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Thursday, December 1, 2022

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Wednesday – Waiting for the Fools on the Hill

Day after day,

Alone on a hill,

The man with the foolish grin is keeping perfectly still

But nobody wants to know him,
They can see that he's just a fool,
And he never gives an answer

the fool on the hill

Well on the way,

Head in a cloud,

The man of a thousand voices talking perfectly loud

But nobody ever hears him,

or the sound he appears to make,

and he never seems to notice,

the fool on the hill,

And nobody seems to like him,

they can tell what he wants to do,

and he never shows his feelings,

 

But the fool on the hill,

Sees the sun going down,

And the eyes in his head,

See the world spinning 'round.

INDU WEEKLYBen Bernanke speaks to Congress today in a true test of the greater fool theory as all of the people in the Capitol attempt to fool all of the people in the World, as well as each other, all of the time.  

Some of the people sold their stocks yesterday (we went short(er) last week) and we'll see what some of the people do today as yesterday (and the day before) was a very low-volume affair and, as you can see from Dave Fry's Dow chart – we're pushing that 15,500 resistance level and well set up for a massive breakout….  Or a 1,000-point collapse.

At the moment, we're betting on the collapse for the simple reason that "M" patterns love to be made and the earnings and the macros are, so far, not matching the price of equities, which are now up that 1,000 points since April's earnings and up 2,000 points since January's earnings and up 3,000 points since November earnings.  

That's 30% in 3 quarters!  Did your stock make 30% more than it made last year?  If not, it may be overpriced.  Did your stock sell 30% more than it did last year?  If not, it may be overpriced.  Is your stock projecting to grow 30% in 2014?  If not, it may be overpriced…  

Oil sure is overpriced and yesterday they dumped just 14,000 August contracts (depriving the United States of 14Mb of oil that were scheduled to be delivered in August and creating an artificial shortage), leaving NYMEX traders still with 138M barrels of oil scheduled for delivery to the US in August.  That would be about 45M barrels a week delivered to the US and those are binding contracts that can only be cancelled by the "buyer."  

I use the quotes because these criminals have no intention whatsoever of buying oil.  They are ORDERING oil in order to drive up the price that YOU (an ACTUAL user) are forced to pay by creating a false demand environment.  In fact, of the over 4Bn barrels of August oil contracts that are TRADED this month, only 11M (0.2%) will actually be DELIVERED – the rest is an artificial pump job aimed at manipulating the price of oil.   And who do you think all those trading fees are ultimately passed on to?   

We take advantage of the fakery to print our own money.  Yesterday, for example, I sent out an Alert to our Members to short oil (/CL) futures at $106.49 and, later, when oil went up to $107 (as planned in the morning post) we hit that short too.  We caught the drop during the day to $105.75 and that's $1,250 PER CONTRACT in profits and, this morning, we got another run up to $106 for another shorting opportunity.  So we don't care if "THEY" manipulate the oil markets personally – but it is a very bad thing for America and needs to be stopped!  

Now, enough talk of ameteur manipulators.  Why bother with them when the Master speaks this morning?  

Already we have the release of Bernanke's testimony and TLT (we're long) is flying up as the Fed Chairman says they have no intention of curtailing (tapering) the current $85Bn a month bond-buying program and that the Fed may even INCREASE purchases if US Corporations fire more workers (or simply refuse to hire new ones).  That's the not-very-coded message from the Fed to Corporate America – "We will keep giving you free money as long as unemployment remains high."  

That's sent gold (we're long) flying back up to test $1,300 and the markets did pop (as expected) but, on the whole – so what?  What is this man saying that's new?   What is this man saying that should make us ignore earnings misses by MAT, NTRS, NVS and PJC this morning, along with revenue misses by ASML, KNL, STJ, TXT and USB.  There were only 20 earnings reports this whole morning and 9 of them were tarnished!  

Not only that but the "beats" we're seeing have year over year revenue gains of 1%, 2% not a single double digit gain in the group yet there's probably not two of these stocks (10%) that aren't up 20% or more from last year (average stock is up 30% since November!).  SOMETHING is not connecting here and, when there is a disconnect between the market and reality – reality often wins in the end.  

That's all Uncle Ben is trying to do – postpone the end.   Hopefully extending it past the point of his resignation, so he can go out as the man who led the markets to a 200% gain since March of 2009, rather than the guy who blew the biggest bubble in history.  Bernanke hedges all of his legacy bets, saying:    

“The risks remain that tight fiscal policy will restrain economic growth over the next few quarters by more than we currently expect, or that the debate concerning other fiscal policy issues, such as the status of the debt ceiling, will evolve in a way that could hamper the recovery. More generally, with the recovery still proceeding at only a moderate pace, the economy remains vulnerable to unanticipated shocks, including the possibility that global economic growth may be slower than currently anticipated.”

We'll see how all this is digested by the markets today but, leading off with this statement pre-market – there's probably nowhere to go but down from here.  Could this be The End??

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Phil:

RE; Truck Act- I will talk to my higher ups when I feel more secure in my position. I think they get around it because it is not “ normal “compensation, like an extra bonus payment for milestone- 5 & 10 year anniversary- etc. The corporation & securities industry also limits my participation in outside business activities- much as I would like to help with hedge fund & new site project.

MCD: Decent concept (anyone could use a budget), but shows an amazing lack of realistic understanding of today’s financial pressures.

If anyone is looking for extra nights in LV this was in Travelzoo today.  

 http://www.travelzoo.com/hotels/las-vegas/-90-Vegas-4-Star-Hotel-on-The-Strip-w-Cocktails-40-Off-1522724

Randers—I did see the Travelzoo special—just a note– our rooms are in the Palace tower with no resort fee $50 p/d or in-room internet fee $13.99 p/d –comes out to PSW rate being approx. $30 less for the total of 2 days

MCD Living wages – Phil/  I read an informal article comparing government aid in PR vs minimum wage.  When items such as free health care, subsidized housing and other types of aid, it was foolish to work for minimum wage since all the benefits where eliminated.  I can't remember the conclusion, but it was over $9 per hour "to be worthwhile".  Of course, I pay $400 in electricity WITHOUT central air whle subsidized housing pays $25 with no limit – but hey, at least I earn my living and can be proud ;-(

"Be to be silent and thought a fool, than speak and remove all doubt."   But, after hours, I thought I'd point out a physiological rather than market phenomenon in respect of this morning's comment  "…I think drinking liquids is addictive and, the more you have, the more your body is used to having and the more you want.  I just seem to remember taking very long car trips and spending days in the woods with just a canteen, which was plenty for a normal day.  Now people drink 3 giant cups of coffee… and juice and soda and there's water coolers, etc….  I think it's a general marketing thing that has worked to boost our consumption of liquids so they can be sold to us in various forms.  Maybe …it's another "crazy conspiracy theory" but it just seems strange to me that we survived for thousands of years without having to stop for a SBUX every 10 blocks…"  My take:  crazy conspiracy theory, as I could detect no conspiracy to delete the following from the internet, although Starbucks doesn't  display posters above their barrista's head with this information, admittedly:

 

"As a stimulant, caffeine increases the activity of the cardiovascular system, thereby increasing heart rate and blood pressure. As a result, the renal system encounters a higher volume of blood to filter, resulting in a higher waste output. Accordingly, this property of caffeine causes more frequent urination…he detrusor muscles in the bladder help determine capacity limits of the bladder as well as control bladder output into the urethra. Caffeine relaxes detrusor muscles, thereby causing the bladder to feel fuller more frequently. Moreover, caffeine causes the bladder to be incapable of holding larger amounts of urine, causing urgency to urinate. This indirectly compounds the diuretic effects of caffeine."

Read more: http://www.livestrong.com/article/294664-diuretic-effects-of-caffeine/#ixzz2ZL8nh9Tg

Read more: http://www.livestrong.com/article/294664-diuretic-effects-of-caffeine/#ixzz2ZL87eiXa

A good book to read on living with minimum wage, "Nickel and Dimed".

We are either getting toppy or building consolidation. My guess would be toppy now but given this market we could just be ready for the next 10% move!

/CL – FU SCO!

 

As of this morning…  August contract had 15MB draw, Sept 12.8MB increase, Oct 5.7MB increase.  I have not seen the end of the day count but i expect August to show 110MB tomorrow morning which should put pressure on the crooks for Thursday and Friday.

A good article! Hope it’s true that the demands of physical gold from goldminers will be getting stronger.

Phil / Pharm / Toppy;  After a number of unsuccessful hedges, I decided cash and relaxation was the only way to play — or rather not play — a market that alternately threatens to double or halve depending on the mood of central banks, which is not terribly predictable, and market reaction to their shifting moods, which is even less so.  But Phil's pointing out that we're up 30% in three quarters [!!!!] really whacked home today.  Then this arrived [GK].  I can't help but think that I'm over my head in these waters.  Was that a sickle-shaped fin poking out of that wavetop?

 

"Unintended Consequences
Long ago, when a student of Political Science, I concluded that the only
valid political law was that of Unintended Consequences. It applies also to
economics. An example relevant to current events is Japan which in 1996,
began a model Keynesian experiment when advised by one Ben Bernanke.

 

o     The monetary base increased by 2.5 times, with the Bank of Japan
buying huge amounts of the Japanese bond market.

 

o      Short interest rates were brought close to zero (for the full ten
years) and real rates were negative (for a while).

 

o     Government spending as a share of GDP went up by 50 pp.

 

o     Government debt essentially doubled as a share of GDP.

The purpose of all this was to stimulate the demand side of the
economy, as prescribed by the prevailing economic orthodoxy. The
actual results:

o     Industrial production growth (I use the 4-year MA to proxy private
sector GDP growth) fell from 2% in 1996 to zero in 2006.

 

o     Inflation fell from 1% to –0.3%;

 

o     Long rates fell from 3.1% to 1.3% and the bond market massively
outperformed the stock market;

 

o      Japan’s stock market languishes about 40% below its 1996 level.

 

The results of Japan’s policies were thus the exact opposite of what was
intended. The same policies have been sold to us for the past five years in
the US, by the same salesman (Mr Bernanke). Caveat emptor.

Hi Phil….Wondering your thoughts on a roll of  /ES July futures options contracts with one day to go…

I let this get away from me hoping(not a valid strategy) that the market would come back down..so now I need to roll out and up….  I sold July /ES contracts at 1645 for a credit of 5.00….now 32.00 as of early this AM

was thinking roll out until Oct at /ES 1695 for a slight credit or December at /ES 1730 for a credit as well…or should I go alot farther out for a bigger credit i.e. March 2014?  not sure its worth the stress for that long a time period…Or I could close but  that would be an 8K hit….I guess its all part of the 10,000 hours…Was a great strangle until the last couple of weeks with the melt up…..Thanks

 

w

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