Saturday, March 27, 2010

Dubai - In the news Kind Of --- Major player disappears at sea in a glider

Do not underestimate the importance of this "news"

Thinking Aloud

US Gov is going to need a buyer of Treasuries

There is a chance that the whole spectre of deflation is something that is encouraged by the inflationists (not the chicken little ones)--the real inflationists who want to default on the US debt by debasing the currency.   The inflationists want the fear of deflation to be well popularized so that they may continue unobstructed with increasing the money supply (inflation).  

This also allows other interested parties to promote and approve various other programs that allow them to get better control over aspects of Governement that they find will be in their financial (and need for power) well being.  Health care for instance. 

Now back to the treasuries.  Hillary Clinton has come out a month ago with the statement that the national debt is a national security issue, effectively linking it so that we can have yet another "war" on something.  

How about this?  To "protect our debt", and to protect "the people" from yet another financial crisis....the government will take over all the 401K, IRA, even some Roth, and whatever else can be cast into a pot of having "tax reduced or tax deferred status".    After all in this time of war, war to protect our debt, against the Chinese who can try to crush the US by selling off their treasuries, those who have benefited from government allowed tax beneficial investment should now be willing to "help", in fact it will be a law, called something like "the Patriot Strong Dollar Support Plan" PSDSP.

Now the technicalities--do they give you treasuries straight up for your stocks at current values?  You know, Bernanke and team are not stupid.   That thing they pulled off with the Currency Default Swap in which they "drained the Swamp" of almost $600B in, well, money supply in Feb 2010 actually played out in the US's benefit in a big way since the dollar rallied in the same time period..   They are not dumb, just desperate.

OK so they don't just trade you treasuries with a promise to swap them back at a later date at the current prices, because they would have to give you a heck of a lot more stock back down the road, then they would be receiveing now.

So, they take the value of your stock, secure the treasuries they give you with your stock, and of course lock the stock so you can't sell it, because after all it is securing the treasuries against the external threats to our national security.   Whallah!  The "Debt has been protected"

In this Bizzarro world that we live in, land of the broken clock, truth is twisted 180 degrees.   You protect assets, not debts.  Financial gimmickry of the shell game money changers have made this switch on a number of grounds.  They are pretending that debts are assets.

This will not end well.   Prepare as best you can.

And check out this ratio.   Corporate debt is being considered less risk than US treasuries.
And watch the TED spread, which in simple terms is a measure of risk that banks see in lending to other banks.
And finally, personal income falling while prices are rising, 'nuff said.

Thursday, March 25, 2010

Fear Factor in Vogue

Blow off top on the Fear Factor?  Just a bit of overthrow?  Perfect timing for market deception.   Bernanke touted low rates forever, and statements that the Greece crisis is solved.   Yeah right.  The PRS133 channels are very instructive on the ES and The EUR/USD.   It's almost an unfair advantage.

I'll post up the PRS133 later

Quick note

Got family coming to town for 1.5 week. 

Ouch, perfect time for a top, when I am distracted the most.

Watch the TED spread, and compare to prior crash zones.

TBT is jumping.

LQD is diving.

Bond traders are smarter than their equity slinging cousins.

Bearish blogs are flopping along like blindfolded boneless chickens.

bloggers are looking at H&S and calling it cup and handles.

steveo (me) called the top over 2% ago.

Standing in front of a freight train is not good for you financial health. 

Nuff said.   It is always coldest right before the dawn.

Wednesday, March 24, 2010

Euro Nice Chart

So nice to play this one like a fiddle.  Covered at 1.3303, Not perfect but damn close enough.

Check out all the channels.  They are nice, working.

Tuesday, March 23, 2010

Toyotas and Sunspots, Or is steveo going off the deep end of Bizzaro World

Anyone reading my blog would know that a lack of sunspots allows more cosmic rays to hit the earth.

We are in a surprising long and deep minimum for sunspots.    Sunspots acts as a shield to push back cosmic rays.

Also keep in mind the near term (1 to 5 years) is likely to be dominated by protectionism among countries and trade groups….which leads to poor economic performance, which leads to more protectionism, which leads to …..more poor performance…

Fact and Rumors of Toyota's woes are undoubtedly amplified by a common feeling of protectionism, as well as direct industry and  governmental influence/propaganda.  After all….US Motors (ahem General Motors) is a large investment that needs to be protected

This excerpt from an Aviation Technician:

In regards to the Toyota problem. I didn’t think they would get to this point. I figured it was environmental. Of course you never know and it won’t/can’t ever be proven. It is very hard to simulate and direct high energy particles. These things cause microprocessors to latch in wrong state occasionally. They are what common folks would maybe call a glitch. I’ve looked into the glitch issue before for electronics figuring there had to be an answer.

Sunday, March 21, 2010

ES and EUR and the PRS 133

PRS guitars, a blog participant, came up with an awesome channel extension, the 133%.   

Watch for a bounce of /ES and SPY on the 133. 

Martin Armstrong - A link to an important hand written PDF

If you have a few hours to burn, do a Google search on Martin Armstrong.  

He may not be easily deceived, but he sure as heck is in jail.

Inflation or Deflation, It really is the issue of the decade, and what is it?

A blog reader had the following comments (below).

And here is a link to Ticker Guy talking about inflation and deflation.
And this nice chart, see the chart and go check out their blog.
I call this chart "too much debt will kill you"

Please comment.

From ChrisMaven on HawaiiTrading blog,

Hi steve

I prefer the latter definition for two reasons: a) in- and de-flation are the Latin words for monetary expansion or contraction.

Going down the route of attributing the word inflation to rising prices regardless of cause (scarcity, becoming a collector's item, fashion etc., or even perceived future scarcity, a thing that drives today's oil prices a lot) leads to intractable errors and circular reasoning. The second reason is: inflation in the sense of expanding the money supply can, but need not, and certainly not immediately, raise prices.

Equally, deflation can, but need not necessarily, lower prices, at least both never work in unison and never across the board.

But the other way 'round, that raising prices cause (or "are") inflation, certainly makes no scientific sense – how can scarce oil be a monetary phenomenon? Certainly no one argues the monetary base hasn't increased manifold since the late 1960s, driving the dollar off the gold standard after which the rise became totally unfettered and is now in a near-vertical trajectory (see St. Louis Fed's charts and statistics).

This MUST eventually lead to hyperinflation like it did in the German Weimar Republic towards the end of 1923 or in Zimbabwe today. Another matter is if "deflation" in the sense of FALLING prices tends to make people postpone their buying decisions (and hence bring the economy to a standstill). I flatly deny it, there seems not only to be no historic proof, with the exception of allegations, such as "had the Fed not let deflation happen, THEN the Great Depression could have been averted" etc. – that's not proof, as we have no access to the "parallel universe" where just that countermeasure was taken to find out if the allegetion were true.

But we have access to anecdotal evidence to the contrary: the computer industry has not deterred anyone from buying their product by constantly lowering prices AND even raising quality and functionality with each new model. Well, these are even TWO incentives to wait ... forever (the same goes for automobiles – buyers should again wait forever since they can only become better!).

But it never happened, in fact computer and related sales as a rule have always increased year over year. Of course some theorists will always argue why the computer industry is different from the yacht industry or bread manufacturing. That's an easy escape route that defies any scientific reasoning, let the moon be of cheese.

However, the exact same "theorists" lump yachts, bread, cheese and computers together in their macro-economic "aggregates" – they can't have it both ways though. Similarly, in a housing market downturn, people keep buying all the time and if there is a certain reluctance it can more easily be attributed to general scarcity of credit and people feeling insecure rather than them waiting for "the best deal ever".

But there is another psychological moment at play: if you know Dutch auctions, where the auctioner doesn't bid UP the price but begins with the highest price and every second goes down at a predefined interval until a hand goes up and the deal is closed, this is anecdotal "proof" that especially in an environment where prices fall people are tempted to buy at the EARLIEST possible moment before someone else takes advantage of the perceivedly low price!

So price "deflation", if anything, spurs sales! If bidders formed a cartel to wait as a crowd, granted, that could let prices fall forever. Instead they are independent competitors not knowing each others' next moves!
But you know what: IF prices were falling all the time, but sellers were convinced they would eventually rise again, the danger would come from the exact opposite faction: SELLERs would then be loth to sell, not buyers to buy! Equally, if the argument about "deflationary procrastination" held any water and if we do not resort to polylogism and e.g. racial differentiation arguing sellers are a different breed of people than buyers (anyhow, every seller in one market is a net buyer in another!) then if "DEflation" makes people wait to buy, INflation must make sellers wait to sell, as they'd be better off "selling tomorrow" rather than now!

Either way an economy would grind to a complete halt while when prices are stable people would just sit on their hands to wait for future price moves in their predilected direction. All this is ivory tower pseudo-economics. Since under a stable money regime which was the rule under the gold standard, price "deflation" was an economic law since productivity gains would always, all other things being equal, drive down prices, and as people thrived under such circumstances I have yet to see unrefutable proof of how stable money bases with ensuing falling goods prices (as a tendency) would harm an economy rather than benefit it while money inflation always is harmful and even the worst inflators at the helm of central banks wouldn't dispute it.

So this "fear of deflation" is just a ruse by central banks to keep inflating the money supply. Deflation does not keep people from spending – they always spend what's necessary to carry on in life.

If money is NOT "spent" on consumption but saved it becomes credit to someone who invests it in capital goods etc. Thus it is again being spent this time to e.g. build a future factory.

That saved money never lies completely idle (supposing it is not stuffed under a mattress). And the recent defaults have even had an INflationary effect since the money extended as credit is still with those who received it in payments; only if the debtors had NOT defaulted would the credit eventually be retired.

See How Bank Robbers cause Inflation.

Chart of Charts

This is the messiest Chart of Charts I have done in a while.   Somehow the formatiing of the multiple charts got moved, and after spending 55 minutes on the data and trying to reformat, that's all the time I can afford this weekend.

Bearish looking charts are starting to increase in numbers, but the 5, 10, and 20 Day moving Average all STILL all crossed over bullish.   Trend setters (think about that) could jump the gun and go bearish.  It is a tricky market.

FF, Earthquakes, Iceland (Maybe call it Fire-Land), and Jim Rogers

 Man, what a combo post!

Evil Speculator Closing Down

Evil Speculator (run by Molecool) is closing down. 

This is a sad weekend indeed.  Although Mole has been accused of having thin skin, he had market perspectives and charts that no one else had.   I never got to try his subscription services, and he says these will remain open. 

I was honored to be a moderator on the Evil Speculator site. 

I immediately thought....this market has worn people down.   The "worst tape" in history.  I remember that after the Tech crash I had made some money on the way up, and kept some by selling off.  But I also just left the market completely.   Not paying any mind, and not even knowing that a bottom happened a few years later.   The market had wore me down.  I had distrust for the market. 

All of the signs the last year of "this is the top" did not pan out.   Lots of lines in the sand were crushed.  Horrific fundamentals did nothing to slow the "Ramp of Pimp".  

So here we are again.   

  • It's the spring equinox.
  • A disastrous health care plan is about to pass.
  • Greek debt is a pre-cursor of other debt defaults to come.
  • Dubai is out of the new entirely, and they won't matter "until they do matter".  Their stated burn rate of cash should place them back at the beggar's table around now.
  • The Fear Factor is perhaps showing a blow off top. 
  • The Chart of Charts is showing one of the longest uninterrupted bull runs, and just Friday flipped a little bearish.
  • EWI is second guessing themselves, and their following subs would have been stopped out of their Full Tilt Bear positions.
  • The Euro is perched on tanking.
  • Quad Witching week just ended.
And Molecool is shutting down his blog.   What is interesting is when you have "skin in the game", i.e. you are human, you are influenced by that no matter how objective your observations are.

And finally, steveo (me) called the top, last Tuesday