Investment

» Normxxx - FED action unconstitutional and could become treason

In response to FED action unconstitutional and could become treason posted by BoltonCT:

Bernanke and the FED have no Constitutional right to plunder Bear Stearns and put $29 billion of US taxpayer money up to guarantee JPMorgan an obscene profit. The Federal Reserve expanded its role illegally to give itself a role only formerly seen in socialist and totalitarian countries.

True enough, but give BB some credit; if he fails spectacularly enough, he very well may end up in the hoosegow. Nevertheless, he is bound and determined that there will be NO repeat of the banking disaster in 1932-1933 that ushered in the Great Depression (another 6-7 years of a faultering economy). In that, much as I hate rewarding the miscreants- who always seem to get away with the spoils- I concur. And, this time, we take the whole world down with us! Last time, we were only one among many, and the probable proximate cause was in Europe, when the actions of France brought down the Austrian bank Creditanstalt. (See Creditanstalt.)

Remember, the UK (hardly a 'socialist' country, certainly not in recent years) had to nationalize Northern Rock- who certainly were the authors of their own disaster- but was also Britain's third largest bank.

Fed's Rescue Halted A Derivatives Chernobyl.

-- posted by Normxxx

» BoltonCT - FED action unconstitutional and could become treason

In response to FED action unconstitutional and could become treason posted by Normxxx:

Thanks for Norm for sharing your viewpoint. I like to present viewpoints that make people think about consequences such as when FED practices are taken to the extreme. For instance people already think it is wrong that some on Wall Street take obscene bonuses for what they claim is good management. And then we find out they were in fact idiots because, "Making money for several years, only to lose most of it in one year, is not a brilliant business model."

Now the FED takes the moral hazard to a higher level of the ridiculous. Now the FED rewards them after already taking millions and losing billions. We reward them by taxing the honest people who actually contribute to our society by doing things productive for a living. This new FED behavior is good material for Saturday Night Live. It is a tragic comedy.

The market began to decline today on increasing evidence that profit margins are contracting fast.

Factory orders for big-ticket items fell sharply and unexpectedly in February, with orders for machinery hitting a record low. The Commerce Department said Wednesday that orders for durable goods fell 1.7% last month. Economists surveyed by Briefing.com were expecting a 0.8% increase.

Factory orders for machinery fell 13%, the largest percentage drop on record.

Orders for non-defense capital goods, which economists use as a barometer for business activity, fell 1%, extending the 8.4% decrease registered in January.

Scott Anderson, senior economist at Wells Fargo, said, "This is another damning report."
Manufacturers are feeling the pressure from weaker demand but soaring prices for energy and raw materials are the main problem.

There was a record decline in shipments of computers and electronic products, which were down 10.3%, led by weakness in orders for semiconductors.

Not much good news today but then it didn't seem to sink in with investors yet.

-- posted by BoltonCT

» BoltonCT - The Commodity Bubble theory just burst

The Asian markets are all cascading down in a clear bear market since last November. Last night they were mixed with the Shanghai Composite down 5.42% and the Nikkei 225 down 0.80%.

The European markets are up over 1% on average.

The American markets appear ready to open on a positive note but they also show the definite cascading downward pattern of a bear market about ready to drop again.

It looks like the theory of a bubble in commodities has popped in less than a week as gold and oil prices have surged again this week. I hope Sy covered his gold stock shorts now so he can be more objective about the economy.

Hyperinflation is becoming more of a current topic on Public Radio as there is a case in Africa and they still talk about Germany in the 1920s. I heard them talking again just yesterday. American Truckers are about read to revolt due to $4.20 diesel oil prices.

American oil inventories have not increased. I know many people are conserving more but it is the undeveloped world that is increasing the world demand and we cannot cut consumption fast enough to make a dent.

The US market patterns indicate we are due for a week or two of declining stock prices. And when this long stock market decline ends in several months we should see inflation kick in like we have never seen before driven by rising import prices which will cause our trade deficit to balloon just as they report a decline in tax revenues from corporations and a record fiscal deficit.

I want to cheer you up so I won't list all the news this morning.

-- posted by BoltonCT

» BoltonCT - American generosity attracts flies

So much for the bursting oil bubble!
http://www.tfc-charts.w2d.com/chart/CO/58

So much for the bursting Gold bubble!
http://www.tfc-charts.w2d.com/chart/ZG/48

Gold short sellers can always pick an hour of the day to say Gold dropped $5. You can also pick one where it went up $10.

http://www.tfc-charts.w2d.com/intraday/Z...

People who give advice like that want to profit by creating false rumors for suckers like you and I who once in a while believe them. Some times their rumors succeed and Americans lose $billions as with Bear Sterns. Morgan is making $billions on those rumors.

Today Asian markets are up and European markets are flat. It looks like the American markets will advance early in the session again. But the smart money realizes the decline has a long way to go. So what we see is increased volatility as the shorts and longs face off and they panic and liquidate when they panic. The smart traders like to liquidate all their holdings by the close of the day. That is why we are getting wider swings. Once in a while the news causes then to panic mid day. But the trend is still down until Congress does something because the FED is only making the George Soros of the world richer.

As we reported before, the lower interest rate the FED provided does nothing to lower mortgage rates but instead is intended to give the rich a bigger profit margin. Thus American taxpayers make up the financial losses their institutions incurred with the scam they participated in to justify their obscene salaries and bonuses.

The difference between the 10-year government bond yield and the average U.S. fixed mortgage rate was 2.7 percentage points last month, the widest spread since 1986. The banks are keeping the cash... not passing it on to new entrepreneurs and homebuyers. The FED has been and still is pushing on a string lining only the pockets of the richest in our society.

In order to stabilize the economy, Americans need access to mortgages at rates they can afford. The Fed has done nothing about that. Fed policy makers have made seven rate cuts since September, shaving 3 percentage points off borrowing costs for banks who have taken it all for their profit margins.

Yesterday they say Connecticut home sales dropped the most in the nation, 40% from last year. Falling prices have not helped much so far. The bank has one hand in the people's pocket through the FED and the other hand directly in the people's pocket with mortgagees to pay their multi million dollar retirement packages. Of course the unionized state employees and teachers are getting jealous and want a bigger cut too. The more generous the Americans are the more the conniving thieves want to come and live off the American generosity. And they get great respect like Soros who came to America with nothing and just loves to attack the USA currency and American values.

They believe home sales nationally will be down 37 percent this year from three years ago. CT has already exceeded that. Prices will drop about 20% nationally before it is over wiping out the equity of even some of the people buying new homes today. Standard & Poor's of New York says that will happen even sooner... this year.

Wall Street bankers pulled the plug on Americans with their scam to justify their salaries and benefits and now they are pushing America into a recession by keeping the interest rates high for the American taxpayer/homeowner.

You see the ads that advertise the lower mortgage interest rates? They are lies. Mortgage rates are higher than they were five years ago.

-- posted by BoltonCT

» BoltonCT - Dollar Devaluation= next an Investment drain????

What caused the gap up in foreign market prices from Monday to Tuesday last week? It looks like the Dollar was effective devalued in most major currencies. Does anyone know the story?

http://finance.yahoo.com/q/ta?s=%5EGDAXI...

A weakening dollar would cause an immediate dollar cost rise in all foreign markets doing the devaluation. This illustrates another problem the FED is creating with the lower rates.

We already know the lower rates are not passed on... they are used to pad bank profits to bail Wall Street out. But the inflationary aspect causes the dollar value of foreign stock markets to appreciate relative to ours just on the basis of the exchange rate. Therefore Americans buying into countries that have a good fiscal and trade balance get not only the benefit of their growth rate but also the benefit of their improved currency exchange.

As inflation continues Americans will then bail out of American stocks altogether and go into foreign stock markets where their governments have more prudent fiscal and monetary policies.

This could ultimately deflate American stocks about 50% over the next five years if the FED continues to make the same mistakes over and over again. Helping Wall Street executives who created the sub-prime scam only makes things worse.

The only cure to this current financial illness is to put the people responsible behind bars for racketeering and exploiting the poor and inexperienced home-owner-want-to-bees and the politically correct bleeding heart type investors. Those exploiters could be called the scum of the earth for doing what they did but that would not be polite to say.

The reason that is the only cure... is because that would let the world know that the people who have been robbing the poor to give to the rich can no longer prey on all the rest of us.

-- posted by BoltonCT

» BoltonCT - Tax repeal hurts middle and working classes- most % increase

www.taxfoundation.org/publications/show/151.html

If the democrats repeal this tax cut won't the lower tax brackets pay a larger persentage?

Taxes under Clinton 1999 Taxes under Bush 2008
Single making 30K - tax $8,400 Single making 30K - tax $4,500
Single making 50K - tax $14,000 Single making 50K - tax $12,500
Single making 75K - tax $23,250 Single making 75K - tax $18,750
Married making 60K - tax $16,800 Married making 60K- tax $9,000
Married making 75K - tax $21,000 Married making7 5K -tax $18,750
Married making 125K - tax $38,750 Married making125K-tax$31,250

-- posted by BoltonCT

» BoltonCT - The Corporate Bath has begun

The Corporate Bath has begun >20% drop still coming

We saw the sub-prime crisis last August and many, including Bob Brinker were in denial. In fact the major bear market began only months after Bob declared the secular bear was dead.

We saw last year that Congress and the President were continually at odds and the President was vetoing every bill that would restore National Park infrastructure or preserve anything to do with American culture and heritage. Here is a fact; those so called "ear marked" funds are not like the Alaska bridge to nowhere that the Republicans initially supported, they are a fraction of 1% of the budget that create productive American jobs not a handout like the bill they passed this year. So why doesn't the President and Congress try to get along a little better and pass those bills that will improve our parks, hiking trails, and historic trails and restore our collapsing levees, dikes, and bridges.

In return the Congress dragged on interminably trying their best to cut funding to our troops in Iraq. Here is another fact. After five years in Iraq we have just last week passed the 4000 troop fatality point. Fact: During the civil War at Antietam (Sharpsburg) on September 17, 1862, the bloodiest single-day battle in American history... 3,620 American soldiers gave their lives and Americans did not flinch. That battle statistic scared the hell out of potential American enemies.

We then saw the FED be panicked by Wall Street ostensibly to reduce rates about 3% and stimulate the economy. But instead it is being used to increase the WS banks' profit margins. Mortgage rates remain too high to turn the housing crisis around. Congress could instead provide first mortgage home buyers up to 3% as an income tax deduction that would go then automatically to only the people who can afford a home, the people who earn enough to pay taxes and contribute to carrying the burden of all the people that do not. They could phase out the deduction as the housing market turned around. This would actually save people and not just Wall Street thieves.

We saw investors put the blinders on and lose money as the market began a broad decline in November. We saw it here and some wrote in to deny reality and say the Pollyanna BS coming from Wall Street was true when in fact anyone could see the week-day holiday traffic shopping jams were almost non-existent.

Now people are pulling out of their 401K plans a bit late but not too late because the real bath is only beginning. Corporation executives who used every financial manipulation possible to extend the false appearance of high earnings growth have been retiring. The SEC is asking questions. New executives can either slowly write off the exaggerated balance sheets thus showing poor performance for the next four years or they can use the popular one time write-off called the corporate bath. When they take the bath they start the following year with a tiny profit so that their growth rate in future years appears astounding. And then uninformed investors actually believe their reported profits and growth rate is sustainable. These baths we are seeing prove that the previous astounding earnings growth and the low quoted PEs were from unsustainable legal manipulation of corporate accounting. The baths will soon be coming fast and furious and the market can easily drop another 20% from where we are today before this is over. Fact; You see the new management has no incentive now to protect the reputation of the retired management and they have every incentive to protect their own reputation and present a solid truthful account now to the growing SEC inquiries. We still need the US Attorney General to lock up the sub-prime criminals before confidence is restored but the lock-up usually occurs toward the end of the "bath period."

The sooner the bath is completed the sooner we will see this market finally bottom. We can stop the decline only if we start working together.

Fat and skinny Republicans, Democrats, and independents alike should ask the President and Congress to pass American infrastructure bills, especially the National Parks trails and tourism related infrastructure as well as flood control and repairs of existing infrastructure. Americans need to get out there and walk and see America because we are getting too fat and unappreciative of the beauty of our land and it is getting too expensive and unsafe to travel abroad.

I am not a Democrat but who can disagree that at a time like this we should create jobs in America not hand out money to be spent on the cheap junk and poisons we are importing or to be thrown to the hogs running on Wall Street. Those bills that have been tied up in Congress with Presidential veto threats still looming are just the bills we now need to pass as soon as possible. Please share these ideas with your representatives and the President and ask them to work together this year for a much-needed change (cooperation). Just spending more mindlessly and increasing Wall Street welfare programs is not going to do what needs to be done.

We always knew that Bulls and Bears ran on Wall Street but at times like this we see the evidence of the Hogs that do the real damage.

-- posted by BoltonCT

» BoltonCT - Clear the decks

Down quarter

Looks like we have a lower first week followed by a down first month followed by a down first quarter. The use of past history to forecast the best time to buy and sell would only work if we could go back in time to take advantage of it. Such forecasts are like the Almanacs farmers used two hundred years ago to predict the weather a year in advance. They were amusing reading... that's all.

The Asian markets were down on average about 2% last night. The Nikkei was down 2.3% and the Hang Seng was down 1.88%. The European markets are down close to 1% on average at this moment and the USA futures indicate American markets will start weak this morning. The decline in American markets had been gaining momentum first starting strong and ending weak and now are going to be starting weak and probably ending weaker at a accelerating pace.

The MACD and Parabolic SAR (the Spiral) have been giving their characteristic false buy signals as the market continues to cascade downward. The new versions of the MACD and Parabolic SAR (the Spiral) I follow are still in sell territory.

-- posted by BoltonCT

» BoltonCT - First quarter results near record

Asian markets were mixed last night ranging with markets like Hang Seng the up 1.3% and the Shanghai down 4.3%.

Markets in Europe are generally up about 1% this morning.

The American market futures are generally up today indicating the day should start in positive territory.

The market news yesterday was not very good.

FTSE ends worst quarter since Q3 2002

Nikkei down 2.3 pct, ending worst quarter since 2001

Hong Kong stocks fall 1.9 pct to mark worst qtr in 2002

European shares fall, ending worst quarter since 2002

Manhattan apartment sales fell in January and February from a year earlier and transactions slid 6.4 percent while the inventory of real estate for sale at the end of last month climbed 15 percent since January 1, 2008. This indicates that the nation's strongest and most expensive urban property market is beginning to founder.

Preliminary data indicates manufacturing in the U.S. contracted in March at the fastest pace in almost five years

The dollar suffered a 13.7 percent decline on a trade-weighted basis in the past 12 months. Arabs contemplating joining Kuwait and resolve ending their exchange rates that are fixed to the dollar. Doing so will eventually spark a major dollar crisis, a move that would destroy the value of trillions of dollar denominated assets held in the Middle East and Asia. One can expect that such a change will not be announced until it is complete. Such a change would happen quickly if the American election delivers a free spender to the White House. Even the so-called fiscal conservatives have driven the Arab Oil producers into 7% inflation consistent with the inflation in the United States. In the USA the price this year of bread is up 11% and milk is up 20%. Foods don't get more basic than that.

Morgan Stanley and Oliver Wyman said in a joint report that credit market turmoil poses the most severe crisis for banks in 30 years, surpassing Black Monday in 1987, the Asia currency crisis and the burst of the dot-com bubble.

Corporations are beginning to line up seeking to print more shares to sell on the market to raise money to cover recent write-downs. This flood of shares dilutes ownership and drives share prices lower.

-- posted by BoltonCT

» BoltonCT - The High Life

Yesterday's analyst prediction was dead wrong when they said, "UBS, Lehman Capital Raisings May Signal Rout in Equity Markets Nearing End. Here is what happened:

Short covering in the financial sector drove the American market rally yesterday. We talked about it before. The hedge funds do not like to get above a 30/70 split of short to long positions. They trail their positions with their exit strategy that is set outside the normal range of volatility. Therefore a day with higher than normal price swings can trigger short covering. As prices rise the short sellers often panic especially if they ever experienced a short squeeze. That fear factor could last a day or two. Typically it occurs as the capitulation of the bears (or victory of the bulls) just before a major market decline.

Likewise at the end of a bear market we would expect to see the capitulation of the bulls (victory of the bears) cause a sharp spike down when the bear market ends.

This end of trend capitulation clears the market of the weak hands, leaving no market to sustain the spike unless a very large number of investors are persuaded back. So for instance when the bear market ends the bulls capitulate and the market moves sharply lower (not up like yesterday) leaving the market seriously oversold and so low that no one else is willing to sell any more (the weak positions were all liquidated).

Yesterday was a day of exuberance as Wall Street revels in the possibility that a new FED policy of robbing the poor taxpayer to help the rich robber barons could lead to more sustainable bubbles. Has the Wall Street crime syndicate finally bought off enough judges, politicians, and enforcement agents to make Wall Street thieves "legit?" Have they bought off Congress yet?

Bloomberg headlines this morning:
? IMF Cuts World Economic Growth Forecast on Worst Crisis Since Depression
? Bernanke Faces Senate Scrutiny for Overturning Tradition in Bear Financing (robbing poor to pay the rich)
? U.S. Index Futures Decline; Hewlett-Packard, General Motors Fall in Europe

Asian markets gapped up about 2.4% on average at the start and then hardly moved the rest of the session.
European markets are up fractionally at the moment. US market futures are down at the moment

The Fed, in the broadest use of its credit authority since the 1930s gave big stock brokerage firms a taste of the opiate of direct financing from the Fed, a privilege that previously had only been snorted by commercial banks. Those actions have prompted protests from honest hard working taxpayers and other critics who contend that the Fed is bailing out Wall Street and putting billions of taxpayers' dollars at potential risk in the pockets of the same criminals who set up the sub-prime scam. Will Congress act now or wait until Wall Street makes the Columbia Cartel a new hedge fund?

The Bush administration clearly wants to reward those who created the housing bubble. The bubble was created by giving vulnerable people a taste of the "high life" like the way cigarette companies once gave children free cigarettes and how pushers now let young people sample of Crack Cocaine. The victims lost but initially had a high old time. Wall Street thinks it is "legit" now to do these things to improve profits as long as Congress and taxpayers are so generous.

-- posted by BoltonCT