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Want a Real View of the Economy? Talk to a CEO
Well, we’ve
reached the point at which the mainstream media is finally beginning to
understand that the US recovery of 2009 was actually an accounting fiction and
that the “green shoots” were just a stupid metaphor.
Indeed, just
this morning, Fed Chairman Ben Bernanke all but guaranteed he will introduce a
large QE 2 program sometime in the near future… which essentially proves not
only that QE 1 failed, but that the US economy is on the ropes (why else would
we need more emergency policies?).
Let’s put
this in perspective…
The US Fed
is already buying between $8-12 billion in US debt per week as courtesy of its
QE lite program. Moreover, the Fed has been juicing the market on 12 of the
last 13 options expiration weeks. So QE 1, for all intensive purposes, NEVER
ended.
And now, our
illustrious Fed Chairman is talking about introducing even MORE QE? Just how
awful have things gotten that we’ve got ONE QE program occurring and they’re
already talking about introducing a second LARGER one at the same time?
Well,
according to US CEOs things are flat out awful… as in May 2009 BAD. According
to Bloomberg:
Confidence among chief executive officers in
the U.S. sank in October to the lowest level since May 2009, when the world’s largest economy was still
in a recession, according to a survey from the Business Council... The group’s
gauge of expectations for the economy six months from now fell to 51.7, the lowest since February 2009.
If you’ll
recall, February 2009 was when everyone thought the whole world was ending. The
US economy was literally falling off a cliff with initial jobless claims
clearing 600,000 (a 26 year high) while the S&P 500 was collapsing on its
way to the March lows of 666.
And US CEOs’ expectations for the next six
months are as BLEAK as they were back then… BEFORE
the Fed even introduced QE 1?
Lest you
think this is merely idle talk, consider that insiders have been unloading
their shares by the truckload in the last few weeks.
For the week
of October 4 2010, the insider selling to buying ratio was 2,341 to 1 with
insiders DROPPING $400+ million in stock and only buying a measly $170,000.
This comes on the heels of September 27’s equally insanely bearish ratio of
1,411 to 1 (which by the way was preceded by weeks with ratios of 250 to 1 and
650 to 1).
In plain
terms, corporate insiders, the folks who know their business and its prospects
better than anyone are dumping shares as fast as humanly possible. They are
literally putting their money where their mouths are when they say the US
economy is AWFUL and business prospects are on par with those of February 2009
(before Bernanke even thought up that stupid “green shoots” nonsense).
All of this
is going to end horribly when the rest of the world realizes what corporate
CEOs have already figured out: that the US economy is a full-scale disaster and
nothing the Fed has done has improved the situation.
This is very
much akin to what happened in 2008 when everyone thought that the “worst was over”
and kept banking that the Fed would stave off any collapse (just as it did for
the Bear Stearns Crisis)… right up until the entire system imploded in late
September.
Sometime,
and I cannot tell you when, the financial markets will have a similar “wake up
call” as they did in 2008. We’ve already got the same set up in place: US banks
are being hit from losses related to garbage mortgage securities, commodities
are soaring, and the US Dollar is collapsing with everyone shouting that it’s
doomed.
This is
almost identical to where we were in the summer of 2008. And we all know how
that turned out.
In plain
terms, you should take this rally for what it is: a gift from the market Gods
to cash out some profits and prepare for what's to come.
Good
Investing!
Graham
Summers
PS. If
you’re worried about the future of the stock market and have yet to take steps
to prepare for the Second Round of the Financial Crisis… I highly suggest you
download my FREE Special Report specifying exactly how to prepare for what’s to
come.
I call it The Financial Crisis “Round Two” Survival
Kit. And its 17 pages contain a wealth of information about portfolio
protection, which investments to own and how to take out Catastrophe Insurance
on the stock market (this “insurance” paid out triple digit gains in the Autumn
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Again, this
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Once corporate America got its hands on political power the outcome was assured. Corporations are global creatures with global markets and global workforce to choose from.
They don't give a toss about their country of origin.
CEOs are all idiots. It proves that even an idiot can tell the economy is headed for disaster.
Glad you liked it,feel better for that,time for a beer.
intents and purposes. but good rant just the same.
Until we stop importing goods from economies that we could produce at home and trying to compete with economies that pay a $ a day we are completely wasting our time.A Governments No 1 duty is to Govern in the interests of the nation.Until you have those 2 things nothing will change.
And how do you expect to manufacture all that wonderful (crap)? US trade deficit is about 50% weighted with energy imports. Also, people in the US are broke.
Now then, this doesn't mean that things won't end up this way (as they most certainly will), it's the manner in which it will occur that I take issue with: as energy and raw materials depelete the natural course will be toward localization.
it's very unlikely to get any better. there are many severe covert market influences at work against liberty. the outlook is grim.
http://covert2.wordpress.com
"here are many severe covert market influences at work against liberty."
WTF are you saying? What is liberty have to do with any of this? I'm sorry, but people need to stop throwing out fucking buzz words like such words give credence when smuggled in a bunch of BS...
for all intensive purposes?
It's the new math. Once they killed freshman rhetoric I knew we were all doomed:(
Yep, the insider buying/selling should tell anyone pretty much all you need to know about where this is heading.
Benron's out of ammo, nobody is believing his (or El Presidente's) BS anymore - it's only a matter of time (damned if I know precisely when, of course) before the house of cards build on wind-swept dunes of shifting sands all comes crashing down.
Apparently the "value-added" that used to support the U.S. economy has been replaced with B.S. added.
Bernanke has the power of an insane dictator. Q.E. and ZIRP has not done a thing to address the structural issues of the U.S. economy.
And we are going to add more of the same- more unpayable debt.
Isn't that the definition of insanity ?
Rome is burning and the fiddler is fiddling.
If you’ll recall, February 2009 was when everyone thought the whole world was ending.
I recall that February 2009 was when BHO was putting his hands on the helm of the US ship of state. Of course we might be saying the same thing here.
And just what is it that you're saying?
Hey...it wasn't Benny that talked about Greenshoots...it was Greenspan.