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Obama Says: "SoU is Strong" - Phil Says: "Bottom 99% SoL"
Obama Says: "SoU is Strong" - Phil Says: "Bottom 99% SoL"
Courtesy of Phil's Stock World
Everything is great!
Well, if you are a corporation, that is and that's all the matters in the United Corporations of America, right? I went through the State of the Union Address last night with my commentary. The Cliff Notes of the Cliff Notes are: A 25-year goal of having 80% of America's electricity come from clean energy (another chance to short FSLR!), A proposal to "redouble" our efforts to rebuild infrastructure (zero has been approved so far, we can double that no problem!), A 25-year goal to give 80% of Americans access to high-speed rail (this will be a neat trick with Amtrak's $2.6Bn in funding), A 5-year plan to get high-speed wireless coverage to 98% of all Americans. That one I WOULD trust to private enterprise.
Blaming lobbyists for "rigging the tax code" (it's not the voting by Congressmen, it's those darned lobbyists!), Obama says we can lower the Corporate Tax Rate without adding to the deficit. This is actually true, Corporations paid $182Bn in taxes last year, just 1.14% of the GDP while US taxpayers paid $2,000Bn - presumably under the same tax code as Corporations. I have long advocated a VAT tax on business sales as profits are too easy to rig, with over 75% of businesses in America paying no tax at all. It's not complicated - add 10% to all goods and services sold and hand the government $1.5Tn - the consumers will then determine who is passing through fair market costs and capitalism triumphs and our deficit is wiped out. That's my first day in office - anything else need looking at?
Obama says worst of recession is over (boosting Global markets) but Government still spending more than it takes in. "That is not sustainable. Every day families sacrifice to live within their means – they deserve a government that does the same." The President calls for a 5-year spending freeze that will reduce deficit by $400Bn over next 10 years ($40Bn a year?). I love these plans - somehow a freeze saves you money because you WOULD have spent $40Bn a year more but now you won't. This is like when Tina comes back from a 25% off sale at the store and tells me she "saved" $500 - somehow it still costs me $1,500!
The President says his military advisers have identified "tens of Billions" of Defense cuts that can be made. Yeah, I think those were identified about $20Tn ago too. While I have no doubt that $10Bn, even $20Bn can be cut from $1,000Bn in annual spending, I would sure feel better if we had a plan that at least saved enough to make a dent in the $400Bn of INTEREST we're already paying on our Debt rather than showing us how we can reduce our additional annual deficit from $1.8Tn to $1.74Tn.
Anyway, there was another few pages of BS and I applaud Paul Ryan for making a respectful rebuttal but, then again, he could afford to be nice as the Tea Party branch of the Republican Party was (literally, I think) foaming at the mouth as she waited to be unleashed. Bachmann had already refused to sit next to a Democrat at Obama's speech, unlike every single other member of Congress - so we kind of knew she wasn't going to be a fan of what he said well before he said it. I'm not going to say anything else about it because I will be accused of picking on her, so watch it yourself - we report, you decide!
See, clearly this entire thing is Obama's fault! She even has charts that prove it! I'll just let Jon Stewart and Steve Colbert have fun with this tonight but the greater economic (and investing) point here is that this is not a Congress that is likely to work hand in hand with the President. We can expect, much like we've seen since November, many compromises made on the part of Obama to cut Government oversight, reduce regulations and enforcement - including tax collections on Big Business - while getting not one penny of all that grand "Building America's Future" stuff he was peddling.
The Global investors were buying it as they don't really understand how powerless a President is when Congress is against him. The Dollar dove to 77.88 last night, the lowest it's been since early November, right before it bounced and knocked the S&P down 5%. Our direction today very much depends on whether or not the volume trading in the US can finally shove the dollar below that 78 line, potentially taking us back to 75.6 for another 5% boost in the markets as our currency collapses - whoopee!
In my morning Alert to Members today, I said I liked shorting the Dow futures off the 11,950 line as I'm still not expecting 12,000 to hold on the main index (we already took up short positions) and we'll see what sticks today. As of 8:30, it looks like we may be able to ride the Nasdaq down as well if it slips below that 2,700 mark. For example, the QQQQ Weekly $58 puts are $1.35 with very little premium and we can use that 2,700 line as an on/off switch in a contract with a two-penny spread.
Of course it's a Fed day but, as I said earlier in the week - What are they going to do - PAY banks to borrow money? When you knock rates down to 0.25%, there isn't a lot of wiggle room although never say never as the BOJ has gone all the way to 0.1% and their debt to GDP ratio is "only" double ours (so far). The Financial Times notes that $1Tn of loose Western "funny money" is flowing into emerging markets and could overwhelm the capacity of their economies, overheating their markets and over-inflating their currencies as Western investors scramble to convert their free money into something less worthless - even Drachmas.
Laszlo Birinyi was the special guest on CNBC at the close and he did a great job of talking up the market despite the earnings misses (DOX, ELY, EWBC, EXAR, NSC, YHOO) that were scrolling along the screen as he said "the party is going to go on a long time." "When you have an 80 percent move off the bottom as we did ... it always has resulted in a long-term market because quite frankly so many people miss so much of it and they have to try and catch up," Biryini said. Hey, who can argue that logic? I'm sure CNBC was "surprised" by his bullishness and that the timing of the interview was a coincidence. After all, how could they know he projected a 322% advance in the S&P on Jan 5? As Laslo said:
The bearish arguments for aren’t any more valid. Many bears expect a recession, which they assume is poison for market performance. Not quite. In the 11 recessions since World War II the market has averaged a 3% gain, despite the inclusion in that data set of the 23% decline in 1974. During 6 of those downturns the S&P went up. If this is a recession year, it is not automatically fated to be bad for stocks.
Oh, silly me! That was what he said in January of 2008. Gosh, how could I have mixed that up? Still, look at that chart! It's the 3rd year of a Presidential Stock Cycle and we're right on track to get back to S&P 1,500 by December - what can go wrong? The Bernank gets to pat himself on the back this afternoon and investors are giving him a 66% approval rating according to 1,000 Bloomberg Readers. What's not to like, this guy has given us (top 1%) $3 Tn in totally free money and it only needs to be paid back by our kids and grandkids WAY down the line and we'll probably be living in the Caymans by then.
Of course, it does pay to keep a little money spread around our favorite tax havens as you never really know how fast it can all hit the fan. Global investors are now predicting that Greece will default within 5 years and that will be the last straw for Ireland. “The problems in Europe have been addressed, but only with a band aid,” said Ted Jarvis, senior vice president at the Indiana Trust Company in Anderson, Indiana, who participated in the survey. “Several euro members have not followed the correct policies and dug themselves a deep hole.”
Brazil's inflation is on track to hit 6.5% in 2011, the worst since 2004, when EWZ fell off 33% in the first half of the year. We've been looking at EWZ as a possible play ahead of Obama's trip to Brazil in March but these are some pretty scary numbers! “Policy tightening will not be enough,” Goldman's Paulo Leme said at a panel held by the Brazilian-American Chamber of Commerce. “Something will have to give. What will give will be inflation.”
China is taking DRASTIC steps top put a lid on 4.6% inflation (that they admit), setting lending rates at some banks 45% higher than the benchmark 5.81%. For ordinary industries, lending rates are about 30 percent higher than the benchmark, though top clients can still access loans at a 5 percent discount to the benchmark rate, it added. The newspaper also cited a separate bank official as saying that overall lending in January cannot exceed 12 percent of the full-year target, which is said to be about 7.5 trillion yuan. Yi Gang, deputy governor of the central bank, said that the effectiveness of Chinese monetary policy was increasingly limited, the China Securities Journal reported in a separate article on Wednesday.
Of course China tightening and The Bernanke (new POMO Explained video here) loosening is doing it's job of ditching the Dollar, which is now down a full 4% since December 10th, when the S&P was at 1,275. Now the S&P is at 1,295 so we are buying 5 S&P points for each 1% decline in the value of our money and all of our dollar-denominated assets. If this trend continues and we make that 1,500 target on the S&P, that should give us a decline in the dollar of another 40% - won't that be special?
In conclusion - you'd better be out there making an assload of money because you'll need it to keep up with rising prices for things you buy and declining values of your US assets. We aren't going to be able to afford to retire/run away to the Caymans if we have to count on US dollars to support us unless we have an obscene amount of them!
- Phil
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http://www.youtube.com/watch?v=1RJxAqisaWg
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Space Monkey
tip e ...!
http://www.youtube.com/watch?v=-LA-S64QY3o&feature=player_embedded
Russell Means: Welcome To The Reservation
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thanks for this link.
The politicians around the world are nothing more than auction items which can be sold to the highest bidder. They will do whatever they can for the lobbyist paying them the maximum amount of money or votes, be it the unions, the banksters, the richest corporations or individuals. They are in the power seat to extract maximum advantage for themselves in the small time frame they occupy the seat of power.
The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.
http://www.marketoracle.co.uk/Article24581.html
The insanity is beginning to manifest on the street level.
Obama's SOTU was embarrasing; but I don't think it would have been any different from a Republican.
The only sane SOTU speech would have been:
"We have failed future generations. In our thoughts and our deeds we have become gluttons of the moment, stewards of nothing but narcissistic self-images, and equivocators of no equal since the fall of Rome. We must stop lying to ourselves and our progeny. We must jail the malfeasant, reward the responsible, and hang the wicked; this starts tomorrow."
Dream on if you believe that ending all regulation would lead to an explosion of useful capitalist/free market "innovation." You would get just the opposite: a plethora of financial products only a Phd from M.I.T. or Harvard B-S(chool) grad could love.
In an unregulated economy all industries tend to oligopoly - not a free market. Nothing is as anathema to b-leaders as truly free markets where profits (and therefore bonuses) tend to zero.
Many people think like you do, but, if an unreglated economy leads to ogligarchy, then, why do we have ogligarchy now? Unless, you think we are unregulated?
Seriously, it serves the purposes of the Elites for the common wisdom to be that Big Biz hates regulations.
What regulations do you see curbing the current fraudulent behavior in the financial sector? We have oligarchs because they can no matter what it says on the books, they are pretty much getting away with whatever they want to.
Unregulated leads to oligarchy, but so does regulated in the interests of the oligarchy.
OK, I can read off the names of the 2 or3 ogligarchs that control almost every sector of our economy, ATT/Verizon/Sprint MS/APPLE GMC/Chr/Ford, etc, rightoff the top of my head, can anyone name some of these ogligarchys that appear thru unregulated business? You have all of history to pick from, surely you can beat the 8 that I just came up with.
It would be difficult to precisely meet your challenge because a purely unregulated/ruled era has never existed - in the same way as no one has experience pure communisim, pure anarchy or even pure Christianity. However, I'll accept the challenge and suggest that even without government intervention - businesses will strive to erect meaningful barriers to entry for the purpose of securing profits. I do believe that horizontal integration and vertical integration strategies are an expression of that desire. Why did Cornelius Vanderbilt seek to dominate the early railroads? Why did JP Morgan "partner" with sometime rivals to form trusts? Why did Andrew Carnegie seek to purchase or lock in as much of the "best" raw materials as he could - if not to prevent competition?
And by the way - GM, Ford and Chrysler have not been true Oligopolies since the late 60's. We have all them thar furreners pushing their products - like Toyota, Honda, Hyundai, Daimler, Volkswagen...etc...etc.
Actually a business vat would be more efficient and less economically disruptive. I would have to agree with a business vat if the business income tax were ended. It does have an effect of lowering demand at the margin, but it doesn't distort economic activity and efficiency as much as the corporate income tax, so net net it would actually be a positive. Gosh...the first vat I approve. But I still hate socialists, excep you Ilene cuz you are so cute! I wouldn't kick you out of bed even if you were reading Das Kapital. Crackers are a different issue entirely.
You are correct, that was a technique so that people wouldn't see how much the dems lost in November. The president has to know that the republicans aren't going to let him have anything he wants and will force him to do what they want, especially with an election coming up for the office. All those things he talked about was stuff rehashed from his other speeches he said and wanted to do. The Congress won't allow him to do anything he wants and essentially he will be a president without support.
Can you say: "Lame Duck?"
If Obama couldn't get these things done with control of all three branches of federal government for two years, what makes anybody think he can get anything done after losing the House of Rep's?
No one in government can get anything done other than collect a salary and gravy benefits.
The role of government is to ensure the collapse of the empire, the servitude of the peasantry, and the enrichment of the money changers.
+2012
Good ol' Phil. Still pushing the insane notion of a conflict of interest between "the corporations" and people... and of course we've enacted thousands of laws, involving hundreds of thousands of pages authorizing tens of millions of pages of regulation to attempt to "fix" this alleged conflict. And what's the result? The creation of the very conflict of interest that was attempted to be fixed, but which the regulation was enacted because of the mistaken belief in, in the first place!
Sure, hate the corporations if you:
- don't work
- don't buy consumer products
- don't have a pension or retirement account
- live as a reclusive hermit in a wilderness somewhere hunting with spears you made yourself
That is wonderful. From inefficiency to inexistence. Classics. I'll take for one dollar.
It should always be remembered that denying a problem is a solution to the problem. No problem, no solution to be brought. No solution to be brought, no efficiency to be measured.
Fact is of course that the inefficiency of the solutions brought to a problem never means the problem did not exist in the first place.
This said, this kind of attitude is going to be widespread in the future.
People should remember that the US claimed the seat of power on certain promises. Failure to deliver on promises and actually performing just like the previous power holders is usually met by the denial of the problems.
It was problems when you were not in power, problems that justified the termination of the previous exercize of power. Once in power, well, and when you fail to resolve the very same problems you underlined, much better to depict the very same problems as non issues. If you persist painting them as problems, somebody might come up and claim that you have to leave the seat of power. And you do not want that...
Bearster - You forgot to say "in China".
Politics is the distraction.
YOu know I have never heard it said better. The massive bureaucracy attempting to fix the ills of capitalism have created the conflict of interest and wasted economic activity and unfairness it was designed to prevent. Down with socialist fucktards, except you Ilene!
Okay. Maybe there was a link from the article. But what the hell is the point of ZH linking to an article about Michelle Bachman if that article doesn't have a picture of her???
Obama hopes to gin up a Sputnik Moment but he'll probably have to settle for a Dupnik Moment.
I've been tryin to figger that one all day...Sputnik?...USSR?...in a SOT American U speech?
Why not Apollo?
Oh...yeeeah...never mind, what was I thinking ;-)
I agree with Bachmann (she is pretty) not sitting next to a democrat during the SoU. It was just another bit of trickery by the dems to obscure their diminshed numbers in the house.
Sneaky these politicians...
I don't know that Bachman is all for smaller gov't as she may think she is, but she sure is purty and fiery, and has far more troll power in relation to the LEFT than maybe even Palin! ++ for the Old Gal.
And who in the world wants decorum and mutual respect in DC, while the whole nation is being destroyed? ATM, its a (d) who is doing it, and the last thing I want is leaders who will calmly just go along with the madness, and play little games with ribbons and 'oh she wouldn't sit next to me' What is this, grade school? The bus?
I insisted my financial planner included the word "obscene" in my retirement calculation.