Two faced/Batman – “Par-tay” – Mad money, big money, fast money vs. the long term economic viability of USA and world. Special weekend Update on short term traders vs. long term investors & taxpayers. Danger Will Robinson Danger, Danger.

1990 DC comic (Neil Adams – pencil)

Two Face 

Two Face is often thought of one of Batman’s most infamous villains (see clip) A man of two faces – one a former crusading District Attorney, the other a wacko super villain.

One major mantra of this blog for weeks has been the infamous Shadow Banks/Institutions and their future for both our country and the stock markets.

As predicted (see Updates of last few weeks) the Shadow Institutions exploded higher  (XLF +15.45%) and Wall Street (@+ 3,5%) soared on Friday. Why not, taxpayers not bond or share holders are picking up the bill for shadow institutions trillion dollar robbery and our government is allowing them to crawl back into the shadows of less transparency/accounting. 

One face to this rally is that if you want to be a short term trader - there is “Fast Money, Big Money, Mad Money” to be made  NOW!  Par-tay! So, the two faced writer of this Investment blog would tell any trader ride the wave – make the money

But as a long term investor or a tax payer – if you are spending trillions to bail out big banks, allowing them to run in the shadows &  keeping their too big to fail status - there is going to another even more catastrophic bubble bursting in the future. Danger Will Robinson Danger Danger

“Even at the cratered Citigroup, a technical analyst was moved to write a report last month urging his peers to stop living in “denial” and recognize that we are witnessing the end of “25 to 30 years worth of excess.”  writes Frank Rich in today’s NYT

Rich has his own two faced dilemma – No one is better faced to make this change to a new economy than Barack Obama and  Obama has paradoxically chosen a Dr. Strangelove “the last person to serve as an inspiring role model for alternative values would have been Summers.”  to lead us out the economic meltdown we face. 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Whose getting the preferred treatment? Shadow banks/institutions like Citbank or American manufacturers like GM – A cartoon. Fixing the Financial News Channel- CNBC – Remember Jon Stewart’s drubbing of Jim Cramer? Now comedians are banding together. A fearless market forecast- wear your rally cap.

cartoon credit – Daryl Cagle

Fixing Financial News – CNBC

The major financial TV channel, by far, is CNBC. We all remember when Jon Stewart opened a can of whoop ass on its most politically moderate host Jim Cramer. The hosts of the rest of the shows like Cramer are  basically cheerleaders for their advertisers - Wall Street

Now a group of comedians is doing something to fix the biased network. “Jon Stewart made the case, now we’re demanding action.”  A funny 4 minute video, but more importantly 20,000 people and economists have asked CNBC to start holding Wall Street accountable. 

You too can sign up to make financial journalism accountable at – FixCNBC.com

Together we can make a difference – take a minute and sign the petition – In the long run it will protect your money, our economy and your job if we have less biased financial reporting.

(Sorry yesterday’s link allowed for no comments and it took a long time to appear- I have no idea what went wrong.)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

STOCKS

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Technicals & Fundamentals

 Markets moderately moved higher yesterday. Volume was well below average.  Therefore volume offered NO confirmation of the price move.  

Overall this week looks like a consolidation of the previous three weeks gains. Just what you want is you’re a bull.  The chart to watch is XLF (ETF for financials – See below) Usually after a big move & then consolidation, stocks continue to move in the same direction,  This should make bulls happy.

Baltic Dry (Sea) Index - (see chart link on side of blog)  Measures flow of goods/trade and is a leading economic indicator.

Since 3/10 the BDI has fallen each day and yesterday was again  no exception. Another @0.20%  Total loss from high more than 31%.   How many days in a row can an index fall?  Right mow it’s 21 trading days in a row.  The rate of change (fall) has slowed dramatically.  We could be seeing a  bottom here.  This would be positive for markets

Reading the Tea Leaves - Same mantra - As long as  Shadow Banks/Institutions are going to get bailed out by taxpayers instead of bond/stock holders then the rally is on. That seems to be the direction Geithner Summers & Bernanke are headed. Trillions in wealth is changing hands.  

Fearless Forecast – The consolidation will end & the rally will continue as shadow banks announce better than expected earnings.   With diamonds, rubies and gold being showered on shadow banks and a big treasure chest to hide accounting procedures in these banks are going to SHINE this earnings season. Its baseball season so put on your rally caps.

Shadow Banks/Institution Watch

XLF (financials/banks) is therefore the key sector to watch. Checkout the chart and technically you will see that the XLF has tried to move above @9.75 for almost 3 weeks and failed. It closed at 9.20 yesterday up +0.55%.

Add Insurance companies  to those receiving bailout funds. Beyond the infamous AIG others are lining up. The reason for the modest rally in stocks yesterday is insurance companies shot up significantly. Story from MSNBC here.

Bottom Line - The more the tax payers bailout shadow institutions and the less transparent they are allowed to be the better these stocks will perform in the short term. The worse it will be in the long term for taxpayers and the national debt.

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! 

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News

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Deer in the Headlight

Stop staring at the headlights and Get out of the road

The reason Investors411 brings you news like “the worlds financial system has effectively disintegrated” (see last post on blog – Roubini, Volker Soros) is so YOU can stop standing like a deer in the headlights and do something to protect your economic well being. - 

Obviously, the Laissez-Faire capitalism under the previous four Presidents has spectacularly failed. The tech, housing, and credit bubbles have all burst under the absolutism of “free market capitalism” and something better has to arise from the ashes. 

Over the last eight years we have so decimated/cut and tainted the staffs of regulatory agencies from the SEC to the FDIC that any short term solution from Madoff to Nationalization becomes,at best very very difficult. 

The Real Structural Problem

What we watched over the last 8 years is an orgy of economic bubbles bursting because of unregulated greed of our capitalist system. Yes its time to restore balance, but first you have to recognize the long term structural problems. Researchers Picketty and Saez on where the money’s gone in our country over the last 40 years. Quote from economist Robert Reich& graph from Picketty and Saez -

“since the late 1970s, a greater and greater share of national income has gone to people at the top of the earnings ladder. As late as 1976, the richest 1 percent of the country took home about 9 percent of the total national income. By 2006, they were pocketing more than 20 percent. But the rich don’t spend as much of their income as the middle class and the poor do — after all, being rich means that you already have most of what you need. That’s why the concentration of income at the top can lead to a big shortfall in overall demand and send the economy into a tailspin. (It’s not coincidental that 1928 was the last time that the top 1 percent took home more than 20 percent of the nation’s income.)

This is the beginning of a “Great Recession.” and the real long term structural problems of income inequality have to be addressed. (see Overview section of blog) Only then will we find a long term solution.

Stocks

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Short Term Outlook

Both Citi Group and Bank of America were again had massive losses on Friday based on fears of nationalization.  The ETF that mirrors financials is XLF

The major indexes recovered from -3% losses in huge volume on Friday.  After 5 straight days of financial meltdown technically it looks like we may see a short covering rally continue.  The huge volume in financial stocks, the Dow and the S&P indicates a short term climax selloff. This is where all the weak or frightened investors panic and sell. The more solid long term holders remain. The rally from the 3+% fall is all the short term traders caught in short positions selling. Technically, Friday’s trading and the oversold conditions indicate a short term rally in stocks should continue.

You shouldn’t get too excited  - this is a technical bounce. Sometimes these bounces can be the start of something bigger. What we need is some major change in fundamentals like slowing unemployment or decline in the default rate of mortgages to give any rally substance.

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Long Term Outlook = BEARS RULE

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See STRATEGY, POSITIONS, OVERVIEW (new) & ARCHIVES sections of blog for more

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!