Investors 411 Blog

by Barr Jozwicki
July 15, 2012

Recession/Deficit Solutions

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , ,

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The Greatest Economists of the 20th Century

Agreed that you Stimulate Your way Out of a

Recession

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Solutions to The Deficit

Stimulus or Austerity

(Part 1)

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The  Outstanding Success of

The Obama Stimulus

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Why Stimulus Works

&

Austerity Doesn’t

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The Obama Stimulus cost $787 billion.

Our national debt is @ $15 trillion.

A 5.2% one time addition to our debt.

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Under Obama & his Stimulus

Job growth went from -800,000 to +300,000

GDP went from -8.9% to +3.9%. = +12.8%

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Millions of jobs

created millions of taxpayers

& the GDP expanded.

Taxes paid by those with jobs

REDUCE the deficit

year after year after year…

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Everything was working until

*The Stimulus ran out

*The Austerity/Banksta Republicans

won the House of Representatives

&

*Obama, himself, put more focus on

austerity instead of stimulus

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Republican blocked virtually every

stimulus/jobs growth plan.

&

Had to be dragged kicking and screaming

for even a payroll tax cut

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Let’s see what happens to

the deficit

when Banksta/austerity

gain even more control.

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Examples – Austerity as a Solution

The European countries in economic trouble.

Portugal, Ireland, Italy, Greece, & Spain

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Ireland’s “free market” economy was

the goal of every Banksta in America.

The Baking Industry had “captured government”

Regulators were no where to be found.

Then Something Hit the Fan

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Ireland was the first country to impose

The Austerity Solution

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The Deficit

Exploded Higher

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Ireland Government Debt To GDP

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Ireland’s unemployment rate exploded

from 4.6% in 2008 to 14.3% today

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IRELAND with Austerity

A 311% INCREASE in Unemployment

A 433% INCREASE in Debt to GDP

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In Hard Economic Times

Austerity = More Debt

..

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More Examples

The Other 4 Troubled European Countries

who have adopted the austerity solution.

All have

Debt to GDP ratios that are still exploding higher

All  have unemployment still exploding higher

For data on these countries see this LINK

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Next Blog – Common Sense works, Regulated Banking works, When Austerity works, Those plutocrats that don’t give a damn, but say they do – More Solutions.

FINIS


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June 1, 2012

Jobs Report

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , ,

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STOCKS

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Jobs, Jobs, Jobs

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You can look at lots more

jobs growth charts

by using this LINK

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The Obama stimulus

dramatically & positively altered

the jobs picture

from -800,000 to

21 months of +100,000/+200,000

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What happened?

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  • The Stimulus ran out &
  • Jobs growth flattened.
  • Republicans preaching Austerity won the 2010 elections
  • European Meltdown Grows

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To recover from other post WW2

Recession we created MORE government jobs

The Obama Stimulus ran out

The Small Businiss/American Jobs Act

was crushed and here’s what happened

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We Lost Government Jobs

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There’s a time for cutting deficits/austerity

But NOW

The Clear and Present Danger is

Worldwide Recession/Depression

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We pay for our Debt by selling Treasury Bonds

Our 10 year T Bond is at 1.58%

CPI(measures Inflation) is at @2.3%

In real inflation adjusted terms we are

paying down debt at @0.72%

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Spain 6.55% Debt is a huge problem

But, thanks to our Fed, and

others across the world buying

our bonds

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Today’s Monthly Jobs Report

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  • Employment rate from 8.1% to 8.2%
  • Jobs numbers +69,000 – +150,000 expected
  • Horrible numbers - Much worse than expected.
  • Very bad for Obama fans because he will be blamed


________________

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Our Canary In a Coal Mine

Stock Market(s) Barometer

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The Canary may not be Dead Yet

But the yield on the 10 year Spanish bond

is rising close to the 7.00% Danger Zone.

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Yesterday huge drop to 6.44 at open

but the yield rallied throughout day

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Today  rates are flat – LINK

6.55% at 8:20 EDT


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****************

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No changes in LTO till Spanish bonds close below at least 6.25%.

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Longer Term Outlook

3 months+

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CAUTIOUSLY BEARISH

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AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK & POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMMAR  ERRORS.

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November 3, 2010

Elections & Economics & You

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , ,

Newspaper Front Pages Election

Photo from Huffington Post

Elections, Economics & YOUR Stocks

Elections

What polls predicted happened, with a few surprises. Harry Reid won.  Dems did better than expected in Senate and Reps. did better than expected in House.

Personally, great sadness over heroic Russ Feingold’s loss – He was the NOT in any way owned by the PUKE Green Party. (see yesterday’s Investors411.) The PUKE Green/Shadow Institutions won hands down. I’d trade Feingold for Reid or just about every other senator out there.

  • Gridlock – The House will come up with proposals for cutting. Each cut has a specific constituency. That’s a negative for a congress person that has to be specific about cuts. The Tea Party now has to get specific.
  • Obama does have a bipartisan commission on cuts and taxes that’s going public in Jan (I think). This could make a difference and something Obama would/might follow.

Economics

The US economy is in shambles – if you consider negative GDP growth shambles and it doesn’t look like a recovery any time soon. Economists are going to be all over the map on this so I’m using a relative moderate Mark Zandi from Moodey’s Analytic (see yesterday’s Investors411, Zandi – $500 billion in QE = 250,000 jobs and o.3% of GDP).

The +2%GDP growth last quarter has to factor in a lot of stimulus that the far right hates.

  • If you add the $1.7 trillion from QE 1 it equals about +1% of GDP (using Zandi’s math – see above)
  • The non partisan CBO says the Obama stimulus added about +1.7 to +4.5 real GDP growth in the second quarter. Let’s divide the total in 1/2 = 3.1% GDP growth was due to Obama stimulus.
  • 1% from QE1 + 3.1 from Obama Stimulus = +4.1% of USA GDP was enhanced by Obama & the Fed. That’s also a whole lot of jobs.
  • I’m not gong to add another factor – The UNaudited Fed makes other 0% loans to who knows how many shadow banks. But this also juices GDP.
  • Therefore, real GDP 2% total – 4.1% enhanced from Fed & Obama= -2.1% GDP for the USA last quarter without the FED & Obama (Remember, I’m playing with ballpark numbers, but if you add in the unaudited Fed loans I’ll bet our situation is  far worse.)

The Vampire Squids at Goldman Sachs think we need $4 trillion more in quantitative easing. That’s how bad GS thinks the economy is.

Elections plus Economics.

Rodney Dangerfield/BarakObama gets no respect for keeping us afloat but its the future thats more important. Here’s the problem. Without stimulus we have at least a -2% probably -3% GDP growth. This kind of negative growth would hemorrhage jobs.

The Republicans who are taking over, especially the more radical Tea Party radicals hate every form of stimulus from QE 1 to the Obama Stimulus. They are going to scream bloody murder and want to cut.

  • The Obama stimulus is almost all over so all we have now to foster growth is QE 2.
  • QE2 may start out small,but it is going to have to be massive to fix the US economically.
  • Obama & congress did pass a small business jobs bill a month ago that will help.

Stocks

Unstimulated GDP growth is negative, Obama stimulus about over, The US consumer is saving more, the foreclosure mess is far from over and globalization is sending jobs overseas (Big thanks to Robert H who discovered INTC has just opened a billion dollar factory in Vietnam – see comments section of blog)

For the economy - We’re in a hole that should get deeper and deeper. Now only quantitative easing (QE2) is there to help.

Prediction – GDP growth depends on how large QE 2 turns out to be. Think +0.6% GDP  for every trillion of QE.  Getting to a 4/5% GDP growth to bring down unemploynent seem mighty hard.

For stocks - We’re going to need a lot of quantitative easing to keep the USA’s economic  head above water. That means a lower dollar and stocks moving higher despite a rotten economic picture nationally = bullish for stocks



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 +0.58% flat
NASDQ +1.14% down
S&P +0.78% up
Russell 2000 +2.05% -

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

US Stock Markets -

Dollar took a significant hit, so stocks rallied yesterday. The dollar is dangerously close to its support level. If that falls, and the chances of that happening are growing, the stock rally should have legs.

Significant Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar fell a significant -0.74% yesterday. Dollar currently moving within a range (see below). Now close to breaking down through support levels of consolidation range. Another fall like yesterday’s and support breaks. Trend for stocks = Neutral/Bullish
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets, exporting countries]Fell a -1.81% yesterday. BDI now consolidating after bull run that began in June. The BDI has been overshadowed by the dollar moves. @another 4% drop to support level and change to bearish. Longer term Pattern now= Neutral
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] Basically flat closed at +6.37% yesterday. Six week trend (see chart) is starting looking bearish but location still = NEUTRAL

Reading Tea Leaves.

Again Mantra for last two weeks -Any move in UUP (tracking ETF for dollar) above 22.7 resistance is trouble for stocks. Any move below 22.18 support level is good for stocks. A breakout of either the support or resistance level will tell you who wins the dollar war.” UUP closed at 22.25 and fell -0.17% Another fall like this a strong support level for the dollar breaks.

Bottom Line = From yesterday -”gives bulls slight advantage”  That advantage for dollar bears and therefore stock bulls became a whole lot stronger with falling dollar nearing support. Looks like the betting before of Fed’s QE2 announcement today is for a falling dollar.

All eyes on Fed and how big QE2 is going to be. What the Fed says and does about QE 2 Today will probably set the course for stocks and settle the dollar war.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions)

  • EWS (Singapore)
  • SSO (2x what S&P does).

Again the Mantra for the last week - “Not making any specific move until dollar breaks out of its range. I would look at a breakout higher for the dollar, and a corresponding fall in stocks and the MO to oversold as a buying opportunity for long term investors. “Looks like next Wednesday Fed meeting is the big event.”

I’m back to buy the dip even though the MO is near zero –

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.”

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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December 7, 2009

One Shocked Panda BEAR

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , ,

Shock & Awe for Bears

openingimage

The unemployment report Friday both shocked and awed Wall Street Bears and almost all economists . Even more than the startled jumping Panda. (Thanks David Fry for photo)

The dramatic drop in job losses coupled with a positive +2.8% GDP growth for the last quarter is certainly good news for every bull on Wall Street and Main St. Economic momentum is flowing in a positive direction both in the USA & especially emerging markets.

Why?

There’s good, bad, and ugly behind the positive economic news . Since, Obama’s Afghanistan policy is such a disaster (at least to those of you who have commented and Investors411 – See additional Clinton, Gates LINK [we're nation building & there for as long as it takes] and Friedman [against surge LINK ] on Talk shows over weekend) lets start out today with the good and give Obama some credit.

There are 4 major reasons why we have seemingly turned a corner. - TARP, emerging markets, printing money, and stimulus.

TARP – Bailing out Shadow Banks was started by Paulson/ Bush and continued under Geithner /Obama.  TARP is working better than almost everyone expected. Last week Bank of America announce plans to pay back $45 billion (plus interest)and losses far less than expected. See NYT. See LINK

Emerging Markets They kept emerging, especially China. (see past Investors411) They’re the locomotive and we are the caboose.

Printing Money – The Fed just kept printing trillions of dollars faster than a super market buys toilet paper. The unusual part is investors from around the world bought truck loads of that toilet paper in the form of US treasury bonds with insignificant interest rates. If/when rates go up, boy will those  investors have a huge supply of TP to whip their ____.

Stimulus - Around the world governments stimulated their economies with programs. You can make a case for Germany & China’s program being better than ours, but Obama’s stimulus (he was limited by Republican opposition) was relatively good.

Remember the old story of you can give a poor man a fish or you can teach him to fish. Well, economists have ways of measuring just how stimulative throwing money at a problem is. Does your dollar buy  even one fish or lots of fishes?

  • The Republican mantra is always cut taxes – Mark Zandi , economist from Moody’s and a McCain’s economic adviser “making all the Bush tax cuts permanent and cutting the corporate tax rate–would raise GDP by at most 37 cents for each $1 of revenue loss. ”
  • Obama’s stimulus “By contrast, increased outlays for infrastructure, aid to state and local governments and extended unemployment benefits increase GDP by between $1.41 and $1.57 for every $1 spent.”

The bipartisan Congressional Budget Office measured the whole thing and you can find more on why/what stimulus worked at LINK

Common Sense – Yes there are time tax cuts work especially targeted and in a recession.

But, when you cut taxes to a company you never know where that money is going to go – Fat bonuses for executives, a new home in Dubai (the global sex slave capital of the world), buying financials WMD’s (Warren Buffett’s term for Credit Default Swaps) or sometimes even good stuff like into research & development.

What you want to have happen is DEMAND increase for your product. The more money flows, the more demand. The reason you see sources like CNBC, right wing polls and think tanks always call for tax cuts is they control the companies or the companies are their big advertisers/sponsors.  Greed is good for me is their mantra.

KISS & STOCKS

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage percentage Volume
Dow +0.22% up
NASDQ +0.98% up
S&P500 +0.55% up
Russell2000-+2.38% -

Investors411 record – 5 years of beating benchmark S&P 500

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

Technicals, Fundamentals & Analysis

Economic Bears were shocked and awed at the fall in unemployment. Great news for Main Street USA, but we have a deep deep hole to climb out of.  This is mixed news for US Stocks.

The news is mixed for Wall Street, because good economic news in employment means the government/Fed will probably stimulate less. Therefore,  financial companies will no longer be able to borrow for nothing,  and their interest rates will rise sooner rather than later.  The dollar also gets stronger and those companies making more because the cheaper goods sold faster overseas will cost more – looss demand & profits.

Technically we had HUGE volume accompany a price rise. Unfortunately, for most major indexes the rally was less than a significant 1%. Stocks first went way up, then down and settled for moderate gains.

Small cap stocks, are more dependent on a recovery on Main Street did gain a significant +2.38% Bigger companies have more contracts abroad.

Fearless Forecast – Last weeks unexpected positive jobs number helped create a positive week. Investors predicted a flat to down week. Oops. This week we should be all over the place, but some solid economic fundamentals are coming into the light. This should help stocks in the long run. Once the dollar calms down (expect it to rise and gold to fall) we should improve. Flat to up week .

Now going to get a bit more technical

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

——–

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 a small rose +45 points yesterday and closed at 4107. Technically  the BDI broke out through its major resistance level 4291 (this year’s high) over a week ago.  The BDI has rallied about 1800 points since late September. After 16 up days in a row, 9 down days in a row & now up 3 days in a row. Multi day moves in one direction are common and the decline in rate of change usually signals a reversal.

What it means – Long term we created a higher high on the chart = Bullish. The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets. After, what looks like a technical correction we are agin moving higher.

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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 rose an ENORMOUS +1.44% Friday . Anything close to or over +/- 0.50 is significant  The dollar closed at $75.59 .

The dollar’s rise did temper the rally, but the whole dynamic or fundamentals have changed. See Positions below.

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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 +23,51 This is a Slightly Overbought Position . This chart is showing we seemed to have reached a plateau. It’s spilled over a little bit, but the McClellan index has moved between +25 & -25 .  There has been no clear buy or sell signal for over a month.  Oversold conditions (@ -60) = buy, Overbought positions (@+60) = sell

The closer we get to +/- 60 the better our chances of making money with a shorter term buy/sell signal

Positions

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

(again a little behind on latest moves)

We’ve had, and volume has confirmed, a quantum shift in markets. This may be temporary and it may be long term, but it necessitates major changes in positions.

Today is a confirmation day for Friday’s move.  More than anything else – looking for dollar to hold or add to gains.  Will buy some ETF’s and stocks until McClellan says we are overbought (@+60)


Recommended ETF’s and Trades

SELLING

GLD – Investors411 sold all of DGP several trading days ago and 1/2 of GLD on Friday. Last entry into this position was at $92.7 .  Traders should sell the rest and longer term investors could hold onto last 1/2 position (5% of portfolio).

Gold will rise again, but for now there is just too much downside momentum. Will be back into GLD & GDP late.

NVS -The flu scare is over. Thenumber of states that have serious flu has dropped from 43 to 25. Time to take profits on last 1/2 this position. Let’s take our profits 21+%

AMZN Taking profits. Markets rallied yesterday and AMZN dropped 2.54%. Never a good sign to see NASQ rally 1% and your tech stock drop. Again, this in part, was a flu play. Why be greedy we have about a 16+% profit.

BUYING

FXI – Adding more to this positions. If Main Street is recovering faster than expected, so will China. Their currency & exports is tied to the dollar. So in one major sense, their recovery is tied, in part, to the USA. They have under performed major USA indexes recently.

IWM or UWM (an ultra fund that does basically 2x IWM) These ETF’s both track small cap stocks (Russell 2000) IF, Main Street is recovering faster than expected they should outperform the other indexes. They have under performed so far and should,like China, make up soe lost ground relative to other major US indexes.

BAC – Bank of America. They’re paying back TARP shows solid fundamental strength. (I know they are a shadow bank bad guys) Bought BAC Friday.

Start small & Build your position – Buy the dip.

Again any stock investment or ETF that doubles or triples what a normal ETF does is a short term play for traders and short term investors – NOT long term Investors .

Long Term Outlook = CAUTIOUSLY BULLISH

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

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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