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7.2.2017 - Free Investment Newsletter Bookmark

July 4
 
Why do we celebrate this? Well of course we all know why. However I want to put in a little twist.

During the American Revolution, the legal separation of the Thirteen Colonies from Great Britain in 1776 actually occurred on July 2, when the Second Continental Congress voted to approve a resolution of independence that had been proposed in June by Richard Henry Lee of Virginia declaring the United States independent from Great Britain rule.

 After voting for independence, Congress turned its attention to the Declaration of Independence, a statement explaining this decision, which had been prepared by a Committee of Five, with Thomas Jefferson as its principal author. Congress debated and revised the wording of the Declaration, finally approving it two days later on July 4.  A day earlier, John Adams had written to his wife Abigail:
 
The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations, from one end of this continent to the other, from this time forward forever more!
 
I have to think that the people that formed this Nation so many years ago, wouldn’t have a clue that this is the same place. Can you imagine the confusion on their faces if they just happened to wake up after a 200+ year nap?  It wouldn’t just be the technology. It wouldn’t just be the cars, the TV’s the computers, the aircraft and appliances that amused them. Our “system” of so called freedoms would surely confound them.
 
In Adam’s own words to his wife, he mentions bonfires and guns being used to celebrate the enormity of the occasion. HA. In 2017 both of those actions would get old John locked up! Not to mention “illuminations” which was his way of saying fireworks. In most states now, fireworks are illegal. Poor John. A founding father. He’d be locked up for doing the freedom’s he fought to provide.
 
I truly can’t imagine the concept of freedom that those people envisioned. Because even though I’m a product of being born in the 50’s there was already so many layers of rules and regulations on our heads, that being dominated by laws telling us what we can and can’t do seemed normal.
 
I have a feeling that if you told one of our founding fathers that it’s illegal to cook turkey dinners and take them to the park and feed the homeless, you’d get a curious look. “Why?” might be their question. “Oh because some government idiot fears that someone might get sick.”  I think he’d find that “odd”.  Likewise if you told him that your wife can’t bake cookies and sell them door to door, he’d question “why?” again. Oh because Government says you need an approved kitchen and a license.  I’m sure he’d grimace at the thought.
 
There’s no question that society needs certain rules and regulations. I’m not totally stupid and I get it. But there comes that point where the ridiculousness of it all, literally puts a brake on not only your personal freedoms, but to the economic success of a people and a nation.

Just last week, 3 enterprising young black teens were selling cold bottled water to willing customers on a hot steamy day at the National Mall in DC.  Not crack, not meth, not weed....just bottled water. And because they didn’t have a “permit” from the “government” to vend, they were detained and HANDCUFFED by the park police.  Crap like this makes me puke. I wonder what old John Adams would have to say.
 
It is said that 40 dollars of the cost of a new lawnmower is to conform with safety regulations. Often these modifications;  with release bars, and remote starts, and chute flaps, etc, just add to the complexity of the machine.  Maybe I’m just an old dinosaur, but I always found that keeping my hands and feet out of the blade, kept me perfectly safe.   I think one of our founding fathers might have been less than amused to see what a litigious society we’ve become. Nothing can ever be our fault. 
 
When I was a young man ( say 12) one of my favorite things was when occasionally  my Dad would come home from his 3 - 11 shift from the refinery, and we’d hop in the car and head to a secluded part of the beach to do some fishing. We’d have a small fire, sit around talking “man to man” and maybe catch a fish or two. Dad would have a couple beers, and I’d feel like a real grown up being outdoors at 1 am, chatting with one of the most important folks in my life.
 
Today that same stretch of beach has a sign with 11 “No’s” on it. No one after dark, no glass, no fires, no dogs, no fishing, no, no, no, no.  Yeah, I get it that this world keeps getting more crowded and a lot of the No’s are because some people are not capable of taking care of things. But what about the “freedom” to just sit around a fire with your dad talking?  For millions, especially city folks, they have to pay to enjoy that sort of thing. They have to go to a special park, and pay the entry fee’s etc.
 
As you ooh and ahhh over the fireworks to celebrate our “freedom” ask yourself a question. How many things can you list that you can do that isn’t taxed, licensed or regulated. I think the shortness of that list speaks volumes.
 
I get a kick out of Ron Paul. In so many ways I wish he’d have had a chance to win the Presidency over the years. Back in 2012 when he was running, he said the following:
 
Campaigning in his home state of Texas, Republican presidential hopeful Ron Paul told a crowd at Texas A&M University that he thinks the country is moving in the wrong direction.
 
In addition to saying that the nation has "too much tyranny," the Lake Jackson congressman criticized the number of people behind bars, saying he doesn’t think that’s a reflection of how "bad" Americans are. His explanation: "I think we have way too many laws on the books is what I think. Just on Jan. 1 of this year, there were 40,000 new laws put on the books in one day."
 
40K laws put on the books in one day.  That on top of the umpteen thousand rules and laws already on the books.  I ponder if one of our founders could even contemplate a reason to have 40K laws about anything. I think no.
 
Obviously I’m complaining a bit here and obviously when I say things like this I get the customary Email telling me that “if I don’t like it I should leave.”. No, that’s not the right approach. If I don’t like it I should try and change it to where things make sense.
 
We’re going to be celebrating the “independence” of our colonies breaking free from the rule of England.  The Land of the Free. Yet In 2014 this report hit about personal freedom’s in the world...
 
We're not number one. In fact, when it comes to personal freedom, we're not even close - so says a new international ranking from the Legatum Institute in London. No less than 20 other nations ranked ahead of America in regards to personal freedom, which is calculated based on protections of civil rights and civil liberties.
 
So we came in at 21, not number 1 in personal Freedom’s, how about our intelligence and communications freedoms?
 
The U.S. is ranked 41 out of 180 countries in Reporters Without Borders' World Press Freedom Index, which measures the "level of freedom of information in 180 countries."
 
According to the organization, the U.S. moved from 49 in 2015 to 41 this year, though it warned that the "relative improvement by comparison hides overall negative trends."
 
Citing the U.S. government's "war on whistleblowers who leak information about its surveillance activities, spying and foreign operations, especially those linked to counter-terrorism," and the country's lack of a "shield law" that would allow journalists to protect confidential sources, the report takes a decidedly negative view of U.S. press freedom.
 
Oops.  You see where I’m going with this. This country was founded to be the Freest of them all, where every man had rights from GOD, and Uncle Sam was to ( for the most part) butt out. But over the last 200 years, those freedom’s have been taken away, chip by chip, little by little.
 
On Tuesday when you’re having a hamburger with your friends by the barbe, and getting ready to take the kids to see the fireworks,  think about their future. Think about what a difference there must be from “true” freedom, to the police state we’ve become.  Think about ways that you could maybe help get back some of those freedoms. Because trust me, the socialist elites don’t want you to have any.
 
God Bless.
 
The Market...
 
I guess it could...but it would be hard....to get more chop than we saw this past week. I had told you all that because it was not just the end of the month, but the end of the quarter AND the end of the first half of the year, we’d see some odd pops and drops.
 
Well that was an understatement. Eeeking out a tiny gain on Monday, then dumping pretty hard on Tuesday, bouncing furiously on Wednesday, panic falling on Thursday, only to bounce on Friday and get half of Thursday back. Quite the roller coaster.
 
So what does the second half bring us? I tend to think it brings us a very strange market. While the reported economic news will probably trend a bit better, as even in recession there are times when things perk up, call it a bounce, we have enormous headwinds ahead too.
 
Recently the BIS, which is the Bank of International Settlements ( the Central bankers bank) has stated that it is time for the worlds Central bank to tighten interest rates and unwind their QE positions.  This from Reuters:
 
Major central banks should press ahead with interest rate increases, the Bank for International Settlements said on Sunday, while recognizing that some turbulence in financial markets will have to be negotiated along the way.
 
Though pockets of risk remain because of high debt levels, low productivity growth and dwindling policy firepower, the BIS said policymakers should take advantage of the improving economic outlook and its surprisingly negligible effect on inflation to accelerate the "great unwinding" of quantitative easing programs and record low interest rates.
 
That fits in with what the Fed’s have said recently about starting to work down their “balance sheet” starting later this year. Now, if they actually go ahead and continue to hike rates and get rid of the Trillions they’ve amassed in QE assets, this is going to bother the market.
 
If the BIS is laying down the law, and that’s what the globalist elites want the CB’s to do, then it is quite possible that their interventions in driving up stock prices to absurd levels, was merely to create the “headroom” necessary to absorb the corrections that will indeed happen in relation to their tightening.
 
Last week we wrote about DOW 50K and if it was possible. It is. But ONLY if the elitists Central bankers want it. If on the other hand, they don’t want it, it cannot happen. So now that the BIS is jawboning about how the market is going to have to just suck it up and absorb some pain, it makes sense that they’ve driven the market to insane levels, simply to give it a lot of room to fade as they tighten.
 
For instance, Let’s say they do ignore fundamentals and continue hiking rates. Then they start selling down assets to lessen their balance sheet. Then Draghi cuts his QE program from 65 billion a month to 25...etc. The market could easily fall 4000 points in response. But that would still leave us with a17000 market! Whereas if the DOW was only at 12K and it fell 4K, panic would ensue.
 
So we do need to ponder that scenario. In the near term however, the big news is Earnings. We’re going to be smack into earnings season in just days and as always there will be winners, losers and “meh” results. We should see sustained volatility over that.
 
Along the way we’ll also have Syria, North Korea, the Civil unrest between the Antifa idiots and normal folks, more race problems, NATO tensions on the Russian border, the debt ceiling, and the usual host of ugly issues that confront us daily. 
 
My guess is not going to be popular. My guess is that the Central banks are being told to take things down in a controlled demolition sort of way. No, they don’t want a panic crash, but they know things have gotten way out of hand, and it’s time to work off some froth. I don’t know where we’ll end next week, but at the end of the year, I think we’ll be lower than here, not higher. Sorry, it just seems to make sense.
 
Obviously we’ve got an interesting market to look forward to. There’s so many variables in the air right now that it’s astounding. We’ve never been any closer to a hot war with Russia, we’ve rarely seen the division between the haves and have not’s as we do now. We’ve not seen race relations this low in decades, and what about the daily warfare between the Democrats and Trump?
 
My position has not wavered one bit. The market will do what the Central banks want them to do. For the longest time, that was to push stocks higher. This isn’t some conspiracy idea I dreamed up, Richard Fisher from the Dallas Fed said so right on TV a couple years ago. He admitted the Fed’s decided to drive stocks higher, as a wealth effect after the 2008 melt down.  Now it “seems’ like their “Boss” over in Brussels has said “enough’. If that is really true and the BIS is sending the marching orders, this market will indeed go lower. If not...they can push it higher. 
 
Folks, enjoy your Holiday. For all its many ills, the US is still a pretty darned good place for the most part. Yes they’ve hijacked it, and yes it’s not the beacon of Freedom Adams and Jefferson created. Maybe if enough of us pray, we can at least hold it steady from here. Take Care. 

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