Well that was pretty bad!
$113 Oil and we can’t rally the markets? As I mentioned in the morning post (and since the weekend) that Treasury Budget was a real market killer and we played a bearish game on Monday. The projection was for and $86Bn deficit for July (yes, JUST July!) and, at 2pm, the ACTUAL deficit came in at an astounding $102.8Bn. What was even more astounding to us was that this amazing, stupendous, terrifying number went completely unreported by CNBC, who purport to be some sort of news station last I heard.
My comment to members on hearing those numbers was: "Woo-hoo! $102.8Bn deficit in July and those morons on CNBC are talking about junk food! I can’t believe the market isn’t tanking on this, it’s 3x last July! Expectations were for $97Bn so we beat by 5%, which is $60Bn a year on just the beat. Something very strange is going on as it’s not in the journal and it’s not on CNBC yet it was released on time… Oh – did I mention covering is a good idea?"
We were dumbfounded as the market went UP after that number came out – I mean, a run rate of a $1.2Tn annual deficit does seem like a lot doesn’t it? Nonetheless, we don’t look a gift horse in the mouth and the run-up gave us great prices for our covers and we took GLD and USO calls anticipating a dip in the dollar as I said at 2:23: "Wow, Oil and gold not reacting to deficit number. How sucky does the rest of the world have to be right now for us to run a $103Bn monthly deficit and people are still willing to leave their money over here? We have good reason on both those trades to risk the overnight with oil inventories and retail sales tomorrow as well as import/export pricing. Thurs is another visit to CPI fantasyland but doesn’t it bother anyone that CNBC can still be ignoring this number???"
5 minutes later, the market was still going up and I said: "Wow, I feel like I’m out of touch with reality here… Am I the only one that’s bothered by a deficit running at a $1.2Tn annual pace? I’m sorry guys but I’m going to have a really hard time going with the flow on this one but I guess we have the advantage of the other markets being closed now so we won’t get our spanking until the morning (if ever)." Then, 10 minutes later, at 2:38: "Damn, this is like one of those cheesy horror movies where you are the only one that sees the monster deficit and every time you try to point it out it goes away…. "
Right about that time, the monster finally struck the markets and suddenly there was screaming and chaos and panic – 40 MINUTES AFTER THE NUMBER CAME OUT – what the hell CNBC? How are people supposed to watch you for "market moving news" when you ignore the biggest market moving news of the day and let your viewers get blindsided? The first mention of the budget gap on CNBC came at 2:59, cheerrily presented as a 3 second comment by Margart Brennan.
Trading Goddess posted the letter in the above image and I thought it was very appropriate for today as it seems to be what’s wrong with our society in a nutshell. We do not teach our children to think, we teach them to follow, to conform. And, when they grow up and become corporate news people, they blindly follow whatever policy is handed down to them – there is no longer any such thing as "investigative journalism" – We are an information society where the information we get is whatever mindless crap gets stuffed down our throats and the government, business and the media take full advantage of that to create a couch potato nation of conformist consumers.
I mentioned the national debt yesterday and someone said to me "Yeah, but as a percentage of the GDP it’s not so bad." Take 15 minutes to watch this great video (the whole series that Barry Ritholtz found is very good) on how the government uses "Fuzzy Numbers" to completely distort the GDP and other economic data that make the MSM reporting of the economy virtually useless.
I am the kid that gets detention for questioning the teacher and I do my best to teach members to question what we hear every day because you need to cut through a whole lot of BS to get to some investing truths that can make you money. We hear so much conflicting information that it’s very easy to get confused or just give up and follow some pundit but that IS the scam – make you pliable and controllable so that you, the investing public, learn to shut up and do what your told. This was all eloquently explained to Neo by Morpheus in The Matrix, so I won’t get into it here but, as Morpheus says, "there is no turning back" once you head down the path of questioning authority, you are doomed to a life of self-reliance.
Taking the red pill (questioning your world view) doesn’t solve any problems and it doesn’t make things any easier but it can make things more real, which can help you develop an investing style that is not dependent on the kindness of strangers, and that is financial independence. It’s a complex World out there and today’s debacle just reminded me how scary it is to be too reliant on any single source for information. We were on top of things, we took action, we made money – that is our site operating at its finest and the more people who bring in different views the better because the truth IS out there – it’s just so damn hard to find!
