Saturday, January 8, 2011

US Rep Gabrielle Giffords Shot Point Blank in the Head

This isn't good:

"TUCSON, Arizona (Reuters) – Representative Gabrielle Giffords of Arizona was shot point blank in the head by a man who opened fire indiscriminately at a constituency meeting in Tucson, U.S. media reported on Saturday.

Giffords, a 40-year-old Democrat in her third term in Congress, was airlifted to a hospital in Tucson shortly after the shooting at a Safeway supermarket in the Arizona city.

"She is currently in surgery. She's alive," University Medical Center spokeswoman Darci Slaten told Reuters. Slaten added that nine other shooting victims were being treated at the hospital.

NPR, citing the sheriff's office in Pima County, Arizona, initially reported that Giffords and six others had died in the shooting, though it later said there were conflicting reports."

Quick Take:

Let's hope this is just a random isolated incident.  My gut tells me that it isn't.  The shooter was white and in his mid to late 20's according to news reports.

This is tragic and my heart goes out to her family.  Washington DC better wake up and get their priorities straight because 20% of this country is unemployed and they are getting restless.

Social unrest is a virtual certainty when this many people feel like they have no future. 

I will wait for more details before commenting any further.

Friday, January 7, 2011

Robo Recovery!

Another day another bizarre tape.   Wall St is certainly happy to have trading robots creating liquidity on days like today.  Today's news would have likely sent the market down 200 points if the market was trading like it was a few years ago.

Technically I thought this was interesting.  The market has done nothing since the big up move on Monday:

Quick Take:

We closed the week out almost to the point from where we started the week following the bounce at the opening.

The rest of the week has been dominated by this bizarre/choppy algo trading.  My guess is the majority of the day traders are getting slaughtered by the robots on this type of tape.  They have no chance against the  speed and precision of the pros and their powerful HFT's.

The algos are loving this hot market right now because it's sucked in many new retailers for them to fleece. 

Over time I am hoping the tape will return to more normal trading once these E-traders get chewed up and spit out.  For now, the robots will rule because there are new pockets for them to empty. 

The Next Bull Market is Here!

It's time to go long food stamps!:

Quick Take:

For a second there I thought I was looking at an Apple chart.  I need to figure out how to buy call options on 20% participation by December.  I am sure those would pay off handsomely by the end of the year.

Seriously, it's a sad day in America when 1 in 6 people cannot afford to eat.  What happen to these people when the deficit forces us to cut entitlement programs like these? Let me answer that for ya:  You might want to load up on some guns and ammo.

The Bottom Line

The market is being held up by the power of the trading robots along with fumes of the emboldened bulls who have ridden this powerful rally the last few months.

I am sensing a loss in confidence in the last few days.  Retail numbers and the jobs report were OK but less than expected.  Europe looks like it's ready to explode.  The Massachusetts foreclosure ruling is a huge negative for the financials.  Commodities like gold and silver have had a bad week as the dollar rallied.

Can this market still move higher without the financials and the commodities participating?  It going to be tough.  Earnings and Europe will take center stage over the next few weeks.

In the meantime it's time for us to pay our respect to the power of the robots!  Who needs QE2 when you have the robot PUT!!!

Massachusetts Bank Bomb

I refuse to even discuss the jobs report this morning because it was so ridiculous.  500,000 people disappeared from the workforce which lowered the unemployment rate down to 9.4%.

Where in the hell did these people go?  Mars?  How did the unemployment rate drop this much when we only created 103,000 jobs? This just wreaks of total desperation.  Let the clowns in Washington report whatever stats they want.  I will wait for revisions.

In case you are curious as to why the market is starting to roll over look no further than this:

"NEW YORK (Reuters) - Wells Fargo & Co and US Bancorp lost a ruling by Massachusetts' top court on Friday that found the banks failed to show they held the mortgages at the time they foreclosed on two homes.

The ruling could cause other foreclosure sales to be invalidated, especially where lenders may not have all of the underlying documentation.

It may also be significant in the realm of securitization, where mortgages are packaged into securities to be sold to investors.

In midday trading, Wells Fargo shares were down $1.03 or 3.2 percent at $31.12, while U.S. Bancorp shares were down 1.3 percent at $25.95.

The KBW Bank Index, which includes both lenders, was down 1.7 percent."

My Take:

This was a Supreme Court ruling which means it can go no further folks.  All along I figured it would be one of the extremely liberal states that blew foreclosuregate wide open.

This will have a rippling effect but the severity of it is unknown.  This ruling potentially has the ability to unravel the banks as their MBS holdings become worthless.  It also opens them up to lawsuits from the pension holders and anyone else that bought these worthless securities.

However, as we have seen before, you can never underestimate what the scumbag banks are able to get done in DC so I will withhold judgment on the fallout of this ruling.

The bank stocks rolled over on the news and the rest of the market then followed.  The Illinois news and the weak jobs report didn't help things either.

Hold on tight folks.  Things are going to get a whole lot more interesting.

Thursday, January 6, 2011

Bend Over: Here it Comes!

So much for those tax cuts if you live in Illinois:

"SPRINGFIELD — Gov. Quinn and the Democratic legislative leaders have struck an agreement to raise the income tax on individuals from 3 percent to 5 ¼-percent and raise the state tax on cigarettes by $1 a pack, sources said.
The moves, if they pass the House and Senate before next Wednesday, could erase the state’s expected $15 billion deficit, generate a $700-million-plus windfall for schools and grant property tax relief, sources said.

The tax increase, which would represent the first time the income tax had been raised in roughly two decades, would be temporary and need to be renewed by lawmakers and the governor, though the duration for that temporary period remained fluid, sources said."

My Take:

Let the raping and pillaging of the US taxpayer begin!  This is the first step that America has taken on the austerity path and it's only the beginning folks.      

Good luck with that whole economic "recovery" thingy as both taxes and prices rise at the same time income falls.  The sheeple can barely afford their mortgages as it is.

It's not going to take much to knock this economy right back into recession.  Watch for margin compression in the next round of corporate earnings as input prices rise thanks to the Fed's bubble blowing antics. 

Alcoa is already feeling it:

"Citigroup analyst Brian Yu cut Alcoa to "hold" from a "buy," explaining that the aluminum maker was approaching his stock-price target of $17. Yu also trimmed his fourth quarter profit estimate for Alcoa to 17 cents a share from 19 cents due to the weak U.S. dollar and rising input costs."

The Bottom Line

There is no free lunch folks.  You cannot bailout the world without consequences.

Our recent strengthening of the dollar won't help us that much on the rising prices front because the inflation genie is already out of the bottle in China.

As a result, wages are rising in China which means prices will rise on everything we import from there.  The same thing goes with many of our other countries we import from.   Get used to rising prices as long as the Fed keeps rates this low.

I will be curious to see how the markets trade the jobs number tomorrow.  ADP really heightened expectations around tomorrow's jobs report after they reporting a blowout number.

If the government's numbers fails to deliver then we could see a negative reaction after the news.  In fact, I wouldn't be surprised to see the market sell off on a great number because the market have already  "priced in" something big.

I like the percentages for a quick short trade here on the announcement.

Quiet day marketwise.  The pump has lost it's momo the last few days.  Let's see if they can regain it after the jobs report.


Please take a look at this chilling video from Peter Stansberry. 

Wednesday, January 5, 2011

Fed's Hoenig Warns of New Economic Imbalances

It was another boring day of algo trading on Wall St as the robots scalped each other for a few points hour after hour after hour.

This market is acting so bizarre.  It moves higher when the news is bad and then does nothing when the news finally looks more promising!

The problem the market has here as I said earlier today is it can't unwind all of the easing without destroying the whole recovery. 

Hoenig was out with some interesting comments regarding Fed policy today:

"Hoenig, who repeatedly dissented against what he regarded as excessive monetary accommodation as a voting member of the Fed's policymaking Federal Open Market Committee last year, predicted that currently "modest" inflation will increase as the pace of recovery picks up.

Hoenig, in remarks prepared for the Central Exchange, also expressed strong concern about the record federal budget deficit and its "ramifications for monetary policy." He said it could lead to "sharp and disruptive" movements in interest rates and exchange rates if not dealt with."

Quick Take:

Oh don't be silly Mr. Hoenig.  The Fed has this all under control.  Blowing bubbles is very efficient and does not present any increased risk to the markets. 

If you just look at the 10 year today you will be able to see that your Chairmen has this all under control.  You need to stop all of your dissenting and get with the program!!:

You see?  There is no risk of inflation.  Just look at food prices if you don't believe me:

"Food prices hit a record high last month, surpassing the levels seen during the 2007-08 crisis, the UN’s Food and Agricultural Organisation said on Wednesday.

The Rome-based organisation said the increase did not constitute a crisis. But Abdolreza Abbassian, senior economist at the FAO, acknowledged that the situation was “alarming”. He added: “It will be foolish to assume this is the peak.”

The jump will increase fears about the repetition of the crisis of 2007-2008. However, poor countries have not so far seen the wave of food riots that rocked countries such as Haiti and Bangladesh two years ago, when prices of agricultural commodities jumped.

The increase in food costs will also hit developed economies, with companies from McDonald's to Kraft raising retail prices."

Take Continued:

Alrighty, let me turn the sarcasm off.  The Fed's reckless policy of printing money is obviously doing a lot of damage.

This might be good for the banks but, as you can see above, it's devastating for the rest of the globe when it comes to rising food costs.  The Fed is basically forcing people in many third world nations to starve as they attempt to bailout their greedy banker friends by printing like there's no tomorrow.

The Bottom Line

Unfortunately for the rest of the world when we create free money for the banks it never sits in cash.  Bankers would never think of doing such a thing.  There is too much money to be made speculating with it!

Therefore it sloshes all across the globe creating mini bubbles in bonds, gold, silver, stocks, and food.  The problem is these bubbles always eventually pop because these addicted gamblers always need to find new "action" once they run something up as far as it can go.

Hoenig obviously sees this and knows if the economy shows an uptick then it will create the recipe for an inflationary disaster.

Ironically, the bulls better pray for more bad economic numbers because you are going to see an instant inflationary crisis if the economy shows signs of life.

The "sweet spot" for the bulls is a crappy economy with tons of money printing.  An improving economy with money printing is actually a nightmare for the bulltards because the QE toy and all of the "free money" associated with it must be put back in the closet.

The bond vigilantes are obviously ready to pounce as soon as any inflation appears in the economy.  The mere risk of inflation crushed bonds today after the strong jobs number.

Rising prices are already being seen in areas like India, China, and even Europe. 

Folks don't kid yourself:  Inflation is heading straight this way if we keep seeing numbers like this and the Fed keeps the pedal to the metal when it comes to easing.

Finally Something Bullish: ADP December Jobs Report

I have to admit I was pleasantly surprised by the ADP jobs report today:

"Private-sector employment increased by 297,000 from November to December on a seasonallyadjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from October to November was revised down but only slightly,from the previously reported increase of 93,000 to an increase of 92,000."

Quick Take:

The issue here is how much of this was just $10 an hour Christmas Season hiring versus actual jobs growth:

"According to the ADP Report, employment in the service-providing sector rose by 270,000 in December, the eleventh consecutive monthly gain and the largest monthly increase in the history of the report."
Take Continued:
I think the reason stocks didn't soar on the news was because 270,000 of the 297,000 jobs were service sector jobs.  These tend to be lower paying jobs that you look for during the holiday season.  Manufacturing looked better too but the numbers were hardly impressive with an increase of only 23,000.
Nonetheless it was a solid report.  I will be looking for some nice follow through post shopping season before I call this a trend. 
The problem with the economy showing any sort of a pulse is the bond market.  The 10 year bond soared on the positive jobs report:
This is the box that Bernanke finds himself in.  If the economy improves then interest rates are going to soar because the bond market will start to worry about inflation.
Rising rates will crush any sort of housing recovery which will then destroy the banks balance sheets.  The way I see it the Fed is in a damned if they do and damned if they don't/no win situation.
If the economy grows then they will be under severe pressure to raise interest rates.  If the economy doesn't grow then we have a huge deflationary problem as the country sinks into a deep depression.
European Debt Crisis
This nightmare reared it's ugly head again today:
"Portugal paid almost twice as much to sell 500 million euros ($660 million) of six-month paper on Wednesday as it did in September, keeping the country at the sharp end of persistent market concerns about euro zone debt.

The yield rose to 3.686 percent from 2.045 percent in the previous auction. The auction produced a bid to cover ratio of 2.6, compared with 2.4 previously."

Yikes!  Ugly.

We also got this from the Swiss:

"The Swiss central bank confirmed Wednesday it has excluded Irish government debt from a list of assets considered eligible as collateral for its repo deals – operations under which it lends money against collateral."

The Bottom Line

The dollar is soaring on the strong jobs report and the European debt issues over in Europe.  Commodities dropped on the stronger dollar. 

The market is mixed as it tries to digest all of the news out of Europe and the US this morning.

I have been warning that the European debt crisis would take center stage early this year and it looks like things are heating up again over there. 

I'll be curious to see where we end up closing on the S&P after today's session.

Tuesday, January 4, 2011

CNBC Gets Punk'd: Market "Bear" Dresses as a "Bull" and Warns of DOW 3000

This totally cracked me up today.  In a segment called "Stay long: Market Pro" Mike Rubino, CEO of Rubino Financial, duped CNBC and pissed on the bulls parade.

Rubino was supposed to be bullish on the market and in the shorter term he did agree that he was a bull.  However, a few seconds later,  Rubino changed into his bear costume and began warning about how the Fed has created the "mother of all bubbles" and warned that the DOW might see 2,3,or 4,000 before all was said and done.

The other contributor in the segment(Scott Redler of was visibly irritated by Mike's comments and immediately went on the attack claiming that such dire predictions as DOW 4,000 are "irresponsible" and hurt market confidence.

Take a look below and I will have a retort following the video:

My Take:

Question for you Scott:  Who is the one being "irresponsible" here?  Could it possibly be YOU???  Confidence and fundamentals are two totally different things. 

Perhaps real confidence might be restored at DOW 4000?  TRUE confidence will  not be restored until the credit losses that remain hidden in the system are purged.  I am not saying DOW 4000 is where we need to go to get there but I wouldn't say it's unreasonable. 

Whatever the number is one thing remains clear:  The sytem will lack confidence until the balance sheets are transparent and assets are accurately marked to market.  No one is going to be confident owning bank stocks when they know that there are trillions of dollars in assets that aren't accurately marked to market.

Scott and the rest of the other bulltards Wall St remain in a state of denial about this critical piece of market fundamentals.  They delusionally believe the market can just "grow out of this" despite 17% unemployment and trillion dollar debts. 

Anyone that refuses to buy into their thinking is instantaneously demonized and labeled as being "irresponsible".  In my eyes Scott is the one being irresponsible because he believes confidence is expressed in only one way:  Higher stock prices. 

This is total BS.  The market lacks confidence because stocks are an absolute horror show fundamentally.  The traders trade the tape and they are basically forced to go long thanks to Fed's QE printing press. 

IMO, 90% of the pros that are long right now are not confident in how the markets are trading.  I know a bunch of them who tell me behind the scenes that this market is a piece of garbage. 

However, they are paid to make profits so they trade the trend no matter how ridiculous it is.  If the bulls were really "confident" then guys like Scott wouldn't be so quick to attack someone that is bearish on the market.

The Bottom Line

CNBC really looks bad when they turn into a bunch of hacks.  Shame on Mark Haines for piling it on after Mike made his bearish call.  CNBC needs to look in the mirror when they wonder why their ratings have continually shrunk month after month.

When I look at the markets right now I see a bunch of nervous bulls that are concerned that their miraculous rally might be over. 

The commodity trade got pummeled today despite the Fed claiming they are still worried about deflation.  GLD got pummeled as gold dropped around $40 a share:

I thankfully  sold out of a good chunk of my GLD a few weeks ago.  However,  I don't think the gold trade is done longer term. 

Nonetheless:   The inflationists need to mark this day on their calender because the commodities should not have reversed like this on a day where the Fed came out and said they plan on keeping the printing presses on.

I have a feeling the market might start getting infected with a deflation virus in the near term where we see the dollar rise and stocks and commodities fall. 

However, it's hard to make a call on stocks when you watch the tape.  The HFT's make the tape so choppy day after day as they buy and sell stocks in a matter of seconds.  Trng Identify trend changes are almost impossible when I look at this tape.

I was told by an insider that it's gotten so bad on the trading floor that the specialists basically only pay attention during the first and last hours of trading because everything in between is a bunch of quant nonsense that means nothing.

Until next time!

The Real Economic Analysts of the USA

Sometimes you need to travel outside of this country in order to hear some USA analysts that have alternative views on what's really going on in this country.

CNBC would never even consider allowing dissenting opinions such as the ones seen below.  They prefer to spend their time trotting out the puppets of Wall St hour after hour. 

The "economic recovery" that these puppets love to tell us about is nothing but a pipedream, but you would never know it when you listen to our media that has basically morphed into something that resembles a propaganda machine.

You may think differently about our "recovery" after watching the clips below:

Let me note that Gerald Celente can be a little over the top and I do not agree with everything below.   Things are bad but "The end of the world"?  C'mon....

Monday, January 3, 2011

The Wall St Pump Job: Leading the Sheep to Slaughter

Articles like the one below really bother me after the rally we have seen in the past two years:

"Is the retail investor returning to stocks?

NEW YORK (Reuters) - U.S. stocks just posted back-to-back years of strong gains, yet the small U.S. investor largely remained a spectator. Now financial advisers say investors, many of whom rode out the financial crisis in cash and bonds, are slowly regaining confidence.

"What I'm seeing now is there's a lot more talk about getting into stocks," said David Gottlieb, a Cleveland adviser for Edward Jones, a nationwide brokerage catering to middle-class Americans.

Gottlieb, who for several months has encouraged clients to increase their stock allocations, advises reducing bond holdings and buying dividend-paying stocks.

The Standard & Poor's 500 Index (^SPX - News) kicked off the new year by rising 1.1 percent on Monday, reaching levels not seen since the weeks before Lehman Brothers collapsed in September 2008. Large company shares, as a group, have nearly doubled since their March 2009 lows, reflecting two years of double-digit gains.

Worries of a banking system collapse and the deepest recession in more than 70 years drove many retail investors out of the stock market back in 2008. And the May 2010 "flash crash," when stocks lost 700 points in minutes for no apparent reason, further undermined confidence.
Investors showed their dismay by pulling money from stock mutual funds month after month, opting for the perceived safety of cash and bonds."

My Take:

What's your point Reuters?  Are you telling investors to buy stocks because confidence is slowly coming back? Is that a solid fundamental reason to buy?

Is now REALLY the time to buy stocks after the equity markets have basically doubled since the lows?

There are just as many money managers advising caution in our current investment environment as there are money managers who are advising investors to take on more risk.  There are severe structural issues with our economy that are not going away, and it angers me that just about every article out of the media slants their articles into suggesting that you should buy stocks.

Shouldn't the media be totally skeptical of Wall St after watching equities plummet 50% TWO TIMES within the same decade?  Also, let's not forget that these are the same criminals that just finished putting of millions of Americans into homes that they cannot afford which are worth 30% less than what they paid for them.

Shouldn't the press be relentlessly hammering Wall St after causing Americans so much financial pain in the last decade? 

I don't get it:

Why does Wall St always get a free pass when they destroy America's 401k's?  Why isn't the article above titled "Is Now the time to sell stocks after a 90% rally?"

The media needs to understand that they have a responsibility when they write this kinda fluff.  To be fair Reuters did toss in a paragraph in the middle of the piece warning of the risks of getting into stocks:

"Still, some advisers are being very cautious.

William Jordan of William Jordan Associates in Laguna Hills, California, says he is telling clients not to increase their stock exposures.

"As good as the past two years have been, you can't say the stock market is undervalued. I'm not bailing out, but I'm advising people to take some profits."

Clients also are encouraged to stick with their investment plans. Scott Smallman, a Seattle broker for Wedbush Securities, said he has been checking to see if the stock market rebound has pushed some stock exposures too high.

"When markets are good, our job is to talk clients down from the ceiling," said Smallman, who on Monday encouraged some clients to consider buying municipal bonds."

The Bottom Line

IMO, this article is far from "fair and balanced". Reuters quoted 4 "pump monkeys" advisers suggesting that everyone should be piling into stocks versus only 2 advisers that were "cautious". 

There were zero "bears" in the piece which is ridiculous when you look at Wall St's performance over the last 10 years.  You are down 20% if you listened to these bubble makers over the last decade. 

There are numerous potentially catastrophic risks that remain out there and they are rarely if ever laid out by the MSM ......High unemployment, bankrupt banks, and insolvent countries are just just a few that come to mind.

I am amazed at how short all of our memories are when it comes to Wall St.  The financial system was brought to it's knees two years ago by these pigs, and it's still sitting there crippled as the Fed runs up the credit card pretending that the economy is recovering.

The MSM should be ashamed of themselves for ignoring the financial fraud and printing pieces of garbage like the one above.

What ever happened to hardcore journalism?  Walter Cronkite must be rolling over in his grave.

Sadly, our media outlets now have the attentian span of an 8 year old with ADD.  If the news is a week old then it's history in their books.

CNBC was no better today as they allowed Goldman to use their network as a sound board for market pumping:

"The one economist all of Wall Street (and I am sure many in the Federal Reserve) listens to, has changed his tune quite substantially the past 3-4 months. Goldman’s Jan Hatzius had a quite dour outlook just this past October but 2 months later as the massive “don’t call it yet another stimulus” plan looked headed for approval turned quite bullish. Indeed the surprise of the payroll tax holiday and some of the other goodies stuffed into the Bush tax cut extensions led him to believe that GDP will be pumped up by an additional 0.5 to 1.0% in 2011."

Take Continued:

The pumping was non stop today as stock after stock was upgraded. 

The markets rallied hard on another FED POMO spending spree in combination with all of the rainbows that were painted by the stock analysts today.

I tell you what:  The Wall St PR machine is something to behold.  They really have it down to a science.  Watching Goldman's chief economist do a total 180 degree turn in a matter of 3 months is comical. 

The fundamentals haven't changed and there is no real recovery and he knows it.  Any GDP growth will be stimulus based and unsustainable.  Show me 400k per month job growth and I will become a believer. 

Let me end with a warning.  When Wall St gets this bullish after a big move up you need to be careful.  The pigmen love to use opportunities like this to sell all of the over priced stocks that they own to the sucker retailers that want to "get back in the game" after becoming mesmorized after seeing such huge stock returns.

Don't be a sheep and get slaughtered.

Sunday, January 2, 2011

Niall Ferguson: Empire on the Edge of Chaos

Warning:  This is a long lecture but it's well worth it.  History usually repeats itself and if it doesn't then it almost always rhymes.

Niall Ferguson is a Harvard University history professor who has done a lot of work around the rise and fall of empires from an economic perspective.

As you will see below:  The similarities of what we have seen in the past from a debt perspective when we compare our current economic collapse with previous famous historical collapses is frighteningly similar.

Debt payments continue to rise and eventually overwhelm the countries GDP.  Niall calls this "Game Over" time during his speech.  At our current rate of spending, Niall explains that 85% of our total revenue would be needed in order to simply service our debt by 2050.

He also explains that we are in a worse fiscal situation than Greece.  There is also a great Q&A at the end.