Investment

» BoltonCT - Cities will begin to default as the crisis spreads.

Yesterday the US markets weakened slightly. Bombay ended up over 1.2% but most of the Asian markets were close to unchanged last night.

Most of the European markets today have moved up over 1%.

Today still appears to continue the third test of the bottom for this possible rally in the USA. The futures indicate the US markets will start out slightly higher.

There still has been no capitulation so the market is still at risk of resuming its decline. The market continues a lateral move.

The DJI MACD has gone negative and most of the other American exchanges look as though their MACDs are also headed towards negative sell territory.

The old Parabolic SAR for the five American exchanges I follow are now all bearish. The last two caved in two days ago. The New Combination of SAR and MACD signals will also turn bearish if the Bulls can't rally soon.

It looks like soon the bears will take the bulls by the horns. If the bulls fail to rally soon, hold onto your hats.

Auction-rate bond failures show no sign of abating after investors abandoned the fixed rate market for variable-rate municipal securities. Rates charged municipalities have doubled, doubling the cost of servicing debt. When this phenomenon spreads to US Treasuries the US fiscal deficit will rise rapidly because the US owes over $9 trillion in debt. It is only a matter of time before the US is hit this way. It will happen as China and Japan convert to Euros. Then municipalities will see their variable rates rapidly triple throwing cities into default.

-- posted by BoltonCT

» BoltonCT - Its stagflation stupid!

Asian markets were up about 1.2% last night. But European markets took it down about 0.9% before recovering most of the losses. Most of the European markets today have moved down slightly on the order of 0.2%. Futures are now indicating a slightly positive start for the US markets today.

Today still appears to be a continuation of consolidation and the third test of the bottom. This may be the beginning of the next leg down today.

The old Parabolic SAR for the five American exchanges I follow all continue bearish. The MACD for the Dow turned bearish and the S&P gave a marginal MACD sell signal yesterday. The New Combination of SAR and MACD signal says cherry pick out of the stock market now as the market is in a volatile whipsaw mode which is great for cherry picking. A stock with a two-sigma spike up could be an attractive short. The indications are that the bulls are not strong enough to rally yet. However the financial media are becoming much more positive now than they were two weeks ago.

Inflation is now rearing its head and Gold is probably about to peak near $1000/oz where it will likely consolidate for a while.

The Fed may have to start raising short-term rates again to protect our currency or China and Japan will stop buying dollar-linked treasuries that pay negative real interest. If the Treasuries are abandoned interest rates will rise in spite of FED efforts to keep them low. Then corruption and swindling like we saw with the sub-prime will be encouraged again because the swindlers make money giving taxpayer money away and face no penalty.

-- posted by BoltonCT

» BoltonCT - The bulls failed and the decline resumes in earnest

Copper prices dropped 2 percent in New York yesterday on speculation that a slowing U.S. economy will erode demand for the metal. Since much of the gold produced is a by-product of copper production gold will become relatively scarcer over time. Therefore while initially gold should retreat from the current highs there should be another resurgence within a few months.

The S&P, NASDAQ, and the Qs broke down through resistance levels yesterday apparently ending the rally and beginning what could be another 10% leg of the bear market decline. All of 2007's gains have been erased and now we stand to lose the gains of 2006.

Stock markets in China and India fell of 35% last night and are set for their largest weekly drop since this bear market started last August. Japan fell 3.2% and ended its rally. Credit losses continue to widen and commodity prices dropped almost as though a depression is now feared. Since the news media usually chases the market tying to explain what is already in the past we can expect the most terrible news for a while. One thing I heard is that in China, their most rapidly growing business is the one of dismantling corporations that are failing. Businesses are falling like flies with the bosses abandoning them and moving away leaving the already poor 20 cent/hour workers with unpaid back wages. The collapse of the stock markets in China and India will likely resemble the collapse of the market in Russia in the late 90s. Foreign investors are especially vulnerable and are still treated as colonialist exploiters and given no quarter.

European markets are down about 1%. Most of the world markets lost everything in the first hour and then were flat. American markets appear to be set to decline today as well. We probably will now begin to see the first avalanche of American 401s being taken completely out of stocks. That would more likely happen next week as the current out-of-control interest rate increases become better known and the FED is seen as incapable now of keeping real interest rates down. The FED essentially is just bailing out the banks now gibing then low rates so that they can make usury profits to cover their subprime losses and skim off some nice bonuses as well.

We can expect Jim Cramer and Motley Fool to become very quiet now and possibly go out of business. They may be reborn later after the market bottoms. The broken clocks they use to time their investments are only useful in bull markets. Their pump and dump messages will backfire even on their insiders. GOOG, QDEL and other recent recommendations seem to be in free fall. They always recommended buying stocks that were setting highs. That becomes the worst possible strategy in a bear market.

-- posted by BoltonCT

» BoltonCT - USA M2 Money Supply 15.7% Growth Rate

He shows the unpublished USA M2 Money Supply Growth Rate is 15.7% per year. No wonder the FED keeps Money supply growth a secret.

Fed Rate Cuts Backfire, Lift Gold and Oil into Orbit posted on: March 07, 2008
by Gary Dorsch

http://seekingalpha.com/article/67570-fe...

"Too Much Money Chasing Too Few Commodities" might be the best way to explain the historic rally that has lifted the Dow Jones AIG Commodity Index into the stratosphere. Central bankers in 18 of the top-20 economies in the world have been expanding their money supplies at double digit rates for the past several years, trying to prevent their currencies from rising too quickly against the terminally ill US dollar."

-- posted by BoltonCT

» BoltonCT - You heard it here before Barrons

Creamer and the motley fools pump and dump recommendations are now in free fall. For example Google's earnings increases have been decelerating for almost two years and the stock price should soon be down 60%. They have also been hyping bird flue for three years now to pump thinly traded QDEL up. It has begun what will likely be a 60% decline down to where it was prior to the Creamer and the Fools.

http://biz.yahoo.com/rb/080309/google_ba...

Reuters
Google shares could fall another 20 percent
Sunday March 9, 7:14 pm ET

NEW YORK (Reuters) - Google Inc (NasdaqGS:GOOG - News), whose shares have plunged more than 40 percent since November, could fall almost another 20 percent due to the U.S. economic slowdown and aggressive spending by the Internet search engine company, according to the latest issue of Barron's.

-- posted by BoltonCT

» BoltonCT - Inflation is the great equalizer of the third world.

Malaysian stocks plunged 9.5% percent on Monday, their heaviest volume decline in a decade. Their currency also fell after the ruling conservative coalition suffered its biggest election setback in history, raising worries about leftist government spending plans. I wonder if this could happen in the US if big spenders take over after all 15+% monetary expansion rate we are already seeing under "conservative" spenders.

Most of the rest of Asian markets fell over night by about 1.5% but only the Hang Seng commissar market price planners decided to push that market there up 0.9% at the close. In China they set market prices like the free world sets interest rates. China could take investors by surprise when a black market develops in stock shares as the communists lose control of share price fixing just as they lost control of currency exchanges in the past. It may be just as hard in the future to get out of China's failing stock market in as it is to get out of failing hedge funds in the USA.

The dollar fell to a three-year low against the yen and declined versus the euro as traders bet the Federal Reserve aggressively cuts rates at its meeting next week.

Your heard it here first! The government reported Friday that employers cut 63,000 jobs in February, the biggest monthly cut in five years. Yet unemployment declined the second month in a row. How could that happen???? It happened two months in a row because seniors are retiring faster than people are being laid off and are leaving the unemployment ranks because they no longer registering for jobs. That means jobs are contracting much faster than the layoffs and the productive social security payers are finally having to support a massively growing social security system filled with former workers and many others who never paid in a dime but who are given SS by "conservative" spenders. What will happen when "big spenders" take over in the USA? And how will it be possible to reverse the largess when the freeloaders eventually have a political majority in the USA?

It now looks like a bad week for stocks. Gold, oil, and inflation rise as inflation now threatens to wipe out USA retirement nest eggs. Inflation is the big socialist equalizer so often seen in the former Spanish speaking colonies. Unfortunately the inflation "heritage" equalizes by making everyone equally poor. It could become the future in the new bilingual America as the USA heritage grows more like the third world. Perhaps that is why the socialist third world buys so much more gold than the more capitalist nations.

Our old and new Spiral and MACD indicators are now indicating the bear market is starting again.

-- posted by BoltonCT

» BoltonCT - Credit Meltdown is really a freeze out.

Blackstone Group, perhaps was the world's largest buyout fund, said fourth-quarter profit plunged 89 percent after a ``meltdown' in the credit markets and predicted a shortage of financing for takeovers in 2008.

What does a "meltdown" really mean? It seems to mean that low interest rates are not obtainable as the FED wishes... so private funding dries up. It is really a freeze out... not a melt down.

Low FED rates cannot sustain our economy, it is really is a slow bail out of banks. It is slow and is not helping the overall economy.

-- posted by BoltonCT

» BoltonCT - High Debt to equity and a low current ratio

High Debt to equity ratio (4.0) and a low current ratio (1.2)are a sign of an impending cash flow crisis and impending bankruptcy. You can screen stocks with those characteristics and select from them
those with the highest PE ratios which have the farthest to fall. I did and went short again today after announcing the resumption of the bear market.

Oil hit a new record high price $108/barrel and experts say gasoline will likely continue to soar in tandem. The experts say motorists should prepare to soon pay nearly $4 a gallon this year.

The Fed is in a bind. The economy may be heading into recession...if it isn't already in one. But can the Federal Reserve really afford to cut interest rates by another three-quarters of a percentage point next week, as WS is predicting? With inflation a major growing cause for concern, the Fed is running out of room if it hopes to successfully accomplish its primary mandate, price stability.

U.S. stocks fell today to the lowest level since 2006 led by a plunge in financial shares. The decline in banks accelerated as Bear Stearns Cos. tumbled 11 percent, the most since 1987 on concern the brokerage was facing possible liquidation. BSC's long term debt is 19.5 times larger than its total assets. But its current ratio is 1.17 so it can still pay its short-term bills with some cash. But the quick ration is likely under 1.0 and that is usually fatal. The problem is that BSC is now a higher risk and interest rates for BSC must increase just as all junk pays higher rates. That means interest rates will soon eat up the remaining cash. Right now creditors would get back approximately $1 for every $19.5 they are owed and that would leave nothing for stockholders. Probable insolvency is no rumor.

Now would be a good time to get out of any stocks Creamer was pumping and dumping because his good friend the governor will not be around much longer.

-- posted by BoltonCT

» BoltonCT - Negative Cash flow is terminal

Remember when Lockheed, the worlds second largest Airplane manufacturer, went out of business for lack of cash flow. Do a stock screen for stocks with more than two times as much long term debt as total assets and a Quick ratio less than 1.0 (or a Current Ratio less than 1.2) and you will find the stocks with a relentless debt situation facing potential bankruptcy because they are facing junk bond interest rates that will consume what little cash flow they still have. Investors have been cherry picking the worst ones to short like they are now doing with Bear Sterns. These highly leveraged companies are like the people who took subprime mortgages they could not afford with low kicker interest rates from when investors acted as though risk was not important. Those companies are heading now towards bankruptcy. The higher the leverage of debt the faster they will collapse.

The Asian markets spent most of yesterday in negative territory before the Asian regulators, and Commissars took control and brought share prices slightly into positive territory. One wonders how religious law is applied to stock markets that are not feudal barter systems. Do all types of totalitarian governments regulate prices the same way, probably not. The Xenophobic ones will be harder on foreign investors. It is likely that many American hedge funds will be enticed and locked in as the fastest growing immature and untested Asian market's regulators lose control in the end.

The European markets are all over the board today due to volatility and uncertainty. Currently they are up about 0.7% on average.

The U.S. Dollar Vs Euro is at 1.55 the worst decline in history (in the last 4000 years). But stock market futures indicate the market today will open on a positive note as it did yesterday.

In the mean time all five USA markets we analyze have both the new and the original SAR (Spiral) and MACD indicators in sell territory. The next leg of the world wide stock market decline has begun. All highly debt leveraged companies are in danger and even companies with a debt/equity greater than 1.0 are at some risk.

-- posted by BoltonCT

» BoltonCT - No buy signal

The Federal Reserve will now lend Treasuries in exchange for debt that includes mortgage-backed securities up to $200 billion available through weekly auctions. The program may be increased as needed. The Fed coordinated the effort with central banks in Europe and Canada, which plan to inject up to $45 billion into their banking systems.

How is this different from what the FED did before? This time Bear Sterns can do it themselves and get treasuries that anyone would accept. Before Bear Sterns had to persuade another bank that their assets had value and the other bank could say yes, but pay me 12% interest anyway. This time BSC could use the treasuries for collateral. Does it make a difference? Yes, it eases the credit crunch and when BSC fails, the FED will lose all their money so it is essentially a bail out not of Bear Sterns like companies, but a bail out of Bear Sterns creditors.

So it will reduce the collateral damage and the spiraling decline caused by the recognition that most of America's prosperity is based on pilfered and worthless asset appraisals.
This will not stop the collapse. The only thing that will stop the collapse and restore confidence is when American's see justice when the FBI begins to put the corporate thieves and their Wall Street pimps in prison and confiscates their ill-gotten bonuses and salaries from ravaging investors and the corporations they served. This will only put new bonuses in the hands of executives who shift their losses to the American taxpayer. This is the big immediate tax relief for the very rich that Congress would not give them. The Fed gave it instead. Americans who make less than $30000 a year will get a $300 check this summer and executives who are destroying America will take home $3million bonuses from the FED.

Investors worldwide were initially buoyed by the FED's news. Asian markets finished their session last night higher and European stocks soared at the open. Today the markets are currently set to move higher again.

However, the market is no longer oversold, and it will not be long before Americans and Congress reacts stronger to WS as WS pilfer the FED windfall with additional bonuses and retirement buyouts.

The economic decline will not end until confidence is restored by the FBI not the deaf, dumb, and blind FED. When the thieves get punished and some are behind bars, then people will feel it is safe enough to put money back into stocks. And no it is not the Martha Stewarts who need to be put behind bars just because they are Democrats. The thieves grease the palms of the influential politicians on all sides like the crime syndicates do.

The rally yesterday resulted in no buy signals.

-- posted by BoltonCT