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6.2.2016 - Financial Intelligence Report Bookmark

Every Day is Groundhog Day

The Beatles did a song called “A Day in the Life” and I want to snag a couple verses for you…

Woke up, fell out of bed
Dragged a comb across my head
Found my way downstairs and drank a cup
And looking up I noticed I was late
Found my coat and grabbed my hat
Made the bus in seconds flat
Found my way upstairs and had a smoke
And somebody spoke and I went into a dream

Isn’t that the way?  We get up and scurry around, getting ready for our day. We’re usually in a rush, as life has a habit of getting in the way. Day after day it goes, we wake, we work, we shuttle the kids, we eat, and we fall in bed ready to do it again the next day. 
Tons of digital ink has been spilled about the “rat race” and tons more literal ink before the invention of 1’s and 0’s on a computer. Most people look at it as the ritual of life, as being “normal” and “the way it is”.  We’re all too damned busy to see the forest for the trees. 

How many of you have the luxury of waking up when your body says “wake up” versus waking up to a clock because you “have to be somewhere” or you have to do something? Not many.  How many, after waking up have the luxury of sitting quietly for a few hours simply meditating?  Not many.  How many of you, could drop out of the rat race, and still have enough money to live comfortably? Again, not many. 

Sure, there’s always the few. Those rich enough to tide themselves over, some with enough retirement savings to live life as they want, and not by the dictates of the rat race. But sadly that isn’t the norm.  For most in modern day America however, they live paycheck to paycheck.  

When life boils down to nothing but doing the same thing over and over again people look for mental escapes. That’s why the entertainment industry has been so incredibly successful. Many don’t know this, but during the darkest times such as the Great Depression and during WWII, movie houses thrived. People wanted a way to be temporarily removed from their daily grind, even if just to get their minds off things for a few hours.  People that couldn’t afford a loaf of bread would spend 10 cents to see a film. Anything to distract themselves from reality. 

So, what’s my point?  My point is simply this… 

No one seems to notice the changes. Every day appears like the day before, however different they might be. The person that has to get up, get the kids ready, rush to work, run home, toss a meal on the table and collapse on the couch doesn’t have the time nor the energy to see just how different today is than yesterday. And how different yesterday was from the month before and the year before that. Yet they are remarkably so. In their little world, if the kid hasn’t gotten expelled, or they didn’t lose their job, life is pretty much the same as yesterday and the month before. But in the grand scheme? Things are so different that they might not recognize the place. 

Consider the following….

In 1950, the United States was #1 in GDP per capita.
In 2012, the United States is #13 in GDP per capita.

In 1950, redistribution of wealth was considered to be something that “the communists” did.
In 2012, the U.S. government redistributes more wealth than anyone else in the world.

In 1950, corporate taxes accounted for about 30 percent of all federal revenue.
In 2012, corporate taxes will account for less than 7 percent of all federal revenue.

In 1950, each retiree’s Social Security benefit was paid for by 16 workers.
In 2012, each retiree’s Social Security benefit is paid for by approximately 3.3 workers.

In 1950, the United States loaned more money to the rest of the world than anybody else.
In 2012, the United States owes more money to the rest of the world than anybody else.

In 1950, a gallon of gasoline cost about 27 cents.
In 2012, a gallon of gasoline costs $3.69.

In 1950, more than 80 percent of all men were employed.
In 2012, less than 65 percent of all men are employed.

In 1950, the average duration of unemployment was about 12 weeks.
In 2012, the average duration of unemployment is about 40 weeks.

In 1950, the average family spent about 22% of its income on housing.
In 2012, the average family spends about 43% of its income on housing.

In 1950, the American people had a great love for the U.S. Constitution.
In 2012, if you are “reverent of individual liberty“, you may get labeled as a potential terrorist by the U.S. government.

How could that all be by accident? It cannot.  60 years ago we were teaching Latin in High School. Today we teach “remedial English” in College. Didn’t anyone notice the changes?  Or were they so consumed with keeping up with the Jones’s and the “rat race” they just didn’t have time?  Or did they think that “change is good?” and went along with anything??  

According to the research firm IPSOS Mori, the United States ranks second out of fourteen countries in general ignorance about social statistics such as teen pregnancy, unemployment rates, and voting patterns. Italy is the most ignorant of the fourteen countries.

The U.S. ranks 33rd in internet download speeds
The U.S. ranks 24th in literacy
The U.S. ranks 11th in fourth grade math
The U.S. ranks 23rd in PISA science score

I’m a dinosaur, I realize that. I’m a 1957 model chassis, that got broken in during the 60’s.  My world was so different than today’s kids are growing up in… that you could make the case that it is two different countries. 

Many of you have seen this, or a similar version of it; but it really is worth a few minutes of reflection.  It’s just a note about things from my time slot….

First, we survived being born to mothers who smoked and/or drank while they carried us.

They took aspirin, ate blue cheese dressing, tuna from a can, and didn't get tested for diabetes.

Then after that trauma, our baby cribs were covered with bright colored lead-based paints.

We had no childproof lids on medicine bottles, doors or cabinets and when we rode our bikes, we had no helmets, not to mention, the risks we took hitchhiking.

As children, we would ride in cars with no seat belts or air bags.

Riding in the back of a pick up on a warm day was always a special treat.

We drank water from the garden hose and NOT from a bottle.

We shared one soft drink with four friends, from one bottle and NO ONE actually died from this.

We ate cupcakes, white bread and real butter and drank soda pop with sugar in it, but we weren't overweight because WE WERE ALWAYS OUTSIDE PLAYING!

We would leave home in the morning and play all day, as long as we were back when the streetlights came on.

No one was able to reach us all day. And we were O.K.

We would spend hours building our go-carts out of scraps and then ride down the hill, only to find out we forgot the brakes. After running into the bushes a few times, we learned to solve the problem.

We did not have Playstations, Nintendo's, X-boxes, no video games at all, no 99 channels on cable, no video tape movies, no surround sound, no cell phones, no personal computers, no Internet or Internet chat rooms..........WE HAD FRIENDS and we went outside and found them!

We fell out of trees, got cut, broke bones and teeth and there were no lawsuits from these accidents.

We ate worms and mud pies made from dirt, and the worms did not live in us forever.

We were given BB guns for our 10th birthdays, made up games with sticks and tennis balls and although we were told it would happen, we did not put out very many eyes.

We rode bikes or walked to a friend's house and knocked on the door or rang the bell, or just walked in and talked to them!

Little League had tryouts and not everyone made the team. Those who didn't had to learn to deal with disappointment. Imagine that!!

The idea of a parent bailing us out if we broke the law was unheard of. They actually sided with the law!

We had freedom, failure, success and responsibility, and we learned HOW TO DEAL WITH IT ALL! (Without the Governments nannies telling us how to do it)

Many of you can relate to what you just read. Today the headlines are carpeted with the fight over transgenders in the bathroom. I’m sure there were transgenders back in my day, they just didn’t seem to want to pee with me.  Back in my day the local Boy Scout troop had a shooting team and brought their rifles to school. Today chewing a Pop tart into the shape of a gun locks down schools and gets you expelled.  Swat teams on standby. 

Like so many things we write about in these pages you have to ask the question…did all this change come naturally, or was it planned?  Is it even remotely possible that we could make so many mistakes by accident? I’m hard pressed to believe it.  In fact I don’t. From where I sit, every quack with an agenda to ruin the US has been given free license to do just that. And also from where I sit, I’d say they have been pretty darned successful at it. 

The Market…

Monday the market was closed for Holiday, so Tuesday became Monday market-wise. It was a long grinding type of session with the DOW and the S&P both dropping after the most meager of attempts to move higher in the opening hour.  As is often the case however, the last hour of the day saw some of that all too familiar “magic levitation” and the S&P closed out the day by only losing two points. 

Today the news flow was pretty much as horrid as it has been. China’s PMI’s slipped, Black Rock downgraded a ton of global stocks, Mortgage applications fell, GM sales fell 18%, Ford fell 5%  and our Manufacturing PMI included such ugly details as 

Markit: "Weakest manufacturing performance for over six-and-a-half years" 
Markit: "Output falls for the first time since September 2009" 
Most regional surveys were weaker than expected

So we started the day in the red, and soon after we had the DOW down over 100 points and the S&P down about 10. But the magic got to work and by 11 am, we were down just 23 DOW points and 2 on the S&P.  We dipped again and soared again, up and down. Then the magic happened. At about 12:30 the S&P peeked into the green for the first time.  From down 10, to green....on a day full of horrific economic news. 

At 2 pm we got the Fed’s Beige book, and according to them “firms saw sustainable growth”  and that a “tight labor market is pushing wages up”.  They were talking about modest economic growth across most sectors. All in all, it was a mushy sort of soggy report, with just enough teeth to keep the rate hike talk alive. 

But it was enough to give the market another nudge higher and by 2:20 pm, all three indexes were green. When the final bell rang we had the DOW up 2, the S&P up 2. 

So what happens now?  Well that’s a great question. What SHOULD happen is that the market falls like a rock because the underlying economic situation is not worthy of a market this high. But since fundamentals don’t work now, and it’s all about Central planning and keeping the market up at all costs…  we’ll probably try and get past this slop at the 2100 – 2104 level. 

I have a sneaking hunch that they’re working so hard to put this market higher, because the Fed’s are going to pull off a rate hike in two weeks and they’re building in “head room” to absorb any selling that creates. Maybe I’m reading it wrong, but from where I sit, it feels like Yellen wants to go in June and if the data doesn’t blow up any worse, she’s going to do it. 

The fly here is the jobs report Friday. It will be very interesting to see what sort of numbers we get out of that, as indications are it won’t be very strong. If the market reacts badly to it, that might hinder the Yellen. We’ll see. 

We’ve been trying to knock out some short term trades as the market chops up and down, and today we jumped into XBIT and took a nice ride higher. In a choppy market, we like to “sell half” of the position when we get a decent profit. So in at 15.80, we did sell half of it at 16.80 for a quick buck, and we still have the remaining shares in play. Yes it’s a lot of work, but in a market where you’re down 122 DOW points in the morning and then close green… you have to play for what they give you. 

Stay safe out there folks. I’ll see you all on Sunday. 


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