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Economic Forecast and Commentary for 2012

2012-01-25T14:10:00.000-07:00

As theelection year frenzy whips up, the Federal Reserve is target numero uno for theemotional base on both sides of the political spectrum as cannon fodder to gainvotes, with the global economy at stake. Adding yet one more headwind for afragile recovery and a bug in the margarita of the mostly under rated andbrilliant Central Bank Governor Ben S. Bernanke.

Monetary Policy

The forecastfor interest rates on this blog have been exactly right so far. It is nowbecome patently clear how long the Gov will keep them low, since he now sets upa time frame for his policy instead of just language that everyone can debateto utter oblivion and confusion.

If one wantsto have more than a drive-by understanding of how Ben Bernanke has used hisarsenal of tools up to this point to re-write the text books, one need look notmuch further than his speech to the NationalEconomists Club in Nov. 2002. A speech many would seem correct in saying islikely the reason he was appointed by a horse smart President from Texas.

While an alphabet soup channelunderstanding of the maneuvers of the Federal Reserve Bank both past and in thefuture are far more sensational and conducive to ratings and the Cassandras` ofthe world; this perspective is not only physically unhealthy since it causes somuch stress, it is fairly ill informed and not a very accurate take on CentralBank Policy from my position in the drive-by theatre.

This sort of polarization has onlyserved to elect leaders who are willing to use emotion and omission to gainconstituent favor. With the end result being bubble burst after bubble burstfor decades and a declining standard of living for Americans as collateraldamage.

On the bright side: globally more people have risenout of poverty in recent history than ever before. If one happens not to believe this fact, onemust use some basic reasoning and math skills and draw a simply obviousconclusion. An inability to be able to make this kind of judgment is concerningand dangerous. It not only shows a lack of critical thinking, it demonstratesin a nutshell how the dumbing down of

America

has been a resoundingtriumph for propaganda monopoly.

Now let’s look inside the mind of Gov. Ben by simplyexamining some parts of this speech in the autumn of 2002 that he made. Aspeech that outlined every step he has taken up to this point and clearlyexplains what he will do next.

In this speech Bernanke said thefollowing when describing one of the tools he would use in the various steps hewould take to fight deflation that reveals with a fair degree of certaintyexactly what his most recent operation has been, and at what stage we are at inhis series of steps he described in this speech:

“… For the Fed to commit to holding theovernight rate at zero for some specified period…”

Thisis a very easy reference point, a sign post that one can easily recognize asone of the Gov.’s most recent actions that almost everyone knows about if theyfollow interest rates to some degree. These days the number of folks doing thisis quite a few, since many are watching the housing market as either first timebuyers looking to buy that first home, or those who are trying to refinance,and as an indicator of the economy and confidence.

Ifthe

economy is the Professor’s laboratory, the mad scientist must be feeling somedegree of satisfaction at this point. In his speech, the Gov. explains histheory on the application of agency tools and their effects on deflation andthe steps he would ideally follow to combat it. While quite difficult to graspin my opinion, one of the things I pull away from it is the idea that histheory if executed properly will always stop deflation, but more importantlythat not everyone agrees with this concept despite historic precedent thatseems to support the Gov.’s hypothesis. The current empirical results of realworld applications and executions of the methods modeled in his speech by himand his predecessors show the evidence is in his favor at this time.

Ifone doubts this reality, they just need to put things in perspective, use somesimple reasoning and math skills, and the facts will become clear to an openmind.

I am not going to take any time out in thisforecast to defend the emotionally unstable notion that the US economy is in adepression, a double dip, or that it is ,”..Just about to go over the cliff anyday now...”.

I am certainly tired of hearing the partisanspin from both sides that everything has been done wrong and only madeeverything worse. However true that maybe, the fact is we are not contracting as much as one would expect by now. Thefact is there is growth in the economy, and it is enough to keep us with ourhead above the water as the economic data flow proves.

But,if your one who thinks everything about the data is not real, then it is notpossible to believe the data. But then that only leaves you with pretty muchone thing left to believe in which granted is very lucrative; but alsodubiously healthy, which is fear.

So since we know that the Gov. isgoing to keep rates fixed for a predetermined amount of time, we can then lookto his next comments for a clue as to his next actions, or even actions he hastaken but may not be widely or easily known by most:

“…For the Fed to begin announcing explicitceilings for yields on longer-maturity Treasury debt… “

He has done this in what is widely known as Operation Twist , whereby the FED has beenbuying the US debt. As one can imagine, this operation has been the subject ofa great deal of propaganda for the masters of spin and the architects of theconvenient truths who use emotion and omission to keep the politics distractedand in the gutter, appealing to the worst in everyone.

The fact yields are falling and not rising appears to me tobe the crown jewel of evidence supporting the Professor `s deflation theories.A fact that would have the Doc getting giddy with excitement as the laboratoryresults continue to stack up in support of his thesis. Indeed, if the world wasa fair place in my opinion, the Gov. would be awarded a Nobel Peace Prize forhis contributions in economics not to mention policy. But as I will explainshortly, it has become very clear to me after reading this speech, why feelingsabout him are so polarized.

But lets first take a look at a couple of other steps theGov. would take after purchasing shorter term Treasury debt:

“Of course, if operatingin relatively short-dated Treasury debt proved insufficient, the Fed could alsoattempt to cap yields of Treasury securities at still longer maturities, saythree to six years.”

Thisis just an extension of Operation Twist spun as many disappointed propagandistand gold bugs claiming the Gov. is out of options as “Shout”. The Gov. is far from out ofoptions at this point, and here are some of the reasons why as the Gov. goes onto explain:

“…the Fed has the authorityto buy foreign government debt, as well as domestic government debt… thequantity of foreign assets eligible for purchase by the Fed is several timesthe stock of U.S.government debt”

Thisis the bazooka with a silencer in the FED`s arsenal, and if everyone catches onto and becomes aware of it, will cause the rabid base to cry foul and everypossible conspiracy under the sun. Even more entertaining to those in the“know” like traders is the fact this is already being done.

Sowhat does this mean exactly? I am no expert and my analysis is certainly notthe final insight, but it would appear to me that the FED has the ability topurchase several times the amount of

debt in foreign securities! Thisis truly a mind numbing idea in my opinion. Let’s just say for example that theUS debt is only 4 trillion, this means the FED could be the purchaser of nearly30 trillion in foreign debt! No wonder the ECB is so resistant to being thelender of last resort; there already is a global lender of last resort: theFED.

I wonder about this and its implications. Doesthis mean the FED basically has an unlimited balance sheet? Not needingapproval by anyone? Not even the President? Furthermore, that it is not eventransparent so as not even known by anyone outside the FED? I would not even besurprised if there are built in charters amongst the various Central Banks thatprotect the supremacy of the FED. After all they invented this fiat system. Itis also a fact that the ECB charter is very limited, I can`t help but thinkthis is a hangover from WWII and how fearful the world has been ever since of globalcurrency denomination domination by the German Central banks. This is notconjecture, it’s a fact all wars have been fought over the dollar and itsstanding vs. other banks in the world; from WWI and Iraq, to Libya.

Sogiven the fact that QE3 is actually already underway in the form of stealthoperations by the FED and world Central Banks, and is going to continue forquite some time it is only a wonder why many folks can`t believe the Gov. whenhe says the following since he is in fact already doing this by purchasingsecurities foreign and domestic:

“…intervening to affect the exchange value ofthe dollar is nowhere on the horizon today”

“A striking example from U.S. history is Franklin Roosevelt's40 percent devaluation of the dollar against gold in 1933-34, enforced by aprogram of gold purchases and domestic money creation.”

The Gov. is devaluing the dollar,and I think he plans to continue this as long as the economy stays indeflation. According to the quotesabove, the historic precedent for devaluation was 40%. I think that the Gov. istrying to say that it will likely be the case this time as well.

Next in the speech by the Gov. heexplains what could only be described as QE4 and flies in the face of theglobal liberal agenda to hike tax rates across borders and shows how thosewaiting on QE4 might be waiting for a long time indeed. But it is beyond thehorizon at some point as the global political gears continue to mesh and churn.It also explains why he is so polarizing:

“…of course, in lieu of tax cuts or increases in transfers thegovernment could increase spending on current goods and services or evenacquire existing real or financial assets. If the Treasury issued debt topurchase private assets and the Fed then purchased an equal amount of Treasurydebt with newly created money, the whole operation would be the economicequivalent of direct open-market operations in private assets…”

“…policy options I havediscussed so far involves the Fed's acting on its` own. In practice, theeffectiveness of anti-deflation policy could be significantly enhanced bycooperation between the monetary and fiscal authorities. A broad-based tax cut,for example, accommodated by a program of open-market purchases to alleviateany tendency for interest rates to increase, would almost certainly be aneffective stimulant to consumption and hence to prices…”

Thebest way to describe all this is “stealth socialism” in my opinion. But to be perfectly honest, it’s a bit overmy head at this point. I think as time goes by these statements will becomeeasier to understand. It is safe to figure that at this point these policymaneuvers are not being exercised. If Iunderstand this part of the speech correctly these policies would be recognizedas a tax cut by the fiscal authorities, and an increase in government spending.Neither of which has happened yet depending on whom you ask. I happen to beliving in the very real world of Government cut backs and see and hear of theeffects on a daily basis. A trend I expect to see for a long time to come. Notonly would we need to see a very publicized increase in public spending, butthis increase in demand on goods and services by the Government would also beaccompanied by an equal amount of FED purchases in the private sector. But ithas to be pointed out, that all of these measures were in effect taken duringthe Great Recession in the form of extending the Bush Tax cuts, TARP and theAmerican Recovery Act.

GDP

If China isto overtake the US economy, they will have some Ghost Cities to showfor it. While everybody in 2011 was looking one way across the Atlantic to theEuro crisis, from behind in the other direction across the Pacific was anotherbig story of this coming decade: the China charade. Americans know very littleabout this great country except that they respect and fear it in many cases.According to my own writings of the last few years by the year 2012 theeconomic recovery would be derailed by bad debt, energy and foreign policy.This has begun to pan out as the Arab Spring solidifies into a deep freezeagainst America and Israel. My take is that if the Super Majority that came inon the tide with the election of 2008 had not been paralyzed by the health careheist, we would be on our way to a very certain and prosperous future. Howeverthe US economy continues to resists another downturn according to data releasesin 2011. As a result I expect to see US GDP come in between 1-2% again thisyear. Last years forecast was the same and it is turning out that 2011 GDP isexpected to come in right at the middle of the road at 1.5%

Dollar

The reportsout of the Middle East about possible dangers to global oil supply are ongoing,developing, and gestating into a plethora of ingredients for the perfect storm.As a result Oil will be supported at 90 a barrel this year. We are very closeto seeing a surge past 120 if policy continues to be so flippant. Gold is incorrection until the market finishes realizing that the fight against deflationis here for a while, and the Eurozone crisis is dealt with. I think gold iswell supported around the current levels and won’t be surprised to see it bevery volatile with a swing lower to 1150-1350 but still make another run to2000k this year. I personally am not as confident of the long gold trade thiswinter as I have been for the last few, but am pretty sure it will be a goodbuy again before next winter. The stock market is technically poised for gainsthis year, with valuation placing it around 1350. It will remain volatile andcapped as long as the Eurozone crisis is not satisfactorily resolved.

Politics

TheGOP nomination process will continue to be a thorn in the incumbents` side,having the potential to derail the longer term strategy the left has to keepthe current President in power. That strategy is one of apparently having arhino nominated in the GOP Primary, continued economic improvement, and perhapsan ace in the hole is another war, then pulling yet another one of the playsfrom the Bush playbook: “… stay the course…”. On the other side for the GOP, the improving economy is diminishingtheir chances at unseating the incumbent. It is also becoming clearer that theassumed GOP nominee will not be able to win the General Election because of ahost of reasons not the least of which is simple stereo types that the majorityof voters will never let go of. The opinions on this good man on the street areunfair to say the least, and are bigoted at best. The curve ball is still yetto come, if Rick Santorum gets folks attention we may avoid the fiasco of athird party candidate and give this nomination something less than a rabblerousing contest and an actual throwing down of the proverbial conservativegauntlet at the liberals.

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We’re Not In Kansas Anymore

2011-09-11T00:00:00.043-06:00

We Will Never Forget

The empirical evidence that the people of the Occidental economies have failed to grasp the realities of globalization mount as the European and American political, economic and financial systems begin to disintegrate and unravel under debt, civil unrest, contracting economies at worst, slowing economies at best, downgraded credit ratings and a broken and second rate education system. All a result of the fact the people have failed to comprehend what it really means now that the Third World has arrived as a beacon of our success, the result of the ideals that we brought to the world via the “American Century” that are now manifesting as globalization.

By Joshua E. Stone

The Titanic is sinking because of a host of iceberg sized realities like the recent downgrade by Standard and Poors of the US credit rating from AAA to AA+ for the first time in US history. Realities like the fact China will be the largest economy in the world in a few years as a result of the exportation of the American economy overseas to more business friendly environments; environments that have modeled themselves on the American system of Capitalism as a result of the American Century with the added caveat of not being bound by the ideals of human rights, self determination and the bravery and freedom of individual responsibility that is the integral essence of American Exceptionalism. Ideals, concepts and values that even the hero of the “ it’s America’s Fault” crowd, the worlds’ longest reigning communist leader and as such the most influential ruler on the planet for the majority of peoples by proxy, Fidel Castro, has said is the best and only feasible economic modality for the world to follow . He has demonstrated his belief in this ideal by passing the torch of his leadership to his brother who has begun the process of privatizing the Cuban economy.

Meanwhile back at the ranch the dumbed down media and people of the west are unable to realize that the history books will record this as a watershed event for socialism and communism after the falling of the Berlin Wall. The people of the US are unwilling to understand that these are the reasons and forces behind these fundamental transformations that have happened to our country as the result of not only the facts just mentioned but also that unlike before and after WWII there was no place for corporations to go to in the Western economies. But now there is, because of Americas resounding success of raising more people out of poverty than has ever been witnessed in history before via its capitalistic transmission to the entire world.

It is these realities among many that are unraveling the fabric of our economy and even our society and not just some rich white corporate boogie man who stole everything and whose only goal is to suppress minorities and keep them enslaved as a majority of people choose to believe. It’s not even because of convenient and mainstream targets like currency manipulation. Even with the popping gold price sending out its May Day warning as it has always done throughout history before a major calamity or transformation transpires in the brightest fashion possible at nearly 2k an ounce, Americans scratch their heads unable to understand why this is happening to gold and tell Congress to tax a few wealthy folks left in America. A diminishing base of wealth that is already migrating to Asia where wealth is welcomed and not punished, and goes much further because of the unlevel playing field as a result of the fact that in Asia they are not bound by Exceptionalism but only profit.

The denial of the people is exemplified by the electing of politicians bought and paid for by lobbies. Their denial is also demonstrated by the way they have chosen to label a vocal, no nonsense this-is-the-facts-of-the-matter conservative minority as racist, greedy bigots for refusing to deny the grave reality of the impending currency collapse; a minority that unlike the majority of the population and politicians, have stayed focused on addressing the imminent financial implosion of the Empire with solutions, however painful and flawed they may be as a result of voters who vote based on feelings ruled by fear fostered by the drive-by media spin of class warfare and blame.

The voters and people are apparently unwilling to learn facts. Facts which, said in another way, are that Corporations are very certain of many things: certain it will cost too much to even hire someone, certain it will cost too much to pay for their employees healthcare, certain they can avoid taxes if they hire and produce somewhere else, certain that the US is an unfriendly business environment as a result of massive government regulatory and financial interference and intervention that result in deflated earnings from currency debasement and impossibly lengthy permit requirements’ and approvals with insane fees that make it simply not worth the effort. Corporations are certain that America can do anything it sets its’ mind to, like killing Bin Laden, but for now it has set its’ mind on entitling itself into default and bankruptcy, in short… financial collapse.

All of this in an age when our beacon of strength as a Nation has not been rebuilt at Ground Zero ten years after the apparent dawn of our twilight on September 11^th 2001. To add insult to injury our Nation faces depression era unemployment with the most unfortunate of society surfacing as 1/3^rd of young African American men. This has happened in the Space Age when we have the ability to build a tower at Ground Zero with magnetic elevators that could reach that hotel that will be in orbit very soon. But instead we are repeating the same tragedy of the 1960`s as was made with the Apollo Space Program and are focusing all of our blood and treasure on a one time jaunt to some silly asteroid and the planet named after war, Mars. This is ironic at best, tragic to be certain.

Rather than wake up and reclaim their self determination and personal responsibility the American and western people cling to talking points of blame and class warfare, while they fail to vote for a majority of politicians who are not pawns of the class warfare special interest lobby that promises to save the people. The lobby that sponsors the phone-hacking drive-by-media-corporate-military-industrial–complex- monopoly that the people are conditioned by whether they pay attention to it all or not or whether they know it or not because that’s the intention and result of the monopoly.

These facts and realities are virtually assuring (to the delight of many and even apparent majority who believe the West and especially Israel and America stole everything in the first place and need to be “fundamentally transformed”, by apparently equalizing the West with the Third World and subjugating it back to the elite that lost their rule over it in the American Revolution and would have Israel cease to exist at all) that in the very near future the rise of Asia, the Middle East and South America as the power houses in the Century of the Orient will be who the Occident will have to answer and look to for everything from leadership, loans and jobs, to resources, education and weapons.

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Special thanks to Pamala Maitreya for editing and contributing.

Economic Outlook for 2011 and Commentary

2011-02-28T18:51:00.005-07:00

Middle East revolutions are yet another straw on the camels back among a storm of headwinds buffeting the outlook for the US economy in 2011 and beyond.

By Joshua E. Stone

Monetary Policy

“Expect the Fed to keep the Federal Funds Rate at current levels near 0-.25% for the remainder of this year at least” This is a repeat of my last two year’s forecast verbatim. There is some possibility that rates could be raised before the end of the year this time. There is a very high probability that the language will change enough to set the stage for rate hikes next year.

The FED has a dual mandate: to keep unemployment and inflation low. Right now it’s failing on both of these mandates in many peoples opinion. While perhaps inflation is debatable, I am in the camp that sees higher consumer prices as deflationary. But it appears that we can’t argue against disinflation either, as this is clearly being felt by anyone who buys things. However there is no debate about the worst employment picture we have had in the US in many decades. Worse, thanks to the fact that apparently no one in Washington is reading this blog; there is still no job creating energy policy. A Manhattan or Man to the Moon equivalent energy policy that switches all Government vehicles to Natural Gas, and road and infrastructure projects that launches us past China and last but not least…a new cheap source of alternative energy that does not transfer the wealth of the current energy cabals via some government mandate or new taxes or the termination of subsidies that will ensure the proposals are DOA. While the “experts” say we can never do these things, we are not China and can’t compete with them; I say we are

America

and can do anything. I would also suggest that those who think we can’t do anything need to move to somewhere that low expectations are the norm.

That we have not dealt and even worse not even addressed the issues is setting us up for real troubles in the next year or so if not sooner.

Inflation hawks will use everything at their disposal to confuse the markets about future policy changes, like the fact we might get some dissenting votes at the next FOMC meeting in March and the following ones this year. I would point to the UK, where something similar is happening. But if you dig deeper, you will find that the

is in no position to raise rates and thus this recent rally in the pound has been nothing more than a breather before more downside ensues by many peoples estimation.

Delving a bit deeper into the Bernanke Dilemma there is a big problem I have only heard addressed by some people, mostly callers on the talk radio shows saying they can’t get a loan because the lenders are getting stricter and stricter in their terms. This is contrary to the mainstream understanding that QE2 was designed to help keep lending available to everyone and loosen the purse strings. Why is this happening?

As brilliant as Bernanke is, and as smart as his policy has been in my opinion to defy consensus in an effort not to repeat history, he seemingly did not count on or foresee one critical thing: the ability of the fat cats to put money where the interest is. I wonder about this conundrum though, and whether a man as intelligent as Bernanke really could have over looked something this problematic. To the best of my knowledge the deal Bernanke has made with the banks works something like this: the banks can borrow money for free, they can then sit on that money and earn interest on it risk free. What a deal!

So that leaves the banks two clear choices to choose from: If they loan it out, they have to take a risk. If they keep it they earn interest albeit small, but the bottom line is all that matters to these folks. Not to mention because of the new regulations they have to stay well funded to protect all those toxic assets they still carry. After all the bursting bubbles in recent decades, can anyone blame them if they don’t want to take on anymore risk? How can we expect any bank to risk funds on a business that may or may not succeed, when it is more likely than ever before to fail than succeed do to the uncertain nature of policy going forward? After all, it is their job to keep money safe. Why are they suddenly sticking to the letter after all this time one can only wonder. Perhaps the new regulations have worked too well. One can only wonder what they are hatching up for the next bubble though. Or perhaps this is the new crisis, the new “bubble” or even worse the next scam and fraud pulled on the people…

It appears to me, the only way out of this dilemma besides a three or four point improvement in unemployment would be an executive order to force banks to lend and corporations to start investing. This has its problems however: who is going to decide who wins and loses? Not to mention it was the politicians telling banks to loan to certain demographics that was largely responsible for the sub-prime meltdown of 2008. The only other option is for Ben to raise rates. Something he needs positive economic growth that runs the risk of inflation to do, which is not happening at the moment from his point of view

It’s quite a quandary: banks and companies don’t want to lend or invest till there are jobs to prove the economy has recovered, and the economy can’t recover till the banks and corporations start lending and investing to create those jobs.

The coming days and weeks will bring about a major debate over the debt ceiling. This will likely trigger a good bout of dollar weakness and market jitters, but I don’t think the great bond crisis is at hand this year. There is still no viable blueprint for another reserve currency at this point. What is already happening is that other countries are ditching the dollar in many places and trading in their local currencies instead. So in a way, our sovereign debt crisis is at hand, but only in stealth mode and not readily apparent. It’s not like a few trades made between Russia and China denominated in their respective currencies are a big deal, but the day Saudi Arabia or China announce they will no longer accept or require dollars for oil or trade will be noticed and felt by all. It will be equivalent to an act of war and will trigger a massive sell off in everything but commodities from what I understand. So it seems the gold bug scenario is at best a tapestry of doomsday for now. That said, recent developments in the Middle East do seem to make this scenario much more likely. China is also very unhappy with their exposure to US debt and has a number of tools at their disposal politically and economically before they have to use the “no dollars accepted here” nuke. At this point they are using the Broken Arrow method of beating us for lack of a better expression, and it is quite effective.

That said, all these forces moving away from the dollar are already in place and in motion as mentioned before, and as a result that is why we will continue to see inexplicable rises in gold and especially commodities.

In recent testimony Bernanke defended QE2 when asked about global commodity prices explaining that it is supply and demand issues, not FED policy causing the spikes in prices. As true as this may be in part, it is only one of many things one could call a perfect storm driving up demand and diminishing supply. The fact that QE2 has added fuel to the fire in this trend can’t be denied as the spikes in most commodities took steroids after QE2 was announced. Most folks don’t understand how QE2 works in my opinion and as a result most are quite confused about FED policy going forward. Bernanke can not only raise rates in fifteen minutes like he said on Sixty Minutes, he will stop the QE2 sooner rather than later if the employment picture improves.

If employment does not improve, and the US Treasury bond yields continue to go higher, it is hard to defend the FED and its policies regarding QE1 and QE2 and many think it will result in QE3. This will in turn result in a run on the dollar and force the implementation of a global gold standard by China and others. Something that is already in the works and is bound to happen sooner rather than later in my opinion. The question is how long the people in the US will let the politicians keep them snowed and asleep before they wake up, or will the global gold standard come first, plunging America and the UK into Third World (this is already occurring due to the natural course of events in the US, but is exacerbated by Government policy or lack thereof) status to wake them up.

Housing

In the last two years forecast I predicted: “…the housing prices to start to bottom in the next year maybe even longer…”… and it appears like it will be more on the latter side of that statement...”

It appears this was fairly accurate as the most recent data confirms the expected correction in housing values after the First Time Home Buyer tax credit expired resulting in a slowdown of home purchasing over the remaining months of 2010.

The forecast for this year is pretty simple and straightforward: we are once again heading off a cliff in home values with no hope of any return at this point because there are no meaningful signs of a recovery in jobs or even worse no plans to create those jobs. While this continues, the “stealth” or shadow “supply” of unsold homes continues to build continuing to compound the problems.

In the tradition of this blog, I would like to be more optimistic about this outlook. The only encouragement I can find is that I think some folks will be in their homes to stay this time, in the belief that home prices will not fall much further and that they are pretty much out of options as rents are rising along with everything else so eventually home values will follow. This is a pretty sound strategy in my opinion. But I am biased as I have recently helped my own mother buy a place with the help of Uncle Sam. The interesting thing is; that as a result of the free money, we have a very high pain threshold for falling value in that home. It is also a home, not an investment property. This is one thing we won’t be dealing with this time: is the collapse of the speculative investment real estate bubble.

Employment

In the last two years I said in this blog to “…Expect unemployment to reach double digits before this recession is over. I am guessing it may go as high as 10% this year. I don’t see much of an employment recovery really. This will be a jobless recovery. Unless the new Administration in Washington can get the corrupt politicians to make a new energy policy that creates jobs. Yes We Can! ...”

We have reached a new norm, where the number of underemployed and people out of work for more than six months has not measurably or meaningfully diminished during the last year or so. This means many people are now unqualified to work or when they do finally get work, it will not be at as high a pay rate as before. This makes weekly unemployment claims one of the key data releases to be watching in the coming months along with the usual like NFP, GDP, Consumer Confidence, Housing and other data related to inflation like PCI and CPI.

With no hope in site of any real job growth from the private sector or by any political initiatives on the horizon, unemployment will not decrease much from the current level of 9.0% for the rest of the year. I have no idea how it will get much lower than this if some drastic changes are not made regarding the current direction of the country. I think it is more likely to move back up if the status quo continues in Washington. I think a depression has been prevented, but this economy can’t be propped up indefinitely.

While unemployment has steadied, and never got above 10% this year; there are some very troubling statistics showing up if you look beneath the headline numbers. There are also bills being proposed by politicians that would drastically lower the unemployment rate and slash the entitlements, creating a permanent underclass. While this is pretty much cheap political theater, playing the politics of fear is not a help. In fact is tantamount to dereliction of duty. How can any politician in good faith waste time on frivolous bills that have no chance of being passed in a time of war and crisis like this! It only shows and demonstrates a caliber in Washington of what I can only imagine and hope to be inadvertently nefarious politician’s and there equally suspicious proposals to help this country in good faith. One can only assume at this point that this and many other monsters` proposed and in some case created; like in the case of GSE `s are not by accident. The Federal Reserve and the amount of power it has is another example how smoke filled rooms have decided the direction of this country with the country only along for the ride.

A source of optimism is the underground economy, greatly underestimated by economist at large in my opinion, it is very unquantifiable and perhaps the most vital and resilient part of the

economy. I have said before there is a job at every firm for Social Networking engineers, and I am glad to say that in the time I first mentioned that last year I have seen many companies are taking it seriously at last and hiring for such positions. Unfortunately as with many things, often one must start as a volunteer or just as a side hand and show results before a company or potential boss will take notice and decide to give you a salary. So that’s right, I am suggesting you find a company you love and start blogging and managing a social network for them. Of course, it goes without saying they should already have a social networking presence, or if they do then that means you are trying to show them it can be done better. So like everything, communication and openness in what you are trying to do for them is a prerequisite. If they have good management, they should have no objection with you giving them positive exposure to the internet. Of course, it also goes without saying that one could easily find a niche being a critic, but the prospects of obtaining a salary from such work would seem more difficult to me. But perhaps not if it is noticed by competition and that gets you a job.

The biggest obstacle to creating and keeping jobs in the USA is a good energy policy and regulation. The forex industry is a prime example of this. There have been so many new regulations put in place by the CFTC in recent years I have personally had to move money out of the

USA

in order to get the flexibility I desire from my broker. Many countries will not even consider taking my deposits or doing business with me simply because I am in the

USA

. This has restricted my access immensely to the market. This is all done under the guise of “protecting” me and making the markets “uniform”. I see it all as a terror attack on the heart of our financial freedom. I have literally lost sleep at night in terror wondering how long before the CFTC figures out a way to keep me out of the forex entirely. Sadly I think that Japan will be a leading proponent of banning retail forex trading in the coming years. It’s not like there is not plenty of compelling evidence that something is amuck in the futures industry. The USA could be a financial powerhouse if it was not for the free market killing regulations that have a stranglehold on this country.

An example of how ongoing detrimental energy policy and new regulations could derail jobs and small business is my own organic farming business: highly dependant on local transport and being free of costs related to regulation; I figure four to five dollars a gallon for gasoline could very well put us under. I have not figured out the exact breaking point, but much above the current three twelve a gallon is already making it much harder to break a profit and is depleting what cash there is to spare. Already we are pulling back on spending as a result of the higher gasoline prices seen at the pump in recent weeks. Not to mention the cost of wheat, the higher fuel prices go, the higher wheat prices go. This a very real and present threat, many have talked about food shortages and thanks to the QE2 fueled perfect storm mentioned before this issue could derail stocks and the recovery at any time. People globally have already been feeling this pinch; folks in the developed nations will soon be feeling it even more as well.

GDP

I am expecting the GDP to chug along at about 2% again this year. Some argue that what positive data we do see in GDP is purely a result of QE2. I don’t think this is true, since in my opinion there is an underground economy fueling an organic recovery. This is the only way to explain how the US is doing so well in the recovery up to this point in my opinion. I fully expect the GDP to continue in this same range for the next several years. This is a new norm and with the result of Benny and the Inkjets policies, everything has been drastically inflated. Resulting in an apparent economic data “recovery” but I would rather call it an economic data “rescue” because the economy has been rescued from intense contraction (that would have been painful but was sorely needed in my opinion).

Stocks

The two year bull cycle in stocks I have observed and forecasted on this blog for two years now appears to be on an unusual third year extension. This is based on a number of factors, QE2 not being the least of them. As a result I expect to see another good year in the S&P500 of about 15-20%. I am expecting some volatility this summer, the age old adage of sell in May and go away will probably be very true this year.

Dollar

Last year I wrote: “…Of course you can’t forget the possibility of events affecting the market. Any number of things could change the outlook for the dollar/stocks and energy/commodities in a hurry not the least of which is terror; but

China

is also a big problem. We can’t depend on them to keep fueling the bulk of this recovery as market action in recent weeks is telling us….”

This has turned out to be quite accurate in the sense that the dirty laundry that is the China economic machine is finally starting to be aired. As a result they are slowing there economy down with rate hikes. This has had a pretty significant affect on the markets over the past year. Slowing down a QE2 fueled rally in stocks and keeping major currencies like the Euro in check.

While my “Death of the Dollar” mantra has matured recently and I don’t think we are going to see that happen completely for the foreseeable future. I, like everyone am bombarded with spin, and I am slowly beginning to see straight as I learn more. I have come to the conclusion that the dollar is the prettiest pig in the ugly contest as one analyst put it during the darkest months after the global meltdown in summer 2008, and that’s not likely to ever change. If it does, it will only be temporary before the replacement is found to be more attractive at first, but not at all functional or an even worse basket case. This puts the Euro on a teetering ledge. I expect to see the EURUSD trade in a range this year between 1.19-1.50 on the outside. I don’t think it is destined to fall apart this year. In fact China has begun buying up EURUSD and Euro zone debt. So the EURUSD looks to be well supported for the foreseeable future. We will see how things look next year, but you know the mantra by now: if these politicians and bankers don’t figure out how to stop creating bubbles and start creating a system that actually works this year were probably all heading down the chute in short order.

This does not mean that gold is going to stop going up though. Quite the contrary, it only adds more fuel to the fire as it becomes an instrument of hedging against uncertainty even for the smallest of households to the largest of banks.

Another factor leading to gold and the rise of silver in my estimation is the IPhone. There are over 500 million phone users in India alone, and soon the phone and pc will be replaced for the most part by the IPhone. Can anyone say upgrade? This will only put more pressure on already limited resources.

I could rattle off the traditional litany of reasons to buy gold and silver I have cited on this blog many times before, but I thought the IPod argument was a refreshing perspective; especially since the Debbie Downers of the gold rally love to point to supply and demand as a cornerstone for their argument against rising gold prices.

I have come to the point where I am not going to guess about possible corrections or what levels any corrections might go to. What I have observed is the most recent correction was decent, but has left those looking for more with a dry mouth of disappointment. In 2009 I did post charts on Twitter when gold re-tested the 1070-90 dollars per ounce support indicating it was a good place to increase long positions. I also forecasted last year that gold would close at around $1200 an ounce. This was pretty accurate to put it fairly. I expect gold to close at a lofty $1500 and ounce this year, perhaps even make a run to $2000 or at least $1681. It’s rather hard to guess at exact levels at this point since it has never been this high before and the best tool besides common sense is projected fib ratios. Silver is also on track for $50 an ounce. I have never talked much about silver, choosing rather to speak about gold as a barometer. It goes with out saying that if gold is going up then so is silver, and that has been true. Some argue that the move in silver is actually what is behind the rally in gold and is a canary in the coal mine for the economy and even geopolitics. It appears these speculators are being rewarded with more evidence everyday as the price of silver goes parabolic.

Oil can’t really sustain a level above $100 a barrel as long as the economy is in recovery in the opinion of many experts. So I expect to see oil to continue bouncing around from the $80-150 a barrel for the year. The wide range is due to all the factors I have been pointing out on this blog for over two years now and more. Not the least of which is the Middle East Revolution. It could go far higher if the Middle East alignment against the USA and Israel we have seen manifesting as a result of the ongoing revolutions continues spreading to other countries allied with America and Israel like Saudi Arabia. Like I said before, it’s hard not to get caught up in the death of the dollar mantra and freak out about oil prices. But in the mildest tone I can muster: if the politicians don’t do something about our energy and foreign policies soon the dooms dayers are probably right, we will see oil being traded in a currency other than the dollar for the most part and this will set off a chain reaction that will cause gas, oil and food prices in the USA to go through the roof. It goes without saying that most of the rest of the world will suffer even more as they already have been for many years.

This could all happen over night, so being a trader or investor in this time is something that requires paying close attention to the ongoing unraveling of Americas influence, credibility and power. A process that has been expedited under an idealistic Administration brought to power by a naive populace wooed by a media so immersed in affirmative action and getting an African American in power that a mainstream journalist like Tom Brokaw can be quoted on Charlie Rose as saying “We don’t really know who he is or what he stands for…” on the eve of the election. A populace that still fails to see the wisdom former president Bush led the US with; and still sees him as the worst president ever simply because everything unraveled on his watch. Never mind it was his ideal of bringing democracy to the Middle East that is largely responsible for the revolutions we now see taking place; just as it was Bush who popped the oil bubble in 2008 by lifting the ban on offshore drilling. It goes without saying that every president I know of has done something to help destroy this country, and of course Bush was no exception, but vilifying him and canonizing another is the road to repeating the mistakes of the past.

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Recovery 2010: Summer Update

2010-07-24T11:56:00.011-06:00

By Joshua E. Stone

There are a few factors pointing to the possibility that stocks have at least seen their lows for the year, if not found a new bottom. As I mentioned in one of my latest charts posted on the S&P 500, I am expecting 1237 as the next target to be reached. Some of the reasons for this include a strong Euro, a robust German economy, and other macro factors like

economic growth and geopolitical forces such as tax policy and the balance of power. Yet other reasons to be optimistic are there as well, like rail loads to name one…and the Yield Curves.

One needs look no further than the Euro to see that some stability has returned to the market. I read an article that was able to indicate 100 pip moves in the Euro on a daily basis never has happened and are actually an indication of a problem in the system. I for one have never ceased to be amazed at how strong the Euro can be….but I have also come to be equally impressed with its ability to become very weak quite quickly. With all the problems facing the Eurozone in the next year or so it’s no wonder either. In either case, as with anything you can always find something negative in everything. Another Euro factor is Germany, a behemoth of an economy that is on track for a strong recovery. This cannot be dismissed.

Germany

is the powerhouse of the Eurozone and if they are recovering then I don’t think the woes of a few small states will bring it down. For now the Euro is a viable currency, and it is not going away anytime soon. Notice how the EUR/USD did not even flinch on Friday the 16th in the wake of all the pessimism, a week when stocks were down more than 2% across the board. The support of

China

for the Euro can’t be underestimated either.

Another currency that I often look at for determining the direction of the economy and which accurately foretold the entire 2008 meltdown and ensuing `09 recovery is the USD/JPY. Ashraif posted this chart and analysis that I find supports a new uptrend is in order for the currency some time in the not so distant future. This would seem to indicate there is going to be a continued appetite for risk. What most folks don’t get in my opinion is exactly how long and slow it will be; just as I have been saying all along on this blog.

Looking at the USA, we find corporations sitting on approximately two trillion in capital as they wait on evidence of a sustainable recovery and the election cycle to bring in more certainty and hopefully a friendlier disposition towards business, as 2/3rds of jobs are created by business, politicians will be pandering to the votes that are the loudest and demanding one thing: jobs! Already there are whispers of allowing the Bush tax cuts to remain in affect in some shape. This idea seems to be supported by the FED who explains that it is too soon to pull life support from the economy yet, but at the same time we must stop spending so much.

The Yield Curve should also be looked at, long term interest rates are lower than short term rates, and this indicates longer term growth….not economic contraction. I don’t have a degree, but smarter folks than me say this is the case. My horse sense from running a farm tells me that it is only logical that if inflation expectations are higher in the longer term than they are in the short term, then in the longer term the economy is expected to continue expanding. That said, inflation expectations are very low, and the money supply has probably peaked for now....so the biggest problem facing the economy is actually deflation. Though I don’t see it as a threat at this point, it is a longer term problem that will be exacerbated by continued inadvertent genocidal tendencies from our political leaders and the lobbies that have them under their more money than god spell.

There is also much more to support the idea that the recovery is not going to double dip, and I suppose many can find even more facts to support the idea of a double dip; I for one am an optimist and do not let the sad state of affairs overwhelm me. I have always found that it’s easier to report on the bad news than the good news, and this is certainly the case for the mainstream media who amps up every detail of bad news in an effort to divide the country for our routine elections; with unemployment the biggest and best lagging indicator of the recovery being the most potent tool in the partisan belt to divide the nation.

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A Tale of Two Economies

2010-05-03T13:06:00.010-06:00

As America struggles with crises after crises, she looks to her people for her future

By Joshua E. Stone

As the S&P closes in and surpasses the 1220 target mapped out in Jan by me, and even earlier by others; the questions are becoming more and more glaring. Where is the volume in this rally? Where are the average investors? Does the rally mean the recovery will be strong? If so, then why is new employment still below 300k a month?
I have come to the conclusion there is a tale of two economies: one in which the traditional job market is gone forever, another where the job market is wide open and not enough talent to fill the demand.
I think the biggest challenge facing America going forward is its people. They are used to getting jobs the old fashioned way, where you go to the paper and find something you can live with, or you get a job at the local mill or car company because that’s all the town has ever known.
While there may not actually be a job posted at the local mill, there is a job there no doubt….its just the management and the seekers don’t see it. At a local mill there is one job I can think of right away that is most likely not being filled: social networking marketer. Another example of a job at a hospital or any big firm that is not being filled: waste reduction engineer. Radio and TV stations are already using social networking or WEB2.0 with great success. The forex industry is a near grandparent in this field already, with social forums and whole websites devoted to experts and consumers alike where you can chat and exchange ideas with like minded individuals.
Between social networking and reducing waste in this economy, we could see vast improvements’ in our productivity and profit thereby increasing the GDP. Things like this are already underway in the form of the Green Economy. These are just two examples I have thought of for the purposes of writing this article, but there are more. For example, it is well known that the high tech industry in the USA is flourishing, but is plagued by a lack of talent in the employment pool and flying vultures in the form of new taxes.
The result is jobs are outsourced, the employment is floundering, industry growth is stagnant and the long term outlook for the economy gets more uncertain to many. Since it appears the people of the USA have been collecting unemployment for the longest time in history, one can’t blame them for feeling like there is no hope for improving their situation.

In theory and in history, the spendicide the US government is committing on behalf of its people will work to get us out of recession in the short term. The problem is that the principles of good economics demand that we don’t run large deficits during the good times. This is something we have failed to do since the late nineties; this has put us in a very bad condition to deal with these tribulations. Aside from the fact the spending policy in Washington has to change dramatically, the private sector has to put the other foot forward and create sustainable jobs for the future, thereby increasing the size of the economy and the revenue base the government has. All that said, history seems to suggest government surpluses as well as taxes that are too low lead to recession.
If this does not happen the next financial tsunami known as the bond market collapse will surely be impossible to navigate and survive in a meaningful way. A strong US economy will help us weather the collapse of the bond market much better, I would think. It also needs to be said that the USA is not Greece or like any country anywhere else, and our bond market crises will not be like the ones we are seeing now in Europe. Will this be good or worse as a result, only time will tell. All that said, history seems to suggest government surpluses as well as taxes that are too low lead to recession. I also do know we can print our own money, so that certainly changes the traditional dynamics of any bond market crises we will have here in the USA.

It is also easy to blame the government for this jobs crisis, the current administration fails to get serious about a jobs creating energy policy. This will ultimately be all of our undoing as the prices for everything continues to soar for the average person. The average person is not going to make it through the transition to more energy efficient models as even the most optimistic plans don’t have everyone driving hybrids in the next few years. I know that high energy prices are deflationary, but cheap energy is a prerequisite for a strong economy. An idea that seems to be lost on everyone these days but the poor folks and business owners who are seeing 60% increases in the COD and fuel expenditures year over year as we transition into the new decade. A VAT tax will put many of the small businesses left in this country right out of business. The recent disaster in the Gulf of Mexico proves the argument and concern beyond a shadow of a doubt: industry and the US administrations have proven there incompetence regarding energy production and policy. Just the consequences of this most recent catastrophe alone may have wiped out nearly an entire gulf and may devastated many industries in one of the world’s formerly most prosperous and beautiful regions for decades to come. In my opinion the Gulf of Mexico has pretty much been quite devastated up to this point by dereliction in policy and industry, and this flow of oil into the sea will certainly not help at all…no matter how lucky we get with the exact details of the cleanup.

My take on the market and the economy at this point are not very optimistic, I do have some optimism. But it is fading as I see the real issues and problems in this country either not being fixed, or even being completely ignored or exacerbated by a seemingly inadvertently genocidal political and corporate establishment.
I do think the current bull market is still in place, as mentioned before on this blog, most bull markets have two year cycles, that puts the current cycle at the age of a toddler by next March and set to end its buoyant ways in the next several months. I don’t see the FED raising rates before then, so that leaves the markets with room to move up baring some development that changes the current trend: like the FED adjusting their language to allow for an increase in rates.

The events in Europe recently have also demonstrated the contagion effect is quite real and could very well if not already have capped the markets in this bull cycle. Some analyst say the market will begin to fall this summer and there is somewhat scary evidence to support that now with the way the markets fell and gold surged on the heels of the Greek crisis in recent days. On the other side the recent uptick in volume could be a sign the average investor is putting their toes back in the water, perhaps as a result of the regulatory bills being passed increasing confidence in the market. I see this market as quite strong still, and the trend we have seen since March of last year though threatened at this point has not quite been broken. The rally and fundamentals are still intact; bolstered by improving economic data and a burgeoning consumer wallet fattened from ripping up credit cards, selling jewelry and walking away from mortgages. I think some sideways action will be in store for summer, then fall will arrive and the market will have done the classic sneak range up by that time.

This leads me to think the most likely scenario for the recovery will be something like what one analyst I saw describe as square root shape. We are seeing a bounce, but I think we will have another recession soon if the taxes go up as many are saying they will next year, and of course as the “business as usual” policy continues.
On the foolishly optimistic side, we could see a history defying economic boom from here on out. I believe in the USA, so I am certain we will do well at the very least. As Americans we can all look forward to the next great road bump, they are hard to deal with and painful, but we need them to wake us up and keep making this world a freer and better place for us all on Gods Green Earth.

Economic Outlook for 2010 and Commentary

2010-02-19T10:24:00.002-07:00

By Joshua E. Stone

Monetary Policy:
Expect the Fed to keep the Federal Funds Rate at current levels near 0-.25% for the remainder of this year at least. I know this might come as shock to many, and it repeats last year’s forecast verbatim. The fed has new tools at its disposal beyond the scope of this article, but suffice it say the current language “extended period of time” means “we are not changing this language for at least 3-6 months”; when the Fed changes the language that will mean only that the door is open to the language getting more hawkish. That means another 3-6 months of jawboning before we actually get to any language that will allow the Fed to raise rates, and then it could be another 3-6 months or longer before they actually do raise them. Fed action in the week of the posting of this blog supports this outlook.
So being conservative that puts any significant change in Fed language at least 9 months out before the Fed even has the language in place to allow a rate hike. I have heard some analyst say that September might be the earliest we will see a hike. The language in the Fed statements would have had to change already in my opinion for that to happen. There is much mystique around the Fed and how it operates; in my opinion this might not be a good thing that Bernanke has done: drawing some of the curtains back so we can peer into the Fed’s ivory tower. These maneuvers only result in more questions which is not bad, but it also results in special interest using confusion to promote their agenda.

Housing:
In last year’s forecast I said: “…expect the housing prices to start to bottom in the next year maybe even longer…” and it appears like it will be more on the latter side of that statement. We have got a very bad situation in housing, and it’s perfectly indicative of the overall situation facing the country at large.The Federal Reserve CRE Forecast for 2010 is not at all rosy, and hints at an even bigger problem facing the real estate world: the commercial real estate bust. Like all the forecasts from the Fed and economists, a recovery in real estate all depends on the recovery in the economy.
The recovery from the Great Recession is still ongoing, and will be derailed by the coming sovereign debt default facing the USA in the next 5 years if we don’t get the people off this sinking Titanic of derelict spending fast. With deficits and debt as high as the eye can see, I was among the first to point out that there is over 120 trillion dollars in unfunded liabilities’ on this blog fxretracer; now it is common knowledge a year later. In short, the real estate market is telling us we are heading over the cliff in the next year or so. This could be stopped like all our economic problems with a real energy based economic initiative like I always say. But with the tax rebate for home buyers program ending in April, it is going to take some months before everyone realizes that something is wrong in real estate again. Right now with everyone buying on the lower income of society, it’s hard to hear the higher end earners when they say their houses are not selling. This is going to make things worse obviously. But that said, data recently has been encouraging for the USA.

Employment:
Last year I said in this blog to “…expect unemployment to reach double digits before this recession is over. I am guessing it may go as high as 10% this year. I don’t see much of an employment recovery really. This will be a jobless recovery. Unless the new Administration in Washington can get the corrupt politicians to make a new energy policy that creates jobs. Yes We Can!...”
I think we could be surprised to the upside in employment this year, the Adminastration is already predicitng 90k jobs a month being created by spring. I think unemployment will not go much higher from here, but dont expect it get back to the normal 5% for a few years at least. Of course that also depends on whether we deal with the problems still facing us.
During the week of the release of this article, the President has made a step in the right direction by ordering the creation of two new nuclear power plants, however this is measly and is really another tremendously blown opportunity for a President who has had enough support, especially in his first year he could have got anything he wanted done. I think biomass/biofuel or some space age technology for energy would be best to pursue for this country, but I know nuclear power has some very good arguments to support it. I think we could do better than nuclear power. This is just slipping into the same old big interest pattern so familiar from Washington now. That said, the President has done a good thing and this ads steam to an economy that came out of recession in Sept or Oct according to the Conference Board.
What I found most remarkable this year was that unemployment did not rise as fast as many I heard from said it would, it was slow grind up to 10% last year, and then it retreated from the double digits! While many of the critics say that we did not have a recovery this year, in the same breathe they tell us that the stimulus had no effect. How then do they explain the positive GDP in recent quarters? They will contradict themselves by telling you it was all government spending.
What does this mean? We clearly have a lot of doubt around the recovery, that’s not news. What is noteworthy is that it is true that much of the economic recovery is organic at this time, this is why we do have some decent GDP results in recent quarters, and the government spending did not account for all of that growth. What the problem is with this organic job recovery is that it will be drowned next year from what I understand by new taxes that will be coming to everyone, “rich” and “poor”. The reason we have not seen better activity as of yet is because of the uncertainty going forward for small business, not because they can or can’t fund pay roll with debt. That kind of thinking from our leaders is scary.
To find a good example of how the government can help stimulate the economy, one has to look no further than my home sate of New Mexico, where the unemployment is below the national average thanks to a diversified economy and the government created tax rebate for the film industry that has catapulted us into the top five best filming locations nationwide. New Mexico has other good incentives as well and is rising in the ranks for one of the best places to do business in America. We need sales for small business, to get sales we need people to have jobs, to have jobs we need the government to direct incentives on cheap energy and other industrial policies: the lifeblood of strong democratic economies for over a century now. What we don’t need is the spending we have had, and the repeal of finance laws that kept the financial wizards and their political cohorts from weaving the kind of catastrophe we saw in 2008 with the collapse of Lehman.
Take me for example, if fuel costs less, the seeds would cost less, then I could go out and hire someone to promote my product. As it is, I am squeezing by on a thread still thanking the daylights Bush popped the oil bubble and a bit bitter at a media that does not remember that fact. But then, that is no surprise: after all this is the same administration and media that ran and covered a campaign platform based precisely upon opposing the surge and losing a war just to gain power. Now that the surge has succeeded, it has become a strategy that they now take full credit for and the media has let them do so. We all know who they would be blaming it on had it failed. I am also left having somewhat mixed feelings about an economy that was engineered to crash, and as a result has kept prices low on consumer goods. I do know that it is a good thing we have not recovered fast, any recovery that bounced back too fast would have got us right back to a standstill with high oil prices and inflation. Going forward I know that any recovery that does not have the uncertainty for small businesses addressed, have a jobs creating energy policy and has dealt with the debt will not be a recovery, but a blip on the radar before the mightiest and richest nation on God’s green earth fell.

The Dollar:
Last year I said in this blog: “the S&P 500 has a 50% downside risk from these levels and is the key to the recovery, besides a good energy policy.” The first half of this turned out to be spot on (the stocks recovered 50% from that time and the recovery is on track for the most part); the second half is still true. If we don’t get a good energy policy soon we can expect the death of the dollar, not that it’s not already pretty dead; having lost a full third of its value in the last ten years alone, and some 98% of its value since the 1800`s.
Again we can look to stocks as an early warning signal for the recovery, if the equities close lower this year I would take that as a sign that the recovery is all but derailed. If they close higher, about 2-3% as I expect, it will mean that there is increased optimism surrounding the economy, and that more importantly, the Washington gridlock will have manifested something productive. My feeling is that there will be a shift of power in the House and Senate and this alone will create enough optimism for 2011 to keep the markets up for the year. It is even likely in my humble opinion, we could see good gains again this year…not 50% again, but 20% does not seem unrealistic.
As for the GDP I expect it to grow at about the same rate as stocks this year, 2-3%. But there are some much smarter people than me out there saying we could see a much higher growth rate this year. Even if that ends up being the case, it would not really be a good thing as it would only trigger massive inflation later, due to the unfettered debt Washington is pouring on. Even worse it won’t matter or help at all, as it will just be a spike on the chart before the Mother of Depressions is here to stay. Don’t get me wrong, it would be great to have an outstanding recovery this year, but it would be equally disappointing and tragic only to see it derailed by large deficits and a neglected energy policy whose fixes were delayed by the euphoria of the recovery. Sadly we need pain to get change and the more the recovery happens in fits and starts, the longer it takes to recover, the better chance we have of really getting things back on track. I think there will either be a recovery (which we are already in) or a depression (which we have not yet slipped into), and there is no “double dip” scenario possible in my opinion. We either get it together fast, or the consequences will be too massive to overcome without a monumental crisis, and it will happen quick, I keep saying 3-5 years; but it will likely be sooner as we have more crises on the horizon not the least of which is the sovereign debt issue and credit ratings for the US.
When it comes to gold, it is a buy in the sub 1070 area, if it goes to $945 an ounce this year, it will be the best buy ever. Why is it going to go that low? We have a long year ahead of us, and the fear is still rampant out there. If you pay attention to the gold bugs, you can see that they are correct about the fundamentals driving gold up, but if you read between the lines you can also see that there is still a risk of deflation due to the doubt surrounding the recovery. What this means is folks buying gold above 1k at this time might have to sit on it for a few years waiting for the politicians to finish flushing this country down the toilet. If Washington does fix the debt problem, then the gold bugs will be sitting on a post Reagan range once again, locked in the 900-2k area in a world where the dollar is in favor bolstered by strong fundamentals. You can also look to silver for sentiment regarding the recovery, as its price is reflective of demand for many products that are used in manufacturing and consumer goods. What I am saying, is I think gold will go up this year to 1500 or maybe even 2k. I think gold could easily close above 1200 this year if everything stays on track. It will only pop out the roof in coming years with continued dereliction of duty in Washington, highly probable that’s for sure. Don’t misunderstand stories of gold losing its safe haven status; the reason gold has fallen against the dollar with the recent sovereign debt crisis in Europe is because this whole juggernaut of debt unwinding is just beginning. Once the debt crisis hits the US, there is nothing left; the buck stops here (pun intended). We have hit the iceberg folks; this is not a joke or a movie.
As for oil, I don’t expect it to go up much this year, due to doubt about the recovery, but closing above $90 a barrel seems very realistic to me. I expect petro prices to stay stable this year; we will get close to, if not over $3 a gallon at some point this year of that I am fairly certain, but I don’t expect it to stay there either. It is a bit harder to tell about gasoline this early in the year for me, as spring is not here yet, and that’s usually the peak in gasoline use for the year. But the recovery is on track and there should be good demand for fuel this spring as consumers hit the road putting pressure on prices at the pump.
Of course you can’t forget the possibility of events affecting the market. Any number of things could change the outlook for the dollar/stocks and energy/commodities in a hurry not the least of which is terror; but China is also a big problem. We can’t depend on them to keep fueling the bulk of this recovery as market action in recent weeks is telling us.

The following credit goes to these sources that I have used in this article, there are also some other sources added not used in this article:

Hot Air » Blog Archive » More “unexpected” economic news
http://bit.ly/9fevni

Hot Air » Blog Archive » Bye-bye Fed funds rate http://bit.ly/9XeSFZ

2010 GDP: Look For A Strong Recovery | FX Instructor Blog - For
Traders, By Traders http://bit.ly/5d0xrz

The Conference Board - Trusted Insights for Business Worldwide http://bit.ly/c4HxfP

Philip Blumberg Blog: Federal Reserve CRE Forecast for 2010 http://bit.ly/cuoewP

Gold Price to 2000 as U.S. Dollar-Gold Correl...bit.ly/83BvHU

Safe Haven | "Commodity Super Cycle"...bit.ly/8KUx2R

Is It Time to Buy Gold? | Uncommon Wisdom http://bit.ly/bhdPOj

FreshPips Stimulus funds nearly 600,000 jobs last quarter
http://bit.ly/91NcMC

cristo1 Rosenberg: Housing Is In A Depression, And It's Already
Double-Dipping: The latest NAHB numbers from yesterday are...
http://bit.ly/4VZZuA

InEgoVeritas Fullcarry: Stock market to decline only after the
FED hikes rates: http://is.gd/52Y8Y Steve Saville.

politiconomic $$ Philip Blumberg Blog: Federal Reserve CRE
Forecast for 2010 http://bit.ly/4VdKcp

FreshPips Gold Loses Safe-Haven Status For First Time in History
http://bit.ly/bhBreB

KevinMHughes upsidetrader $$ 824,000 jobs will disappear
on Friday http://bit.ly/aECvHg

KevinMHughes alaidi and the EUR MONTHLY CHART (Blue
graph) speaks volumes http://bit.ly/88mm6K

Fundamental Commentary for 2009

2010-01-25T22:23:00.005-07:00

A stellar rebound in equities in the last year of the decade has many wondering what else we may have lost besides ten years of no gains in the stock market.

By Joshua E. Stone

The Lost Decade: After 9/11/01 & 9/18/08 still business as usual.

Although stocks posted amazing gains in 2009, it has left most with an empty feeling as the decade overall was flat in US equities. The politics though fiery and hopeful at one euphoric moment in 2008 were also empty.
It appears that in hindsight the last decade was a wash for America. Americans marched through most of the last ten years mad at a President who recovered an economy that had been dealt its largest blow ever and kept us from being attacked for a second time during his watch from an enemy that is so dangerous the western world does not even comprehend it for the most part. Over 10% of the US economy was in the World Trade Centers…putting that into perspective, California equals 20% of the US economy.
The attack on the US on 9/11/01 was a fantastic opportunity for America to wake up and create an economy that does not instill anger by impoverishing so many. The opportunity to get off foreign oil and create a jobs creating energy policy after the attack was truly there…the President could have ordered Americans to do anything at that point and we would have done it. Instead we were told to go “shop”.
Then we saw opportunity number two: the financial meltdown of 9/18/08. This was not only another chance to fix the energy crises that had blown up in our face in the form of 147 dollar barrel oil earlier that summer, a price and bubble that President Bush popped by lifting the ban on off shore drilling; it was also an opportunity to fix the problem with the financial industry and most industry for that matter: the lobbyist.

The Tragedy: A Change We Wanted to Believe In

It is no surprise to about 57 million of us that the new President has seen his approval ratings fall the fastest and hardest ever since records like that started being kept.
Change we can believe in appears to mean making everyone pay for a few folks mistakes. It has to be admitted that this is a valid prescription for cleaning up messes most of the time. But when it targets the limbs and not the roots it’s not going to work. It appears Washington thinks the answer to getting back the rest of the TARP funds is to tax big banks; did it occur to anyone that some of those banks may have paid back what they borrowed? Would it be fair to make them pay again for others who received bailout funds but can never pay it back?
This example of “change” that has come in the form of proposals for bank reforms, reforms that if implemented will benefit the big banks and their stock holders the most such as Goldman Sachs and JP Morgan as they will by law be required to spin off their most unprofitable operations: the consumer instruments, and thus make the share prices of those companies much better valued and thus more attractive to investors. For example if you look at JP Morgan’s stock price, it has traded at the same value for the last decade or so precisely because their value is pretty much capped, there is no growth in the consumer credit instruments that make up a large part of their operations. This is something most of the banks share in common, so its is no wonder that so called bank reform coming from the lobbies of Washington would end up benefiting the banks the most and not the consumer.
To think that these kinds of measures and policies will not be passed onto the consumer is naive. What this will do is make it harder for small retail traders to get into the market because of higher fees. Not to say, as this article written by fellow Twitter user PumPuiMonkey writes, it is not already getting increasingly difficult. I do realize that some people think that traders such as my self are next thing to nefarious and should not be allowed “day trade” in the first place, but that aside; this policy only serves to limit opportunity for people looking for a chance to get ahead by trading and investing. Whether the “opportunity” is safe for them is not something for anyone else to decide really, especially for individuals…lets be real: you're not going to be forced to bail me out of a bad trade or investment. A more in depth look at this discussion and how it has affected me personally can be found by reading the "No More Hedging"
thread I made contributions to in an attempt to share my perspective on the subject.
Real change would have been doing something about the stranglehold Wall Street has on Main Street via the lobbies. But then that would not have fulfilled any campaign promises, and would only have assured that a derelict electorate is delivered some other more cooperative candidate the next time around.
Can't miss the chance to hound again, what a change it would have been to come up with a sound energy policy.

The Legacy: Less Opportunity and the Inheritance of Debt

It looks like we have a legacy of debt, a retreating free market and a democracy with increasing transparency but infected from the enemy within that is always tied to some special interest spinning the progress being made as a bad idea from the opposite political party; while all the time nothing of real meaning is ever addressed or even discussed. Worse yet, when something is accomplished it is so burdened with special interests and buy offs that it just becomes another debt increasing monstrosity that this country and its people have had enough of already.
After the attacks in 2001 the powers of the government were greatly expanded to protect against more threats, however I happen to think that our freedoms were not so much infringed upon as they were clarified. After all, our government had been doing these things forever already. Only it was in secret and sometimes manifested itself in National shame such as the Japanese internment camps of WW II.
After the financial collapse of 2008, for many the jury was out on capitalism. Almost like a deer in the headlights, Greenspan in testimony to Congress all but shattered many peoples faith in the free market. I never thought as highly of Greenspan as many in the first place, sure he is a genius…but every genius has a blind spot. He was an instrument of the lobbies like all of the heads of Washington so therefore I don't think he “missed” anything. Every aspect of this economy has been carefully manipulated for generations already. Over time it has been technology that keeps us ahead of total ignorance and enslavement by the educated elite who think most of us are too dumb to make qualified decisions for ourselves.
The latest round of lost opportunity comes in the form of the President going on a somewhat perplexing campaign like stump into the heartland where he was supposed to be going to give the people hope when it comes to the dire job market. Instead of doing anything close to what so many see as our only chance to get out of this mess: announcing a jobs creating energy policy; the President promised to fight. I just am still unsure exactly what he will fight. The lobbies and special interests that are really holding things back? We can be sure that will not be the case. The alternative fight must be politics and Filibuster gridlock as usual. We have already got a glimpse of what that will look like and how the market and therefore by default the economy will fare under a return to that kind of partisan bickering and gridlock with the asinine Senate protests over re-nominating Ben Bernanke as head of the Federal Reserve. This is a fine example of how partisanship wrecks everything. If we want to fire Ben Bernanke out of some moral duty, then we have the duty to fire the entire government starting with the President who also took money from the lobbies who engineered this crisis as well.
Don't misunderstand me; we do need to fire everyone and I hope we do in 2010 and 2012. The biggest problem is even the new faces will be in the pockets of lobbies so change will still take more time before we can figure out who will and will not stick to the principles the people want like lowering debt, creating jobs and making regulations work instead of creating more government and more regulations.

The Hope: Americas Resiliency

One thing I have learned is that not even a writer can imagine what America might do or accomplish next. The nature of our democracy is largely misunderstood by the world and it is far more conservative than any other regime on the globe or in history. This is one reason why we have such an incredibly strong market. It is true that part of our strength comes from geographic luck and resource…but there are other regions of the planet that if they were more like the American system would be much more resourceful than they currently are no doubt.
China is a good example of this; they have now become the second largest economy not by rejecting western models but by embracing them. The difference is the corrupt nature of their system allows them to exploit everything without any concern for the consequences because there are none since everything is run by the State. This has pretty much “gamed” the entire theater of Chinas entry onto the global economy. It is no wonder they have progressed too far to fast, you could say they have cheated in a way. It all spells trouble for the global communities future, their policy on many fronts not the least of which is currency value and how most recently monetary rate policy is hurting the global recovery in some analysts views.
It’s not these particular policy issues that bother me as much as the other more human and environmental policies they have that have no regard to human rights or the environment that create an unlevel playing field for the market and most importantly hurt people.
So considering America and the western economy has no choice but to do things correctly or face certain doom, we will produce a sustainable and innovative economy that will end up being the model for the 21st Century to the entire world as we have been since we were born over two hundred years ago.

A Look at the “Recovery”:

2009-12-17T20:07:00.012-07:00

By Joshua E. Stone

From film to finance, the internet offers a beacon of innovation for America’s economic future...while the high tech manufacturing sector fights to survive the onslaught of new taxes, America struggles to gain its footing in an uncertain and frothy recovery.

Is the recovery for real? That is the biggest question of the year for many people. Looking back on 2009, it was quite a year. It did not offer up as much historic volatility in the markets that 2008 did, but behind the scenes the monetary policy of the country was something of an epic story. Needless to say it appears that the Bernanke School of Injection has been beneficial for Wall Street. The problems are how long will it be before Main Street benefits, and will Bernanke be able to pull back on monetary support for the system via low interest rates and TARP programs without the recovering economy triggering inflation. How long before the Main Street recovery catches up with the Wall Street rebound? Or will the rebound turn out to be just a cyclical rally in a larger down cycle like some analyst say, leaving the catch up of the real economy lost in a quagmire of fallout from a vanishing fortune in securities. The other three problems that are much bigger and really more important in the long run: will the politicians do anything about the small business credit availability, the debt and energy problems?

Bernanke faces an unprecedented challenge never before undertaken in history. The balancing act he must pull off in the next year or so is very complicated to explain. It will also be harder for him to accomplish than most of us realize.
From what I understand his challenge is to withdraw the TARP funds, thereby reducing liquidity or the amount of money in the system, and keep interest rates at a level that keeps inflation in check and also does not strangle money supply at the same time.
Considering these two facts, he still has quite a heavy arsenal at his disposal. But how he uses them will be completely dependant on the economic data that he gets. Assume for a minute that there will be no more big bank problems and the TARP funds will not be needed anymore, so he will be able to continue to pull back lending. This will reduce money supply. Then assume for another minute the economy does heat up and he has to raise rates to keep inflation at bay. This would be really something and could mean the dollar would be in the lime light once again as the money supply shrinks and it will bring the dollar back into favor. The long term threat to this scenario and the strength of the dollar is the securitization of assets and the structural imbalances between the eastern and western economies and of course the energy policy and the debt. An article that fellow Twitter user Ancient_Warrior found and posted explains much of these problems and others very well.But I think these problems are still at least five years from becoming the end of the world lights out problems that the gold bugs and naysayers believe they are. Yes oil and gold are going very high. But it is going to take another ten years of negligence from the politicians and the voters who put them there before the gold bugs get the 5k an ounce in gold. In short, there is still time to fix this mess.
The stocks are telling us that as well: on a technical level the S&P 500 has retraced 50% from the March low. I continue to believe this level will be a key decider of the recovery. If we get above the 1224 level and hold, it will be very bullish and indicate the recovery will be strong within six months from the point the S&P 500 does decide to make the 1224 area support on a technical level. But really we need to wait and see how January goes to see how the rest of 2010 will go. Analysts are expecting some selling in stocks in the next ninety days, and I tend to agree with this. Also gold has taken a good fall from the highs, and hopefully indicates a period of consolidation is underway. Gold is a great buy at 1000 now. We need to see how it reacts to the former resistance at 1070-1100 to get a better idea of what’s next. So it will be February before we can see how the GDP, NFP Housing and retail data are in Jan to really know more. Anyone saying that stocks will tank in the first quarter or this or that just can’t say that for sure without data to support it. If the economy were to tank, then gold will have to go back to down quite a bit. Just remember, as long as the consensus is that the data coming in is positive for the economy; gold will keep going up a lot.
How long it will take for the recovery to come to Main Street? It all comes down to jobs. When will new jobs be created by this economy?
The outlook is not good sadly; half of the much touted US GDP growth in the third quarter was spurred by the stimulus or the Recovery Act. The drop in unemployment last month was weak, and not a surprise considering the season. Were in the longest period of unemployment ever, that is to say, on average people have been out of work and looking for a job for a longer period o f time than in any other time since they started keeping those kinds of records from what I understand. Also the recent retail data was actually down from last year in some areas excluding food, and energy, like clothes for example. The housing data touted by the drive-by media as recovering, has others pointing like JimBurness who posted an article that points to dire facts that don’t look so rosy. One fact that is very troubling is that one quarter of home owners are in foreclosure, and seven percent are thirty days behind on their monthly payment. Another big problem in housing is that higher end homes are not selling, and most of the sales are in the foreclosure market and lower end homes. So that means the inventory is a long way from being tightened. On a more troubling note, it also means that the people are not moving up from the mid sized homes to the larger ones. This means that the middle class are not moving up. Not surprising to most everyone out there. The data being watched by the experts for the recovery is frothy to say the least.

The two bright spots in the employment arena where I believe we will see the most opportunity and the fuel to help lay a good foundation for jobs are high tech manufacturing, and the internet continuing to reshape industries as we have known them. Of course it goes without saying, but I must repeat the mantra….the politicians have to develop a jobs creating energy policy and deal with the debt also or we face the gold bug scenario of gloom and doom.
The high tech jobs are here, though the work force is not educated enough for them, and the sector has vultures circling in the form of higher taxes.
On the other side of the spectrum the internet continues literally turning industries inside out and has everything from film to finance in turmoil and turned upside down on their heads.
Two examples I can think of on the internet are StockTwits and FansofFilm.
On the financial side Howard Lindzon has created a platform that allows Twitter users to post their Twitter updates into a financial stream that aggregates Twitter updates that are tagged with the “$” symbol for financial related updates. I once saw an update that compared the StockTwits stream with Barrons. My personal opinion is that the StockTwits stream and its blog network have more financial information from more outstanding sources, content (both premium and free) and individuals in one place than I would have ever thought possible even six to nine months ago.
On the film side I am very proud of my brother Michael Palombo and the work he has accomplished for the film industry and most importantly its artists, where he has blown the doors off of traditional four wall distribution, by giving film artist the opportunity to distribute and market their films with the same technology that the giant networks like FOX and NBC use on their sites for video content, an amazing and as yet virtually untapped technology called VOD (Video On Demand). This technology is just now being used by professionals to provide videos on demand to their clients for educational purposes or just plain entertainment as in the case of the major networks. In the case of FansofFilm, the technology is being taken a step further and being used to help artist and producers directly.
Michael Palombo and Howard Lindzon are one of many examples of how folks on the internet are continuing to take the existing technology as they have done for all time, and harnessing it to provide consumers with products they want and more importantly allows them to choose their consumption level in ways that would have never occurred to most of us and still many more can hardly wrap their minds around yet. Just like Google, E-Bay, Amazon and so many others have done over the years.
Google is the ten ton gorilla in this arena. Most folks still don’t get exactly what Google really means and how much it is actually worth.

Though I don’t agree with much of what Richard Florida says in his March 2009 article from the “The Atlantic “How the Crash Will Reshape America”; I do agree with the idea that we face a fundamental shift in demographics and the economy. However, the recession has merely accelerated it; the shift has been underway since the internet came of age in the late nineties and before that with the industrial revolution, and cheap energy has always been the backbone. The internet and manufacturing require lots of energy, so energy must remain cheap for any meaningful economy to manifest. I also think petro can’t be too expensive, as much of the world industry still needs it for basics such as plastic. I also think that folks move less now precisely because of the internet and the new economy allows them to work remotely in more cases now than ever before in the past. It is the bad energy policy leading to high costs for fuel and food that hurt most, and the politics of installing high speed internet. I would say getting internet to the rural areas is about as important as getting the railway built was and has just as big of an impact on a community when it does arrive. The difference between the rail and the net, is in the case of the rail you needed one rail going through a state to satisfy the requirements of transport, and that lead to demographic advantages materializing in the form of suburban and metropolitan development; in the case of the net the infrastructure for the web is possible to bring everywhere and not favor a particular region unless unusually remote. It is not the distance from the city so much that sets back my productivity as much as these infrastructure and energy issues that should not even exist in the first place if free enterprise and the free flow of information were a priority.

So in a nutshell, I guess what I am saying is there is hope, and the future is bright for jobs. It will not be easy, and the biggest threats are economic and energy policy. The hardest thing is the jobs are many months and depending on how things go next year maybe years away. It is truly sad that the Administration has gone on record as saying jobs will be coming back by spring, they don’t have a great record at predicting these kinds of things. We need to do four simple things right away to spark this recovery into producing jobs: first, a jobs creating energy policy, second, get the rules of the game straight for small business, third, draw down the debt and fourth, promote what manufacturing we have with tax credits and less regulation that is actually enforced, and can’t be bought off by lobbies.

To read more articles by this author click here.

Below is a list of some key point made in this article and links to some of the articles I have read and/or used in this article.

• Securitization of Assets http://bit.ly/6Oj8FX (http://twitter.com/Ancient_Warrior)
• Longest period of unemployed
• Seasonal NFP
• Half of GDP growth was stimulus
• Private sector growth/credit
• Recent recovery data is frothy, ie some sectors (if you exclude autos, food for example) of retail sales were actually down from last year.
• The housing sales are new home buyers and foreclosure market, higher end homes not selling
• The new economy(web 2.0 and high tech manufact)
• Structural imbalances
• Economic Outlook for 2009 http://bit.ly/3aA9Ci
• http://twitter.com/JimBurness What housing recovery? The Most Important Housing Chart Shows Things Are Still Getting Worse http://bit.ly/1NODCj
• How the Crash Will Reshape America http://www.theatlantic.com/doc/200903/meltdown-geography
• http://www.theatlantic.com/
• http://www.milkeninstitute.org/newsroom/newsroom.taf?cat=press&function=detail&level1=new&ID=161 California losing manufacturing jobs, including high-tech, faster than nation as a whole, according to Milken Institute
• Virginia Business - Opinion: Are you ready for the aftershock? http://bit.ly/4E302Q

Recessionary Rally

2009-11-16T17:34:00.009-07:00

By Joshua E. Stone

The Dollar is increasingly frowned upon as a world reserve. As of Oct 6th gold surged to new highs. This was helped by the global meetings to talk about creating a new reserve currency not pegged to the dollar. But this comes as no surprise to those following my blog or those paying attention to the “recovery”.
We have a few reasons for these rallies in stocks and commodities: the “psychological” rally, the “recovery” rally, and then there is the “nothing else to buy” rally.
The “psychology” rally is hard to peg, from what I have read it is spurred by the fear of getting in too late and in my opinion is the same as the “recovery” rally or what some refer to as a "recessionary" rally.
The “recovery” rally is a natural cycle seen in recessions called a “recessionary” rally. A recessionary rally can last up to 24 months, I have read. That would mean this rally has some legs still. More interestingly, that would make this rally mature around the next election cycle in 2010. Then there is the “there is nothing else to buy” rally. This is basically a matter of liquidity. What I have referred to in a previous article as the “Bubble Transfer”. With all other investments shrinking on the back of a falling dollar, there is no other place to put money other than stocks and commodities.
Since the recessionary rally is basically a matter of psychology, that is, the idea that the economy is recovering, it will be a matter of psychology that changes the trend from up to down. When this will happen is anyone’s guess but, many analysts are saying they think we have seen the bottom in stocks last March. The technical indications point to this as well, i.e. the strong rally to DOW 10k to name just one item of note, the surging GDP fueled by the FED hijacking of trillions of tax payer dollars another item that has analysts seeing a recovery beginning and other less wise soothsayers claiming we are out of recession already. Try to explain that to the unemployed, however. One problem with techs as anyone who trades knows, they can change just like the fundamentals driving the market can change. On the tech side of the rally many analysts think that the market is due for a pull back from these levels soon. I don’t think we will see a major pull back before year end however.
Still many other analysts are saying that there is no way the economy will recover from the hole were in this time. I guess they think the stocks will go even lower than what we saw in March of `09 at some point. This might be true, however even if this is so, we will not see this happen this year or even next. It will take some time. I think we could even see another bull market ensue before then. This will hinge upon the GDP, Employment and Housing data going forward in 2010.
So that leaves us with the last great bubble and only place left to put our money for secure growth over the foreseeable future: commodities. Since we are seeing some kind of hybrid recovery going on via China and FED magic, there will be a greater demand on fewer resources.
The wealth cycle of bubble transfers is underway and in full force. We have wheat and various commodities trading at depressed levels and even gold is depressed compared to historical inflation measures. As the trillions of dollars of wealth that was harvested from the tax payers and by the corporations dwindles in value and is transferred to the newest bubble of gold and commodities, Main Street will be left with a dwindling middle class as their purchasing power vanishes and is consumed by higher prices for food and energy. While their children will be left with a debt that is to big to even comprehend.
Yet in this process the ultimate goal will be accomplished; to drive up the value of gold, then use the profit to buy up wheat and other staple commodities, sending their value up; thereby securing a food and energy monopoly for the very rich.

The Summer of Twitter:

2009-09-09T21:12:00.009-06:00

2009 will be known as the summer WEB 2.0 overthrew the mainstream media as Twitter and other blogospheres shatter the Medias own imposed glass ceiling by eliminating the six degree separation of the “experts” from the “masses”

By Joshu E. Stone

What am I talking about? Van Jones of course. The mainstream media is livid that what they are calling the ‘sewage” of the internet has usurped their power and is now the media that decides what the President can say to schoolchildren, who he appoints to his Administration and perhaps even decide what wars are worth fighting like the late legendary Walter Cronkite did in the hey day of the birth pangs of the mainstream media.
Walter Cronkite was not thorough and professional however. He failed to uphold the most basic principle of ethics and integrity in journalism: he did not admit in that fateful broadcast that all but ended the Vietnam War he could be wrong in his judgment. He passed it off as fact: the war was bad and we had to get out. It may have been true, but a responsible journalist who respects the power they have to influence others would have been very careful to report the fact that his facts might not be all there were to the story.
The crucible of ethical and quality journalism is reporting the facts as you see them, and then being clear that you don’t know everything. Cronkite set the bar very low in this very crucial area of journalism, and since his passing I now understand why the mainstream media always acts like they have covered the story fairly and that they know all the facts. In fact they seem to take offense at the mere notion that a population they have said “don’t know what the word euthanasia means” (This Week with George Stephanopoulos) or “most of the population does not even know what plagiarism means” (Rachel Maddow) could possibly have insight or facts they don’t know about. To them the listeners of Amy Goodman and Rush Limbaugh are not educated participants in our democracy, but rather a kook fringe that is too radical to deal with.
Personally what Twitter did for me is eliminate the six degree glass ceiling that separated me from communicating directly with celebrities, analysts and politicians just to name a few. It has given me truly fair and balanced access to all the different sources of information out there. No longer do I have to ask myself, I wonder what Bloomberg is reporting on this story; I can see the story being posted by Bloomberg directly and others reporting the story from Bloomberg or another media outlet all at once.
So here’s to WEB 2.0 , Twitter, Facebook etc., and all the social networks that have turned traditional “drive by” media upside down.

To read more articles by this author click here.

Analyst Look for Pent Up Consumer Demand to Sustain Recovery:

2009-09-09T21:09:00.013-06:00

Stock rally forecasts a strong recovery in Q4, but glittering gold spells out risk aversion and inflation on the horizon.

By Joshua E. Stone

I heard an analyst say something profound this summer: don’t miss the market. Clearly the equity bears have done just that this summer. The question is why the market has shrugged off the bad fundamentals so many have pointed out this year. The answer might be pretty simple: the S&P 500 is a forward looking instrument. It is pricing the health of the economy about six months in advance. Not six years or even six days. According to some analysts, the recovery will be sustained by pent up consumer demand from the savings they have accumulated. At this point Wall Street seems to think the same thing or at least it must be thinking something positive about the economy for the near term.
Keeping this in perspective clearly means the bad news bears are not necessarily wrong. It does mean that those who got in the market this last year have been very happy with the results so far. The fact is by most accounts I read from, the money flow in stocks is no longer long, and the major inside traders are shorting. But they have the ability to stay solvent much longer than most of us as the market acts in what some might think an irrational way. Since the stocks have already priced in a good economy( at least much better than the last few quarters) for the last quarter of 2009, it would make sense that it would start reflecting some rising trepidation as it is now pricing in Jan and Feb of 2010. By the looks of the Sept so far, the first quarter of 2010 is shaping up rather optimistically.
This is not a surprise to those of us who have talked about Obama and how the majority trust him. Though his approval is down, he is still the most trusted politician by a few landslides. I think it’s possible the S&P might be higher than its present level around 1k by the end of the year. In short, Sept and October pullbacks will be another good opportunity to add to longs from lows of this year. The same can be said for gold, oil and the eurusd as well.
The strength of the greatest psychological bubble of all time has been quite amazing and deserves some healthy respect. I am speculating that the psychological nature of this rally may mute the usual Sept-Oct correction. The fact inside traders are mostly short now, could be a reflection of the massive risk aversion out there, especially among professionals as they tend to take more factors into account than the rest of us. They have to; it’s their job to avoid risk. I don’t think this means the inside traders are all expecting a massive meltdown in stocks this fall, only that they are prepared for a correction as historic precedent clearly shows is quite likely this Sept or Oct. If you’re interested in seeing my most recent chart analysis of the various instruments I follow and have mentioned here be sure to look at the frame on the right side of my blog entitled “What I am Looking At”.
All that said, for the bears I have this idea: Sept of next year will be the start of a whole new down cycle of data as the unemployment pains are felt and are channeled out through a massive uptick in foreclosures. If not this Sept-Oct then perhaps the target rich environment will manifest itself next year.
That cycle could be very bad for equities, even lower lows than 2008-09 in stocks might happen. This is the logical conclusion if you look at history for a reference. For example, most recessionary rallies last about two years. That means this rally is in its infancy if the historical pattern is repeating itself as usual.
Since the stocks are predicting an economic recovery by year end and perhaps for the beginning of 2009 already, this brings us to the pressing issue of how is the President going to deal with the crash of the dollar? First of all I think were going to have to see a much bigger loss in the dollar before it gets the Administration’s attention. I guess the fact that it is worth 8/100ths of what it was since the mighty days of the 1800`s is not a loud enough alarm for these drunken sailors in Washington DC. Or perhaps that’s part of the plan. The Administration is on record as not being concerned about inflation anytime soon. I also don’t think the Administration has factored in China properly. China though amazingly progressive for its nature has been doing things their way nevertheless. It is costing everyone. How much will it cost eventually? No matter what happens it will cost a lot, some plans I have read that speculate on revaluing the currencies could put gold well above $2,500, perhaps twice that even. The recovery is strong at this point, but very bad retail sales out of Australia for August could be just a precursor of what’s to come next year in the way of deflation for the rest of the globe if something is not done about the crash of the dollar.
Right now everyone is looking at gold, and its fourth attempt in history to peg 1k. I think it will easily break this level to settle back in above 1k by year end. I have heard other analyst expect this too. My speculation at this point is the dollar will fall a lot more between now and Nov, sparking some debate at least if not action by the Administration to address the crises. The response might very well be worldwide and coordinated. Some analysts are saying they will ban spot forex all together and create at least one or two other new “reserve” currencies alongside the dollar. Many scoff at this idea, the arguments are it’s too hard to get everyone to agree, the logistics are to massive etc. What these same critics might be forgetting is the fact that Obama is the most trusted and liked politician of our time, and if he says follow me, they will follow. They have no choice, they don’t trust anyone else more than they do him, and so who else can they listen to or follow? If you have any doubt about this, watch how some version of the healthcare bill is passed soon, and after that cap and trade. I am not saying all this will happen for sure, I am just reporting on the fact that a few analysts have created a buzz on just these subjects and their implications for the economy and the people.
I guess a reminder is in order here: according to the mass on the left and even Alan Greenspan eluded to it, capitalism is a bad love story and its time to fix it. We have a saying where I come from: “if the wheel is not broken don’t fix it.” When I look at China and Europe I am not a believer in socialism or communism that’s for sure. If anything Russia and China have proven that capitalism does not mix well with government control. There is actually a word for that kind of a system: fascism.
Perhaps I am wrong, perhaps the American people have seen the light and smelled the coffee, and will not be taken in anymore, by Obama or anyone but a bunch on fresh new faces in the House and Senate in 2010. One would think this is the case since even fringe bloggers like me have proven to have more credibility or be more accurate to say the least. There is more than one example of the blogosphere having more credibility than the mainstream media or the current Administration. For instance I reported early this year that many analysts were forecasting unemployment to reach double digits by year end.
I figure another reminder is in order here: the people were promised that unemployment would not go higher than 8% this year by this very Administration that everyone has so much faith and trust in.
Yes We Can!

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Debt and Consumer Savings to Tank the Dollar and Stocks:

2009-07-20T16:08:00.018-06:00

Consumers stimulated to save as reality of “recovery act” leaves pockets empty and Wallstreet laughs all the way to the bank.

By Joshua E. Stone

All the railing on the stimulus might be unfair; in fact people talking about it may not have really looked into it very deeply. The funds are directed to very worthy causes in some cases and will certainly spur growth in the economy later in some sectors; however it neglected to take care of the two most important things to spur confidence: a clear and reassuring energy policy as I have repeated many times on this blog already and disposable money in the pockets of consumers right away; so the banks wipeout the 401ks` and the tax payer with one stone. Double wammy!

Simply put the stimulus spends too far in the future to help an economy that all experts said needed an infusion of disposable income immediately. This is the typical kind of oversight of typically overreaching politicians who want power and are not concerned with the plight on the street. The pain and fallout from these policies are not fully realized yet by the masses. But as unemployment reaches double digits and the Congressional Budget Office releases come out in August point to incomprehensibly soaring debt, just as I and many others said these things would happen; it will all become undeniable. Even by adored politicians who face re-election soon. The pain will even be mathematically clear to those not affected directly. With 85-90% employment, its hard to ignore over 10%, after all it was only 10% of the people that supported the revolutionary war of the United States from Britain... On the flip side, most people are working still so it’s not the end of the world. It just sounds like it, and feels like it for 9-10% of us.

Now as for the spending at some point trillions upon trillions of dollars in debt will be undeniable as well. It will be a 9/11 style wake up call is my feeling, a 9/11, but a 9/11 on the dollar. Last year we had 9/18 and that hit stocks. This year it will be the debt that wakes everyone up from their drunken pre 9/11 zombie mode. But again on the flip side...the American pockets are deep and all the sources of money out there are not fully understood, if the policy can change in time, we can save ourselves from the debt too.

Thanks to the tremendous wisdom of the politicians who passed the stimulus, no one has any extra disposable money to spend. In short they sent the children out in the blizzard to get the sleds with no coats. This will have a very negative impact on two thirds of the US economy and shrinking: consumer spending. This in turn will prolong a recession that has already lasted 19 months and shredded 7million + jobs, causing the economy to shrink even further. This is already the longest and most painful recession on record for the US.

The good news is I think the politicians already planned it this way. If they had granted a stimulus that helped the peoples` pockets, there would be no way they would have enough political capital left to convince the constituency another stimulus was required. A stimulus that added to the debt and would be crucial for a strong and healthy foundation for the future of the American economy to insure it competes in the global theatre. In short they had to keep the tax payer hungry to get everything they (the politicians) wanted and perhaps need to keep this country great and competitive in their judgment.

The reason a second stimulus will be passed is because it is required to keep the recovery on track; a recovery that is already threatened by the meteoric rise of looming deficits and fluctuating employment numbers that are not losing momentum. To top it off, the government has borrowed all the money, so the only prospect for growth in the economy will be in the government sphere. The second and most potent reason: the 2010 elections. So where does this leave us? That leaves us in debt; the estimates for the healthcare by the Congressional Budget Office are chilling. The outcry against Cap and Trade is even scarier. So the consumer will retreat and save.

This means we have conflicting signals for the dollar and stocks: the debt scare should send the dollar down and the consumer saving should send the dollar up. I think we will see both scenarios play out by the end of the year. Stocks go up in recessions, by the time the recession is over it is too late to get into them historically. So don’t let this rally lull you into complacency or take it as something indicative of an early recovery. In short 2009 will be a year of revaluation for commodities, stocks, the dollar and real estate. In my opinion the strength in this rally is indicative of the possible strength in the ultimate recovery if policy is executed properly, not an indication the recession is over. If they pass a stimulus before the end of the year for the people in time for Christmas we will see an amazing bounce in the fourth quarter. Already the organic recovery in the economy is doing very good considering all the problems that have been heaped on it and compounded by the bad policy in the last year. Some proper management from the politicians’ could really get things on the fast track to recovering. If the bad policy continues, we`re going to see an even longer recession and my guess is a global depression that will come here to the USA eventually.

Ask yourself a couple of questions going forward: why will congress not join the people in the public program for healthcare? Why it is there is so much big money interest in passing Cap and Trade? Who really benefits from these bills?

Below is my list of items that have my attention:

• 11 trill $ debt /20 trill over next ten yrs.
• Unfunded liability
• 2nd Stimulus
• Consumers’ savings 7%
• Congressional Budget Release in August
• Employment Numbers
• So much bad data
• Game Changer (pre 911 atmosphere)

Below are links to some of the stories I have read and one that I wrote myself:

http://www.businessinsider.com/henry-blodget-gary-shilling-still-filled-with-unrelenting-gloom-2009-7

http://fxretracer.blogspot.com/2009/02/economic-outlook-for-2009-and-commetary.html

http://www.businessinsider.com/henry-blodget-lay-off-obama-2009-7

http://www.google.com/hostednews/afp/article/ALeqM5gRwjRd6yZHskJ5Xh7XiPA0kxLedQ
(medvedev world currency)

http://forums.somethingawful.com/showthread.php? threadid=3159732&pagenumber=1
(goldman sachs is everywhere)

http://michellemalkin.com/2009/07/14/document-drop-cbo-scores-the-health- care-takeover/
(cost of healthcare)

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Recovery Underway For Now but Consumer Confidence to Take A Hit

2009-06-12T16:59:00.022-06:00

By Joshua E. Stone

The economy has showed all the signs I was looking for when it comes to economic data supporting a recovery. In fact the data coming out of the UK is beyond forecasts for the most part. Since this was one of the first economies to start falling, it makes sense this will be the one to start recovering first. I find the forecasts these days for data releases are very incorrect to say the least. There could be a number of reasons for this I am sure, but I am taking it as another sign that no one really knows what to expect in this recovery.
I see signs on the street myself of a recovery taking place, though some of the big projects in town are still waiting for financing so the recovery is not in full force yet. One of the biggest problems is the way the Washington bailouts have kept all the trash stuck under the water. Housing prices are still too high, the stock market is already over valued; worst of all the inflation is simmering with oil at $70 a barrel and gold near 1k.
I fully expect to see oil and gold stay in this range and perhaps surge to even higher levels this summer or next year or even in the coming weeks. The architects of the recovery are failing miserably and they can’t possibly admit it. They have simply ignored the safety harness. Because of all the debt and the decision by the New Administration to focus on healthcare rather than the real problem, energy, we have been set up for a major depression in the not so distant future. Simply put, the “recovery” is already threatened if not derailed by the coming inflation and debt. My guess is this depression will hit us within the next ten years at best. The worst thing is the opposition party seems to be betting on this happening even sooner by the way they scream the sky is falling everyday. I think they will lose the next two election cycles, 2010 and 2012 because the economy will seem to be doing good enough to keep the current majority in power. This will be accomplished mainly with the help of the mainstream media of course, since they are always six months behind the curve on information anyway. They will not report on the major threats facing the US like inflation, energy etc. It will be all about how the opposition foiled and stymied all the efforts of the wonderful party and president who just wanted to pay for our doctor bills. If they do pass healthcare reform, I would expect the depression to kick in much sooner than ten years from now.

All that said, I feel it’s important to remind everyone of something called the Plunge Protection Team. Basically it means that everything in the markets has been being manipulated for a long time already. So with that in mind, I am sure that the New Administration will make sure that stocks and the economy look good enough too keep them and the current majority in power for the next four to eight years at least. They will also use the same rationale that war time President George W. Bush used in 2004: “We can’t change course in midstream.” They have left no stops plugged for this power grab and they are not going to lose it in a mere two years.

It’s easy to predict this one. Some analysts are already doing so. Consumer Confidence is going to go down again. The recent rise in gas prices, coupled with the enormous debts being piled on the tax payer will start taking its toll soon on the consumer. The New Administration has completely disregarded the advice of so many analysts including myself and totally shut out our cries for a Manhattan Project style energy policy. The repercussions of this dereliction of duty make those of us in the financial and business world shudder. As a result I expect Consumer Confidence to start taking some hits as it starts to ease from recent highs made off the record lows recently set by it. This key data is in great danger of taking another plunge now that the policies of the new Administration are becoming clear. Once the policies start being felt then the Consumer Confidence will start taking a sharp plunge. The effects are already being felt at the pump, but this is an early sign and most consumers only have this at the back of their mind as one of those annoying things they can’t face right away because it is still cheap enough to deal with for now. The most disturbing thing for consumers is how fast prices are moving up already. If oil and gold prices stay at current or higher levels, it will leave no room for lower prices while the recovery is in progress. It may even prompt the Fed/FOMC to act with rate hikes too soon. In short the only thing they could have done to get us out of these crises they have not done anything about: the energy crises.
How long this takes to play out is hard to say, I do know the current majority in power in Washington will do what it takes to stay in power for the next four years at least, no matter what it takes, except make energy and fuel cheap. Once we see Consumer Confidence start to fold, the stocks will start doing the same thing at some point. It is quite likely we will see stocks in the S&P near 40% lower than the bottom seen recently in March of `09. I expect this should play out in the next two years if history repeats itself like it usually does.

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Gold Rejects the Key 850 Area:Remaining on the long track $900 proves to be a good level to be in gold.

2009-05-25T11:48:00.020-06:00

By Joshua E. Stone

Gold came within just a mere $10-15 of my target in the 850 area at 865 and promptly rejected it and now mere weeks later gold is soaring well above 900 dollars an ounce; validating a previous post suggesting the 900 area is a good place to have longs positioned in the commodity. In yet another post I suggested targets for the golden metal, and the key fib supports identified in my study played out nicely. This is only because the stocks have had a marvelous rally from the lows seen in the first part of this year. I think the gold price would have gone lower if not for this long rally we have seen in stocks. We did not have the anticipated hysteria largely expected by many with the highly publicized so called “stress tests”. Also the behavior of the stock market is reflecting what a good recovery if not rebound we will experience in the economy. Hence the gold has gone up on anticipation of inflation fears even though we don’t have any inflation at the moment. This is not to say we are not still in a bear market and we will not see retests if not even new lows (though unlikely) in S&P and DJIA.
I think gold will continue to play out like it did last summer, moving higher in the next month or so; though clearly we don’t have the one way momentum we had last year in the decline of the dollar. It is a fact the dollar did not fall as fast in the first part of this year as it did last year. This most know is because of the flight to safety status the dollar has enjoyed on the hills of the manufactured crises that the paid off politicians let transpire over the last several plus decades. All with their cronies who make all the money from these periodic scams on the tax payer in the endless plot to hand our sovereignty over to the international banks. This flight to safety will continue to drag on the gold and eur/usd as well as the overall decline of the dollar. To many the question is not whether the dollar will continue to fall; the question is how fast it will fall.
Not only is the eurozone facing some severe headwinds and not so nearly as resilient and fast a recovery as their allies across the pond, the fact is the New Administration has been at the helm of the fastest and strongest recovery in the dollar I have ever seen in my relatively short time trading. I think its safe to say it was an amazing event and all the traders I talk with were all just as surprised by the overwhelming strength that the greenback has flexed with the advent of the crises last year. Many will say it’s just the crises that have resulted in the rise of the dollar. But I don’t believe that’s the only reason. Also the fact remains: the current Administration has enjoyed a strong dollar, as did the previous Administration at times during its eight year term in power. I have even talked with some traders who think the eur/usd is going to go below parity again.
Which brings me back to the point made earlier about how the dollar has done very well under the New Administration. Apparently the trend for the dollar under the new President is favorable for the resilient buck. This is something to take note of in my opinion. It could very well be that it’s all a matter of circumstance and confluence; on the other hand it is also possible it is part of a larger plan to save the dollar from extinction. Another thing I learned in the summer of `07 with the merciless carry trade unwinding: when everyone knows about a trend it is usually over. Everyone is talking about the death of the dollar and has been for some time now. Yet the dollar is actually not falling as much as many have expected it to. Again I know people will point out the crises and the dire straights of the eurozone…I would just gander it is not unwise to wonder if something else might not be at work on top of all these extenuating circumstances. It’s not like some have not seen and been warning everyone about all these economic troubles coming for years in advance.
By now you are probably asking where I am going with this. It’s simple: the Undertakers of the dollar are in for a long haul. If things are done correctly to mitigate the debt and energy problems in the USA; the Undertakers might even be looking at having to resize their coffin for another unexpected and unrepentant client. If history continues to repeat itself this summer or fall will bring something new to the market to shake things up again. What the catalyst will be exactly is hard for me to say as my sources of information are the same as most everyone else’s. I am just going to say that the last two summers were very volatile to say the least and if there is one thing I have learned up to this point is trends do not end easily.
So what else could possibly be out there? To get an idea we need to look to the real and most immediate crises at hand: the massive debts. We need to ask the question: what are ways this problem can be solved? As of the writing of this article the current US President has said “we are out of money”. One’s first and natural reaction would be “the tax man cometh”. But wait, were in a recession; raising taxes in a time like this is not wise. Monetizing the debt is one idea that’s been thrown out there. But wait, were in a recovery; it’s not wise to build a superhighway to hyperinflation in such precarious economic times. What are some other options? I am sure there are more, perhaps many I have not thought or heard of. But one solution I have mentioned in a previous post is revaluing the dollar. How could this be done? Monetizing debt as mentioned before; or valuating the dollar against something else besides the very volatile and unstable price of gold. These are just two possibilities…as I mentioned already. I am sure there are more solutions and ideas out there.
One more note on the debt and all the spending at the risk of being laughed out of the classroom: it’s a hoax and a scam. We have lots of money in the US still. You’re asking: even if that’s true, what do I mean by that? I have talked to a few folks about this subject and found out something interesting that makes sense to me: the Governments in the USA from the Fed to the State have what one could call“asset income”. This is income from returns on investment and existing infrastructure like tolls and fees for museums to name a few. This is how the congress pays things on the spot like bailouts and emergencies etc. After all, have you not ever wondered WHERE they get all that money on the spot? It is not like the Congress decides to unload 750 billion dollars by selling treasuries at that moment. No everyone knows that treasury auctions are scheduled in advance and the revenue from them is used to pay for the debt we have already planned on going into for the future plans of a budget that is projected into the future.
I could be wrong about this, but I have run into this concept in more than one place when talking to folks on the street, traders and non-traders alike. If it’s true, then it adds a whole new dimension to the politics of debt and what really is the motivator behind making everyone think we are out of money.
I think that at some point before the end of the year the New Administration will have no choice but to address this most important of all issues beside the energy crises. Oh yes, the REAL problem: the energy crisis…that’s a story for another time.
Since this post coincides with Memorial Day in the USA, I want to take a moment to extend a gratitude that words can never express to all those who have served and died in the service so that me an others have the freedom and time to twitter, blog, trade and run businesses large and small in this the greatest country on Gods green Earth.

US Economy & Fed What a feeling: how emotions may yet save the economy

2009-05-11T22:19:00.004-06:00

By Chrystia Freeland
Published: May 7 2009 20:35 Last updated: May 7 2009 20:35
An influential Democrat who was also one of the world’s top-ten, highest-paid hedge fund managers last year thinks he knows which book is at the top of the White House reading list this spring: Animal Spirits, the powerful new blast of behavioural economics from Nobel prize-winner George Akerlof and Yale economist Robert Shiller.
Judging by the upbeat economic message we have been hearing from the White House, the Treasury and even the Federal Reserve over the past six weeks, that is a shrewd guess. The authors argue that “we will never really understand important economic events unless we confront the fact that their causes are largely mental in nature”. Our “ideas and feelings” about the economy are not purely a rational reaction to data and experience; they themselves are an important driver of economic growth – and decline.
EDITOR’S CHOICE
Q&A: Stress test jargon explained - May-07
Interactive graphic: Stress tested - May-08
Banks turn to markets in effort to plug holes - May-08
BofA aims for $34bn in fresh capital - May-08
Morgan offers $2bn in common stock - May-07
US Treasury yields soar on poor demand - May-08
Since mid-March President Barack Obama and his team have mounted a sophisticated effort to brighten those “ideas and feelings”, reassuring the nation with “glimmers of hope across the economy” and the assertion that “we’re starting to see progress”. The much bally-hooed stress tests – whose comprehensively leaked results were fully unveiled after the markets closed on Thursday – are both an important example of this confidence-building campaign and its toughest challenge.
The sunnier rhetoric of recent weeks marked a sharp shift both from the bleak mood of the fin de regime administration of George W. Bush and from the first weeks of the Obama White House. The outgoing president’s political capital was so low in his final months in office that the mere fact of his public appearances seemed to have a depressing effect on the markets. His secretary of the Treasury, Hank Paulson, enjoyed greater confidence, but he needed to convince lawmakers the situation was dire enough to merit his $700bn Tarp programme.
Likewise, Mr Obama needed the nation to be worried enough about the economy to pass his nearly $800bn stimulus plan. And too much good cheer in the first days of his administration could have wasted one of his most powerful trump cards – the country’s belief that this recession is owned by president number 43, not number 44.
But once the stimulus bill was passed, the White House calculated that, as Mr Obama told the Financial Times, lawmakers and US voters had reached their limits. No new money to rev up the economy or revive the banks would be forthcoming until the president and his team could demonstrate concrete results from the first instalment.
Since then Americans have been hearing a decidedly more optimistic vibe from Washington. It has seemed to work. A Google search for the term “economic recovery” turned up 6,991 references to the term in January and 7,831 in February. In the first week of May the phrase occurred 24,443 times.
More traditional yardsticks show the same result. According to a recent ABC/Washington Post poll, Americans’ belief that their country is heading in the right direction has soared from 19 per cent, just before Mr Obama’s inauguration, to 50 per cent, the highest in six years. In what could be a textbook example of behavioural economics, the stock market has followed the same curve, recovering from what rightwing commentators were calling “the Obama bear market” at the beginning of the year to a healthy rally.
Thursday night’s verdict on banks’ balance sheets will also be a stress test of the administration’s experiment in behavioural economics.
Washington has clearly learned the lesson of one of its rare, early failures. In contrast with the disastrous media management of Treasury secretary Tim Geithner’s maiden economic speech, the results of the stress tests have been so thoroughly previewed that by Thursday financial pundits and punters seemed almost bored with the exercise. Ennui is not the same thing as conviction – one of America’s biggest money managers on Thursday described the exercise to me as “the feather tests” and it is hard to find anyone who doesn’t work for the government, or one of the banks, who believes the tests have been rigorous.
But, like Washington, Wall Street really does want the scheme to work and the markets to recover. Over the next few weeks the administration will be hoping those feelings are powerful enough to drive the economic data.

Gold Chart Update.

2009-04-10T11:22:00.017-06:00

By Joshua E. Stone

The chart to the left shows gold heading to the key fib in the 851 area next. As mentioned in a prev post , my bias is for gold to fall over the coming weeks and maybe months. It will be a tug of war as the market decides how well the Fed deals with inflation issues. Most think they will be very carefull not to let it get out of control, so thus the price of gold will be a choppy grind to the upside over the next 3-4 yrs.

Gold Chart & Comments

2009-04-07T22:28:00.027-06:00

First Published: Thursday, March 12, 2009, 9:09:03 AM

By Joshua E. Stone

The chart to the left illustrates the consolidation taking place between the major monthly fib lines.
The 23.6% is now serving as res, and the 38.2 is now support.
My personal bias is we can see more consolidation and perhaps an attempt at lower prices than the 38.2% level over the coming months. That said most agree it’s on its way up over the next 4-5 yrs; so this is an ideal entry area for those who can do it.

Spring `09 Outlook

2009-03-30T10:21:00.013-06:00

By Joshua Stone

I wanted to take the time to give everyone a heads up to what most of us all know is coming in the next several weeks; a lot of hysteria.
Probably one of the biggest things coming up right away is the Friday employment numbers; these could be bad, perhaps even sending the three month average down further. The big thing to watch for is the failure of banks as the Fed Stress Tests begin in April.
The coming drop in stocks will be very scary, maybe even new lows, but most of the fundamentals have been calculated into the market at this time, hence the rally from oversold levels. This will present a good opportunity to buy stocks, commodities and to sell the dollar as it hits new record levels on the upside.

Below is an example of a simple chart set-up on eur/usd monthly that with proper money management and patience could give you a good position in a euro long.

You might be saying, “wow, he expects a big drop in the eur/usd,” We will some good support in the weekly levels, perhaps they even hold up. But my feeling is we will be seeing some pretty scary drops coming up in the stocks, and over all quite a bit of volatility as the markets digest all the data we have seen and are still yet to get over the coming weeks and even summer months. My personal hope is we don’t get a repeat of the surprises’ that afflicted the market last summer, that most things will by this summer be on a sideways with up bias trend. But of course one never really knows about the markets and what they plan to do.
I do think that despite the Medias attempts to suddenly turn Obama into a villain, His popularity will actually carry the economy up, as people decide to believe and trust his ability to deal with these crises. Let’s hope so, because if folks actually snap to what’s happened, then we will have a global depression and no chance at all of paying off these huge debts.

Barack Obama and the Strategy of Manufactured Crisis

2009-03-30T09:25:00.002-06:00

By James Simpson
America waits with bated breath while Washington struggles to bring the U.S. economy back from the brink of disaster. But many of those same politicians caused the crisis, and if left to their own devices will do so again.
Despite the mass media news blackout, a series of books, talk radio and the blogosphere have managed to expose Barack Obama's connections to his radical mentors -- Weather Underground bombers William Ayers and Bernardine Dohrn, Communist Party member Frank Marshall Davis and others. David Horowitz and his Discover the Networks.org have also contributed a wealth of information and have noted Obama's radical connections since the beginning.

Yet, no one to my knowledge has yet connected all the dots between Barack Obama and the Radical Left. When seen together, the influences on Obama's life comprise a who's who of the radical leftist movement, and it becomes painfully apparent that not only is Obama a willing participant in that movement, he has spent most of his adult life deeply immersed in it.

But even this doesn't fully describe the extreme nature of this candidate. He can be tied directly to a malevolent overarching strategy that has motivated many, if not all, of the most destructive radical leftist organizations in the United States since the 1960s.

The Cloward-Piven Strategy of Orchestrated Crisis

In an earlier post, I noted the liberal record of unmitigated legislative disasters, the latest of which is now being played out in the financial markets before our eyes. Before the 1994 Republican takeover, Democrats had sixty years of virtually unbroken power in Congress - with substantial majorities most of the time. Can a group of smart people, studying issue after issue for years on end, with virtually unlimited resources at their command, not come up with a single policy that works? Why are they chronically incapable?

Why?

One of two things must be true. Either the Democrats are unfathomable idiots, who ignorantly pursue ever more destructive policies despite decades of contrary evidence, or they understand the consequences of their actions and relentlessly carry on anyway because they somehow benefit.

I submit to you they understand the consequences. For many it is simply a practical matter of eliciting votes from a targeted constituency at taxpayer expense; we lose a little, they gain a lot, and the politician keeps his job. But for others, the goal is more malevolent - the failure is deliberate. Don't laugh. This method not only has its proponents, it has a name: the Cloward-Piven Strategy. It describes their agenda, tactics, and long-term strategy.

The Strategy was first elucidated in the May 2, 1966 issue of The Nation magazine by a pair of radical socialist Columbia University professors, Richard Andrew Cloward and Frances Fox Piven. David Horowitz summarizes it as:

The strategy of forcing political change through orchestrated crisis. The "Cloward-Piven Strategy" seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.

Cloward and Piven were inspired by radical organizer [and Hillary Clinton mentor] Saul Alinsky:

"Make the enemy live up to their (sic) own book of rules," Alinsky wrote in his 1989 book Rules for Radicals. When pressed to honor every word of every law and statute, every Judeo-Christian moral tenet, and every implicit promise of the liberal social contract, human agencies inevitably fall short. The system's failure to "live up" to its rule book can then be used to discredit it altogether, and to replace the capitalist "rule book" with a socialist one. (Courtesy Discover the Networks.org)

Newsmax rounds out the picture:

Their strategy to create political, financial, and social chaos that would result in revolution blended Alinsky concepts with their more aggressive efforts at bringing about a change in U.S. government. To achieve their revolutionary change, Cloward and Piven sought to use a cadre of aggressive organizers assisted by friendly news media to force a re-distribution of the nation's wealth.

In their Nation article, Cloward and Piven were specific about the kind of "crisis" they were trying to create:

By crisis, we mean a publicly visible disruption in some institutional sphere. Crisis can occur spontaneously (e.g., riots) or as the intended result of tactics of demonstration and protest which either generate institutional disruption or bring unrecognized disruption to public attention.

No matter where the strategy is implemented, it shares the following features:

The offensive organizes previously unorganized groups eligible for government benefits but not currently receiving all they can.
The offensive seeks to identify new beneficiaries and/or create new benefits.
The overarching aim is always to impose new stresses on target systems, with the ultimate goal of forcing their collapse.

Capitalizing on the racial unrest of the 1960s, Cloward and Piven saw the welfare system as their first target. They enlisted radical black activist George Wiley, who created the National Welfare Reform Organization (NWRO) to implement the strategy. Wiley hired militant foot soldiers to storm welfare offices around the country, violently demanding their "rights." According to a City Journal article by Sol Stern, welfare rolls increased from 4.3 million to 10.8 million by the mid-1970s as a result, and in New York City, where the strategy had been particularly successful, "one person was on the welfare rolls... for every two working in the city's private economy."

According to another City Journal article titled "Compassion Gone Mad":

The movement's impact on New York City was jolting: welfare caseloads, already climbing 12 percent a year in the early sixties, rose by 50 percent during Lindsay's first two years; spending doubled... The city had 150,000 welfare cases in 1960; a decade later it had 1.5 million.

The vast expansion of welfare in New York City that came of the NWRO's Cloward-Piven tactics sent the city into bankruptcy in 1975. Rudy Giuliani cited Cloward and Piven by name as being responsible for "an effort at economic sabotage." He also credited Cloward-Piven with changing the cultural attitude toward welfare from that of a temporary expedient to a lifetime entitlement, an attitude which in-and-of-itself has caused perhaps the greatest damage of all.

Cloward and Piven looked at this strategy as a gold mine of opportunity. Within the newly organized groups, each offensive would find an ample pool of foot soldier recruits willing to advance its radical agenda at little or no pay, and expand its base of reliable voters, legal or otherwise. The radicals' threatening tactics also would accrue an intimidating reputation, providing a wealth of opportunities for extorting monetary and other concessions from the target organizations. In the meantime, successful offensives would create an ever increasing drag on society. As they gleefully observed:

Moreover, this kind of mass influence is cumulative because benefits are continuous. Once eligibility for basic food and rent grants is established, the drain on local resources persists indefinitely.

The next time you drive through one of the many blighted neighborhoods in our cities, or read of the astronomical crime, drug addiction, and out-of-wedlock birth rates, or consider the failed schools, strapped police and fire resources of every major city, remember Cloward and Piven's thrill that "...the drain on local resources persists indefinitely."

ACORN, the new tip of the Cloward-Piven spear

In 1970, one of George Wiley's protégés, Wade Rathke -- like Bill Ayers, a member of the radical Students for a Democratic Society (SDS) -- was sent to found the Arkansas Community Organizations for Reform Now. While NWRO had made a good start, it alone couldn't accomplish the Cloward-Piven goals. Rathke's group broadened the offensive to include a wide array of low income "rights." Shortly thereafter they changed "Arkansas" to "Association of" and ACORN went nationwide.

Today ACORN is involved in a wide array of activities, including housing, voting rights, illegal immigration and other issues. According to ACORN's website: "ACORN is the nation's largest grassroots community organization of low-and moderate-income people with over 400,000 member families organized into more than 1,200 neighborhood chapters in 110 cities across the country," It is perhaps the largest radical group in the U.S. and has been cited for widespread criminal activity on many fronts.

Voting

On voting rights, ACORN and its voter mobilization subsidiary, Project Vote, have been involved nationwide in efforts to grant felons the vote and lobbied heavily for the Motor Voter Act of 1993, a law allowing people to register at motor vehicle departments, schools, libraries and other public places. That law had been sought by Cloward and Piven since the early1980s and they were present, standing behind President Clinton at the signing ceremony.

ACORN's voter rights tactics follow the Cloward-Piven Strategy:

1. Register as many Democrat voters as possible, legal or otherwise and help them vote, multiple times if possible.
2. Overwhelm the system with fraudulent registrations using multiple entries of the same name, names of deceased, random names from the phone book, even contrived names.
3. Make the system difficult to police by lobbying for minimal identification standards.

In this effort, ACORN sets up registration sites all over the country and has been frequently cited for turning in fraudulent registrations, as well as destroying republican applications. In the 2004-2006 election cycles alone, ACORN was accused of widespread voter fraud in 12 states. It may have swung the election for one state governor.

ACORN's website brags: "Since 2004, ACORN has helped more than 1.7 million low- and moderate-income and minority citizens apply to register to vote." Project vote boasts 4 million. I wonder how many of them are dead? For the 2008 cycle, ACORN and Project Vote have pulled out all the stops. Given their furious nationwide effort, it is not inconceivable that this presidential race could be decided by fraudulent votes alone.

Barack Obama ran ACORN's Project Vote in Chicago and his highly successful voter registration drive was credited with getting the disgraced former Senator Carol Moseley-Braun elected. Newsmax reiterates Cloward and Piven's aspirations for ACORN's voter registration efforts:

By advocating massive, no-holds-barred voter registration campaigns, they [Cloward & Piven] sought a Democratic administration in Washington, D.C. that would re-distribute the nation's wealth and lead to a totalitarian socialist state.

Illegal Immigration

As I have written elsewhere, the Radical Left's offensive to promote illegal immigration is "Cloward-Piven on steroids." ACORN is at the forefront of this movement as well, and was a leading organization among a broad coalition of radical groups, including Soros' Open Society Institute, the Service Employees International Union (ACORN founder Wade Rathke also runs a SEIU chapter), and others, that became the Coalition for Comprehensive Immigration Reform. CCIR fortunately failed to gain passage for the 2007 illegal immigrant amnesty bill, but its goals have not changed.

The burden of illegal immigration on our already overstressed welfare system has been widely documented. Some towns in California have even been taken over by illegal immigrant drug cartels. The disease, crime and overcrowding brought by illegal immigrants places a heavy burden on every segment of society and every level of government, threatening to split this country apart at the seams. In the meantime, radical leftist efforts to grant illegal immigrants citizenship guarantee a huge pool of new democrat voters. With little border control, terrorists can also filter in.

Obama aided ACORN as their lead attorney in a successful suit he brought against the Illinois state government to implement the Motor Voter law there. The law had been resisted by Republican Governor Jim Edgars, who feared the law was an opening to widespread vote fraud.

His fears were warranted as the Motor Voter law has since been cited as a major opportunity for vote fraud, especially for illegal immigrants, even terrorists. According to the Wall Street Journal: "After 9/11, the Justice Department found that eight of the 19 hijackers were registered to vote..."

ACORN's dual offensives on voting and illegal immigration are handy complements. Both swell the voter rolls with reliable democrats while assaulting the country ACORN seeks to destroy with overwhelming new problems.

Mortgage Crisis

And now we have the mortgage crisis, which has sent a shock wave through Wall Street and panicked world financial markets like no other since the stock market crash of 1929. But this is a problem created in Washington long ago. It originated with the Community Reinvestment Act (CRA), signed into law in 1977 by President Jimmy Carter. The CRA was Carter's answer to a grassroots activist movement started in Chicago, and forced banks to make loans to low income, high risk customers. PhD economist and former Texas Senator Phil Gramm has called it: "a vast extortion scheme against the nation's banks."

ACORN aggressively sought to expand loans to low income groups using the CRA as a whip. Economist Stan Leibowitz wrote in the New York Post:

In the 1980s, groups such as the activists at ACORN began pushing charges of "redlining"-claims that banks discriminated against minorities in mortgage lending. In 1989, sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants; this allowed various studies to be ginned up that seemed to validate the original accusation.

In fact, minority mortgage applications were rejected more frequently than other applications-but the overwhelming reason wasn't racial discrimination, but simply that minorities tend to have weaker finances.

ACORN showed its colors again in 1991, by taking over the House Banking Committee room for two days to protest efforts to scale back the CRA. Obama represented ACORN in the Buycks-Roberson v. Citibank Fed. Sav. Bank, 1994 suit against redlining. Most significant of all, ACORN was the driving force behind a 1995 regulatory revision pushed through by the Clinton Administration that greatly expanded the CRA and laid the groundwork for the Fannie Mae, Freddie Mac borne financial crisis we now confront. Barack Obama was the attorney representing ACORN in this effort. With this new authority, ACORN used its subsidiary, ACORN Housing, to promote subprime loans more aggressively.

As a New York Post article describes it:

A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money.

Banks that got poor reviews were punished; some saw their merger plans frustrated; others faced direct legal challenges by the Justice Department.

Flexible lending programs expanded even though they had higher default rates than loans with traditional standards. On the Web, you can still find CRA loans available via ACORN with "100 percent financing . . . no credit scores . . . undocumented income . . . even if you don't report it on your tax returns." Credit counseling is required, of course.

Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which worked with community activists and followed "the most flexible underwriting criteria permitted." That lender's $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003.

The lender they were speaking of was Countrywide, which specialized in subprime lending and had a working relationship with ACORN.

Investor's Business Daily added:

The revisions also allowed for the first time the securitization of CRA-regulated loans containing subprime mortgages. The changes came as radical "housing rights" groups led by ACORN lobbied for such loans. ACORN at the time was represented by a young public-interest lawyer in Chicago by the name of Barack Obama. (Emphasis, mine.)

Since these loans were to be underwritten by the government sponsored Fannie Mae and Freddie Mac, the implicit government guarantee of those loans absolved lenders, mortgage bundlers and investors of any concern over the obvious risk. As Bloomberg reported: "It is a classic case of socializing the risk while privatizing the profit."

And if you think Washington policy makers cared about ACORN's negative influence, think again. Before this whole mess came down, a Democrat-sponsored bill on the table would have created an "Affordable Housing Trust Fund," granting ACORN access to approximately $500 million in Fannie Mae and Freddie Mac revenues with little or no oversight.

Even now, unbelievably -- on the brink of national disaster -- Democrats have insisted ACORN benefit from bailout negotiations! Senator Lindsay Graham reported last night (9/25/08) in an interview with Greta Van Susteren of On the Record that Democrats want 20 percent of the bailout money to go to ACORN!

This entire fiasco represents perhaps the pinnacle of ACORN's efforts to advance the Cloward-Piven Strategy and is a stark demonstration of the power they wield in Washington.

Enter Barack Obama

In attempting to capture the significance of Barack Obama's Radical Left connections and his relation to the Cloward Piven strategy, I constructed following flow chart. It is by no means complete. There are simply too many radical individuals and organizations to include them all here. But these are perhaps the most significant.
The chart puts Barack Obama at the epicenter of an incestuous stew of American radical leftism. Not only are his connections significant, they practically define who he is. Taken together, they constitute a who's who of the American radical left, and guiding all is the Cloward-Piven strategy.
Conspicuous in their absence are any connections at all with any other group, moderate, or even mildly leftist. They are all radicals, firmly bedded in the anti-American, communist, socialist, radical leftist mesh.

Saul Alinsky

Most people are unaware that Barack Obama received his training in "community organizing" from Saul Alinsky's Industrial Areas Foundation. But he did. In and of itself that marks his heritage and training as that of a radical activist. One really needs go no further. But we have.

Bill Ayers

Obama objects to being associated with SDS bomber Bill Ayers, claiming he is being smeared with "guilt by association." But they worked together at the Woods Fund. The Wall Street Journal added substantially to our knowledge by describing in great detail Obama's work over five years with SDS bomber Bill Ayers on the board of a non-profit, the Chicago Annenberg Challenge, to push a radical agenda on public school children. As Stanley Kurtz states:

"...the issue here isn't guilt by association; it's guilt by participation. As CAC chairman, Mr. Obama was lending moral and financial support to Mr. Ayers and his radical circle. That is a story even if Mr. Ayers had never planted a single bomb 40 years ago."

Also included in the mix is Theresa Heinz Kerry's favorite charity, the Tides Foundation. A partial list of Tides grants tells you all you need to know: ACLU, ACORN, Center for American Progress, Center for Constitutional Rights (a communist front,) CAIR, Earth Justice, Institute for Policy Studies (KGB spy nest), National Lawyers Guild (oldest communist front in U.S.), People for the Ethical Treatment of Animals (PETA), and practically every other radical group there is. ACORN's Wade Rathke runs a Tides subsidiary, the Tides Center.

Carl Davidson and the New Party

We have heard about Bomber Bill, but we hear little about fellow SDS member Carl Davidson. According to Discover the Networks, Davidson was an early supporter of Barack Obama and a prominent member of Chicago's New Party, a synthesis of CPUSA members, Socialists, ACORN veterans and other radicals. Obama sought and received the New Party's endorsement, and they assisted with his campaign. The New Party also developed a strong relationship with ACORN. As an excellent article on the New Party observes: "Barack Obama knew what he was getting into and remains an ideal New Party candidate."

George Soros

The chart also suggests the reason for George Soros' fervent support of Obama. The President of his Open Society Institute is Aryeh Neier, founder of the radical Students for a Democratic Society (SDS). As mentioned above, three other former SDS members had extensive contact with Obama: Bill Ayers, Carl Davidson and Wade Rathke. Surely Aryeh Neier would have heard from his former colleagues of the promising new politician. More to the point, Neier is firmly committed to supporting the hugely successful radical organization, ACORN, and would be certain back their favored candidate, Barack Obama.

ACORN

Obama has spent a large portion of his professional life working for ACORN or its subsidiaries, representing ACORN as a lawyer on some of its most critical issues, and training ACORN leaders. Stanley Kurtz's excellent National Review article, "Inside Obama's Acorn." also describes Obama's ACORN connection in detail. But I can't improve on Obama's own words:

I've been fighting alongside ACORN on issues you care about my entire career (emphasis added). Even before I was an elected official, when I ran Project Vote voter registration drive in Illinois, ACORN was smack dab in the middle of it, and we appreciate your work. - Barack Obama, Speech to ACORN, November 2007 (Courtesy Newsmax.)

In another excellent article on Obama's ACORN connections, Newsmax asks a nagging question:

It would be telling to know if Obama, during his years at Columbia, had occasion to meet Cloward and study the Cloward-Piven Strategy.

I ask you, is it possible ACORN would train Obama to take leadership positions within ACORN without telling him what he was training for? Is it possible ACORN would put Obama in leadership positions without clueing him into what his purpose was?? Is it possible that this most radical of organizations would put someone in charge of training its trainers, without him knowing what it was he was training them for?

As a community activist for ACORN; as a leadership trainer for ACORN; as a lead organizer for ACORN's Project Vote; as an attorney representing ACORN's successful efforts to impose Motor Voter regulations in Illinois; as ACORN's representative in lobbying for the expansion of high risk housing loans through Fannie Mae and Freddie Mac that led to the current crisis; as a recipient of their assistance in his political campaigns -- both with money and campaign workers; it is doubtful that he was unaware of ACORN's true goals. It is doubtful he was unaware of the Cloward-Piven Strategy.

Fast-forward to 2005 when an obsequious, servile and scraping Daniel Mudd, CEO of Fannie Mae spoke at the Congressional Black Caucus swearing in ceremony for newly-elected Illinois Senator, Barack Obama. Mudd called, the Congressional Black Caucus "our family" and "the conscience of Fannie Mae."

In 2005, Republicans sought to rein in Fannie and Freddie. Senator John McCain was at the forefront of that effort. But it failed due to an intense lobbying effort put forward by Fannie and Freddie.

In his few years as a U.S. senator, Obama has received campaign contributions of $126,349, from Fannie and Freddie, second only to the $165,400 received by Senator Chris Dodd, who has been getting donations from them since 1988. What makes Obama so special?

His closest advisers are a dirty laundry list of individuals at the heart of the financial crisis: former Fannie Mae CEO Jim Johnson; Former Fannie Mae CEO and former Clinton Budget Director Frank Raines; and billionaire failed Superior Bank of Chicago Board Chair Penny Pritzker.

Johnson had to step down as adviser on Obama's V.P. search after this gem came out:

An Office of Federal Housing Enterprise Oversight (OFHEO) report[1] from September 2004 found that, during Johnson's tenure as CEO, Fannie Mae had improperly deferred $200 million in expenses. This enabled top executives, including Johnson and his successor, Franklin Raines, to receive substantial bonuses in 1998.[2] A 2006 OFHEO report[3] found that Fannie Mae had substantially under-reported Johnson's compensation. Originally reported as $6-7 million, Johnson actually received approximately $21 million.

Obama denies ties to Raines but the Washington Post calls him a member of "Obama's political circle." Raines and Johnson were fined $3 million by the Office of Federal Housing Oversight for their manipulation of Fannie books. The fine is small change however, compared to the $50 million Raines was able to obtain in improper bonuses as a result of juggling the books.

Most significantly, Penny Pritzker, the current Finance Chairperson of Obama's presidential campaign helped develop the complicated investment bundling of subprime securities at the heart of the meltdown. She did so in her position as shareholder and board chair of Superior Bank. The Bank failed in 2001, one of the largest in recent history, wiping out $50 million in uninsured life savings of approximately 1,400 customers. She was named in a RICO class action law suit but doesn't seem to have come out of it too badly.

As a young attorney in the 1990s, Barack Obama represented ACORN in Washington in their successful efforts to expand Community Reinvestment Act (CRA) authority. In addition to making it easier for ACORN groups to force banks into making risky loans, this also paved the way for banks like Superior to package mortgages as investments, and for the Government Sponsored Enterprises Fannie Mae and Freddie Mac to underwrite them. These changes created the conditions that ultimately lead to the current financial crisis.

Did they not know this would occur? Were these smart people, led by a Harvard graduate, unaware of the Econ 101 concept of moral hazard that would result from the government making implicit guarantees to underwrite private sector financial risk? They should have known that freeing the high-risk mortgage market of risk, calamity was sure to ensue. I think they did.

Barack Obama, the Cloward-Piven candidate, no matter how he describes himself, has been a radical activist for most of his political career. That activism has been in support of organizations and initiatives that at their heart seek to tear the pillars of this nation asunder in order to replace them with their demented socialist vision. Their influence has spread so far and so wide that despite their blatant culpability in the current financial crisis, they are able to manipulate Capital Hill politicians to cut them into $140 billion of the bailout pie!

God grant those few responsible yet remaining in Washington, DC the strength to prevent this massive fraud from occurring. God grant them the courage to stand up in the face of this Marxist tidal wave.Jim Simpson is a former White House staff economist and budget analyst. His writings have been published in American Thinker, Washington Times, FrontPage Magazine, DefenseWatch, Soldier of Fortune and others. His blog is Truth and Consequences..
on "Barack Obama and the Strategy of Manufactured Crisis"

THE CRISIS EXPLAINED

2009-03-30T09:23:00.001-06:00

By Unknown

By Unknown
The financial crisis explained in simple terms...Heidi is the proprietor of a bar in Berlin. In order to increase sales,she decides to allow her loyal customers - most of whom are unemployedalcoholics - to drink now but pay later. She keeps track of the drinksconsumed on a ledger (thereby granting the customers loans).Word gets around and as a result increasing numbers of customers floodinto Heidi's bar.Taking advantage of her customers' freedom from immediate paymentconstraints, Heidi increases her prices for wine and beer, themost-consumed beverages.. Her sales volume increases massively.A young and dynamic customer service consultant at the local bankrecognizes these customer debts as valuable future assets and increasesHeidi's borrowing limit.He sees no reason for undue concern because he has the promissory notesof Heidi's customers as collateral.At the bank's corporate headquarters, expert bankers transform thesecustomer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. Thesesecurities are then sold and traded on markets worldwide. No one reallyunderstands what these abbreviations mean and how the securities areguaranteed. Nevertheless, as their prices continuously climb, thesecurities become top-selling items.One day, although the prices are still climbing, a risk manager of thebank, (subsequently fired due his negativity), decided that the timehas come to start demanding payment from Heidi for the debts incurred bythe drinkers at Heidi's bar.Unfortunately Heidi's customers cannot pay back any of their debts toHeidi.Heidi cannot fulfill her loan obligations to the bank and claimsbankruptcy.DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better,stabilizing in price after dropping by only 80%.The suppliers of Heidi's bar, having granted her generous payment termsand also having invested in the securities are faced with a new anddesperate situation. Her wine supplier claims bankruptcy and her beersupplier is taken over by a competitor.The bank is saved by the Government following dramatic round-the-clockconsultations by leaders from the governing political parties. They cameup with a miraculous rescue plan that saved the bank.The funds required for this massive rescue are obtained by levying anew tax on all the non-drinkers..Finally. An explanation I understand.

Why the Economy Might Rebound

2009-03-16T15:08:00.006-06:00

By Joshua E. Stone
Though it’s too early to tell from the data coming in there are some signs that things are already getting better in the economy. To site a few of the things I have noticed is the Retail Sales and Consumer Sentiment released last week. Another item of note is the jobs report at the beginning of the month; though far too soon to know for sure shows indications of having reached its peak losses per month at about 650k averaged out over the last three month period. Also, the big one, China will pass a stimulus package for their economy. How this can be is the obvious question. Spending and Government intervention is how we came to this boondoggle, how is that these are the things that are saving us now? The answer is quite simple: it is not.
Then what is going to account for the recovery? What could be the reasons if it’s true that the economy is already recovering? Two things: Psychology and China.
What was the reason for the bank meltdown last summer? The first response naturally is what we have all been spoon fed by the media: That banks were caught up in a bunch of bad sub-prime real estate deals, trying to get everyone a home, the American Dream. If you look harder some media will tell the tale of how the politicians made all this happen, with the help of unscrupulous bankers. But buried deep in the heart of the fire is a word that came out in the heat of the meltdown last summer: Trust.
Trust is the psychology of the markets. Without going into endless analogies, we all know this as fact. The entire system is based on trust. This is why Presidents get elected; the winner is the one who the majority of people are convinced they can trust.
So when people decide there is no hope and they can not believe anyone or trust them with anything, everything breaks down. Nothing anyone says or does will save anything because everyone is just selling what they can and heading for the hills to get away from it all. The new President has restored the trust. People believe he can fix these crises and they trust him to do so. That’s all it will take, with some help from China of course. But it has to be noted, nothing close to trust has developed so far between investors and the banks. This remains a big problem, and Obama will have to address this issue.
China can not be underestimated, the recovery in their economy will provide the octane needed to boost not only the global economy; but perhaps make it take off. We still have yet to see a global economy working in cohesion. This crisis will bring it all together and provide the foundation for a possible run on global prosperity unparalleled in its relatively short history.
These facts combined the reality that this crisis was manufactured and not really that bad in the first place, set the stage for a surprising rebound in the economy. Sadly all of the intervention and massive debt being piled on top of all the problems is setting us up for much larger and very real problems later on down the road. Especially if they pass Cap and Trade; that will insure everything derails and breaks down at the seams eventually. As usual the media is derelict in reporting those sides of the story.
In the end this is all that matters, that people have not given up no matter what the reason, even if it based on false hope, or a source of trust they have placed their hope in that is at the same time insuring there own demise in the long run. So keep that in mind during the next crisis: we will survive, all we have to do is believe we will.

The Conundrum

2009-02-26T21:45:00.007-07:00

By Joshua E. Stone

Imagine it is the year 2016, Obama is finishing his second term, and the economy has recovered….just two little problems remain: inflation and debt. This is the optimistic scenario. Being ever the optimist, I can do this. But it has to mentioned here, that to put just the unfunded National debt into perspective, it would be as if you had spent one million dollars a day for the last 2000 years and you would still need 700 more years to spend one million a day to pay it all off. Or another way to put it would be as if you had annual income of just 26k and a debt of 120 million dollars.
So now what? I wonder how good the recovery will really be, and who it will really recover for. One thing is for certain: you will certainly need to be making a lot of money in order to afford the prices for everything from gas and food to recreation. You also better not be in debt, or making your money from some sort of loan origination.
Without going into a huge history lesson, it is a fact that money returned on debt has been negative since sometime in the 1960`s. In other words, you can not possibly get a positive return on your debt, and have not been able to for decades. If by chance you think you have done this, it was more like an illusion than reality. If you look hard enough you can find that you have really lost money over the long run by operating in debt. To me this explains perfectly why major companies in debt like the auto industry are having such a hard time surviving, while smaller companies who have not taken on debt seem to be doing well for the most part. (I speak from experience here being the owner of a small wheat farm).
As far as going into debt for a home or real estate, all the level heads have always said to limit this only to your primary residence and not to take on loans for a house that will take you 30 years to pay off. Is it any wonder then why we have had such a crash in real estate, despite the fact the politicians did everything in their reach to enhance that crash, to help them gain power in the years and even decades preceding the 2008 election.
By the time 2008 came along too few knew to little and too many voted out of frustration and ignorance; much to the delight of the premeditating politicians who gained so much power in that year.
Assuming the politicians do manage to tame the budget and deficit, it begs the question: why the massive inflation? This is quite a conundrum we will find ourselves in.
There is a chorus of contributing factors of course, but at the end of the day it all comes back to the energy policy of the corrupt politicians in the USA. With the Recovery and Reinvestment Act you can find out very quickly what the priorities of the politicians are: Tax Rebates is number one, and the last on the list is Energy. They have it backwards. You can see this for yourself at http://www.recovery.gov/.
So imagine again we are in the year 2016 with still no feasible energy policy for the USA. Just think back to eight years earlier in the summer of 2008 when all was well except for that pesky gas price at the pump. Will the successor to the current Administration have the wisdom to do something like President Bush did in lifting the ban on offshore drilling to help pop the oil bubble? I for one as a small wheat farmer that grosses less than 20k a year was saved by that action.
Exposure to gold and silver in your investments and trading are the best way to deal with this manufactured crises. Look for a bottom in consumer confidence and the existing home inventory to fall lower over the next ten months to start looking for a bottom in stocks. But the stock recovery will be a long haul to put it mildly. Gold is falling at the time of this writing, at about 941 currently bouncing off the support in the 936 area. I am looking for a fall to the 901 area maybe 898 if we are all lucky, to buy some more gold. Silver is undervalued to its production costs, so that’s a no-brainer at anytime as long as you have the margin to survive the swings in price. I think silver is a good buy in the 12 dollar handle and for those with less margin/smaller accounts 10.50-12 dollars should be a fine range to buy it in 2009. Silver costs about 20 dollars an ounce to produce and gold about 300 dollars and ounce. And that was a few years ago.

Bubble Transfer

2009-02-06T14:22:00.007-07:00

By Joshua E. Stone
After the way the market has behaved over the last 2 months I am thinking the top is in for the dollar. I am hearing many traders expect gbp/usd to fall next week on bad data after a mind numbing run up from the 1.35 handle. This should present a good chance to start getting the market set up for an eventual run on everything not the dollar, like gold, silver ect.
The porkulus saga in Washington will also drive markets down as fear mounts over whether they get something passed, again this should help drive the markets into a good position to start setting up the big bubble transfer from treasuries to commodities once this behemoth is eventually passed.
How long this process will take is harder to guess at, but the charts are talking. We have weekly support on the eur/usd, gold and silver. It’s just a matter of time before the oil starts to head up on anticipation of spring demand.
So I am waiting for the drop coming in the S&P and gold, and then I will be looking to go long stocks gold, silver, eur/usd ect.
A close below the 800 level in S&P and/or Gold on the weekly chart negates this speculation.

Economic Outlook for 2009 and Commentary

2009-02-02T12:13:00.010-07:00

By Joshua E. Stone

Monetary Policy: Expect the Fed to keep the Federal Funds Rate at current levels near 0-.25% for the remainder of this year at least. The Fed will worry about inflation later. The main focus for them right now is to stimulate the economy and get credit flowing again.
That said the Fed is setting up a nightmare scenario for supply and demand. The thing to understand is that business inventories are getting lower. When demand kicks up again as the Fed plan, it will put pressure on supply. This combination of forces leads to inflation.
So it is clear that at some point, barring a massive depression that the Fed will have no choice but to raise interest rates again, and quite aggressively.
Ultimately inflation may go higher than 10%.

Housing: Expect the housing prices to start to bottom in the next year maybe even longer. The recession is already one of the longest in history, and I expect it to last longer than any in the past.

Employment: Expect unemployment to reach double digits before this recession is over. I am guessing it may go as high as 10% this year. I don’t see much of an employment recovery really. This will be a jobless recovery. Unless the new Administration in Washington can get the corrupt politicians to make a new energy policy that creates jobs. Yes We Can!

The Dollar: The North American Union will become a reality soon enough, sadly. I am not sure what this spells for the Greenback. I don’t see it becoming history all together, but certainly revalued.
The oil will go to 600 a barrel if they don’t do something soon about energy policy. Expect oil to go to 75 a barrel this year, then 150 in the next few years if not sooner.
Gold has decoupled from the currencies and will most likely keep going up and not look back much at all. If S&P 500 goes down 50% from these levels then gold would go even lower maybe. Into the 400 handle perhaps is my speculation. But only a speculation on my part, many think it’s on a one way road up.
The S&P 500 has a 50% downside risk from these levels and is the key to the recovery, besides a good energy policy. If S&P moves up from here for the rest of the year, then expect a quick recovery in 2010 and oil, gold,stocks and the others will start flying high. (i.e. inflation)

Will It Work? Will the stimulus and bailout efforts of the Fed work? According to folks much smarter than me it will. There will be so much money coming into the system by just the first half of 2009 it will have an amazing effect on the economy. The problem is that these efforts are the equivalent of giving a drug addict a dose of his narcotic he is coming down from.
History tells us that the efforts of the New Deal actually did more harm than good, till WWII; when the real big spending kicked in full force.
This makes me think that the current efforts ultimately will not fix all the problems, but a new currency and global tax system or war would. The bill is just too large and someone is going to have to pay it somehow. But this is more long term and I will not go into it here. For the near term just the efforts of the Fed with TARP, the expected tax rebate on the way and the hope surrounding Obama will provide a remarkably quick recovery albeit a hollow one to say the least.

The Real Story

2009-02-02T12:10:00.001-07:00

By Thomas Sowell
With both Barack Obama's supporters and the media looking forward to the new administration's policies being similar to President Franklin D. Roosevelt's policies during the 1930s depression, it may be useful to look at just what those policies were and-- more important-- what their consequences were.
The prevailing view in many quarters is that the stock market crash of 1929 was a failure of the free market that led to massive unemployment in the 1930s-- and that it was intervention of Roosevelt's New Deal policies that rescued the economy.
It is such a good story that it seems a pity to spoil it with facts. Yet there is something to be said for not repeating the catastrophes of the past.
Let's start at square one, with the stock market crash in October 1929. Was this what led to massive unemployment?
Official government statistics suggest otherwise. So do new statistics on unemployment by two current scholars, Richard Vedder and Lowell Gallaway, in their book "Out of Work."
The Vedder and Gallaway statistics allow us to follow unemployment month by month. They put the unemployment rate at 5 percent in November 1929, a month after the stock market crash. It hit 9 percent in December-- but then began a generally downward trend, subsiding to 6.3 percent in June 1930.
That was when the Smoot-Hawley tariffs were passed, against the advice of economists across the country, who warned of dire consequences.
Five months after the Smoot-Hawley tariffs, the unemployment rate hit double digits for the first time in the 1930s.
This was more than a year after the stock market crash. Moreover, the unemployment rate rose to even higher levels under both Presidents Herbert Hoover and Franklin D. Roosevelt, both of whom intervened in the economy on an unprecedented scale.
Before the Great Depression, it was not considered to be the business of the federal government to try to get the economy out of a depression. But the Smoot-Hawley tariff-- designed to save American jobs by restricting imports-- was one of Hoover's interventions, followed by even bigger interventions by FDR.
The rise in unemployment after the stock market crash of 1929 was a blip on the screen compared to the soaring unemployment rates reached later, after a series of government interventions.
For nearly three consecutive years, beginning in February 1932, the unemployment rate never fell below 20 percent for any month before January 1935, when it fell to 19.3 percent, according to the Vedder and Gallaway statistics.
In other words, the evidence suggests that it was not the "problem" of the financial crisis in 1929 that caused massive unemployment but politicians' attempted "solutions." Is that the history that we seem to be ready to repeat?
The stock market crash, which has been blamed for the widespread suffering during the Great Depression of the 1930s, created no unemployment rate that was even half of what was created in the wake of the government interventions of Hoover and FDR.
Politically, however, Franklin D. Roosevelt could not have been more successful. After all, he was the only President of the United States elected four times in a row. He was a master of political rhetoric.
If Barack Obama wants political success, following in the footsteps of FDR looks like the way to go. But people who are concerned about the economy need to take a closer look at history. We deserve something better than repeating the 1930s disasters.
There is yet another factor that provides a parallel to what happened during the Great Depression. No matter how much worse things got after government intervention under Roosevelt's New Deal policies, the party line was that he had to "do something" to get us out of the disaster created by the failure of the unregulated market and Hoover's "do nothing" policies.
Today, increasing numbers of scholars recognize that FDR's own policies were a further extension of interventions begun under Hoover. Moreover, the temporary rise in unemployment after the stock market crash was nowhere near the massive and long-lasting unemployment after government interventions.
Barack Obama already has his Herbert Hoover to blame for any and all disasters that his policies create: George W. Bush.
Copyright 2008, Creators Syndicate Inc.

2009-01-09T22:25:00.013-07:00

Fundamental Commentary for 2008

By Joshua E. Stone

The Set-Up: Fannie Mae/ Freddie Mac. Let’s Start with this last year…it was in the first days of July and oil was spiking through the roof on the way to 150 trading at about 147 a barrel when President Bush saved the summer and lifted the offshore ban on domestic oil drilling. Congress was out to recess, and apparently not concerned with the fact most of us were going under water financially because of this oil crisis.
Skip forward to Lehman Brothers collapse, no one expected this, and it caused a total panic and lack of confidence in the entire financial system. We know the rest of the story: We are left holding the bag, with wiped out accounts from soaring gas prices and freefalling 401k`s. The Government starts the largest series of bailouts and takeovers ever seen. The Democrats win with a historic majority on the back of the first African American ever to run for and win the Presidency of the USA, a star struck media, and cleverly engineered economic crises from the smoke filled lobbies of Freddie Mac and Fannie May. Senator Barney Frank had been working with these crooks for years by this time. Senators Dodd and Obama happen to be the first and second largest recipients of money from the two lobbies over a period of time before 2008. However, all this historic momentum was not enough to keep the Republicans from holding on to the Filibuster in the Senate. The S&P was down over 40% for the year by the time it was over on December 31st 2008. It was the biggest decline in the S&P since the Great Depression.
The result of all this in the near term is the recession and trillions in spending. So much money will be flooding into the system by the first six months of this year; most analyst agree it will get the economy in recovery mode by the end of 2009 and 2010 will see housing start to recover. So it is clear that inflation will be a major concern again because of all this. That said all the indicators at the moment say the market is not worried about inflation right now. Neither is the Fed, as demonstrated by the language and actions coming from them.
The result for the long term is something most analysts agree is a lot more uncertain. Everything I understand goes along the lines of currency revaluation and re-pegging, or even new countries being created and others passing into history.

The Crisis: Debt. It is widely accepted wisdom that the US Dollar has depreciated 95% since it was taken off the gold standard. The 1960`s were the last time you could actually see a return on your money from going into debt. So where does that leave the economic “stimulus” politicians have promised? Have we already forgotten the children again? They will be faced with the same crisis, only unimaginably larger if that is even possible. And don’t point at China; they are saving us right now by actually having confidence in the US Government. That’s more than can be said for a lot of Her constituents.

The Patsy: De-regulation. This is rather simple. The war cry these days is that Reagan deregulation caused the economic crises. This is a bald face lie to promote corrupt political agendas. The problem has been the politicians do not properly oversee and enforce the existing regulation.

The Problem: Transparency. Conventional wisdom from economic experts is that the lack of transparency in the financial system has brought about a total lack of confidence from investors.
Until this problem is solved we will continue to see the crisis escalate over time, till it becomes too large even for the tax payer to fix. The incoming Administration has not addressed this to the satisfaction of many investors. In fact one of many ways they are carrying all this on is the way they have just lowered the credit requirements to buy a car…enter the sub-prime auto crisis. One of many Ponzi schemes we are yet to feel the pain from when they self destruct like the financial industry did in 2008.Not to mention the bonanza of Ponzi schemes: The Social Security System. It all adds up to what may be close to 100 Trillion dollars. The press is the main culprit behind this malaise and tolerance of ignorance and un-vetted fashionable trends. They are too powerful not to be held accountable for failing to completely report all the facts about these cons politicians are pulling on the voters and the tax payers` children. Meanwhile back at the ranch this year and next unemployment is expected to rise to possible double digits. My personal opinion is that unemployment could reach 12% before all is said and done, and stay high for some time; another “jobless” recovery?

The Agenda: Global Control. In a speech at Harvard last November, Harvard physicist John Holden, President-elect Obama's choice to be his science adviser as director of the White House Office of Science and Technology, presented a "top 10" list of warming solutions. Topping the list was "limiting population," as if man was a plague upon the earth.
Do I really need to make any comments on this? It seems quite self explanatory to me. I think the agenda is summed up at Stone Mountain Monument in Georgia USA.
I guess we all know shattering the economy is one of the key steps to controlling the people as well as helping to “limit population”.

The Solution: Re-regulation. I know it’s a dirty word in investment circles, but we all know more is coming now. To pile on more regulation is not the answer as the corrupt politicians tell us. The answer is to make regulation simpler and give it some teeth.

The Threat: Loss of Sovereignty. If something is not done to fix these fallacies, then the USA will really be owned by some banks, and not just on paper like it is now. Everyone will be paying off the debt to foreign governments for the rest of their lives. I think we know what this is called: slavery/colonialism. I am not talking about the slavery pampered people say they are in now because of a job working for the “man”. I mean real slavery, the kind you have no choice about whatsoever.

The Following are some links to where I get a lot of my information:

http://www.drudgereport.com/

http://www.770kkob.com/

http://www.dailyfx.com/

http://www.forexfactory.com/

2008-06-26T15:52:00.007-06:00

Expect alot of confusion and price action as everyone figures out that Congress has set the classroom on fire and are out to recess.

-retracer

FOMC expected to keep rates unchanged at 2.00%

2008-06-23T11:37:00.005-06:00

Some doubt sorounding the coming FOMC meeting. I think they will keep policy the same with a more hawkish stance on inflation. This will help the dollar, but provides a good place to short it on rising Middle East tensions and political gridlock in Washington.

-retracer

Chart Archive ($dji & $eurusd update 5/08/10)

2008-06-22T20:34:00.028-06:00

Click on an image to enlarge

Next target 1.2250 expected in May $eurusd.

Inverse H&S and strong US econ data gives some hope this is just a correction.

Bearish Divergence in $dji weekly. Close below 50% last week is key, 9435 eyed.

Watching a Death Cross in the works in $spx H4 2/25/10

Overbought MACD in the weekly on $spx suggests consolidation ahead.1/22/10

MACD is still clearly very bullish in the longer term on a monthly cycle.

Close above the 50% fib of `07-08 cycle on weekly in $spx,1220 eyed.12/28/09

This chart shows $spx has broken some major trendlines & working on 50% fib.12/14/09

We have a decision point coming up in $spx daily, prob in Jan.11/24/09

1070 & 1124 in $gold was spot on.11/15/09

1030 sup. in $spx turned out to be spot on.11/15/09

1030 support is nearby now.Here is a pic of the bearish div in $spx daily I mentioned before.10/28/09

Glittering Gold targets key 1070 area:

Politicians continue to ignore the advice of fringe and mainstream economist from cnbc to twitter, and gold tells the tale as the market reaches key technical and psychological decision point.

I have been jumping up and down on this blog all year about the dereliction of the politicians in Washington. Now gold has soared to nearly 1070 an once. This area is going to be key:

As we can see by the chart 1124 will be the next target if 1070 clears and holds. I will be watching this level and many other factors like oil, earnings and any major fundamental events that might develop. Right now the dollar is being dumped and that’s the fact we all have to live with.

Were in an upmove now in $spx. Looks like a 4th wave.

$eurusd appears to be staying in an uptrend.

Like the $spx, $eurusd cant decide to form a bear divergence.Will 09/22/08 high do the trick?

Updated chart of $spx

Bear Div in play, but dont think it will be a big sell off.

Will be watching for potential Bearish Div to develop in $spx.

1.4863 target is in play in $eurusd.

Updated chart of Inverse H&S forming. Bullish longer term in $gold.(weekly & monthly)

Looking for a retest of the 14 EMA , 38.2 Fib & Trendline in $eurusd.

$eurusd has a solid base to attack 1.4717 & 1.4863 from this time.

Updated big picture view of the $spx showing the Golden Cross, Bullish Divergence,and break of the 38% fib. The 50% fib is now in play.

Big picture view of $spx with a new h&s forming.

We have had a break of the 38.2% in $spx at last. So lets roll!

Golden Cross in $spx is official now. We could see a Death Cross again b4 this works out.

Updated $spx chart with some arrows painted in for next week.

Big Picture view of $spx w/bullish div & Golden Cross + break of 38.2% fib res of current cycle all in play.

H&S formation in $gold weekly is bullish longer term.

H&S formation in $gold 4hr is bearish short term

Two H&S patterns in $DJI daily(one an inverse h&S)suggests a play for the 200ma might be in the works.

The smaller of two H&S patterns pointed out in prev updates in $dji is shaping up nicely. Bearish potential now in stocks. $$ #forex #mkt

The multiple h&s patterns continue to play out well in my chart analysis of $dji. #mkt #forex #stocks

Inverse h&s possibly playing out in $dji

This continuing analysis in $dji is either dumb luck or some hidden talent I still have not quite grasped.

The h&s analysis is playing out beyond my best expectations. I expect some retracement from the 200ma. If not then it looks like a good pop to the north is in order.

A close up of the continuing $dji canvas.

fxretracer`s verified live trade performance: