Archive - Jun 2011

June 14th is a national day of resistance against economic tyranny. We all need to do our part. The good folks at AmpedStatus.org have hosted this site: Acts of Resistance: What Are You Going To Do On June 14th to Rebel Against Economic Tyranny? Demonstrations and public actions are being planned in a number of cities.If you cannot attend the public events, then consider taking direct action against Wall Street and the "too big to fail" banks. Direct action boils down to this simple act: remove your money from their grasp. Your money fuels their exploitation, their fraud, their skimming, their lobbying and thus their sabotage of democracy. If we all take our money out of their grasp, then they will shrink or expire. If you haven't already, move your IRA and other accounts out of Wall Street and "too big to fail" banks. Move the accounts to online firms, local credit unions or local banks. Yes, there are still locally owned and controlled banks. Moving your money to them is a direct-action statement against financial tyranny.

Despite near record corporate earnings, the S&P has continued to trend lower for 6 weeks: the longest drop since 2002 as reported yesterday. But have no fear: Goldman's David Kostin summarizes the upside/downside potential of the market (1450/1210 on the S&P), and the key bullish and bearish factors that help determine the current outlook. "Discussions with clients this week focused on the risk/reward balance for US equities. Our forecasts reflect a 2:1 upside/downside return profile through year-end 2011. S&P 500 has declined by 5% from its April 29th closing high of 1364. Our year-end 2011 index target remains 1450 representing 12% upside from current levels. A downside scenario suggests an index value of approximately 1210 or roughly 6% below current levels." Also, Kostin is confident the current sell off is overdue to reverse "During the pull-backs the median length time for the market to reach bottom equaled 27 days. Six of the episodes took 20-40 days and on four occasions the decline occurred in less than two weeks. The current sell-off has lasted 41 days and counting. The historical episodes we analyzed had a median time to recover of 41 days. Recoveries during 2003-07 typically took longer than the speedy rebounds since 2009." Needless to say comparing the current centrally planned regime to any other time is futile, and we completely disagree with his assessment.

For investors and risk managers, the legal and sovereign risk illustrated by the Tropp v. the Corporation of Lloyd's litigation boggles the mind. If the Tropp petition is denied by the US Supreme Court, can any US individual, fund or fiduciary invest in Lloyd's with confidence?

Is history repeating itself in Africa?

"But, the world is now more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries."

- David Rockefeller, Bilderberg Meeting 1991

I'm working on the backend.

Unrestricted in its growth by any constitutionally mandated limits on its ability to create and manipulate money – the official currency now being nothing more than IOUs redeemable in nothing more tangible than coins made out of base metal alloys with inflated face values – and supported by a Supreme Court that has unequivocally demonstrated a willingness to ignore or sign off on egregious tramplings of the Constitution, the stage is set for the U.S. government to evolve into something far more dangerous on the domestic front. All it requires now is a triggering event, and it would be naïve to think that such an event won’t occur. Maybe not tomorrow, maybe not this decade – but when it inevitably does, the federal government already has all the precedents it needs to do “whatever it takes.” This absence of legal restrictions on its actions is the very foundation of fascism.

“…through thousands of years of Chinese history, I know no example where outside pressures about the domestic structure of China produced domestic changes in, in [cq] China. ...”

Many have asked for it, so here it is: the full list of gentlemen (and ladies) attending this year's Bilderberg conference. Some wonder if like in previous years, when following the group's 2009 and 2010 meetings in Greece and Spain, the host countries have subsequently had to deal with some sad episodes of sovereign insolvency, if 2011 host Switzerland, despite its ironclad Swiss National Bank (except for all those dollars on the balance sheet of course) may be next...

As we all know, it is usually impossible to predict the future...

This week's truly market moving headlines, courtesy of Bloomberg (these are real)

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 10/06/11

Tastes fine, and saves on lighting bills!

I hope not! But ignorance is not bliss ...

As the superimposed chart below demonstrates, the current 6 week drop, which is the longest in the last 9 years, or since 2002, may just be the beginning. And while our prediction that 2011 is a replica of 2010 is now confirmed, the far scarier possibility is that the next comparison to 2011 is 2002 - if that year is any indication, the SPX will drop to ~1000 before rebounding: obviously at that point the Fed will have no choice but to proceed with QE3, or the downward momentum will accelerate in what may then become a repeat of October 2008, and all those predictions for an S&P 400 would promptly be validated.