Dow Jones Industrial Average Keeps Sinking

Dow continues to plummet on "stimulus package" .


Markets don't like socialism

its got to be said

How much longer will it be before someone notices that the market seems to have gone down everyday since Obama got elected?

now ask yourself why?

So here's the good news its in the music ......

So here's the good news ,and yes the good news .The seeds of destruction for the 70's generation and all this big government lunacy are already being sown. Listen carefully ,its in the music . New music is everywhere ,and for the first time in decades new bands ,good bands are breaking onto the scene . The clubs are already being filled with remixed eighties music and like the resurrection of DISCO in the late 90's foretold the end of an era and significant decline in equities and the rebirth of the bigger government is best concept ,The remixed eighties music signifies the raise of the 80's can do generation which will work hard first to undue all that is the 1970's and the 70's generation . And with its belief in itself and a willingness ,is ready and able to remake the world in a more open ,independent free environment limited government view.After all the 80's generation grew up and all knows that the government is the problem !

Obama Declares War on Investors, Entrepreneurs, Businesses, And More

We'll say it Larry ,"we told you so"

Posted By: Larry Kudlow Anchor
cnbc.com 27 Feb 2009 04:39 PM ET

http://www.cnbc.com/id/29434104

Let me be very clear on the economics of President Obama’s State of the Union speech and his budget.

He is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds.

That is the meaning of his anti-growth tax-hike proposals, which make absolutely no sense at all — either for this recession or from the standpoint of expanding our economy’s long-run potential to grow.

Raising the marginal tax rate on successful earners, capital, dividends, and all the private funds is a function of Obama’s left-wing social vision, and a repudiation of his economic-recovery statements. Ditto for his sweeping government-planning-and-spending program, which will wind up raising federal outlays as a share of GDP to at least 30 percent, if not more, over the next 10 years.

This is nearly double the government-spending low-point reached during the late 1990s by the Gingrich Congress and the Clinton administration. While not quite as high as spending levels in Western Europe, we regrettably will be gaining on this statist-planning approach.

Study after study over the past several decades has shown how countries that spend more produce less, while nations that tax less produce more. Obama is doing it wrong on both counts.

And as far as middle-class tax cuts are concerned, Obama’s cap-and-trade program will be a huge across-the-board tax increase on blue-collar workers, including unionized workers. Industrial production is plunging, but new carbon taxes will prevent production from ever recovering. While the country wants more fuel and power, cap-and-trade will deliver less.

The tax hikes will generate lower growth and fewer revenues. Yes, the economy will recover. But Obama’s rosy scenario of 4 percent recovery growth in the out years of his budget is not likely to occur. The combination of easy money from the Fed and below-potential economic growth is a prescription for stagflation. That’s one of the messages of the falling stock market.

Essentially, the Obama economic policies represent a major Democratic party relapse into Great Society social spending and taxing. It is a return to the LBJ/Nixon era, and a move away from the Reagan/Clinton period. House Republicans, fortunately, are 90 days sober, as they are putting up a valiant fight to stop the big-government onslaught and move the GOP back to first principles.

Noteworthy up here on Wall Street, a great many Obama supporters — especially hedge-fund types who voted for “change” — are becoming disillusioned with the performances of Obama and Treasury man Geithner.

There is a growing sense of buyer’s remorse.

Well then, do conservatives dare say: We told you so?

http://www.cnbc.com/id/29434104

St. Louis riverfront draws rally against Obama stimulus plan

St. Louis riverfront draws rally against Obama stimulus plan

By Tim O'Neil
ST. LOUIS POST-DISPATCH
Saturday, Feb. 28 2009

ST. LOUIS — Critics of President Barack Obama's stimulus plan gathered beneath the Arch Friday to cheer speeches over a bullhorn and toss tea into the Mississippi River.A few conservative activists organized and promoted the rally, with help from talk-radio hosts. Pleased with the turnout in 35-degree bluster, leaders said they had stolen a page from liberal tradition by taking to the streets with homemade signs."If I had known this many people would show up, I'd have charged admission," said Bill Hennessy of Ballwin, the lead organizer. "We'll do this every chance we get until Congress repeals the pork — or we retire them from public life."

Hennessy estimated that more than 1,000 people showed up. There was no official count, but the crowd spilled across roughly one-fourth of the grand staircase from the Arch to Leonor K. Sullivan Boulevard. Former state Sen. John Loudon, R-Chesterfield, said, "We conservatives are usually pretty pathetic at making crowds. But this one's good."Hennessy said he got the idea after Rick Santelli, a CNBC market commentator in Chicago, last week called for a tea party to protest Obama's anti-recession plan. Santelli's comments became a YouTube hit, and similar "tea parties" were planned in other cities.

The original took place on Dec. 16, 1773, when American patriots dumped imported tea from merchant ships into Boston harbor to protest British colonial taxes.

Dana Loesch, a radio host on 97.1 FM, had talked up Friday's rally and served as emcee. Signs waved around her included, "Pork, the new 'Red' meat," and "King Barack III and the House of Lards."Jackie Smith, former tight end for the old St. Louis football Cardinals, said, "We are mad as hell and we need to stay mad as hell. Don't let up."Megan Dunham of Maplewood brought her four daughters with some painted signs "because it's important that the kids take part." She said it was her first protest. "All I'd ever done before is yell at the TV. This is exciting."


http://www.stltoday.com/stltoday/news/stories.nsf/stlouiscitycounty/story/1D9D9B78798122B28625756B00076A57?OpenDocument

The Crisis of Credit Parts 1 & 2

one of the best explanations I have seen on the banking crisis

Rick Santelli Goes Balistic on creeping socialism

CLICK HERE

DOW drops to its lowest point since 2002!

Perhaps the question is ,is the Obama's Stimulus bill DOA ?

The stock market continues to fall as President Obama decides to return the statue of Winston Churchill the British sent over here after 9/11. Given a 2000 point plunge in the DOW since his election perhaps he should reconsider?

One failure after the next has not even tempered the mainstream media 's love affair with our new President . As advertising revenues continue to drop perhaps it may not be much longer that the consequences of all this unbridled cheer leading will be felt with more journalist on the dole.

An American Carol

answer to failure is do even more of the same.....

So with one swoop of the pen in a huge leap back wards the single greatest achievement of the Clinton Administration ie...welfare reform ,is done away with in the "stimulus package".
Poor Bill looks like the stain on the blue dress will be his only lasting legacy .

A 700 plus billion dollar bacon, eggs and cheese massive government intervention in an already crippled economy looks like a sure fire failure from the get go. As the cover of Newsweek pointed out so eloquently "we are all socialists now" and as I have remarked often on this blog yes with the 70's generation firmly in charge and reshaping the world in its own likeness., and yes they are really a bunch of communist's now as they were then . It is a generation that neither realized the fruits of the free market nor experienced free market prosperity in action.

Past government interventions of any sizable magnitude have all ended in utter failure and this one starting with the initial TARP funds from the Bush administration has failed at every single step of the way ,but in the infinite wisdom of all bureaucrats the answer to failure is do even more of the same .

Comparing Bernie Madoff to over paid banking execs is beyond ridiculous!

What continues to amaze me is how little the talking heads in the main stream media seem to understand about capital markets. The silly argument of comparing Bernie Madoff to over paid banking execs is beyond ridiculous! The over paid execs in many cases are more a kin to a superstar baseball player having a bad year or not living up to his superstar status. Yes there are exceptions giving the 70’s generations inability to produce anyone of substance and having the necessary leadership qualities. Don’t forget there is also corporate America’s propensity to reward “ass kissing” instead of creativity and hard work. Contrary to popular belief the capital markets are one of the most over regulated industries on earth. One look at Sarbanes Oxley or any of the million SEC directives and one would instantly understand what I am talking about.So you ask once again you ask how did Bernie commit such a vast criminal conspiracy?

While much of the mainstream media is concentrating on weather his family was duplicitous or not and yes of coarse many of them were. The real issue is and remains are what the hell were the SEC and all the regulatory bodies thinking? Recounts of his operation show numerous instances where even the smallest and simplest securities regulation was being violated. Over the years there had been numerous complaints made against him and his operations that went unheeded by authorities.

One can only conclude by this that many people both aided and abetted Bernie over the years or at lest remained hands off for reasons unknown. My point being that it was obvious for a long time that he was doing something wrong, very wrong. No one could pull off a scam of this magnitude by themselves.

To make matters worse the very same people that refused to investigate Bernie are the same people in charge of running, some say destroying the banking system. Once again I will repeat, if you destroy the capital markets then people will become ever more dependent on big government for security.

"Stimulus" Passed Dow sinks!

Apparently bringing home the bacon is not as simulative as once believed. The “stimulus” package gets passed and the DOW is down 382 points. I mean hey lets face it if you destroy the capital markets then people will become ever more dependent on big government for security.

FIVE IMPORTANT TAX LAW CHANGES FOR TAXPAYERS

FIVE IMPORTANT TAX LAW CHANGES FOR TAXPAYERS

Here are a few tax law changes you may want to note before filing your 2008 federal tax return:

1. Expiring Tax Breaks Renewed

The following popular tax breaks were renewed for tax-years 2008 and 2009:
• Deduction for state and local sales taxes on Form 1040 Schedule A, Line 5
• Educator expense deduction on Form 1040, Line 23 or Form 1040A, Line 16
• Tuition and fees deduction on Form 8917

In addition, the residential energy-efficient property credit is extended through 2016. In general, solar electric, solar water heating and fuel cell property qualify for this credit. Starting in 2008, small wind energy and geothermal heat pump property also qualify.

2. Standard Deduction Increased for Most Taxpayers

The 2008 basic standard deductions all increased. They are:
• $10,900 for married couples filing a joint return and qualifying widows and widowers
• $5,450 for singles and married individuals filing separate returns
• $8,000 for heads of household

Beginning this year, taxpayers can claim an additional standard deduction based on the state or local real-estate taxes paid in 2008. Also new for 2008, a taxpayer can increase his standard deduction by the net disaster losses suffered from a federally declared disaster.

3. Contribution Limits Rise for IRAs and Other Retirement Plans

This filing season, more people can make tax-deductible contributions to a traditional IRA. The deduction is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes between $53,000 and $63,000. For married couples filing jointly, the income phase-out range is $85,000 to $105,000.

4. Standard Mileage Rates Adjusted for 2008

The standard mileage rates for business use of a vehicle:
• 50.5 cents per mile from Jan. 1 to June 30, 2008
• 58.5 cents per mile driven during the rest of 2008

The standard mileage rates for the cost of operating a vehicle for medical reasons or a deductible move:
• 19 cents per mile Jan. 1 to June 30, 2008
• 27 cents from July 1 to Dec. 31, 2008

The standard mileage rate for using a car to provide services to charitable organizations remains at 14 cents a mile. Special rates apply to the Midwest disaster area.

5. Kiddie Tax Revised

The tax on a child's investment income previously only applied to children younger than age 18. It now applies if the child has investment income greater than $1,800 and is:
• Younger than 18
• 18 years of age and had earned income that was equal to or less than half of his or her total support in 2008
• Older than 18 and younger than 24, a student and during 2008 had earned income that was equal to or less than half of his or her total support.

Links:
• IRS FS 2009-1 Highlights of 2008 Tax Law Changes
• Form 1040 instructions (PDF 941K)
• Publication 526 Charitable Contributions

CONGRESSMAN SCOTT GARRETT’S OFFICE

WHAT THE ‘STIMULUS’ WILL COST AMERICAN FAMILIES

WHAT THE ‘STIMULUS’ WILL COST AMERICAN FAMILIES

As the chart below shows, the per-family cost of the House-passed ‘stimulus’ bill will range from about $7,000 to more than $20,000.

Based on Congressional Budget Office [CBO] score of $820 billion for H.R. 1, with House Minority Budget Committee staff calculations, as follows: First column: Divides CBO score by the number of households in the U.S.
Second column: Adds CBO interest estimate, and divides by the number of households.
Third column: Takes CBO score with interest, then adds a list of programs identified by the Committee for a Responsible Federal Budget as likely to become permanent, applies interest, and divides by the number of households in the U.S.

CONGRESSMAN SCOTT GARRETT’S OFFICE

Network - Mad as hell

Network - 1976 - Life is Bullshit

maybe the honeymoon is over?

Maybe the honeymoon is over...

The Obama administration is now pulling out all the stops from coordinated media briefings with CNN and sympathetic media outlets to petitions signed and commercials run against the likes of non other than Rush Limbaugh. The crisis is ON and if we don’t pass the stimulus bill “we are all gonna die”. However the facts belie the crisis with the current slow down still falling far behind the voracity of the slow down in the early 1980’s.

Obama reaches for the bacon.....

So in grand fashion, with the economic pressure on our new president did what politicians over the ages have long resorted to, he reached for the bacon, promising a chicken in every pot and a pool in every back yard, a thousand bucks to every illegal alien and loads of money for every left wing program proposed over the last 40 years .It reads like a laundry list or a wish list resulting in no good deed going unpunished. So much for all that “change”. The only change so far is the price tag, which seems to be growing by leaps and bounds.

The rush to the extreme left is not as extreme as many talk radio commentators such as Rush Limbaugh surmise. Again I repeat it’s just a generational thing the folks who came of age in the 1970’s were never really invested in the free market to begin with. After all they never reaped the benefits or even saw it in action. They were the generation of bad disco, Watergate, hyper inflation, failure in Vietnam, stagflation, drug addiction, the hostage crisis and gas lines. Even the Olympics in Munich were tarnished by violence. These folks have spent there whole lives emotional scared from the trauma of growing up in the 70’s and now is there turn for revenge. Their goal is to punish everyone who has or has done anything and they view the Obama administration as the vehicle to make this happen.

INAUGURATION DAY

INAUGURATION DAY MASSACRE!

WELCOME TO THE 1970'S



DOW DROPS 330 POINTS HITS LOWEST LEVEL SINCE NOVEMBER 20TH

Words of Wisdom.....

Today will be a day rich in inspiration, just one percent of Edison's equation for success. After that, we'll be sweating it out.

the 70's Generation the Generation that never made it....

like most generations coming to age in a particular time period that era has a way of effecting ones out look throughout that rest of there life. In the 1920's it was the devil make care attitude ,in the 1930's the great depression ,in the 1940's it was world war twoand the greatest generation ,in the 50's it was moving to suburbia ,in the 1960's it was the anti war counter culture ad wanting to change the world . These generational experiences have a way of effecting the majority of that generation shaping there experience and the way we think about the world . In the 1970 's oil shocks ,stagflation,international terrorism ,military failure ,stagflation ,the misery index, high divorce rate ,high drug and alcohol use ,the hang over from the sixties all lead to one over riding principle for the 70's generation FAILURE and the 70's generation becare the generation that never really made it .

With this failure came the litany of kook conspiracy theories ,and inability to see a benevolence in the universe ,a feeling that things larger then onself were working against us . That malevolent forces beyond our control were conspiring against us. That we were helpless in the face of doom .Not trusting the markets nor the government but looking to punish and spread the misery equally far and wide, the 70's generation embrace totalitarian socialism or communism to a greater degree than anyone since the 1930's.

As the 70's generation grew up it brought incompetence and disaster and mostly failure in its wake , from ENRON,the mutual fund debacle ,to the current banking and finance disaster to the destruction of wall street ,the 70's folks have unleashed a cataclysm of disaster and failure on to the rest of us. Remember these people still think good old stagflation Jimmy Carter was a good president?

So why do I keep harping on this day in and day out ,well any economist worth his salt would admit that one of the strongest cyclical driving forces in an economy are demographics and given the most economic activity is driven by business creation and house hold formation it can be noted that from time to time an economy is blessed with demographics that favor these to factors ,but what we find in the 70's generation is a proclivity for neither. My last reunion told the whole story ,as i am told nearly half the graduating class of 1980 had never been married . I found this simply astonishing given we came from a very upper middle class place with a "first rate education".

No dont get me wrong every generation has its successes and failures but some generations seem to produce more of the latter .

there is more to come....

HAPPY NEW YEAR

Connections, political donations and cocktail parties

So yes I have sold my practice, retired and a lot of you have voiced concern about weather I will continue with this blog. The answer is a resounding yes and I am going to start with a little story about Bernie Maddoff. As you know I have for most of this decade warned many of you that these financial wrong doings are never the solitary acts that the media and the industry want you to think they are. What we have with the Bernie Maddoff scandal is another example of how the rules that the rest of us go by don’t seem to apply to certain people. Connections, political donations and cocktail parties as for most of this decade seem to out way professionalism and ethics. Wall Street in recent years has become a business where the customer’s money has become the firm’s money to do with as they see fit. Don’t blame your local broker he or she is subject to the most stringent rules and requirements imangable but understand that people like Bernie operate outside those legal requirements that you and I are often subject too.

I only know what I read but misgiving about Mr. Maddoff surfaced as far back as the 1970's and a fairly large amount of suspicsion has been build up that last 12 years! Yes that’s right heavy dought has been cast more than once in the last 12 years . Now Mr. Maddoff made off to a tune of 50 billion yes that’s BILLION , about double what the auto industry was bailed out for. Seems his operation didn’t pass the small test more than once, yet when notified the regulators sat on there hands or seemed unwilling to take on the challenge.

So here I will interject some of my own personal musings and many of you who know me personally will find this somewhat ironic. As it became clearer and clearer that I needed a change I began to shop around for a new clearing and compliance arrangement. One firm that shall remain nameless seemed like a pretty good fit to me but upon discussion they seem to have problem, not with this blog but with my other blog,"the Ridgewood blog”. A blog in which soccer moms and dads argue as to the nuances of turf fields, math programs and the finer points of pedestrian etiquette while crossing the local streets. The very day the Madoff story broke and it became know that the likes of Eli Wisel, Yeshiva University and NYU had all fallen prey to this scoundrel to the combined tune of say 80 million .I was being blown off by a firm that was worried about negative fall out from the Ridgewood blog? And that my friends was the as they say the straw that broke the camels back and told me once and for all it was time to step aside and search for new ventures.

The moral to the story is that it appears that the regulators and the industry have consistently protected themselves and defend their unaccountability at the detriment to the investor class, while the investor is left with these words to the wise "if your over 18 everything I say to you could be a lie ".

and yes there will be a lot more to say on this subject for the next couple of weeks while the biggest scandal in US financial history unfolds.

Merry Christmas !!!!!

Time to Retire

Dear Friends and clients,

As you are well aware the stock market has been an extremely unforgiving place in recent years. While everyday we read of one financial catastrophe after the next the regulatory environment has become increasingly onerous. One financial scandal after another has made very difficult for Independent brokers such as myself to deliver the kind of services that you as clients deserve.

Recent events have made it virtually impossible for me to continue working as a stand alone broker and have put me in a very difficult position with some very big decisions to be made. That’s why I feel that the time is right to announce that I will be taking early retirement so that I can explore other opportunities.

I want to thank you for all your support over the years. If you need further assistance in my absence please contact Zuri Idoeta @ 1(717)393-7003 he can help you with your accounts and be taking over my practice.

Sincerely,

James J Foytlin

PS this blog will continue with many updates coming in the next couple of days

Tuff Times for the US Economy

frys with that ?

Japan a very willing consumer of US debt

The power of the next administrations stimulus plane lies in the voracious appetite by foreign banks and governments for US treasury securities. Over the Weekend several Japanese banks agreed that they would be willing to buy all the debt the US government can issue .This news of ready and willing customers, and not the stimulus plan it self is what has pushed the market higher since Friday.

2008 Market Performance

12/31/2007- 12/2/2008 2008

Close Close % of Change

DJIA ^DJI 13,264.82 8,419.09 -36.53%

S&P 500 ^GSPC 1,468.36 848.81 -42.19%

NASDAQ ^IXIC 2,652.28 1,499.80 -43.45%

Russell 2000 ^RUT 766.75 441.82 -42.38%


Http://finance.yahoo.com

Citi’s salvation signals the midpoint in this crisis

As I said previously my bet would be that Citi’s salvation signals the midpoint in this crisis. Don’t break out the Champaign just yet as one analysis Meredith Whitney keeps reminding us Citi as well as many other banks suffer from the “junk in the trunk” syndrome and these bad assets are systemic and slow to heel. On the bright side the recent resolution for Citi seems far more satisfying than the previous alternatives of Bear Stearns and Lehman Brothers.

At this point weak economic data is looking more and more like its being priced into the market and it appears that for the moment many stocks have already made there lows ,yet it would not surprise me to see the market as a whole make some lower lows. Long term investors have begun to pick up equities and fixed income predicated on the idea that yield equals good values and if not at lest you are getting paid to wait and wait and wait....Some of the large scale institutional barging hunters are becoming ever more active and even starting to compete for controlling stakes in various entities with each other .Some of the more recent data though far from benign has come in not nearly as bad as many had come to expect. It appears at the moment that the end of the world has been forestalled to yet another day.

Thomas Jefferson said in 1802

Very Interesting Quote In light of the present financial crisis, it's interesting to read what Thomas Jefferson said in 1802:

'I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.'

Better ways to seek your fortune

sound prudent financial advice for hard times :

James Foytlin

jamesfoytlin@optonline.net
toll free 1(866)492-3959

Citi Never Sleeps ...snore

As I have said many times all financial crises in recent generations seem to begin and end with Citibank. Weather it’s the late 1970’s with the Latin America banking crisis or the Early 90’s financial melt down all roads as they say lead to Citibank. It seems when Citibank stocks goes below $10 the end of the crisis may be at hand. It was that way in the early 90’s when the same pattern as now brought several major investments from a white night or should I say a Saudi Prince and some additional help from Uncle Sam. No mea culpa was forth coming from Citi as none will be now. The bank was propped up by a combination of government aid and outside investors. Then as now no great proclamations were made, no show trials were had and no politicians patted then selves on the back. The fix was in and the financial system began to resurrect its self. Let’s hope that once again the recent bailout of Citi signals the same.

“no reason to buy is reason enough to buy”

Treasury Secretary Paulson always good for 100 points to the down side on the DOW once again made a failed attempt to reassure markets that someone in Washington actually knows what they are doing, but alas the markets weren’t buying. Students of market physiology would suggest that “no reason to buy is reason enough to buy” so perhaps an over sold condition coupled exhausted sellers may produce a reflex rally at this juncture. There are 4 ways in my view to play this: 1) the long term short ie... investing in the decline of the market thru indexes 2) Investing in quality stocks and bonds that pay excessive dividends and interest hoping to out last the return of the “Carter administration” 3) the market will from time to time offer unusual high risk trading opportunities due to excessive volitility and 4) safety would suggest that unless you have at lest a 4 year horizon best to allocate more money to cash

Sometimes market events are bigger than any of us. The stock market has gone through a period of major turmoil and in the trailing 12 months has the S&P 500 down a sizable 37.47%. There have been major dislocations in the economy especially in finance and banking. A complete crisis of confidence has griped both the government and private sectors. The bond market, mortgage market and commercial paper market have frozen. Even money markets have broken the buck and banks have failed. Large government initiatives have been needed and shot gun weddings have been manufactured to prop up the ailing bank and brokerage sectors. The worse financial crisis since the 1930’s has left little growth in any type of investments.

You don’t have to be a college graduate to figure this one out.

So the worst 2 day sell after a presidential election and still investors wonder why, well folks its simple:

The new administration has talked about higher corporate taxes; higher personal income taxes; higher capital gains taxes; higher taxes on dividends and a government take over of 401k plans. You don’t have to be a college graduate to figure this one out.

Look for the new administrations choices of economic advisors and key fiscal appointees to divine the leadership direction from the campaign rhetoric. No one seems to have any clue how President Obama will govern. Will he as critics claim lean far to the left and sit down with Hugo Chaves or will he embrace the Clinton legacy and push hard toward the center pursuing free trade and welfare reform and perhaps even some tax cuts?

The perception by many is that he is a smooth talking good looking empty suite who will be filled with the ideas of his big money supporters and there proxies. Again critics assert that it’s more likely the views of Weatherman Bill Ayers and his ilk that have the most influence President Obama again the key is his choices of his key economic advisors.

There is also a third possibility which harkens back to the Carter Era when and aggressive congress confronted a weak inexperienced President. President Obama for sure lacks experience but I am not sure this Congress is either smart or shrewd enough to run the show.

The other key issue is energy policy for if the new administration harkens back to a conservation at all cost philosophy instead of a focusing on the discovery and promotion of new resources I fear we will very quickly see the return of vastly higher energy prices due to constrained supply.

Greenspan Sells Out and we go limit down....

No wonder the market continues its sell off even the former FED Chair Allen Greenspan has raised the white or should i say red flag and joined the communist socialist big government party. Oh how the mighty have fallen once a clear voice now humbled by this huge financial crisis. Sometimes I wonder why these guys hold on when it’s clearly time to retire and manage in moment of weakness to decimate an entire lifetime of work.

Given the preponderance of 70’s generation types who operate under the philosophy that governments know better than markets and people its no wonder the market continues to fall and chaos reigns. The Elliot wave suggest this is the final leg of the 5th wave down

The current misconception being propagated is that hands off lazy fair left us with this mess, and big government is here to save us. Unfortunately in the world of Sarbanes Oxley it very hard to argue that there is not enough financial regulation, if the truth be told regulation it seems was applied unevenly with generous dispensations given to political friends and patrons.

Contrary to the current view that the government didn’t do enough in the 1930’s the reality is that it did plenty just not the right thing .In the 1930’s Government activism virtually created and prolonged the great depression, then like now the market was wrung by scandal creating a movement for greater regulation. This led to a very activist government ever searching for more revenue too feed their schemes. Interest rates and Taxes were raised, and world trade was halted with the passage of Smoot Hartley. There were efforts to over regulate everything and with price fixing of commodities were used guarantying shortages.

The positives yes they do exist are more than you think, inflation remains benign, the FED has stated buying commercial paper from qualified companies reinvigorating that market and perhaps saving consumer money markets,banks are beginning to merge clearing out the dead wood, the FED is buying up bad debt, interest rates are declining ,the dollar is strengthening and municipals bonds are firming up and once again looking to be the haven of widows and orphans.

The French turn to McDonalds

As unlikely as the French turning to McDonalds for sustenance: much has been made of the extreme levels of volatility in recent trading. As I warned in the past the push to remove the human element from the trading process was untested during a time of market breakdown or market crisis like 1987. Prior to the recent increased market volatility this past decade has been characterized most notably by a complete lack of volatility. I had reflected that in a crisis fully computerized systems may not be up to the task and run a greater risk of systematic break down.

Now it seems that one of the prime factors contributing to increased volatility is the removal of that very human element. Even with all its cost effectiveness it seems technology has exacerbated market volatility. The fact of the matter is that computers don’t think and technology is not a replacement for experience. Therefore they don’t have the “feel” necessary to assure orderly markets in a time of crisis. The “feel” as I describe it is the difference between Science and Art, mathematics and music. Traders for years have known that there is a zone between stimulus and response. Some have called it a nose for trading but it boils down to the ability to factor in an enormous amount variables under the watchful eye of wisdom, knowledge and experience. A machine simply can not take into account all the variables be they know or unknown to weigh the proportionate risk. “Black Boxes”, don’t think they respond and often in a “Black Swan” type event are left with little or no resources to accurately evaluate and act on the introduction of new variables.

I do a lot of investment seminars if you have any connections with organizations large or small that use public speakers and would be interested in some kind of a seminar on current market conditions and there long term implications contact me!!!

Yes I do Investment Seminars

I do a lot of investment seminars if you have any connections with organizations large or small that use public speakers and would be interested in some kind of a seminar on current market conditions and there long term implications?


Contact me :

onlyonesmallvoice@gmail.com

2008 Market Performance

2008 Market Performance


12/31/2007 10/15/2008 2008
Close Close % Change

DJIA ^DJI 13,264.82 8,577.91 -35.33%

S&P 500 ^GSPC 1,468.36 907.84 -38.17%

NASDAQ ^IXIC 2,652.28 1,628.33 -38.61%

Russell 2000 ^RUT 766.75 502.17 -34.51%


Http://finance.yahoo.com

a “Black Swan Event” ?

While investors are busy trying to find there way, and Europe is forced to take its medicine by getting served a round of bank failures, Washington plays the blame game without realizing Identity politics and affirmative action have destroyed our credit markets.

What we had is a “Black Swan Event”, the worst week in 75 years a 9.5 standard deviation move .In English this means you have a greater chance of getting hit by an asteroid or winning the lottery twice in one week than you have the stock market get as clobbered as it did last week .Like 9/11 these so called “Black Swan Events” are as devastating as they are improbable

Investors are left wondering if this is the worse case scenario, the beginning of the end or the end of the beginning. My feeling toward this market calamity is simple, its important to remember that even though there have been a significant technical break down unlike past calamities such as 1929 ,1987 and 2000 the market was up huge in the preceding period while in the last 8 years the market has barely kept us even after adjusting for inflation . So I guess what i am getting at is that unlike other market observers I am of the view that as they say you can’t fall off the floor, which leads me to favor the ‘this is the buying opportunity of a life time” scenario. I will also go out on a limb and say this is October and in the past the seeds of many significant turnarounds have been planted during this month.

I don’t think despite the sirens of doom that we are heading into the next great depression. The government for all its failings during this crisis does not seem to be nearly as inept as the government actions were during the early 1930’s such as raising taxes, price fixing ,stopping foreign trade ,and raising interest rates . The financial rescue plan if anything seems to be a reorganization of the need for global liquidity .The closest thing to the stupidity of the early 1930’s seems to be this silly attempt to stem “Global Warming” though the regulation and taxation of carbon which is scientifically totally bogus.

The Elliot wave however is telling me that we are due a short term rally which will then followed by a significant bottom. It may come at us hard and fast so I would play it safe and look toward any relief rally to sell and move into more dividend paying stocks.

Listen you might learn something

Ronald Reagan: First Inaugural Address: the Problem is the Goverment!

Is Wall Street Broken Part 4 : the Community Reinvestment Act

Another problem is the Community Reinvestment Act; this appears to be at the crux of the entire sub prime problem. The Community Reinvestment Act, was pushed under the guise of making home owners out of everyone. The problem comes when many were not prepared to be homeowners .Lending standards were thrown out the window to meet this noble goal and lending institutions were basically forced to throw money out the window, by luring weak buyers with no money down and enormous mortgages thus creating the sub-prime lending mess.

From my under standing this act has not been addressed by the bail out bill and if anything could be perceived to encourage more bad behavior,with the "foxes watching the hen house nature of this bill"

My view would be to modify the act and make it more realistic by encouraging and rewarding saving and investment instead of paying off political constituencies with irresponsible lending practices.

Is Wall Street Broken Part 3: Down with “Mark to Market”

A simply way to improve bank solvency at little or no cost to tax payers would be a revision in the “Mark to Market Rule” For the laymen all financial institutions and investment funds must at the close of business price all the assets on the books at the bid price for that day’s business. So in simply terms if your house is on the market and you received no offers on that particular day your house received no bids, and according to “Mark to Market” your house is worth nothing. Yes that’s right nothing, zero. I think a light modification in this accounting rule is in order. Perhaps a moving average or a longer term bid period. It’s simple, it’s sensible and I dare say it cost far less than $700 billion.

The 4 most dangerous lines in the English Language:

The 4 most dangerous lines in the English Language:

1) I'M FORM THE GOVERMENT I AM HERE TO HELP
2) NO MONEY DOWN
3) ITS DIFFERENT THIS TIME
4) THE CHECK IS IN THE MAIL

Democrates Fail to Pass Bailout!

Never was there a day when it became so obvious that there is simply a lack of leadership in Washington ,folks the House of Representatives is majority rule ,the Republicans members didn’t need to show up the Democrats have enough of a majority to pass anything they want ! The fact is that Democrats failed to get there own members to support the bailout bill, END of story! It wasn’t even close .

So is Wall Street broken? : Part 2 the unwinding of Glass Siegel

So is Wall Street broken?

Recent events have seen the unwinding of the Glass Siegel Act and the reemergence of a pre Glass Siegel banking structure where Investment and Commercial Banking are once again under one roof. I don’t understand the argument that deregulation and the move away from Glass Siegel restrictions was the cause of the current financial crisis. If anything the clinging to the obsolete notion of Glass Siegel premeditated the demise of many of today’s financial institutions. Glass Siegel only worked because investment banks were run primarily as partnerships and the risk to your own capital put constraints on leverage and speculation. The demise of the old partnership style investment bank lead to spending of the publics money has led too more leverage and more risk taken. After all Europe had no Glass Siegel and their banks ,and investment houses have faired much better than their American counter parts in the current environment. The joint structure of investment banking and commercial banking together makes capital far cheaper than the highly leveraged investment banking model, but I suspect less profitable. It’s rather strange to be criticizing the demise of Glass Siegel while the current solutions all involve undoing all the separations between commercial and investment banking.

This cleansing process signals the end of the Bear Market that has engulfed US Equity markets since March of 2000. Firms that are not accountable and transparent will be put down. While the free market seems to be taking the hit for poor judgment and a lack of oversight. This should come as no surprise given the very people looking to expand government power by trying to clean up this mess are the very people that created this mess to begin with. Let’s all face it, its not like all the rules were not already on the books such as Sarbanes Oxley but apparently large political donors were granted exemptions.

Only Six US corporations hold a AAA credit rating from S&P

Currently, only Six US corporations hold a AAA credit rating from S&P - Automatic Data Processing (ADP), Exxon Mobil (XOM), General Electric(GE), Johnson & Johnson(JNJ), Pfizer Inc(PFE) and Microsoft(MSFT)- carry a 'AAA' rating.

XOM BRIEF: For the six months ended 30 June 2008, Exxon Mobil Corporation's revenues rose 37% to $254.93B. Net income rose 16% to $22.57B. Revenues reflect an increase in Upstream Non-U.S. revenues and upstream U.S revenues. Net income was partially offset by an increase in crude oil & product purchases, higher production & manufacturing expenses, a rise in depreciation & depletion, increased sales based taxes and higher other taxes & duties

ADP BRIEF: For the fiscal year ended 30 June 2008, Automatic Data Processing, Inc.'s revenues rose 13% to $8.78B. Net income from continuing operations rose 14% to $1.16B. Revenues reflect an increase in income from Employer Services segment, higher income from PEO Services segment and increased income from Dealer Services segment. Net income also reflects a decrease in interest expense and the presence of gain on sale of buildings.

GE BRIEF: For the six months ended 30 June 2008, General Electric Company's revenues rose 9% to $89.16B. Net income from cont. ops. fell 7% to $9.76B. Revenues reflect an increase in income from Infrastructure, Commercial Finance, Industrial, NBC Universal and GE Money segments due to organic growth. Net income was offset by increased cost of sales, higher interest & other finance charges and increase provision for losses on financing receivables

JNJ BRIEF: For the six months ended 29 June 2008, Johnson & Johnson's revenues rose 8% to $32.64B. Net income rose increased 22% to $6.93B. Revenues reflect higher turnover as a result of increased earnings from Consumer segment and increased Medical devices & Diagnostics segment sales. Net income also reflects higher operating margins due to cost reduction in administrative expenses and the presence of in-process research & development expense.

PFE BRIEF: For the six months ended 29 June 2008, Pfizer Inc.'s revenues increased 2% to $23.98B. Net income from continuing operations increased 18% to $5.55B. Revenues reflect increased income from Pharmaceutical and Animal Health segments. Net income also reflects decreased research & development expenses, lower restructuring charges & acquisition related costs and decreased amortization of intangibles assets

MSFT BRIEF: For the fiscal year ended 30 June 2008, Microsoft Corporation's revenues increased 18% to $60.42B. Net income increased 26% to $17.68B. Revenues reflect an increase in income from Client segment due to growth in licensing of Windows Vista, higher OEM revenues driven by growth in OEM license units and increased OEM premium mix reflecting strong demand for Windows Vista Home Premium. Net income also reflects improved operating margins


* market guide

Is Wall Street Broken Part One : Put some clothes on those “Naked Shorts”

The shorts got hammered by government edict banning shorting financials. These types of moves have historically only given markets a short term boosts followed by prolonged periods of decline. The 1930 showed markets don’t respond well to irrational government interference and these actions often have the unintended consequences of lessening confidence.

Shorting is as necessary for the proper functioning of markets as going long. By banning shorting you are once again simply rewarding more bad corporate and regulatory behavior. I do think however the ability to do “naked shorts” should be significantly curtailed except for market makers and floor brokers who need to use this activity to insure orderly markets. The reason ‘naked shorts” should be eliminated is the simply logic that the action of shorting a stock you have not borrowed seems to alter the capital structure of the target company, making shorting a self fulfilling prophecy.

In order to restore confidence in US equity markets US regulators should 1) restore the “uptick rule” 2) eliminate “naked shorts” and 3) Immediately restore market players ability to legitimately short any and all equities.

too big to fail? Or perhaps a better question is, has there become a total abdication of accountability?

So how big is too big to fail? Or perhaps a better question is, has there become a total abdication of accountability? For some time it has appeared that regulators were more interested in protecting vested interests in the industry than joe average investor. The answer to everything has been to blame the lowly retail stock broker for everything up to the imminent demise of western civilization.
But the facts seem to suggest otherwise. Your broker at the end of the day for better or worse is the only person beside yourself that is responsible for what goes on in your account. Basically he or she has to pick up the phone.

Account representatives are held accountable thru two major rules 1) know your customer and 2) suitability. It is amazing that you and your broker are the only ones held to these standards. Yes firms have supervisory responsibilities but lets face it in the era of Sarbanes Oxley they seem to be falling far short .Basically applying different standards to large political contributors such as Fannie Mae and Freddie Mac .Given Sarbanes Oxley and industry grips about implementation costs It is incomprehensible that large firms like Lehman Brothers can have such opaque balance sheets.

The main focus of every investor right now should be financial transparency and again accountability. Over times firms that come clean and stay clean will be rewarded and like or not you may want to start with your local broker who is already sticking his neck out

blame it on the 1970's

Seems to be a crisis of leadership …my theory is simple; almost no one who came of age in the 1970’s has good leadership quality’s ,everyone of that decade was brought up as an anti American socialist and cry baby thus the current crisis and the move toward government running everyone’s life. Good thing the 1980’s can do generation is right around the corner!

Lehman didn’t come clean got caught lying while Merrill fussed up and made the best out of a bad situation. It’s a long story staring bad government, stupid politics, weak management and an inability of any of the players to grasp the magnitude of the situation.

A crisis of confidence but no panic yet

A crisis of confidence but no panic yet, fasten your seat belts folks looks like there is a lot more to come. The lack of capitulation leads most seasoned market observers to feel there is more to come. This crisis that is so drastically reshaping Wall Street seems anything but over.

Lipstick on a pig or Commodity bust ?

The last several weeks of trading has seen the continued decline of the price of commodities and the decoupling of the relationship between the declines of oil prices leading too rallies in US equities. There are four main reasons for the price decline; 1) the dollar has begun to rally, as US interest rates stabilize and other global economies follow the US into a slow down. 2) Commodities are priced in dollars and a stronger dollar has brought down those prices by firming up the profits of the sellers of these commodities 3) the entire commodity market has had a significant deleveraging due to rule changes in margin requirements and 4) the US seems to be on point to make the first major change in energy policy since the 1970’s featuring a shift in focus from conservation to expansion of energy resources

What a difference a day makes?

What a difference a day makes? A FED bailout tosses Freddie and Fannie shareholders under the bus. While investors ask is it really over? Is this a fundamental turning point for the financials? It is certainly a boost short term for both bond and stock markets. But weather a government bail out fixes the fundamental problems of the current banking crisis, remains to be seen. For decades Fannie and Freddie provided liquidity to the US mortgage market allowing “Joe 6 pack “to take out a 30 mortgage. In recent years however both Fannie and Freddie have strayed from their original purpose according to some critics growing far to large in scope and following the industry decline in lending standards . Many including the former chair of the FED Alan Greenspan warned the Freddie and Fannie should be rained in and in time pose a significant liability to the treasury, well that day is upon us. And once again let me repeat that a government bailout of Fannie and Freddie is NO bailout for shareholders.

McCain Victory will lead to lower Commodity and Energy prices

As a McCain victory in November looks more and more likely and with it a significant overdue change in US energy policy and strategy, energy prices and commodities will continue to decline on the hope of new found opportunities in exploration.
The McCain policy of increasing capacity flies in the face of the last 40years of US energy policy of conservation and waiting for a miracle magic resource the takes away nothing and adds something. Like so many of these fantasy no cost to you ,no money down ideas it has lead to a dangerous dependence on importing foreign oil as a political tool in lieu of foreign aid . Yes there are many alternatives such as nuclear, natural gas and coal but expansion of use of these resources has also been stifled by 40 years of the “fossil fuels are evil lobby”.

Senator McCain’s recent performance and political mastery of appointment of Alaska’s Governor Sarah Palin puts him in the driver seat for this November’s election. Go ahead let the opposition attack “motherhood” and focus on family matters all they want, it is simply a non starter with the American public and will do even more damage to the wood be McGovern –ites.

This blogger for one would like to say good riddance to the policy of energy constriction and the whole 1970’s mentality and thinks the time may be right for change .Recent weakness in commodity prices maybe confirming a McCain Victory will lead to lower Commodity and Energy prices

Now for something completely different :GDP REVISED UP TO 3.3% in Q2

GDP REVISED UP TO 3.3% in Q2 surprising many but not this blogger who has speculated for some time that US and global growth rates would be far higher than most economist had predicted. Mean while Fannie Mae reshuffles executives and the proverbial deck chairs on the Titanic and Barak Obama prepares for Nuremberg. Once again we exit from the summer doldrums making premature funeral arrangements for the American consumer.

Again focus on the big picture:

1) the US economy is stronger than most assume
2) Banking finance and real estate continue to contract
3) While even with improved strength of the dollar exports continue to boom
4) Unemployment lags with job creation coming in export dependent and energy sectors
5) Kitchen table lap top entrepreneurs continue to sprout up and go unnoticed
6) Yes inflation will be higher than we are used to ,but not at 1970’s levels
7) Long term the US Economy will move away from the consumer of last resort to the world and export
8) The current 1970’s mind set is a generational thing with roughly 4 years left in the cycle
9) And finally this current election is more like the McGovern election than anyone in our life time you do the math

the VIX ,If you’re not confused you’re not paying attention.

If you’re not confused you’re not paying attention. Trading continues to be dominated by the VIX and low summer volume which further exacerbates market volatility.

During the past year the Volatility Index (VIX) has done a good job of forecasting market tops and market bottoms. When the VIX has risen above the 30 level ,this has been followed by significant rallies ranging from 6% to 15% However when the VIX has dropped to around the 16 level we have seen substantial sell offs occur ranging from 11% to 17% .

(VIX) is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge"” from http://www.investopedia.com/terms/v/vix.asp

Real “real” people, the madness of crowds and continued confusion….

Let the “Real” Real people stand up and take a bow. Be wary of those who look to make stock recommendations who have no experience or qualifications. Every time the main stream types pick up the stock picking torch it signals a market top. Bear market rallies are particularly dangerous, best to keep your eyes on the long term prize.

In this bloggers view the fall season should see a firming of energy prices with the summers 20% correction in energy ,commodity and AG stocks signaling the end of a correction phase in these sectors and a global economy that will show it self to be more resilient than common wisdom gives it credit for. Demand will firm and stabilize.

I would remain cautions on banks and financials given the current continued credit contraction. Let’s face it banks make money by loaning money and if they don’t loan I am not sure how they are going to dig themselves out of the current bad debt crisis.

Keep a watchful eye on “Bear Traps” or when oversold sectors bounce from significant oversold positions. These rallies have a tendency to suck you in and leave you hanging on the top tick. Unless the fundamentals change then the sector is saddled with the same problems that sold it down to begin with.

And finally the 1970’s style policies and physiology is in tact and here to stay till the next generational change. Look for a continued mirror of that decade for investors.

You can’t inflate your self out of this one

Given the so so volume yesterday I am still holding the position that this is a counter trend rally, not the beginning of a new bull market.

There are some Long term positive trends:

-Export boom
-Technology Migration of Work from Home Revolution or Kitchen laptop revolution causing huge new business formation
-Energy Boom: drilling, oil services, building nuks, infrastructure, and so on adding vast numbers of new jobs (all predicated on a major change in US energy policy)

But perhaps it’s the politics of the rush to the bottom or the search for the lowest common denominator, but the latest “inflate your tires “rhetoric with the assumption that everyone is driving around on flat tires is just too stupid for comment! Next we are going to be told that if we don’t eat we are going to be hungry or if we don’t breathe we will suffocate. Given the nature of the demeaning insults hurled towards the public, its no wonder there is no confidence in the US economy and no perceived leadership from our elected officials. I am beginning to think that if the mainstream media continues this paparazzi style coverage of Mr. Obama the public at large will become quickly disenchanted and the mainstream media will continue to expedite their demise.

when it comes to energy and food its all about politics

So is this the end of the commodity boom or is this a correction on the long road to higher food, energy prices and inflation? Many will argue on one side or the other of the supply and demand curve, but my view is that when it comes to energy and food its all about politics. And the politics are very simple; since the 1970’s the US has embarked on a policy of adding no new available supply of energy. Instead choosing to view the amount of energy available as a pie to be divided up but not added too, a sort a zero some game. No new domestic drilling, generation, transmission and so on has been the net result. Supply constraints have been made up for by importing more and more foreign oil while domestic energy resources ,coal ,oil ,natural gas, nuclear and so on have been suppressed in hopes that higher prices would lead to some new form of non polluting ,cheap, non carbon based usable wonder energy ie… “the promise of fantasy energy” .

If we have learned one thing from our European friends that have endured excessively high energy prices for several decades is that energy consumption and use are a function of technology, and life style not price. No one in America seems ready to give up their SUV and trade it in for a horse and carriage. America after all is a country founded on the ideals of economic mobility, and “mobility” of the individual not class being the key idea. Even though many in the political class seem to want to eliminate this fact from American life the general population and this blogger have other ideas.

Energy prices have been determined and will continue to be determined by the politics of availability, Weather by accident or design if the world’s largest economy would make a major change( ie …try to increase the availability) in it’s energy policy it would have a major impact on glabal energy prices for decades to come.

Once again I would like to thank everyone for all the referrals I have received this year.

Once again I would like to thank everyone for all the referrals I have received this year.

Over the years many of my clients have asked me to speak with one of their friends or colleagues concerning my Customer Centered Philosophy and Private Client Asset Management Services. I consider it an honor and a privilege and have been happy to accommodate their wishes. For your future reference, I want you to be aware of the standards by which I comply with such requests.

First, confidentiality is the cornerstone of my business. Each of my client relationships is distinctly separate and totally private.

Second, thoughtful and courteous service is guaranteed. This is a people business.

Finally, I will never give advice and counsel to a client without thoroughly understanding his or her needs.

My purpose in writing this letter is to let you know that if and when you would like me to speak with a friend, relative or associate, you will feel comfortable with my professional standards.

Best Regards,

James J Foytlin
Horwitz & Associates
54 Washington Place
Ridgewood NJ 07450
toll free 1(866)492-3959
phone 1(201)301-2780
cell 1(201)966-7788
jamesfoytlin@horwitzco.com

This Week Chicago Trip

I will be in Chicago till Sunday.

I you need my attention please call my cell 201 966 -7788 I can still carry on a full range of financail services.

thank you

James Foytlin

let the kids Dance !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

So Mayor Mike says its OK to dance in NYC again and as the word spread that the repressive dance ban in the city was about to end the market responded with a bit of a dance of its own ! Putting together back to back wins for investors. While some licked their wounds from the recent market turmoil other expressed optimism that toilet paper will continue to have strong sales in the current market environment.

Crowds filled the down town underground club scene and an excitement in the air that seemed to spill out and into the streets and perhaps into the hearts and heads of investors . Perhaps this is a sign of things to come and perhaps that the next generation that is waiting in the wings with new ideas and a solve the problem get it done attitude unlike the down trodden 70’s generation is starting to feel its own.

Perhaps we have reached the depths of financial and sub prime despair and banks have finally told us what is really on their minds and on their balance sheets . Better yet perhaps the solutions will be reached despite the best intentions of the political class and the worlds largest economy will once again create jobs by getting back into the energy business.

So look for more volatility till the end of the summer in to the middle of October . October 21 or so should see some kind of direction set and the playing of both sides of the fence the short and long should come to the end .

The issue of energy is not a supply problem it’s a delivery problem.

The issue of energy is not a supply problem it’s a delivery problem. We are not running out of resources, its our ability to deliver energy to the right place at the right time to the right people at the right price that is the problem. The US has so under invested in energy infrastructure since the 1970’s the ability to deliver energy has been so constrained as to push up prices and until the restraints on the energy delivery system are relieved we will continue to feel the pinch of higher energy prices . That means we need, power plants, transmission lines, refineries, shipping terminals, drilling rigs, better regulatory environments and so on and so on…

Looks like we have gotten a strong counter rally the last two weeks. What has worked the last year or so, what I have been calling the 1970’s inflation trade or “Disco trade” of energy, Ag and precious metals has backed off while the counter sectors such as airlines and financials have rebounded. The process has been exacerbated by heavy short covering and the climatic event of Fannie Mae and Freddie Mac almost testing the implied guarantee of the federal government. So what’s next, I would expect the counter rally in airlines to continue until oil prices stabilize again and the financials bounce should get you back up to the 50 day moving average and then the fundamentals of each issue and the industry should begin to guide us.



I am available for public speaking and beers after work please contact me for bookings

Ball Four!

Years of economic observation has taught me that consumers tend to put off major spending decisions during the summer months. Looking to Wall Street and their annual proclamation of the next great depression after every summer holiday season of stalled consumer spending does not seem a reliable indicator of future economic activity. I find a more accurate way to tell the health of the economy in the seasonally slow summer spending period is attendance at major league baseball parks. Over the years this is one of the simplest ways to judge the underlying strength of the general economy. Given a baseball game in a major market can set you back at lest $50 per seat ,a set of $10 hot dogs ,$20 bucks to park ,gas and a watered down beer running $15 bucks. For anywhere from $200 to 400 bucks you too can take your kids to see the New York Yankees… ouch but as every parent will tell you and experience well worth the cost.

So let compare 2008 so far to 2007 and 2006


RNK TEAM GMS TOTAL
AVG


2008
1 NY Yankees
54 2,842,615 52,641
2 NY Mets
46 2,318,166 50,394
2007
1 NY Yankees
81 4,271,867 52,739

3 NY Mets
81 3,853,955 47,579
2006
1 NY Yankees
81 4,200,518 51,858

3 NY Mets
78 3,379,551 43,327

Looks like baseball fans don’t know about the economic slow down…

Starbucks closes stores

So lets take a look at Starbucks is it just another case of over expansion or perhaps a bad economy eating into consumer spending or is there something even more fundamental?

First some history,

For years I have used something called the “Starbucks test” to gauge the economic vitality of potential clients. The test simply says, the more expansive the coffee chosen by a particular consumer the lower there prospective net worth. The theory is simple the less money you have the more significant short term gratification plays in your consumption. People with more substantial net worth have many avenues in which save and spend and self actualize or feel significant. Let’s face it $10 bucks maybe a lot for coffee but to tuck $10 away for a rainy day is not nearly as gratifying. People with less means get a so much greater feeling of significance spending the money right away instead of saving it .That $10 bucks for a rainy day, that in the end is still only $10 ,which saved or not still hardily amounts to anything.

Since Starbucks has in my view lost its way ,the “Starbucks test” is no longer as valid as it once was.

In my view Starbucks is struggling because of 2 basic reasons 1) is over expansion ,enough said that seems obvious to most of us and 2) and significantly more serious, abandoning the “coffee house” look for the typical “sandwich shop” knock off look. The mass produced “coffee house” look was what made Starbucks ah Starbucks , and with out it ,its just not Starbucks .The fact that they continue to worry that Mac Donald’s selling better coffee is proof positive that the company has lost its way.


*this is not a recommendation, solicitation, offer it is the opinion of the author and only the author

you can’t fall off the floor

Ok so the back stop on the financials has been put in place and as a wise man once told me you can’t fall off the floor ,but incase you do the FED will step up and cover your ….yea.. you get the picture. So I have only one proverbial question, if government agencies operate under an implied Federal guarantee and bank deposits are insured by the FDIC why does the Secretary of the Treasury have to keep reiterating what appears to be the obvious?

The Treasury Secretary put on a grand show over the weekend in an attempt to avoid a Bastille Day route of the financials

The Treasury Secretary put on a grand show over the weekend in an attempt to avoid a Bastille Day route of the financials and in typical fashion as we have seen time and time again Federal reassurances often have the opposite effect not reassuring traders at all. The Secretary outlined the possibilities of a Fanny and Freddie bailout reiterating what this blogger finds all to obvious with the “implied guarantee” nature of the relationship that the two agencies have with the federal government. Some market participants however seemed quite surprised by seeing it all outlined on national TV.

Tuesday the grand show will continue when the FED Chairs testifying before congress and there is nothing more entertaining than a bunch of congressmen and women with little to no understanding of the banking system and the economy in general grandstanding and looking to pass the buck in an election year .Makes for very good daytime TV but I am afraid it is hardly a substitute for sound fiscal policy.

Other issues such as the more permanent nature of the inflation picture coupled with anemic US growth rate it is thought leave the FED little wiggle room. It does seem to this blogger that given the disconnection of the FED funds rate with more general consumer loan rates that the FED has more wiggle room that one might think .A small increase in the FED funds rate seems fairly insignificant to overall economic growth yet it might just do the trick boosting the dollar higher and reassuring markets that this FED really means business on inflation.

Fannie and Freddie may be forced in to receivership, yikes!

Fannie and Freddie may be forced in to receivership, yikes! Perhaps we all should have paid more heed to the warnings of the previous FED Chair as he pinned over how much on the hook the Treasury could be with its implied guarantee’s .Perhaps this is the climatic event that from which my past experience signals the end of the crisis and the beginning of a rebound in financials. I had long surmised that this current crisis would end with some major bank teetering on the edge of disaster. My regular readers will remember several times I pointed out that in financial crises of the later half of the 20th century all roads led to Citi bank but a crash and burn act from Fannie and Freddie might just do the trick .Apparently it would be an understatement to say that things are a bit worse than even the most negative commentator has led us to believe! Folks I am not ready to say buy yet but as Baron Rothschild once said,” buy when there is blood in the streets” and at this moment it’s starting to look pretty gory.

off to the races ...well sort of

So how does the sell off end and how does the rally start ? Unlike the huge oversold bounces of the previous decade the current decade has hard sell downs under low volume, little or no capitulation, followed by a rapid re-flation of equities values under steady volume. The key is no one calls the bottom and stocks are up 20-30% by the time anyone realizes the party has already started. The up motion of the market is characterized by a subtle shift from sellers to buyers and a slowly and steady building volume .

can you say re-remics ?

"Collateralized debt obligations that helped drive banks to $400 billion of writedowns and credit losses are finding buyers under a different name: Re-Remics. "

the word of the day?

Fed chair reiterates the “too big to fail policy”

Fed chair reiterates the “too big to fail policy” and avoids the big interest rate decisions till next year ,or “as long as emergency conditions prevail” .Again the current economic dilemma’s has been created more by continued poor policy judgment and much less by the forces of supply and demand.

The very congress that seems so out of touch on the sub prime mess continues to look to act on more regulation of the financial sector and throw in enough tax increases to go around consequences be damned ….humm sounds like the Carter Era to me and remember investment banks may be too big to fail but your portfolio isn’t .

As this current correction runs its coarse dust off your white suit and look to slowly add back the same sectors; energy, Ag and metals, with particular attention to natural gas and drillers. Like the 1990’s the sectors that led the market higher will lead the market when it comes out of a tail spin unless there is some major change in policy direction.

Given the inherent political opportunities with “global warming” and the current government penchant for raising taxes and over regulation “global warming” offers politicians a goldmine of unlimited chances to tax and regulate the human condition recognizing that all living activity results in the explosion of CO2 gases. This blogger however hopeful that sanity may prevail is rather dubious that any leadership will be exhibited from Washington.

The big issue once again is leadership and the 70’s generation’s inability to exhibit any.

As I put fourth in the last post the market has just about sold off everyday since the FED meeting and to readers of this blog that should be no surprise. The FED has once again talked the talk, waffled, but failed to walk the walk.

On the positive I don’t really think the economy is half as bad as we have been led to believe, after all productivity continues to grow which is virtually unheard of during a slow down and unemployment remains relatively low. Inflation for all the talk is still low compared to the 70’s, but still a long term treat and high compared to recent years .

The big issue once again is leadership and the 70’s generation’s inability to exhibit any. The lame 1970’s style political solutions are pushing the market down and will continue to do so given the vast failure of all these government first, tax and regulate everything that moves policies .The thing any keen market observer should take away from the 1970’s was the utter failure of the policies of that time period and the grave consequences that followed. So don’t forget to take profits from time to time but stick with the Ag ,Energy and Precious Metals trades that have performed so stellar year to date and given the possibility of an emergence of a “second jimmy carter “ presidency this trade should stay in tact for some time .

ITs the FED folks ...

reason for the selloff is yesterdays FED-speak and the failure of the FED to follow through and stem the tide of inflation !

a little bit about me................

I am a Investment Advisor with a unique perspective on markets, economics ,politics and media . I have experienced and weathered the 1970’s stagflation, the ’87 crash, 2000 meltdown and worked in ground zero on 9/11. I use everything from very basic number crunching to esoteric wave theory. I use a proprietary matrix that match’s historic trends to current data which attempts to isolate the dominant dynamic in today’s current price movements to maximize investor returns and minimize risk . I manage money for individuals and institutions and offer a wide verity of financial services operating in a traditional stock broker model using internet technologies to off “mass produced customized solutions”.No account is too big or too small. No cookie cutter financial planning ,everyone is treated as a unique individual .I am a free market guy all the way and do view government action as part of the problem not the solution.

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The FED dose it again

So the FED did it again talk the talk on inflation then back down when clear action would send a strong signal . The failure to communicate its intentions clearly has continued to mar this FED and the byproduct being a continued decline in confidence in the FED chair and a continued decline in the confidence of the US economy, the US dollar and the entire leadership of the US government. Perhaps this generation (the 70’s) simply doesn’t have it in them, but the continued lack of leadership is starting to become a real problem. This 1970’s mindset seems so misplaced 2½ decades later but is on its way to becoming a self fulfilling prophesy. While the FED dawdles the two parties are busy embracing the failed policies from this bygone era ensuring that the same failed results. Under these circumstances further deterioration for most equities is a foregone conclusion. Investors will be wise to keep there focus on inflation driven results. Sectors such are energy, precious metals and Agriculture will continue to outperform . With particular focus on domestic natural gas, coal and drillers .Natural gas because its viewed as “cleaner” and we have plenty of it ,coal with its “dirty reputation” because we have even more and at lest it could be exported to China and finally the drillers because weather we spur demand with a new policy of drill drill drill or stick to our old prejudice against drilling a continued premium will be placed on domestic resources and access to those resources.

Brilliant simply brilliant : Drill Drill Drill

Finally a viable alternative to this silly idea that raising taxes is going to lower energy prices some how… Drill Drill Drill ..so will some kind of sensible energy policy that involves making more supply available ,thru drilling and construction of nuclear power plants as well as additional investments in alternative energy and passive conservation push to US toward energy freedom ,create an economic boom and change the security picture of the US over night.? It sure would and it looks like John McCain finally has something to run on. If he is serious this could fundamentally change the global energy picture for generations and would finally rid the US of this irrational fear of energy production and change the balance of power in the energy business for ever. Stay tuned this could be very interesting for investors and fundamentally change the dynamics of the US equity market, the inflation rate, productivity growth ,interest rates and national security. Remember there is NO Energy shortage just the political unwillingness to add to supply.

The cost of money is about to go up in the US

As the FED warns of imminent attempts to put the brakes on inflation, market watchers continue to speculate on the repercussions.
The main question on everyone’s mind is weather the dollar will keep falling or will a slow rise in US interest rates and perhaps a decline in EU rates push the dollar higher? My bet is that the dollar is moving higher in the short run but to what extent that is going to effect energy, commodity, precious metals, and Ag I am unsure. I would look for the G-10 to make some kind of a joint strong dollar pronouncement, given how much the weaker dollar has damaged EU exports.

McCain and Obama using the Carter play book

Ok so you are really surprised the proposed policies from our political leadership dating back to the Carter Era will not cause the same results? With Hillary out and McCain and Obama using the Carter play book the market quickly passed judgment like it or not on the foolish Carter style agenda.

It’s also important to remember that employment is a lagging indicator and unemployment will continue to climb for some time after the end of the current slow down. This factor will be exacerbated by the continued growth in productivity and the continued “under the radar” growth in home based technology businesses and professional consultants from all fields working from home or should I say from a laptop and blackberry. And of course at the low end the latest increase in the minimum wage which dis-employed many teens and students.

Beverley Hillbillies

Seems the continued demand for energy and the restricted supply situation in the US has begun to place a premium on domestic energy sources. Coal has its environmental political issues but natural gas seems to be plentiful with many new domestic discoveries coming on line with drillers on land already authorized to drill. Some experts suggest the as much as 90% of domestic US oil and gas is off limits to drilling dues to government environmental regulations so a premium is now being placed on operating US recourses.

An Isolated tribe is found in Brazil, and isolated worker found in his Pj's working from the kitchen table...

An Isolated tribe is found in Brazil, the space stations toilets finally flush and Susan Sarandon vows to move to Italy Ciao ! Wall Street starts to trade hot air thru Chicago Climate Exchange. Meanwhile the FED ponders its next move with many suggesting interest rates will move up. Inflations proves less than expected by some measures and the economy despite the all the negative news apparently has turned off the TV with GDP figures looking better than expected . The interesting thing is that despite the doom and gloom the unemployment rate has hardly budged and the growth rate in productivity continues to grow at an uncanny rate given the current economic slow down. I would suggest the little reported phenomenon of people thru the use of technology working independently from home in more and more occupations and industries continues to be below the radar for economic data collection.