Wednesday, October 31, 2012


"QE falls into a black hole. And it leads into an - if possible even larger - black hole. Ben Bernanke and Mario Draghi have neither the power nor the tools to stop deleveraging and debt deflation. That's just a myth they, and many with them who stand to benefit from that myth, like you to continue believing. It makes it all that much easier for them. That surge in excess bank reserves (see the second graph above) comes from QE. It is your money, everyone's money. And it does nothing to "heal" the economy you live in and depend on for your survival; it just takes away more of it all the time."  A MUST READ, if you have ANY hope of understanding what is going on.


Saturday, October 27, 2012


you KNOW, it is a crying shame what the &**% THEY have done to the world, all in the name of *&%)! what?

Just like this mammoth storm coming Sandy, this (FINANCIAL STORM) will pass, but not before it carves out a path of destruction no one can imagine....then the skies will clear.

Our job is to somehow remain standing my friends!!

Friday, October 26, 2012


NEW YORK (CNNMoney) -- "The Federal Reserve announced plans to unleash more stimulus Thursday, in its third attempt at a controversial program to rev up the U.S. economy.
The policy, known as quantitative easing and often abbreviated as QE3, entails buying $40 billion in mortgage-backed securities each month. The end date remains up in the air, as the Fed will re-evaluate the strength of the economy in coming months."

The FED has launched QE3 to LOWER long term interest rates, which is what mortgage rates are based on.....why isn't it working?


Wednesday, October 24, 2012


"QE falls into a black hole. And it leads into an - if possible even larger - black hole. Ben Bernanke and Mario Draghi have neither the power nor the tools to stop deleveraging and debt deflation. That's just a myth they, and many with them who stand to benefit from that myth, like you to continue believing. It makes it all that much easier for them." 


"Applications for U.S. home mortgages fell sharply last week, registering the biggest percentage decline in a year as demand for both purchase loans and refinancings tumbled, data from an industry group showed on Wednesday."

STOCK BULL IS TOPPING Adam Hamilton's Zeal

"The bottom line is the strong stock bull of recent years appears to be topping. It is long in the tooth, much older than average. It has also powered far higher than average, driving it up near bull-killing secular-bear resistance. And since stock-market valuations remain way too high to herald the end of this secular bear, it needs to reassert itself. And the recent topping behavior sure looks like this process is starting.

Cyclical bears within secular bears are not to be trifled with, as they mercilessly slash stock prices in half over a couple years or so. But not everything gets sucked into this selling. Gold actually becomes much more attractive during stock bears, an island of strength in a sea of weakness. And gold stocks generally follow gold higher, particularly earlier in stock bears before the selling grows more intense later on."

Monday, October 22, 2012


Now let's step back for a moment and try to get a grasp of what is going on and where we are WITHIN the SECULAR (long term) cycle. DO read the link to Adam Hamilton's article above.

This is a sideways GRIND, stocks are lower than they were 12 yeasr ago. We are long in the tooth for cyclical bull trend and near the 1500 topping zone. 2 X we have bottomed near 750 SPX the bottoming zone, where do YOU want to put money to work? Near the topping area? knowing the bull is 43 months old? YES that's what THEY want you to do.

ALL THE QE infinitty talk is to help establish that "stocks can't do down" and one FOOL on CNBCBS quipped "there will beno 200 pt declines", well he's a liar already.

OK, so if history means anything, we know that PE ratio is now at 19.8 (per Adam's piece), and we also know that SECULAR BEARS end between 6-7 PE ratio. IS this a good place to buy based on that?

Have we returned to some kind of norm? Is the economy reset? AS you can see from the 2 charts above, the CREDIT BUBBLE has barely begun to correct, or do you believe what happened in 1929-1950 won't repeat?

The move to our current CREDIT DEBT BUBBLE HIGH is far greater % wise than in 1929 and it has barely begun to adjust, retreat. If we are doing so well, if QE worked so well, why did the FED just call for QE 3 to infinity? WHAT imbalances are being aggrevated because of these actions?

A BELL may not go off, to warn you that the next phase of this SECULAR BEAR
 (usually lasting 16-17 years) has begun. OR maybe you think like some that history won't repeat and it will be different this don't know JACK as they say....or JAck don't know squat...

We have the fiscal cliff ahead of us, we have Bush tax cuts probably ending, calls for Cuts in Federal spending, we still have the government debt growing at over $1 Trillion a will this all end?

Do we have a government debt bubble and will it burst? We better hope it doesn't burst, because we know we have one.

From DR MArc FAber
One day, the system would break, he said.
"Eventually you have either huge changes occurring in a peaceful fashion through reforms, or usually through revolutions," he said. The U.S. was getting closer to such a revolution, he said, as was Europe.
"I think the timeframe would be within five to ten years you have a colossal mess... everywhere in the Western world," Faber said.
"I think the deficit here (in the United States) - irrespective of who is in the White House - will stay above a trillion dollars per annum for at least as far as the eye can see," Faber said.

Bureaucracies in the U.S. as well as Europe were far too big, he said, and were a burden on the economy.
"My medicine for the U.S. is: reduce government by minimum 50 percent," he said. "The impact would be immediately an improvement in the economy."


Saturday, October 20, 2012


The 1.98% yield is one of the lowest yields on record, the lowest came in 2000 when the GREAT BULL MKT topped and the tech bubble burst.

SEE in 1980 how the rate was above 6%....the last GREAT BOTTOM, which set the stage for a 20 yr plus bull mkt.



HISTORY TENDS TO REPEAT ITSELF  Doug Noland's Credit Bubble Report 25th Anniversary (of the OCT 87 crash)

"The Nikkei ended 1989 at 38,916. The Nikkei closed Friday, some 23 years later, at 9,003."

"Especially after the ’87 Crash, the Federal Reserve and other regulators should have moved decisively to nip the derivatives boom in the bud, especially in the area of the dynamic hedging of myriad market risks. “Black Monday” provided unequivocal evidence of the serious flaws and dangers associated with the premise of “liquid and continuous” markets – an assumption that is really the foundation for contemporary derivative hedging strategies. Instead of the Crash destroying this market fallacy, the Fed’s day-after statement validated the view that derivative contracts could be written and risk-strategies pursued on the belief that policymakers would be there to counterbalance market illiquidity and neutralize “tail risks” and system shocks. "

"And the way I see it, the Fed, ECB and global central bankers today fight a losing battle. The mountain of global debt, securities, and derivatives, along with this destabilizing global pool of speculative finance, just inflate larger by the year – and after each policy response. "

My premise for this blog has and always will be to warn and educate.Some affable bobo's come by after each rally and proclaim how right they are, but after a market decline are noticeably quiet.

Each time there is a "CRISIS", the ECB and or the FED open the flood gates of liquidity, and easy money policy to "correct" the decline. All this has done is add more imbalances to an already overloaded unhealthy system that PUNISHED investment and  savings, and rewards speculation.

For 4 years now we have had a 0% interest rate policy, forcing MANY who otherwise would not do so, into RISK markets in search of yield. As long as there is a "greater fool" to pay higher prices this strategy will work in rewarding the risk taker. BUT at some point it will NO longer work and there will be nobody left to catch the falling knife.

After 2 horrendous BEAR MARKETS In the last 10 years, many would be investors have either left the market for good, or are still left in a state of shock even perhaps still holding their really there is little other strategy to take.

Where is it good, where variety isn't the spice of life, and choice taken away from investors limiting their options is the reality?

Current account debt keeps piling up at now over $16 TRILLION, this does not take into account some $50 T more in unfunded liabilities like medicaid and SS. WHAT politician is going to get elected or keep office telling the American people "Houston we have a problem" and somehow it will take the form of shared sacrifices and less opportunity for many years to come.

4 years of 0% FED funds rate, 3% 30 year mortgages and the Housing Market barely has a heartbeat, 25% of HOMEOWNERS are underwater in their mortgages. This is the FIRST recovery not to be led by housing, any wonder it doesn't feel like a recovery?

If printing money (digitally) was the answer and cure for all the ills, why would we EVER suffer an economic contraction and ever leave prosperity?

43 months of spectacular market gains have not led to historic recovery in housing, hiring, wages, investment ,spending and overall economic activity.

What feels like economic stability is more or less a mirage, being held up by FED POLICY and GOV'T spending and handouts. More Americans are receiving GOV'T assistance than ever if we had a true recovery would that be so?

That is life living under the specter of the ongoing credit bubble and its effects on our lives. AS Doug suggests, what has been growing in that aftermath of the bursting of the housing bubble is now a GOVERNMENT FINANCE BUBBLE....the "MOTHER" of all bubbles.

IS it possible that at some point, the US TREASURY auctions find few others takers than themselves or the FED?


Friday, October 19, 2012


I'm very interested to see what action we get near SPX 1430.


Wednesday, October 17, 2012


"As Pimco’s Bill Gross wryly observed: “What a good country or a good squirrel should be doing is stashing away nuts for the winter. The United States is not only not saving nuts, it’s eating the ones left over from the last winter.”

INTC and IBM MISS send tech spending warning

EBAY misses forcast, growth slows

Below is a more positive, butnot climactic chart that shows continued improvement in housing starts and permits....but it sure is still a FAR cry from normal isn't it?

Tuesday, October 16, 2012


Hey Mr Belkin agrees with me? I would listen to Belkin before I would some of the BAFOONS out there.

His Model has been pretty spot on, and his service is pricey at around $40,000 a year last I heard.



Same as.....if I was in debt $100,000, and I borrowed another $100,000 I could use that to make payments on the $200,000 and buy more shit.

When that ran out, if lenders agreed, I would borrow another $100,000 to make payments on now $300,000 and buy more shit etc.

As long as I can keep doing this, the game continues.  But that doesn't alter the facts that I now owe $300,000 instead of $100,000 which means I will be paying forever, borrowed even more to keep going or default because I can never pay it back.

If my borrowing costs rise, I will then be making higher interest payments and have less left over to buy more shit.

US 10 yr rates below 1.7%...the norm is closer to 4-6%. The FED has pegged the rate banks can borrow at 0%, but that also means Savers get 0%.

TRILLIONS HAVE BEEN POURED into efforts to jolt economy, and here in the US we have declining GDP , growth rates which are now around are we already in the influence of the debt "black hole" and no matter how much NEW MONEY is printed to pay off the OLD MONEY and see it trickle into economic activity, we have perversed the system....delay the inevitable correction....STIFLE investment and we get mediocre job creation.

FED SPOKE of QE3, butactually since then their balance sheet has declined.....


Monday, October 15, 2012


"I think we can draw a rough parallel between a black hole and our current global economic situation. (For physicists this will be a very rough parallel indeed, but work with me, please.) An economic bubble of any type, but especially a debt bubble, can be thought of as an incipient black hole. When the bubble collapses in upon itself, it creates its own black hole with an event horizon beyond which all traditional economic modeling breaks down. Any economic theory that does not attempt to transcend the event horizon associated with excessive debt will be incapable of offering a viable solution to an economic crisis. Even worse, it is likely that any proposed solution will make the crisis more severe."

Are we too close to thebalck hole of debt? Can we achieve excape velocity? I have my worries, doubts as out economy, the world has been subject to HISTORIC attempts to stimulate, and creation of money, yet we have meager historic worst recovery, and its not creating enough jobs.

By the FED monetizing the debt, have we fixed anything? ZERO % interest rates held for alreay 4 years, has that fixed anything? what it has done is make it impossible for savers to get any return. There are no choices, we have not deleveraged, we have not gone back to the NORM from where maybe we return to investment and real job growth.


Chinese data as clue

Wednesday, October 10, 2012



I don't need to call a top, not running around with my bear hair protruding out of my shirt like some mad crazed monkey.....I just report what I see and only hunt for the truth.....which you won't get in too many places.


Tuesday, October 09, 2012


"In a memorandum dated September 28, the White House Office of Management and Budget counseled defense employers not to issue layoff notices on November 1. OMB assured employers that if they did not send out layoff notices and layoffs occurred, the "contracting agency," namely the Pentagon, would absorb the penalties and attorneys' fees the employers would have to pay, a significant cost to taxpayers. If firms don't file WARN notices and plant closings or layoffs of more than 500 workers occur, employers are liable for penalties of 60 days back pay and benefits paid to workers.

No problem, says OMB in the memo, the contracting agency will pay the costs. It specified that if sequestration occurs and the contractor has followed Labor Department guidelines, "any resulting employee compensation costs for WARN Act liability as determined by a court, as well as attorneys' fees and other litigation costs (irrespective of litigation outcome), would qualify as allowable costs and be covered by the contracting agency, if reasonable and allowable."

It's not clear that the White House has the authority to offer to pay the costs. Nevertheless, defense companies, such as Lockheed Martin and Boeing, which were planning to send out notices to tens of thousands of workers, have announced that they will refrain. Blatant Manipulation This is clear manipulation by president Obama. That said, it would not affect the unemployment rate now. Nor is it a conspiracy. However, it was a cowardly act, one that certainly cannot inspire confidence in the president at all "




Sunday, October 07, 2012


Are the Gloomers wrong as a recent comment left suggests? I never suggest TIMING the market, the trend for stock may still be UP, but I have been warning of underlying problems both fundamental and technical.

Currently the world markets are in the GRIP of FED and ECB actions, there is nothing subtle about it, they have taken away the vail of secrecy and have laid their cards on the table. The MAJOR players like PIMCO and large hedge funds are buying up SPanish bonds and all kinds of "risky" assets, in defiance to the underlying issues, as in as near a guarantee as they can muster, both FED and ECB say buy we got your back.

Speculation is being telegraphed, supported, almost guaranteed in an effort to avoid IMPLOSION. It will, has worked for awhile, but I don't think this will be open ended.....manipulation always comes with unintended consequences.

ECRI has said we are in a Recession, that economic data suggests a firm slowing down of economies.

There is a year long NON CONFIRMATION DOW THEORY in place, the Transports have not since 2011 confirmed the new highs in the Dow and SPX. As Tim Wood recently pointed out in an essay published on SafeHaven, Dow Theory Non CONFIRMATIONS are WARNINGS OF TROUBLE AHEAD, NOT TIMING TOOLS FOR SPECULATION.

Did I say trouble was brewing 6 months ago? probably so. And it IS, IMHO. That doesn't mean the market will crash a day later.

IMHO we are further apart from the actual economic reality compared to stock valuations. WHEN markets are manipulated this will happen. But for EVERY BUBBLE.....there comes a POP....and when they BURST it usually gets ugly, that I want to avoid.

This is a dangerous game of musical chairs we are playing...


Saturday, October 06, 2012


If this pattern is still alive, as it appears it is, that is certainly a possibility. There is no crime in having been long during this cyclical bull market, that appears may have another leg left.

This pattern is call a Broadening megaphone, and after it completes is Bearish, that is well above where price is today.

Is the current FED policy of no options for returns enough to keep money flowing into stocks and keeping volitility low?

Is the job market gaining momentum? Friends, it may be that none of this matters, all that matters is the people who can move the markets, believe there is no worries of a serious decline at this time.

I can say to you , well maybe this is not for me.....but I try to present all possibilities. This does NOT change my view of how it all ends, BADLY. But sometimes you have to take what they give you, and since 2009 they been giving a lot.

43 months into this CYCLICAL BULL means it may be running on borrowed time. Tops seldom give out shouts to get out, and take time to guarantee history repeats.

Whether Transports ever confirm the new Dow high in the short run won't matter, but it does certainly give a warning, should that divergence continue that something is wrong and buyer beware.


Friday, October 05, 2012


**This was from last months report**(8.1 from 8.3%


Unfortunately, the drop in the unemployment rate was the result of a sizable drop in the labor force participation rate (from 63.7% to 63.5%).

That rate is the lowest since September 1981.

Read more:
Todat's report, given the LOW #'s reported in the jobs data....seeing a drop from 8.1% to 7.8% is rather dramatic on the surface until you read above, same thing must have happened this month but even greater numbers giving up. And stocks near new highs.....WHAT a disconnect!

"The job market has been improving, sluggishly but steadily. Jobs have been added for 24 straight months. There are now 325,000 more than when Obama took office.
The September gains were led by the health care industry, which added 44,000 jobs — the most since February. Transportation and warehousing also showed large gains. The revisions showed that governments actually added 63,000 jobs in July and August, compared with earlier estimates that showed losses. Still, many of the jobs added last month were part time. The number of people with part-time jobs who wanted full-time work rose 7.5 percent to 8.6 million."