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No Easy Way Out
Here's the latest Stock World Weekly: No Easy Way Out. Enjoy!
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Excerpt:
Inflation continues to be a major problem around the globe. Food price inflation has been one of the primary triggers for the protests and riots across the Middle East and North Africa. China has been struggling with rampant inflation for months now. And price inflation has been cited as one of the primary complaints among participants in this week’s massive protests in Spain.
Inflation is also causing problems closer to home. The Senior Citizens League (TSCL) released a report on May 19 showing that seniors have lost almost one-third of their buying power since 2000, according to the Annual Survey of Senior Costs. “In most years, seniors receive a small increase in their Social Security checks, intended to help them keep up with the costs of inflation. But since 2000, the Social Security Cost of Living Adjustment (COLA) has increased just 31 percent, while typical senior expenses have jumped 73 percent, more than twice as fast.” (Seniors Have Lost 32 Percent of Their Buying Power Since 2000)
Lee Adler discussed last week’s market action and the impending end of QE2: “The markets responded as expected to this week’s light Treasury supply, which included a hefty paydown on Thursday along with the usual dose of POMO. Stocks sold off Monday under the pressure of settling $72 billion in new notes and bonds, but then they recovered as POMO and $10 billion in Treasury paydowns put cash back in the pockets of the market’s movers and shakers. As usual, they deployed some of it into stocks.
“However, there was a fly in the ointment of this week’s light Treasury schedule. The evidence suggests that the foreign central banks ran away from the auctions. If this is the reversal of their short term buying cycle, it should depress the performance of the markets in the weeks ahead...
“The supply bogeyman will return at the end of the month, with $61 billion of new notes and TIPS settling on May 31. That will be an interesting challenge for the market. Once again, how that is handled should give us a preview of things to come when the Fed’s POMO pause begins in July. I have a hunch it won’t be pretty. (Lee Adler at Wall Street Examiner, “What goes around, comes around”)
Commenting on Friday’s weak market behavior, Lee wrote, “Friday was an interesting day, but for bears to take control there must be follow through... The market now sits right on a major trendline. If it is decisively broken, a bigger decline could lie ahead after the end of POMO. POMO should still allow for an intermittent bid to prop the market for the next 5-6 weeks. Then it’s on its own for awhile. That should be ugly.” (Lee Adler's Wall Street Examiner
Excerpt from the SWW: No Easy Way Out (Week Ahead section)
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"It isn't that we can grow any more per se, BUT there is a very real cost for creating capital. TPTB just want everyone else, but themselves, to pay that cost. There are far too many people doing NOTHING to add real value to the economy while at the same time they are extracting huge sums of real wealth from the economy."
that right there is the entire kitandkaboodle in a nutshell...no integral calculus required.
well said. now this very simple message needs to get out to as many people as possible toots sweet.
Duh. Pretty weak commentary. No shit Phil/Ilene. Our current economic models still depend on infinite growth in a finite world. It isn't that we can grow any more per se, BUT there is a very real cost for creating capital. TPTB just want everyone else, but themselves, to pay that cost. There are far too many people doing NOTHING to add real value to the economy while at the same time they are extracting huge sums of real wealth from the economy. History shows us how this turns out if things continue as they are. So long as fraud remains the status quo, everyone should be making strong trustworthy alliances with good people in your community now and investing in all those things that will continue to inflate in the real economy. Unlike the last "crisis" or "crash", all those things (gold, silver, oil, food, dare I say RENT?) are not going to crash. Until accountability returns to the system it now becomes a game of losing the least. Black markets continue to be the only thing remotely close to a "free" market.
Earlier this year Bernanke was taking smug credit for the RUT, while denying any responsibility for the CRB. Is it now time, Ben, to get ready to take smug credit for the CRB and deny any responsibility for the RUT?
wouldn't a black swan event as QE2 approaching cut off make any difference?
Bermonkey should consult Madoff on keeping the tectonic plates of US debt spinning. If he isn't already, that is...
Spillover effects among countries so call your Senator to ask them about it. The G-20 is actively pursuing a framework of indicative guidelines for identifying imbalances that need to be addressed by policy measures. Yep, thats what the brilliant minds are working on.
"...a framework of indicative guidelines for identifying imbalances that need to be addressed by policy measures."
Sounds like bullshit sausage to me; so it fits politicians and the G-20.
Yep, they will grind up whatever they need along the way.
No shit, communities really need to start getting together on this. The new world order will be coming soon enough to "correct imbalances". No one will stand a chance as an individual. Get with your neighbors, employees, hell even get your sharecroppers on board, now we find out what everyone is really made of.
Folks could easily indicate they are ZH community-friendly types by planting tomatoes near the front sidewalk or roadway. These would be for passing gleaners.
OK ilene,
you got a market letter some publicity and came to the conclusion that home equity has been wiped out. That news hit Sept. 15 2008.
Winning The Future?
I hear dog food is cheap.
I remember Seniors getting crushed by inflation in the 1970's and little old ladies buying ALPO for ten cents a can so they could eat.
Of course now, the dog food costs more than the people food because our culture has lost it's mind that much more but...
...of course the bankers are punishing Seniors and savers - it is their modus operandi.
First, you ape the young, then you ape the old, then you do it to the left then the right, then the responsible versus the irresponsible - get the masses whipped up into a lather at each other but never toppling the true causes and troublemakers.
Ok, before we were told these stock traders and these financial firms were the best and most effecient system ever devised for investing capital where it is most needed. Money naturally gravitates towards the best returns and keeps innovation and technology charging forward showering the plebes with the niftiest ipads at prices the market can bare all the while creating more and more innovative jobs that surely will keep up with the population numbers.
I don't believe it. I wouldn't believe it even if all major financial institutions didn't FUCKING FAIL and need a trillion dollar bail out. It looks like they are just blowing bubbles at this point with all that free liquidity they got. I'm not even going to get into the assbackwardization of the rules of supply and demand when it comes to precious metals.
You fuckers stick us with this weekend at bernies market and expect us to cheer record wall street profits? Wait for it to trickle down? suck on Ipad? FUCK THAT.
I hear you.
Markets roughly 15% from their highs of 2007, but in a debauched dollar that buys 25% less combined with inflation, crushed home values, unemployment, and over 14 trillion in debt.
Things are 50% worse than they were in 2007, but somehow we are in "recovery" by bailing out Wall Street on the backs of regular people.
What a crock.
Well said. Now if only we could get the other 7 billion walking around on the planet to understand that.
price control bitchez
Peter Whitley is scorching the dollar and the euro on CNBC Capital Connection right now. 00:28 EST.
Yemen President does not step down...
Oil drops a buck
...and http://www.youtube.com/watch?v=4994186umUU
So now I am confused, ummm is this bullish for stocks?
That's bullish for QE∞
Not particularly in the intermediate term. Lee Adler looks at the flow of money from the Fed, to the Primary Dealers, and the Treasury, and surmises how that would affect stocks. There's not much of a relationship between stock prices and how well the basic economy is doing when the Fed is "printing" large quantities of money and essentially enabling the primary dealers to use that money to trade - it's causing the value of the dollar to decline, and stocks and commodities to increase in price independently of concepts such as "value". It's my understanding that Lee watches the markets and applies his form of technical analysis to decide where he thinks the market is going in the short term time frame. (I can't really speak for Lee, he might describe his methods differently.) Phil's premise for being long-term bullish on the stock market is inflation, so again it's not that stocks are undervalued, or that the economy is in good shape (it's not), that should cause stocks go up in price, it's that the dollar is losing value and interest rates are close to zero, and inflation is going to be increasing. However, Lee would argue (probably) that when QE2 ends, and before QE3 begins, the artificial bid under stock prices that we see now is going to vanish for a while as the money won't be there for propping things up. The Fed, however, is greatly influencing the markets, so it could do something that would change the analysis. Does that answer your question?
Paraphrasing...short term nope. Feds stop giving away money with 0% interest rates and the market shits the bed.
Market crashes...FED prints more money, market goes parabolic again, except because of inflation.
Only things that don't drop this time like last time: Gold, Silver, Oil, Food.
Thing that will lose value: Salaries, Fiat currencies (all of them versus gold/silver/oil/food), Homes, Businesses that provide services (people get cheaper) versus products.
I think you're pushing your luck to claim that PM won't drop with the rest of the market. If fiat liquidity is the measure of all things, the PM will be effected. Maybe less so on a relative basis, but I doubt the price will be immune to panic and forced sales. Or is it "different" this time?
I'm looking at a universe where the infrastructure is 70 years old and is falling to pieces. PM is needed in nearly ALL cities, by ALL people across the planet. The last pile of money was supposed to rebuild infrastructure, unfortuantely it didn't, and we are all left with the same problems as before. Waiting for complex systems to break down that we all are dependent on in varying degrees.
Blah blah blah. Hello Ilene. It's absolutely irrelevant what "the market" does, as the real economy is dead and Revolution is coming to America: time to start thinking in terms of reality and how You are going to avoid being offed by some starving citizen in your neighborhood who is only trying to feed his family. Game over. Wake up.
+1 Reality is a foreign concept to the ivory tower crowd. A warped normalcy bias colors their world in the hue which they have grown accustomed.
Dr Frankenstein's creation now owns the butcher shop folks and the place is swarming with flies. Is it any wonder the traditional customer has fled the premises? Maggots are only appetising to vultures... who find the rancid product offered to be in keeping with their culture of death and predation.
there goes the neighborhood
Anybody notice that gold just took out its all-time high in Euros?
Does that matter?