A Word From Bob

As Seen & Heard

Contact Us

rss

Invest Yourself

The FREE Investment Newsletter That Really Works!

Financial Intelligence Report 10.26.2014 Bookmark

It was really a wonderful piece of timing for me; that my friend and partner Phil Grande from philsgang.com decided to send me an article he’d like to express.  My wife and I were going to be pretty tied up this weekend with some travel, so having an interesting article to publish was mighty handy. So with no further ado, here’s Phil with today’s commentary….


AMERICANISM vs QUANTITATIVE EASING;  CHARTING vs FUNDAMENTALS

With just 13 days left from this writing before the senate race; who would ever think that under the leadership of the democrats and President Obama (our “liar “N” chief) who’s cornerstone of his administration is lying , deception and deceit  (which is exemplified by his recent statement  “by almost every measure we are better off than the day he took office”) while his record shows more lies and deceit and quite the opposite facts:

It was really a wonderful piece of timing for me; that my friend and partner Phil Grande from philsgang.com decided to send me an article he’d like to express.  My wife and I were going to be pretty tied up this weekend with some travel, so having an interesting article to publish was mighty handy. So with no further ado, here’s Phil with today’s commentary….


AMERICANISM vs QUANTITATIVE EASING;  CHARTING vs FUNDAMENTALS

With just 13 days left from this writing before the senate race; who would ever think that under the leadership of the democrats and President Obama (our “liar “N” chief) who’s cornerstone of his administration is lying , deception and deceit  (which is exemplified by his recent statement  “by almost every measure we are better off than the day he took office”) while his record shows more lies and deceit and quite the opposite facts:

Savings on the day he took office were at 6.5% it’s now 5.4%,. The people  receiving food stamps has increased from 31.9 M to 46.5 M. Part time work has increased from 25M to 28M and the median income has dropped from $55,871 to $53.978 .Wages are 32% lower and the number of  temp workers increased from 56 M to 58M. What are you nuts?

 
With a record like that you would think republicans would be out front instead they’re trailing . If the election was held today republicans would lose with 41% of the voters favoring democrats.  36% of republicans and 28% of the dopes now say they don’t know who they would vote for. How could they not know?? These are the idiots who must  have  a permanent spot on a stupid bench.

 
How could they not know that Obama has destroyed the economy for 90% of the population while using QE to enrich a tiny segment 10% of the population??  It helped his friends - the Wall Street money bundlers the bank-sters and the banking cartel . It helped hedge funds and wealthy speculators who bundled $92 million for his reelection campaign in2012  and in return and in a show of his gratitude Obama promised he would make them more wealthy than they already. How? by injecting  $20 trillion dollars into the stock market using QE to mask the discrimination . Obama through Bernanke would take an aggregate of $4 trillion dollars of the $20 trillion and inject 4 separate doses of Quantitative easing into the stock market.

QE1 injected  $1 trillion, QE2 $650B,  Twist $400B and QE3 $1 trillion which caused the stock market to rally in  QE1 by 80%, QE2 33%, Twist 28% and QE3 25% consecutively. That increased the wealth of just 10% of the population, and  for the other 90% it did absolutely nothing. But the side effects of the $4 trillion of QE;  followed by another 2 trillion that went to corporations to purchase their own stock to move stock prices higher…then yet another $14 trillion to be used to buy bonds to force countries who buy our treasuries to shift to stocks,  (to move stock prices artificially higher again) Only worked  for the 10percentile of the population.

Which in turn by the way, literally destroyed job creation and economic growth!  See, all the printing and borrowing of money kills the real engine of growth which is “Americanism”  the  small business and the entrepreneurs behind them.  

Americanism is the small business who  creates 85% of the all  jobs; and when the Federal Reserve (which is no more federal than federal express and has no reserves) create $20 trillion in debt through borrowing and  printing of money they know they can’t pay back,  small business are hit  first with higher taxes, more regulations, higher capital costs and increases in commodity prices.

Next comes the waves of layoffs  and the replacing of full time work with part time-temp jobs. They’ve been substituting high paid jobs for low paid jobs, in a situation where 60% of the jobs lost since 2008 have been ‘high paid’ (more than $18/hr. on average), while 58% of the jobs created since 2008 have been ‘low paid’ (less than $12 an hour) jobs. Soon small business stops purchasing equipment and information technology.  

Now let’s take the $1 trillion cost of QE3. Divide the $1 trillion by 1 million jobs and the result is a cost of $1 million per job created. What are you nuts? That’s the ultimate in inefficient and wasteful job creation programs!

So who really benefited from the Fed’s $1 trillion QE job creation program?

Taking the calculations one step further, if you take an average makeup of the 400,000 part time-temp/low wage jobs, the median wage is no more than $15/hr

That $15/hr. is about $30,000 a year. The ‘benefits cost’ is no more than 10% of the base pay, since many of the jobs are part time-temp with no benefits. That’s another $3,000. That’s $33,000. That leaves $967,000 of QE3’s Fed printed money going into the pockets of bank-sters - NOT the workers, who got the QE created jobs!

The ‘someone else’ in this case include the bankers and investors to whom the $1 trillion was provided in the first place. The bank-sters and investors then loaned out the QE to other speculators, who in turn invested it in the stock, bond and derivatives markets—thereby driving up the financial asset prices for these securities. Then when sold, realized increased -capital gains. Given the capital gains tax rates that exist, the bankers-investors got to keep 85% or more of their profits. They might not loan out the $967,000 billion to other speculators, but instead loan it to offshore emerging markets, like China.

 Either way the $967,000O doesn’t create any jobs in the US since it doesn’t result in investment in the US. Or they could hoard the cash; or send it to their offshore tax havens in order to avoid paying the nominal capital gains tax, or if they’re a public corporation; use it to buy back their bank stock, payout more dividends to shareholders, or use it for a mergers or acquisitions. None of that creates jobs either.

The net outcome of QE was/is to create even more wealth for the already very wealthy so they can put that money in a pile with all their other money. Remember, they never use their own money to create jobs or anything else they always use OPM.  So when you hear Obama say how QE is good for the economy and the other 90% because the wealth of the 10% trickles down to the 90% … that is all, plain BS,  because with trillions of household debt it stops trickling down and goes in the pockets of   bank-sters, investors, wealthy shareholders and high net worth individual households. Just exactly what QE was created to do, and nothing for the middle class or working poor .

Yet it’s these very criminals; the actors in this play of lies ,deceit and deception, such as  Bernanke , Yellen, Obama, and Congress  who  blame income  inequality on the republicans, budget cuts, and even the wind if they could get away with it. Yet they know they have purposely set out borrowing and printing  $20 trillion to boost stock prices higher; and to have the Federal Reserve keep manipulating to keep the stock prices high. Why?  To benefit only the 10% percentile of the population who they knew control 80% of all the privately held stocks! That is called crony capitalism and income inequality. And if you’re one of the many Americans who lost your job during the recession and couldn’t find another that paid as well; or you’re one of the 48 million people living in poverty( a record under this President) or you’re one of the 10milion middle class who slipped from middle class to poverty… then you have a front row seat to income inequality and crony capitalism. You now see the very players on stage who say they are not in the play when they most certainly are.

Obama’s use of QE was totally responsible for the stock market to rally 193%  in 5 years.   As a result of this manipulated stock market- QE rally, the wealthiest 10% households became richer simply because they already were in the stock market controlling 80% of all the privately held stock.  These folks accrued 95% of all the income gains of the $967,000 a year for each of the 5years.   (Complements of the Federal Reserve manipulating the stock price to remain high after the  4 injections of $4 trillion dollars QE1,2,twist,QE 3)

And to put into perspective Obama’s income inequality; he is responsible for  the stagnant income of the 90% they get from their job . How?  Because they had no stocks, their pay stayed at $33,546.00 for each of the same 5 years!

 For further perspective of Obama’s income inequality and crony capitalism. If one were to assume this ratio represents ‘trickle down’ economics in practice today, it would mean that for every one dollar in income for the worker, the capitalist-investor-banker is now getting 29.3. Of course, that 29.3 invested in financial securities generates even more income over time. The ‘trickle down’ ratio rises further and is virtually unlimited to the upside for the wealthy investors who benefit enormously from the free money QE policies of  Obama and his Fed—while workers struggle to make ends meet by working increasingly part time and temp jobs with low pay and no benefits.

The solution to a recovery; rather than continuing with this BS of just taking care of the 10% of the population ( his friends and mostly money bundlers)  is for Obama to start  supporting  small business  so they can create real full time high paying jobs.  But Obama won’t because  that’s “Americanism” which contradicts his core principles, and his ideology of socialism. All of  which is rooted in the dream of a utopia where life is fair and all things are equal. He knows if he used small business to deliver the solution to our problems, he would lose his base of environmentalists and sick liberals.


 This is why we will continue to have bubble economies,  boom- to- bust and is why it’s important to use charts and technical analysis instead of useless fundamentals. The supposed fundamentals are not real information, mostly made-up and definitely “delayed” instead of real time, which is vital in a QE environment.

The Market…

We all want to know the future. It’s human nature to speculate on “What’s next?” Well no where is that more evident than in the stock market. If anyone really had the ability to see the future, they’d easily be the richest human ever born. But unfortunately we don’t have that ability and all we can do is connect the dots and see what the picture looks like.

As we come into the end of this year, there’s no shortage of wondering just what will happen. So, let’s take a peek at some of the possibilities. Let’s start with some reasons the market could fall heading into year end…

One is that next week when the FOMC ends the QE program, the air starts to leak out of this market. On top of that, we’ll be over the elections on November 4th, so any of the “propping up” that they might have done for that event will be over.  Then of course we have this wicked volatility which often happens at the end of a long term trend that’s about to reverse itself. Finally you can toss in the incredible misses from some of the biggest multinationals, and the outright “doctoring” of earnings with all these billions upon billions of buy backs, which is NOT organic growth.

On the flip side, we’ve had a 10% correction, the first one in over 3 years. Many feel that was as deep a plunge as we’re going to see, and rushed right back in. Then we have the seasonality factor. The months of November and December are typically good months for the market. November is notorious for being the month where companies do the bulk of their buy back action, and when they buy back their own stock, it “forces” the stock higher. The float shrinks and the same money is chasing less supply.

Finally, there’s a TON of hedge funds that are woefully behind the market. There’s some thinking that a lot of them will try and save face by piling in during these last couple months, “making” the market go higher as they ride along.

So as you can see, there’s reason to think we fall, reason to think we rise. But what we really know is that the market is being manipulated higher. At some point every ponzi ends, every bubble meets its pin. We just don’t know when. This ponzi has gone on for 5 years now, and the volatility we see lately is proof positive that it is long in the tooth. Without more injections of Fed money, it won’t be long before this thing starts to really roll over.

But will that happen between now and the end of the year? That’s the question. I don’t think so. I think that we’re going to be trapped between the lows of the 10% dip and the highs we’ve set. I could see us running up and down inside that box until the year ends. But come the new year, all bets are off. I do expect this market to begin its downtrend in 2015 and it could fall a long long way.

Thus, between now and year end, we’re going to have to play the pops and drops as we have all year long. You can’t get too long and sit there, you can’t get too short and sit there. Being nimble is about all we can do.

Most of you want an “actionable” instruction, and I understand that. But I cannot tell you to “buy” when I myself am so  hesitant. If you’re a daytrader, then sure, life is good. But if you’re the type that wants to hold things for a while, it isn’t a great time right now to do that. We’ve simply got too much to think about, from Ebola in NY, to the FOMC meeting and the end of QE, to the elections that will finally be over, to you name it.

Sometimes the best play is no play and right now that sounds right. We’ve come a long way off the big dip, and we made a lot of money in the past month. It feels to me like time to be a bit patient and see where we’re going to end up. Right this minute we’re in no mans land between the big correction and the old highs. I expect some back and forth bouncing around for a bit.  We haven’t sold out our 401K, but we’re down to just one long side “trade” which is the QQQ’s. Don’t fret, when we see clear signals to buy or sell, we’ll tell you. Right now…we just don’t.





 

 

 

 


Showing 0 Comment

Social Media

Bob Recommends