alternative hypothesis, many of the key financial players were bailed out, but low income house owners were not and there has been powerful political resistance to extension of unemployment benefits.”

Two Alternative’s to Obama’s

State of the Union.

Paul Krugman in NYT excerpts

Consider: A corporate leader who increases profits by slashing his work force is thought to be successful…Who, exactly, considers this economic success?…

[GE] with fewer than half its workers based in the United States and less than half its revenues coming from U.S. operations, G.E.’s fortunes have very little to do with U.S. prosperity….

The financial crisis of 2008 was a teachable moment, an object lesson in what can go wrong if you trust a market economy to regulate itself. Nor should we forget that highly regulated economies, like Germany, did a much better job than we did at sustaining employment after the crisis hit.”

Robert Reich in Common Dreams excerpts

He [Obama] should point out that the U.S. economy is now twice as large as it was in 1980 but the real median wage has barely budged…

In the late 1970s, the richest 1 percent of Americans got about 9 percent of total income. By the start of the Great Recession they received more than 23 percent. Wealth is even more concentrated….

Many thanks ti Jim J in the comments section of Friday’s blog (scroll down to comments) for bring us all stats on GE, Paul R for mentioning a Robert Reich editorial and JS for his reply.

The major issue we have to fix the problem of Jobs, Jobs, Jobs is that Globalized American companies like GE  no longer need American Labor and even more critical now they no longer need the American consumer to grow.

This is your wake up and smell the coffee moment. GE and a host of other so called “American” corporate giants are no longer American. Even though these companies originate in the USA the use of the word “American” is little more than a propaganda tool.

They are globalized corporate giants who will suck what they can from Americans (any anywhere else) for the bottom line of profits. Like it or not that’s the system.  History has show this to be true in the past. This globalization of corporate so called “America” companies is a trend that is RAPIDLY INCREASING.

Like they say “no worries its just business.”

_____________

.

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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

_____________

.

Index	Percentage	Volume
Dow	+0.41%	up
NASDQ	-0.55%	down
S&P 500	+0.24%	up
Russell 2000	-0.63%	-

_____________

.

Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

• Technology, small caps,  high Beta (fast growing), emerging markets & commodities all took it on the chin yesterday and last week. A significant correction underway
• Tech leaders AAPL & AMZN both lost 6% last week.
• Monday’s have historically been the best day of the week as earnings season continues.
• We have what may be a shift of leadership into major US companies and the too big to fail financials that enjoy government and Fed support.
• Here’s how the week sets up from Seeking Alpha’s John Nyaradi
• Still endorsing the concept that the Fed’s POMO [schedule] is and will be the key factor in keeping a long term rally going. (see Investors411 for past months).
• The Fed’s POMO (QE 2) is also a major factor in driving inflation in emerging markets (see Friday’s Investors411)
• From Friday - Key factor of day - Inflation fears
• Obama’s State of the Union is the big political news of the week. (Tuesday)

____________

_________________

Reading The Tea Leaves

The dollar is falling like a stone and that’s good for American exporting companies. There are still growing inflation fears in part brought on by our Fed’s quantitive easing. (see Friday’s Investors411)

“Don’t fight the Fed” is an old Wall Street axiom. The falling dollar and the special “gifts” shadow financials (latest example Friday GE earnings, stock up +7%)

Again many major analysts (far more renowned and knowledgeable than me) from Nyaradi (today) to a real big name DeMark last week are calling for a much more significant correction.

The falling dollar, the strength in major exporters, and the Fed ( behind these factors & pumping up financials) will keep correction minor. So if the MO dips down some more close to -60 I’ll be nibbling.

What to watch today

Dow Index - From Friday - Almost all sectors that may be negatively impacted from Emerging market inflation – high growth stocks, commodities, China, gold – have faltered this week. The big holdout is this minor meltdown are the giant Dow companies.

AAPL - breaking below its 50 Day Moving Average would be trouble. It fell -1.79% Friday & rising 50DMA is a bit over 1% lower. Look for some upside strength at its 50 DMA/support level. So the bounce or non bounce off the 50 DMA is the cutting edge today and for the week

_________________

Positions

• UWM - (2x small cap stocks) Sold last 1/2 at 44.50 for +6% gain
• REMX - (rare earth metals) Did not sell last 1/2, but will place another 2% trailing stop on this ETF today. (already almost -2% loss on last 1/2)

Under consideration -

DDM - (2x DOW) The trend to big cap stocks is apparent. A buy ,but a bit overbought right now

UCO -(2x oil prices) All commodities, are under pressure from inflation worries in emerging markets. Sitting on 50 DMA, More cold and snow for East cost should create a bounce.

REMX (Rare Earth ETF) –  Rare commodity used in everything from some TV’s to hybrid cars.

FAS (3x financials) & UYG (ETF that does 2x financials) XLF is the financial ETF. - Shadow banks have numerous advantages. – Opaque, special help from Fed and your still on the bottom line to bailout too big to fail institutions.  This sector is being manipulated higher by Fed. Those that can overcome ethic problems with shadow banks could consider buying. Yes, this is another bubble building.

DGP – (ETF is 2X gold)

_________________

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#3)

.

Inflation

It’s no secret, almost every country out there is seeking some advantage to manipulate their way out of the economic “Great Recession” or keep their economy growing at a rapid rate (emerging market countries)

Part of what our Fed does with its quantitative easing puts pressure on China and other emerging market countries that results in inflation abroad. There are inflation fears in USA, but it is emerging markets are really feeling the brunt of INFLATION as they have recovered far faster than either the USA or Europe.

Three major articles on this today. It is a problem for all emerging market countries.

• Nobel Prize winner Paul Krugman – China goes to Nixon
• Seeking Alpha’s John Nyaradi - Inflation fears Spreading Through Global Markets
• In a pot calling the kettle black article & why only 3? Sam Willford – US Names Three currency manipulators

Emerging Markets have fallen for about a week on inflation fears. This has also impacted commodities.

Bottom line for Investors – Not only are we overbought (Long term up 7 weeks in a row) but there is a new fundamental – fear of inflation that could take a bite out of emerging markets and commodity prices. Our Fed is walking a tight rope. So far skillfully. But the wind is picking up.

Our turn will come, but the clear and present danger in the USA remains Jobs, Jobs, Jobs.

_____________

.

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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

_____________

.

Index	Percentage	Volume
Dow	-0.02%	up
NASDQ	-0.77%	up
S&P 500	-0.13%	up
Russell 2000	-1.12%	-

_____________

.

Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

• We had what many stock pros call a “confirmation day” The day after 3 of the 4 major indexes took a hit, they DECLINED further = confirmation. More often than not this spells trouble, especially after reaching a top.
• One of the primer analyst who technically called the the S&P top in 2007 (It plunged 57% starting in Oct. 2007) Tom DeMark, has made  another bearish call that market will plunge about 11% stating in a week or two.
• In opposition to all this is the FED’s POMO. Notice that directly after the Fed purchased bonds from its 21 big banks at 10:15AM EST to 11.00 AM the US markets started to rally from inter day lows and moved higher.  Strong correlation between this liquidity coming into markets and stocks moving higher since it began in 2009.
• This is an Options expiration day – third Friday of the month. This sometimes makes for unusual activity and increased volume. However since we have had a short term reversal of trend some of the calls will not get made and volume will suffer. Translation expiration day will probably not have big impact. Other forces might.
• Key factor of day – Inflation fears

____________

_________________

Reading The Tea Leaves

Too many fundamental worries out there. Therefore, going to wait for better conditions or a lower MO to buy.

Will inflation fears trump the Fed’s money dumping and hurt US equities? It has this week. Most say we are long overdo for a correction and DeMark’s call (see above) is significant. Many US companies  that sell to emerging markets could and have been a monentum play to the upside could end up the same way cloud computing did, (See FFIV yesterday)

It’s an escalator going up, but a elevator going down & right now for US equities we have the Fed manipulating to ease the pain.

What to watch today

Dow Index – Almost all sectors that may be negatively impacted from Emerging market inflation – high growth stocks, commodities, China, gold – have faltered this week. The big holdout is this minor meltdown are the giant Dow companies.

AAPL – breaking below its 50 Day Moving Average would be trouble. It fell 1.82% yesterday & rising 50DMA is about 3% lower

_________________

Positions

• UWM - (2x small cap stocks) A 1/2 position. Setting 2% trailing stop today. Considering selling into a rally.
• REMX - (rare earth metals) Sold 1/2 at 23.23 for a 1+% loss. Setting 2% trailing stop loss today

Look for short term a rebound today.

Under consideration – Not touching anything new

UCO -(2x oil prices) All commodities, including gold are under pressure from inflation worries in emerging markets.

REMX (Rare Earth ETF) –  Rare commodity used in everything from some TV’s to hybrid cars.

UYG (ETF that does 2x Dow financials) XLF is the financial ETF. - Shadow banks have numerous advantages. – Opaque, special help from Fed and your still on the bottom line to bailout too big to fail institutions.  This sector is being manipulated higher by Fed. Those that can overcome ethic problems with shadow banks could consider buying. Yes, this is another bubble building.

DGP – (ETF is 2X gold)

_________________

How to look up comments from the last two weeks.

Click on SUBSCRIBE TO RSS (top right of blog) You will see a list with title and short summary of the last two weeks of blogs. Click on title and up will come that day’s blog and the comments associated with it. Scroll down to comments

_________________

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.” (YSL#3)

Read it all..

-

Senate Fails to Break Shadows

3 Republicans and 30 Democrats stood up to the mega Shadow banks & their lobby yesterday in support of the Kaufman/ Sherod Brown legislation to break these massive financials. Senate Finance Committee Minority leader Richard Shelby (R) & Senate Majority leader Harry Reid (D) vote yes. The above link has a list on how YOUR Senator voted.

Opposition came from the vast majority of Republicans and the Summers/Obama White house. This whole group is owned by  and protects the Shadows.

Hopefully Main Street can still win some crumbs or a pice of the toast instead of getting toasted in the finacial regulatory legislation.

Greece vs. USA

Greece’s problems are many ways are similar to the USA. The major difference is in the solution.

The central Bank of the USA can print money and loan it out at @0% to shadow banks who take that $ and not so secretly invest most of it in highly leveraged derivatives instead of less profitable loans to small business and consumers.

Greece can’t print money to bail itself out like the USA. It is under the jurisdiction of the European Central Bank (ECB). Therefore, it can only get TARP like loans from other countries and the IMF.

Some where down the line all the $ we print are going to slap us with inflation. But for now its kept us from sinking.

EU Contagion

The 2008 collapse has created massive problems for PIIGS and former Russian satellite countries. Example Spain’s unemployment is at 20% Yesterday’s map of debt obligation is the tip of interconnected obligations that spread worldwide and are exacerbated by derivatives sold on that debt.

Nobel Prize winner, Paul Krugman has an excellent editorial. Krugman recognizes the European Union’s main problem

“The problem, as obvious in prospect as it is now, is that Europe lacks some of the key attributes of a successful currency area. Above all, it lacks a central government.”

He goes on and explains how Greece is different than our governments bailout/relationship with California. The only logical endgame is -

“Greece leaving the Euro…unless European leaders are able and willing to act far more boldly than anything we’ve seen so far.”

Another possible solution from MIT’s Simon Johnson & co author.

Bottom Line for Investors – Fundamentally its hard to see a bottom until some resolution comes to pass. Till then, we will all be slowly twisting in the wind.

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	-3.20%	up
NASDQ	-3.44%	up
S&P 500	-3.24%	up
Russell 2000	-3.77%	-

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

Technicals, Fundamentals & Analysis

See Positions for changes made each weekend

Massive loss in massive selling. Technically, we have gone elliptical to the downside. On a pure technical basis we are near the end of the downside move. = Bullish

However both fundamentally and psychologically the stocks across the world have been damaged and hopes of a V shaped worldwide economic recovery have turned into U‘s, W‘s L‘s and perhaps worse. The entire group of talking heads on CNBC, the #1 financial cheerleading channel, looked liked deers caught in the headlights. The trotted out Nourille Roubini (a Dr. Doom) to jawbone this AM. = BEARISH

Failing to break massive shadow banks = Bullish

A technical glitch caused caused a massive 1000 point drop in the DOW (similar drops on all indexes)

Therefore, its hard to see any rally NOT getting sold into and another low on the way. Stocks broke through support levels like a knife through butter. The only piece of good news is in the short term stocks are getting so technically oversold that they are close to running out of sellers.

Monthly Unemployment rate up to 9.9% But non farm payrolls up +290,000 This is a STRONG number (@+180,000 was expected) and other months were revised upward. When Obama took office it was over -700,000 I have no idea why such a strong jump in numbers equates to a rise in unemployment. But end result = Bullish

• McClellan Oscillator fell dramatically  to -113.71 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. – In the last three years the MO has only reached pass this level 3 times –  10/08, 3/09, & 10/09
• US Dollar – rose another massive +0.87%. This marks the 4th day in a row of huge gains. You have to go back to the 2008 stock meltdown to see anything similar. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules Rising dollar almost always = falling stocks. The dollar is rising mainly because of the fluctuations in European currencies = Greek debt.

Bottom Line -Roller Coaster Rally day, but real long term fundamental problem from Greece spreading.

Positions

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

The DANGER WILL ROBINSON, DANGER DANGER SIGNAL is as many of you long time readers know is the signal to duck and cover. It the strongest warning Investors411 gives of impending doom.  Investors sold its remaining position in EWZ (Brazil) near the open yesterday for a loss.

Long term what’s happened is bad for US markets - The higher dollar is a killer for any US company that makes profits abroad and will take a chunk out of economic recovery including job growth. Until we see a measurable reversal in the dollar both stocks and our economy are going to have trouble.

Gold has become a proxy currency and Investors411 mentioned last week GLD was a good investment, but never pulled the trigger. A buy the dip ETF

Today, Investors will start nibbling on IMAX & perhaps ESRX on any further dips. Both stocks have compelling reasons for long term growth, except in another world wide meltdown. This may be a shorter term trade

Caution – There is probably more major downside to this market because of Greece. The first major rally will get sold into & Investors will use ETF’s that short the market when this occurs. Example SDS = @2x shorts the S&P 500.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Jobs,Jobs, Jobs

To paraphrase James Carvill’s famous line “Its all about the jobs stupid.”  (he used the word economy) Obama’s mistakes-

• Obama’s took on Larry Summers and the Wall Street crew who dominate his economic team.
• Underestimating just how huge the economic meltdown was.
• Realizing that because of globalization and superior growth in emerging markets major US companies are going to hire first abroad instead of here. (see past Investors411)

What can Obama do to solve this problem? The stimulus and tax cuts help, but two noted economic experts offer solutions.

• Robert Reich – LINK – 4 steps – Use funds to bail out average people through states, 1 year payroll tax holiday on first 20k, Job tax credit for small business, & directly loan to small business (bypass big banks)_
• Bob Kutner – LINK – Makes the case for increased deficit spending for job creation. Bob looks at the most recent poll that show 53% believe unemployment is the #1 concern of Americans vs 27% who fear the deficit.

Bottom Line – Deficits are bad even crippling. This year the deficit will be about 11% of GDP. In World War 2 deficits maxed out at 29% of GDP. If Democrats want to stop an  implosion in the next election they have to create more jobs NOW.

Unfortunately from Nobel Prize winners from Krugman to Stiglitz , Obama has ignored the progressive side of his party.

Your Comments

#1) Mama Jama brings ups Thursday’s Tom Friedman column again LINK – about how radical and anti Obama the right has become in America.  This is alien for lots of us who don’t even consider Obama a liberal, but are also worried about the fact that no one seems to be standing up against this divisive hatred.

One of the latest examples was members of the right carrying guns to a health care town hall meeting.  Can you imagine the outrage if blacks and Hispanics carried guns to a Sarah Palin speech.

#2) Don’t worry about a 700 point dip, unless someone bombs Iran . Both the Obama administration and the Fed are flooding the economy with money forcing the dollar down. This in turn makes American exports cheaper and imports less expensive. As long as this money flows Wall Street will do well. Add to this less transparency and no real regulations on shadow financial institutions.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.18%	down
NASDQ	+0.98%	down
S&P500	+1.32%	down
Russell2000	+1.88%	-

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 as markets rose. Therefore, our #1 confirmation factor is NOT giving us a bullish sign.

US markets reacted positively to news that the service sector (ISM number) was back above 50%.

Rumor of the AM is that group of countries (Gulf oil producers) have been meeting to replace dollar as standard currency according to CNBC – lead story. Denied by Saudi’s – Should push dollar lower and stocks higher this AM.

Earning season officially starts tomorrow with Alcoa (AA) reporting Wednesday.  Any company that is going to have top line growth (increased profits from sales instead of cost cuts) is what Wall St. is looking for.

——–

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 @ 47% 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 only +5 points yesterday and closed the day at 2362 . After a sharp turn higher it looks like we are headed back down.  Longer term (since the June high) the rate of decline has softened, but its still going in the wrong direction.

——-

$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

The dollar fell -0.46% yesterday.

Last year’s low was around $71, so there is a long way to go before the next major support level.

Positions

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

S&P 500, SPX , our #1 position (20% of portfolio) is down 4 to 5% from highs – This is really a holding position instead of cash.

China, FXI, our #2 position (18% of portfolio) is bit less than 10% down from highs. (very long term investors should see this dip as a buying opportunity) So far this looks like China just moved too high to fast.

Brazil, EWZ , our #3 position  (12% of portfolio) has broken out to a new high. Like a huge group of investors now looking to buy the dip – so look at 3% pullback as a dip.

Gold, GLD, our #4 position (10% of portfolio) is close to a new all time high.

Financials XLF – (5% of portfolio) Selling remainder today -reason,  weak volume behind two day rally

S Korea EWY – (5% of portfolio) Up about 7% and @ 4% from highs.

Traders

– Instead of ETF’s – Investors411 does have a position in NVS Novartis (10% of portfolio) a swine flue play. Up 7 to 8% – We will exit this when flu season hits.

One of you recommended MVIS  Microvision- Missed a great buy the dip opportunity because of business trip Thursday & Friday – Looking to buy next dip.

Sold our AAPL position for a +7% gain. Would buy another dip

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Iran Day 14

Collage of dead protesters – Photo Andrew Sullivan Blog

Sorry, I’m just too emotionally exhausted and heartbroken to continue sifting through the blogs and tweets on Iran. You look at too many videos, audios blogs, tweets, and analysis and it’s overwhelmingly sad.

Best 4 sources still

Nico Pitney at the Huffington Post here

Andrew Sullivan at the Atlantic here

Robert Mackey at the NYT here

BBC- world’s largest news outlet that strives to be unbias here

The Obama Debate

We’ve had an excellent debate over Obama’s policies and effectiveness in the comments section of the blog .  You all have make some great points. Investors411 has both praised Obama and condemned him (mostly over the choice of Larry Summers as chief economic advisor)

Right now Obama is a very popular president (something like 60% positive and 32% negative) So what.

To jumble the title of his book – We have The Hope , but not enough Audacity .  This summer is the time for him to forget about consensus building and take charge. The single issue he alone can make the most difference in  this summer is health care.

"[Obama's]command of the issues — and ability to explain those issues in plain English — is a joy to behold. His administration has spent months talking and working with everyone on health care. Fine. Now its time for Audacity.  Take one plan and lead. See Nobel Prize winner Paul Krugman editorial here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+2.08%	up
NASDQ	+2.08 %	up
S&P500	+2.14%	flat
Russell2000	+2.88 %	-

-

Volume was below average again  and up just a smidge for the NASDQ and Dow. Perhaps some expert analyst can glean something from the volume, but the bottom line is no big moves are being made by the big institutions and there are a lot of people sitting on the sideline. Some of these folks are very unlikely to get back into investing in stocks. Volume is NOT confirming any price move.

Yesterday’s big move higher was probably a whole bunch of traders (as opposed to long term  investors) getting caught having to cover their short positions.

-

Top 3 Recommendations/concepts

Very happy with the mid term results posted yesterday! Obviously Investors 411 toasted the benchmark S&P 500.  Going forward 3 recommendations/concepts

• China (FXI )will continue to outperform USA (See Positions & Overview at top of blog for more on this and other recommendations)
• Brazil, (EWZ ) India (INF ) and alternative energy (GEX/PBW ) are still decent buy the dips plays.  But you have to be careful on all of the above including China. Even though they will outperform USA. They will fall faster in a meltdown.
• The economic problems  created over the past decade are massive. Over leveraged or phony wealth accounted for huge part of economic growth and where is that growth going to come from now?  Our (the USA) debt, dependence on foreign oil, and our inability to change entrenched special interest groups are three large anchors holding our economy back.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

WHAT’S UP? – Iran’s Elections – The “Obama Effect” – The “Green Revolution” – The Big Hate – Paul Krugman – Home grown Terrorist and feeding their hate.

Iran

“Green Revolution” supporter – Photo by AFP

Major elections today in Iran.

Already the USA is taking advantage of the Lebanon victory (see last few Investor’s411) and US diplomats are flooding into Syria and Lebanon. Winning means nothing unless you capitalize on it.

The Wild card in Iran Election: Obama by Christian Science Monitor’s Howard La Franchi lists some of the changes. It is one thing for the “Obama Effect” (Link to polling results on Obama effect ) to influence an election in a more liberal Lebanon and quite another to influence an election in hard line Iran. A sitting president has never lost a bid for a second term and Ahmadinejad is heavily favored.

You can read a lot more on Iran elections at Professor Cole’s site , including The Iranian American’s voting in these elections. Iran is a quasi democracy and the real leader is the head Ayatollah.

Our hope here is that there is a strong vocal alternative to Ahmadinejad in the “Green Revolution.” They probably will not win, but it consists mostly of younger Iranians and that’s the future.

The Big Hate

Nobel Prize winner, Paul Krugman editorial in today’s NYT is titled The Big Hate To his credit he differentiates between right wing haters in the media and those who refuse to go along with “The Big Hate.” He concludes

“Yes, the worst terrorist attack in our history was perpetrated by a foreign conspiracy. But the second worst, the Oklahoma City bombing, was perpetrated by an all-American lunatic. Politicians and media organizations wind up such people at their, and our, peril.”

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+0.37%	up
NASDQ	+0.50 %	up
S&P500	+0.61%	up
Russell2000	+0.45 %	-

-

Technicals & Fundamentals

A 1 to 2% rally melted into the close. Not a good short term technical sign. Volume still below average except for the NASDQ. This indicates that the NASDQ (mostly tech stock) still has the power of leadership position.  We are at yearly highs for most major indexes.

End of the quarter buying will begin to take place.  Many of the major players are waiting (a bit like Investors411) to buy the dip. Mutual funds and others would like to show off positions in some good performing stocks. Therefore, the end of the quarter (2nd 1/4 ends last day of June) is often bullish.  But even more so because we have rallied.

$USD – Repeat – The dollar is the index to watch You could write a book on the dollars influence on everything but for us the bottom line right now is – When the dollar goes down -stocks and oil prices go up and visa versa. Stocks went up so guess which way the dollar went.  Actually the dollar going down is leading stocks higher. It’s the horse and stocks are the cart.

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. Financials had been leading the 2+ month long rally. Techs seem to have taken over leadership role, but hard to see any sustained move higher without financials. Yesterday financials down +0.81 %

WTIC - Oil prices exploded higher +3.01 to $73.90 Chart starting to look like it is going elliptical. Fundamentally the talking heads/ experts see no reason for oil prices to be so high.

BDI - The Baltic Dry Index measures the flow of goods (world trade). Stated before -  This is extremely important because one of the greatest obstacles to a worldwide recovery is the lack of trade between countries (protectionism) 24 up days in a row, 6 down day in a row, & yesterday a rally.  Bullish sign.

Reading The Tea Leaves

From yesterday – Right now, markets seem to have over extended themselves and a 10% correction would be good in the long run for stocks . Trading is very light except for the NASDQ which is near average. (Summer trading is usually light)

Many US market is showing signs of stalling out. The breakouts do not seem to be getting any real traction. Watch the Dollar and the BDI.

Position s – (See positions section of blog for more)

• FXI – our major position rose +2.43% yesterday. BREAKOUT to new high, but volume did not confirm the move. For the second day in a row the FXI was actually up 2% more and then pulled back.  This is a weak breakout.
• GEX – alternative energy - +0.38 yesterday. Dollar/Oil trade influences this. If oil goes up so doe GEX.
• PBW – We are going to change from GEX to the other major ETF that does alternative energy PBW- chart This alternative energy ETF is more liquid and its also outperforming GEX. We have been in PBW in past years and went with GEX because it outperformed then. This will be a slow transition over the next month. Already sold 1/2 position in GEX and will add that $ to PBW on a small (5%) dip.  Then sell other 1/2 and wait for a dip.
• The HEDGE – Little change again.  You can get a rough idea how this position does by looking at the difference between the NSDQ and S&P 500 – (-0.11% and multiplying it by 2) instead of looking up SDS and QLD

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

 

What’s Up? – David Patraeus on torture and Gitmo – The Supremes sing in Spanish – Californification, Is the Golden State falling into the sea? Will the US join them – Women’s historic win in the Islamic state of Kuwait – Fearless market forecast.

Petraeus – Huffington Post photo

Torture

• Obama says – torture bad – closing Gitmo good – Right wing says NO
• McCain says the same thing – Right wing says NO
• Powell says same thing – Right wing says NO
• Admiral Mullin (chair joint of staff & a Bush appointment) says the same - Right wing says NO
• Sec. of Defense Gates says the same (another Bush appointee) says the same - Right wing says NO
• Now the hero of the right wing General Petraeus says Obama is right – what will Cheney, Limbaugh and the rest of the right wing now say  about torture and closing Guantanamo Bay?

Californification

California is up to its neck in quicksand. Its one of the leading states in foreclosures and unemployment. Will the US follow California? Previous posts over the years have brought up California’s two major problems

 

• Proposition 13 - This state taxes property at what you payed for it. So for example if you payed $50,000 for a property 30 years ago and it is now worth $1,000,000, you pay only a tax on$50,000. Someone who buys property now pays today pays a whole lot more – This has lead to a serious short fall in revenues.
• You need a 2/3 vote in the legislature to make any serious changes in tax structure.

 

In the USA we too have self interested people who want to pay almost no taxes & have to overcome a 60% filibuster in the Senate to make any serious tax changes.  Not as bad as California, but still a problem.

Want to learn more – See Nobel Prize winner Paul Krugman’s editorial California - A State of Paralysis. 

Sotomayor – AP Photo

Supremes

Front page of every newspaper – An “inspired” (obviously others might disagree) choice for the Supreme Court – Sonia Sotomayor. – - Impressive legal background, compelling life story, first Hispanic ever nominated to Supreme court. For more see NYT editorial

Aseel al-Awadhi photo – Boston Globe

Women in Kuwait

4 of the recently elected 50 members of parliament in Kuwait are now women. This begins to breaks the mold of how women are treated in Muslim countries and a first for the Gulf States. This is truly a historic move

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+2.37%	up
NASDQ	+3.45%	up
S&P500	+2.63%	up
Russell2000	+4.75%	-

-

Technicals & Fundamentals 

Forecasting what markets will do is all about how potential investors feel about the  fundamental aspects of stocks and the economy. Technicals (looking at chart patterns) gives us some idea of where the traffic signals are. It all about predicting attitude.

Yesterday the US stock markets exploded higher as volume rose. However volume was below average and below the down days of both Wed. & Thur. of  last week. While the price move is encouraging and explosive, what natural for a sustained rally is increasing above average volume. This show buyers or potential investors are not moving back into stocks.

Yesterday is certainly not a bad day and it may be the start of another leg higher. However for right now it is a move from near the bottom of the consolidation pattern we’ve been in for the last three + weeks to near the top. Therefore, no big green light till volume confirms a breakout.

One interesting pattern is developing – The first trading day of each week recently shown a  a significant move higher and the rest of the week has given up those gains.

Good consumer confidence numbers were said to be the fundamental behind the market move. Never seen consumer confidence boost the markets this much. Very suspicious over lack of volume.

News this AM – GM bondholders say no and it looks like GM will go into bankruptcy.

XLF - The ETF that tracks financials (mostly shadow banks ) rose +3.26% . This index closed at 12.04. As stated in past updates for the last 3 weeks financials have been trading between @ 13+ and @11+ (more specifically support at 11.33 and resistance at 13.08) Any close above or below these support of resistance levels would turn confirm a longer term trend for bull or bears.

WTIC - Oil prices again closed over their $60 support level +1.26% at $62.45. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.

Reading The Tea Leaves - Yesterday we moved up within the consolidation range. (see above or chart of SPX) There has yet to be any breakout in any US or world indexes.(except Brazil) The formerly leading Financials (shadow banks) are now a bit behind the major US indexes. The NASDQ (techs) seems in the lead.

Positions - (See positions section of blog for more)

•  EWZ - sure looks like it was a mistake to take our substantial profits (+26) in Brazil (EWZ) Brazil reached a new closing high yesterday. As stated Thursday looking for a dip (-5 to 10%) to get back in.
• Inflation – GLD (gold) is one of the hedges against inflation. As recommended last week I was able to add to this position as about $93. We sold some gold at $95 earlier this year. 
• There are ETF’s that also will move higher if/when inflation occurs. Considering TBT  (explanation later this week), but is has way too high a price right now.
• FXI – our major position here only rose +1.24% yesterday due to the proximity of China to the nuclear test in North Korea. 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

Below is your very own collection of photos of the men who have privatized the profits and socialized the risk.  The Masters of the Universe who have rescued the dishonest and  greedy banks, kept the financial system afloat,  and created an explosive rally on Wall Street by moving in the shadows and stripping away financial transparency. Of course that’s just how they helped create the financial meltdown in the first place.

The Masters of the Universe

 

   

(above photos – Tim Geithner, Larry Summers, Hank Paulson)

“To the Moon Alice”

was Ralph Kramdon’s (John Herbert “Jackie” Gleason Jr.) famous line.  That’s just where the stock market is now going. See technicals and fundamentals below.

Masters of the Universe

was , of course, was the term author Tom Wolfe used in to describe all  the greed, arrogance, and shadow deals that personified Wall Street in the 1980′s. Since Obama’s took office his boys (Summer’s & Geithner), like Paulson before them, have become the personification of Wolf’s term.

Nobel Prize winner Paul Krugman  in an editorial entitled “Zombie Financial Ideas” states “ Every plan we’ve heard from Treasury amounts to the same thing — an attempt to socialize the losses while privatizing the gains.”

Arianna Huffington In her editorial pleads with Obama to take the “steering wheel out  of Geithner’s hands.”  She chronicles the war within the Obama administration between Axelrod and Geithner/Summers over AIG, Wall Street bonuses and just who is going to pay to fix the worldwide financial problem. Right now the fixer sure looks like YOU (the taxpayer) your children and your chldren’s children. 

John Bogel (legendary founder of Vanguard) - This AM on CNBC – The solution gets the government back in the shadow banking business

The solution, brings the world’s financial system back from the brink and ignites a Wall Street rally lead by the financials that scammed the world.  Probably later rather than sooner ordinary folks are going to realize how big the bill will be. 

A whole lot more on this later and since we’re all in this together you can lead the conversation by  submitting YOUR editorial/comments at the bottom of the blog.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!