-->June 16, 2003 -- What did you do over the weekend? I have five kids, so I played dad on Father's Day. Sunday morning I had breakfast with my only"kid" who still lives in San Diego. I had breakfast with my oldest daughter, Daria, along with her husband and her three kids. Ah to be a father, and to visit a restaurant where I have to be careful about what I eat. We ate in a"hippie" restaurant where everybody was sporting pierced ears, lips, tongues, eyebrows, pierced everything -- plus the ever-present tattoos.
Daughter Daria just received her MA or advanced degree in teaching, and she's going to do some good in the world. She will teach elementary school. So great, by proxy I've done some good for the human race; I produced a terrific daughter who I'm sure will be an excellent teacher. And if there's anything this world needs, believe me, it's outstanding teachers.
By the way, maybe it's just San Diego, but I note that the kids are beginning to look more and more like the kids of the '60s, and I mean the hippies. Tats, metal in their face, torn blue jeans, old clothes. Is this just a throwback to the '60s, or is it the signal for a coming societal"revolt"? Something is in the air. You want my guess? I honestly believe it's the beginning of a revolt against the mindless spending that has taken over this country for the past 15 years. So get ready for a new era of savings in America. People have become exhausted with spending. Spending is going out of style. There you have it, and you heard it here first.
I have another theory. My theory borders on the mysterious. I believe that roughly 90% of the world's population of this earth are here to learn how to survive -- basically to learn how to put three meals on the table and how to put a roof over their heads. This process has been slow, very slow. Experts tell us that at present two-thirds of the world's population go to bed hungry (that's if they have a bed). I don't doubt it, I don't doubt it at all.
I also believe that maybe ten percent of the world's population are here to be teachers. I don't know if I qualify for that one-tenth status or not. Anyway, maybe I'm just faking it, because (blush) I do play teacher. And since I've made a living at it for almost five decades maybe I'm pointed in the right direction. I sure hope so.
What's this all got to do with the stock market and the economy? The stock market has a purpose too. It's basic purpose is to distribute stocks (equity) to the public. This process raises much-needed capital for business. So the stock market is basically a sales mechanism. Sometimes it's easy to sell stocks -- that's when the market is in a long-term rising trend, and we call that a bull market. And sometimes it very difficult to sell stocks -- that's when the market is in a corrective or falling trend, and we call that a bear market.
The stock market has a second use, and a few of us goof-balls call it forecasting. The stock market possesses an uncanny ability to discount the future. But there's a problem. The problem is that it's damn hard to figure out what the stock market is saying. Of course, a lot of people don't believe the stock market is saying anything at all. But they're wrong.
There's a language -- I call it the language of the market. I've spent most of my life trying to learn the language of the stock market -- and I'm still at it. To my mind, it's the toughest language in the world to learn. The reason that it's so tough is that its counter-intuitive. It goes directly against our emotions.
In fact, it almost seems that the stock market has been created to deceive us. We look at the market, and we say,"Hey, this thing is hot -- it looks like the market is heading for the moon!" But that's just a surface view. That's what the stock market wants us to think. Beneath the surface action of the market something just the opposite is happening. Stocks are being distributed under the guise of exciting volume and a big push on the part of some most conspicuous stocks.
At other times the market looks like a dying swan, and we shake out heads and say,"This is it, this is the death of equities. Capitalism is finished, and I don't want to ever own a stock again." But we're wrong. Stocks are really being accumulated by smart money. Under the guise of the"death of equities," smart money is putting stocks away preparatory to a new bull market.
All right, Russell, enough blather. Let's just talk about what's happening now?
What's happening now is that the Greenspan Federal Reserve is desperately trying to reverse the primary trend of the market and the economy. The Fed is trying to revive the US economy -- via inflation. The Fed has flooded the system with liquidity and it has dropped short rates to the floor. The idea is to keep the economy going, at least until next year's election. And the way the Fed plans to do that is to keep the US housing sector boiling and to keep America's consumers spending. The Fed wants to keep that process going long enough and to the point where corporations will once again start to expand.
I've likened the Fed's action to trying to cure a heroin addict by giving him an endless series of additional heroin injections. Will that work, or will it kill the patient? Guess we're going to find out.
In the meantime, the stock market has been surging. It's beginning to look like the late-'90s again. Housing and the stock market have been heading due north with a vengeance.
In the background we have three tell-tale barometers -- the dollar, bonds, and gold. Bonds have been rising, rising, rising -- until today. Why? Because the bonds are reacting to the collapse in interest rates. Furthermore, the bonds smell disinflation -- or let me put it another way, the bonds don't smell any inflation -- at least not yet.
Gold has been rising ever so slowly. Gold is in a new bull market, and gold senses that the dollar and possibly all fiat money could be in trouble. But gold is particularly concerned with the dollar.
What's wrong with the dollar? What's wrong is that there are too bloody many of them. The Fed is grinding them out by the multi-billions, and due to the US's budget and current account deficits, the world is beginning to choke on dollars. In fact, certain parties suspect that the US is not turning out to be the best credit risk in the world.
After all, if you absorb a huge chunk of the world's goods and merchandise, and you pay for all those goods and merchandise with paper that you manufacture the paper at will, there comes a time when the exporting nations of the world begin to wonder whether they are being played for a sucker.
When that happens the dollar starts to lose it's value, and wise men, worried men, turn to euros -- and gold.
Well, that's just the background of what's going on. Of course, the stock market's initial reaction to the sinking dollar is"Hey great, this is going to really help our exports. Europe may be in trouble, but US exports have got to surge. The sliding dollar is making the euro more expensive, and while this hurts Europe, it could revive the US economy. In fact, within a few months or so, the US economy could be booming again. And before you know it, the US will be back in business."
That's the theory anyway -- the declining dollar, the low interest rates, and the booming money supply are going to make everything honky-dory again.
As I write a few hours after the opening of today's session, the Dow is up over 100 points and above its June 12 high close of 9196.10. The problem is the Transports. The Trannies recorded a closing high of 2556.40 back on June 4. And they haven't closed above that level yet.
The Dow Theory warns us to distrust a move by one Average unconfirmed by the other. So it's a bit disconcerting to note that the Transports haven't confirmed the action of the Dow. Of course, the Transports could always"change their minds" and suddenly head higher and confirm. It looked as though they might do it today.
Last Friday the McClellan Oscillator closed at a negative minus 5. That opened the door for more weakness today, but it didn't happen. This market is just not ready to go down.
Russell hard talk -- The stock market is acting as though it's driven. As over-bought as this market is, it refuses to correct. Money is almost hysterically going into the stock market.
What's behind this? I believe it's the Fed's frantic effort to keep deflation away and to keep the US economy from sinking. To do this they MUST keep the housing market simmering, and the MUST keep consumers buying.
The stock market is not rising simply on the market's discounting of future earnings. I believe money is literally being"forced" into the stock market because there's almost no opportunity cost in moving into stocks. It's the same with gold. You can buy gold at this point because you're losing almost"nothing" in the way of interest in holding gold. If bonds were paying 6% you'd be losing money by holding gold or today's dividend-less stocks, but as I said, with the yield on money instrument being driven down to almost nothing, why not own stocks or gold -- or anything else, for that matter?
On top of this, as I've been saying week after week -- THERE'S NO SELLING PRESSURE IN THE STOCK MARKET. Nobody is selling. Selling for what? T-bills that pay nothing? Money market funds that pay nothing? The Fed has driven rates down so low that the opportunity cost of holding stocks, gold, or even a house is literally nothing.
Money market funds are now on the edge of trouble. If rates drop any further, some money market funds will be under water as far as payout. In other words, the expense of running the fund will be more than what the fund can bring in on its investments. This could put some money market funds in the red, forcing them to dip into principle -- or else produce a loss for the holders of money market funds.
For this reason, today I switched almost all my money market funds into T-bills, 91-day T-bills which brought in.55% in the open market. Did you ever think that you'd see 91-day T-bills bringing in half a percent? This is how far the Fed has moved in its frantic effort to keep the housing boom going and to keep consumer's buying.
I have to think that the Fed is far more worried about deflation than it let's on. The Fed has taken emergency steps to offset deflation. But there's one thing the Fed cannot do. The Fed cannot halt the wild build-up of US deficits. These deficits have resulted in dollars piling up around the world, and these dollars have allowed nations to vastly increase their productive capacity and therefore their exports.
The straight fact is that the world is now producing too much in the way of goods and merchandise. This means that too many good are chasing too few dollars -- basically a deflationary situation. The Fed's answer is to produce so many dollars that deflation can be neutralized.
Is this a win-win situation or a frantic running up the down escalator? We're going to find out, but in the meantime nobody's selling anything. With the opportunity cost of saving cash near zero, the FED IS LITERALLY FORCING PEOPLE TO SPEND, TO OWN -- AND TO GET RID OF SAVINGS.
TODAY'S MARKET ACTION -- In two words --"Gang busters!" My PTI was up 6 to 5320 with the moving average at 5264. My PTI remains strongly bullish.
The Dow was up 201.84 to 9318.96. There was one mover, MMM, up 2.68 to 130.48.
July crude was up.53 to 31.18.
Transports were up 39.90 to 2495.46.
Utilities were up 5.99 to 255.00.
There were 2403 advances and 895 declines. Up volume was 84% of up + down volume.
There were 408 new highs and 7 new lows. My High-Low Index was up 401 to 2816.
Total NYSE volume was 1.30 billion shares.
S&P was up 22.25 to 1010.86.
Nasdaq was up 40.83 to 16567.32.
My Big Money Breadth Index was up 10 to 718.
Sept. Dollar Index was up.15 to 92.79. Sept. euro was down.26 to 118.00. Sept. yen was down.23 to 85.22.
German DAX, despite near-recession in the Fatherland, was up 95 to a recovery high of 3264. Sept. Nikkei was up.10 to 89.60.
Bonds sharply lower -- Sept. 30 year T-bond was down 30 ticks to 121.21 to yield 4.21%. Sept. 10 year T-note was down 19 ticks to 119.21 to yield 3.17%.
August gold was up 2.50 to 359.70. July silver was up 3 to 4.61. July platinum was up 3.10 to 667.70. Sept. palladium was down 1.00 to 165.00.
Gold/Dollar Index ratio was up 2.00 to 387.60.
One share of the Dow buys 25.90 ounces of gold.
The gold advance-decline line was up 9 to 1169 -- the high was 1180 set on January 24. The A-D is close to breaking out.
XAU was up 1.08 to 79.37. HUI was up 4.93 to 151.13 with gold shares looking strong.
ABX up.15, AEM up.07, AU up.62, BGO up.01, GSS up.03, MDG up.20, NEM up.35, PDG up.20, RGLD up.37.
STOCKS -- My Most Active Stock Index was up 9 to 248.
The 15 most active stocks on the NYSE were -- LU down.02, PFE up 1.48, NT down.01, GE up.83, TXN up.37, AOL up.26, C up.95, FRE up 1.51, EMC down.09, TYC up.23, MOT up.17, XOM up.23, MRK up 1.87, FNM up 4.15, HD up.80.
VIX was down.65 to 22.24 and option-writers have sweated a drop yet.
McClellan Oscillator was up 50 to plus 44. I don't particularly like the look of the Oscillator -- it now shows three declining tops.
Keep close stops under your DIAs and SPYs. You've got nice profits, don't be greedy.
CONCLUSION -- The Fed is telling the world,"Cash is Trash! Get out of cash and buy, baby, buy." Buy what? Buy stocks, buy homes, buy cars, buy the corner lamp-post, it doesn't matter, just get out of cash and buy."
And that's exactly what's happening. Says the Fed,"What, you dummy, you still have a little cash. Well, we may drop rates another quarter percent, so if you still have cash, you're either a boozer or a loser. Get rid of it, buy some GM, buy AOL, hell, if you must, even buy a gold stock."
"Golly-gee," says the Prez,"things are looking so much better, maybe we should take over Saudi Arabia -- what do you think, Rumsie?"
And it's over and out for the R-man.
See you tomorrow.
.....................................................................................................................................................................
Is there a master plan that the US is following? Maybe, but if there isn't, one of my subscriber submits this one. Have faith, dear subscribers, there is a plan. See below --
Dear Richard:
In a recent posting you asked something to the effect,"does anyone have a solution to this mess?" i.e. the US economic crisis.
The answer is yes is there is a way out of this mess and I believe that it has already been implemented. In abbreviated form it will work like this. It is based on the model of the Roman Empire.
But first those geopolitical forces, already in place, have to be understood for what they really are. Once the geopolitical goals are accomplished then the financial solution will drop into place.
Step One: Occupying Iraq does much more than control an oil supply. Looking at the globe, not a Mercator projection, the strategic importance of Iraq is awesome. The U.S. now has a large land based fortress (no need for vulnerable aircraft carriers).
From Iraq the U.S. can force the Iranian mullahs out of power which would be enthusiastically welcomed by the Iranians according to my Iranian friends. Syria would be first neutralized and then destabilized and then democratized. The same for Saudi Arabia. As an aside, the U.S. public will support because we support democracy and even the ultra left will because they have to support the liberation of women, etc. In time, as the economic benefits become clear, there will be widespread support to overthrow Islamic Fundamentalism.
STEP 2: Once the Arab nations surrounding Iraq are subdued Palestine will be without financial aid. Enough pressure can be brought to bear on both the Jews and Palestinians to settle once and for all. The choice is clear. In ancient times, the Romans would have given both the Jews and the Palestinians a choice to knock it off or be anilhated. That means both of them. The same pressure will be put on India and Pakistan and in fact, I think there was something recently that stated that one or both of them are voluntarily reducing their nuclear warheads. In any event we cannot and will not tolerate the risk of a nuclear war, however limited, in the Middle East. This threat will be neutralized.
STEP 3: Again, looking at the globe. From Iraq, the U.S. (and its allies) can easily send troops, weapons, missels, and reach to Pakistan and India, Southern Russia, Indonesia, and Central Africa. The choice will be given to any troublemakers, as did the Romans, join the Roman (read U.S. Empire) be protected, given the right to trade, technology, modern medicine, education, capital, etc., or suffer the fate of the barbarians. President Bush made this clear when he said"you are either with us or you are against us."
I, for one, would like to see Africa brought out of the horrible tribal devastation and disease. With our"legions", often filled with local volunteers, we can bring peace to these the regional factions with a carrot and club approach. Barbaric tribal leaders who use"boy soldiers" to fight their wars would be summarily disposed of.
Remember the Romans brought civilization to barbaric tribes and it did it by a two fold program,"Join and prosper and be safe or our legions will mow you down." Those alliances, often uneasy, nonetheless survived.
Of course, the"new empire" will have to cut the"have nots" in on the pie. A hungry, sick, homeless and helpless group of people are our biggest enemies. Islamic Fundamentalism is able to appeal to this cancer. And why shouldn't the Palestinians, the Nigerians, the Rhuwandians have jobs and have their children have good health and full tummies? This is biggest question! There is more than enough information and history to prove to me that we still are a just nation and that we want others to have what we have.
The question is can we control corporate greed and get the multinationals focus on their best self interest which is to make healthy consumers out of the heathens? Assuming that we can, then the financial problems of the U.S. are easy. I have faith that this nation which has given so much of itself can control the power elite to do the right thing. The American public, not the politicians, will have to insist that the right thing is done.
STEP 4:
Next or simultaneously, we can easily to break the oil cartel which is an illegal restraint of trade, extortion, and which benefits no one but the ruling classes of the middle east potentates. Just think what $5.00 a barrel oil would do for a world economy now on the brink of implosion, especially the U.S., which is the most heavily oil dependent nation? $5.00 a barrel oil would be"massive tax cut", liquify the financial system, stimulate profits and the markets.
At the same the Federal Reserve (and other world banks) are on an inflationary plan and not just a mild one. That's great for the U.S. debt problem. Since, the U.S. Treasury owns more gold than the rest of the world, our Treasury will let the price of gold rise to say $3,000.00 an ounce and the U.S. could sell whatever amount of gold is necessary to liquify the debt and pay the unfunded liabilities such as social security and other U.S. obligations.
But first, the short positions of the gold banks would have to be liquidated so as not to cause a collapse in the futures market but that should be easy enough to do. Then let the price of gold rise (and maybe manipulated up just as it has been manipulated down for years). I don't know what price gold should be in order to liquidate the debt but some of your other subscribers can figure that out, i.e. $5000.00 an ounce, $10,000.00 an ounce? Whatever it takes.
As a part of our world dominance, we then renogiate our trade deals. China or Mexico or India or whomever sells to us can continue to sell to us but the playing field has to be level, i.e. China's manufacturer's also have to have benefits for their employees which are equal to the US and Western Europe, i.e. if you don't have worker's compensation for injuries or health care, etc., then you can't trade with US unless there is a premium or tariff added to bring the cost of foreign goods up to what a an American company would have to pay. If the US farmers can't use pesticides then Mexico can't use them if it wants to import its tomatoes into the US.
AT THIS POINT SOMETHING WONDERFUL BEGINS TO HAPPEN: Good and services in the world trade with other nations based on quality and not on price because once the price is relatively the same throughout the world the only competitive edge that a seller can is to offer is quality. Something that is long over due and is the very best of capitalism.
Further, for our role as benevolent protector the world has to be pay us a reasonable amount of tribute to replenish the US Treasury for all of the debt we have created to save the rest of the world for the past 70 years starting with WWII and to maintain our Armies and Navies to keep the peace.
China and North Korea will go along with this scheme because they have even worse economic problems and unemployment than we do and they need to trade more than they need to confront us.
Thus, by using our military power we can stop the world chaos and at the same time bring prosperity to the world including the US and liquidating the US debt.
While I admit that I don't like my country being the Big Daddy to the rest of the world I, for one, am tired of continual wars starting when I was a little boy in WWII and today's threat of WMD. The United Nations hasn't worked.
As much as this will be difficult and require a substantial change in mind set THE QUESTION IS NOT WHETHER OR NOT THE US SHOULD DO THIS BUT RATHER DOES THE US HAVE ANY OTHER CHOICE?
My guess is that some think tank has figured the above scenario and the Bush team is implementing it. It won't be easy, it will be scary, but saving the third world as well as ourselves it worth doing. The key word will be courage, courage and more courage and an enlightened media that will not make tonight's headline one of the day's"toe stabbelers."
Richard, thanks for your continued good works. Your are free to publish this in any manner you chose. Again, if you come to Tucson, my wife and I would be pleased to buy you lunch at one of the best restuarants. I would appreciate your comments.
Jim Robinson
Tucson, Arizona
A loyal subscrib
|
-->Da hier ja soviel moralisiert wird über dumme und korrupte Politiker etc., nur ein weiterer Hinweis:
Das was Du hier machst nennt man Urheberrechtsverletzung!
gruss
cg
>June 16, 2003 -- What did you do over the weekend? I have five kids, so I played dad on Father's Day. Sunday morning I had breakfast with my only"kid" who still lives in San Diego. I had breakfast with my oldest daughter, Daria, along with her husband and her three kids. Ah to be a father, and to visit a restaurant where I have to be careful about what I eat. We ate in a"hippie" restaurant where everybody was sporting pierced ears, lips, tongues, eyebrows, pierced everything -- plus the ever-present tattoos.
>Daughter Daria just received her MA or advanced degree in teaching, and she's going to do some good in the world. She will teach elementary school. So great, by proxy I've done some good for the human race; I produced a terrific daughter who I'm sure will be an excellent teacher. And if there's anything this world needs, believe me, it's outstanding teachers.
>By the way, maybe it's just San Diego, but I note that the kids are beginning to look more and more like the kids of the '60s, and I mean the hippies. Tats, metal in their face, torn blue jeans, old clothes. Is this just a throwback to the '60s, or is it the signal for a coming societal"revolt"? Something is in the air. You want my guess? I honestly believe it's the beginning of a revolt against the mindless spending that has taken over this country for the past 15 years. So get ready for a new era of savings in America. People have become exhausted with spending. Spending is going out of style. There you have it, and you heard it here first.
>I have another theory. My theory borders on the mysterious. I believe that roughly 90% of the world's population of this earth are here to learn how to survive -- basically to learn how to put three meals on the table and how to put a roof over their heads. This process has been slow, very slow. Experts tell us that at present two-thirds of the world's population go to bed hungry (that's if they have a bed). I don't doubt it, I don't doubt it at all.
>I also believe that maybe ten percent of the world's population are here to be teachers. I don't know if I qualify for that one-tenth status or not. Anyway, maybe I'm just faking it, because (blush) I do play teacher. And since I've made a living at it for almost five decades maybe I'm pointed in the right direction. I sure hope so.
>What's this all got to do with the stock market and the economy? The stock market has a purpose too. It's basic purpose is to distribute stocks (equity) to the public. This process raises much-needed capital for business. So the stock market is basically a sales mechanism. Sometimes it's easy to sell stocks -- that's when the market is in a long-term rising trend, and we call that a bull market. And sometimes it very difficult to sell stocks -- that's when the market is in a corrective or falling trend, and we call that a bear market.
>The stock market has a second use, and a few of us goof-balls call it forecasting. The stock market possesses an uncanny ability to discount the future. But there's a problem. The problem is that it's damn hard to figure out what the stock market is saying. Of course, a lot of people don't believe the stock market is saying anything at all. But they're wrong.
>There's a language -- I call it the language of the market. I've spent most of my life trying to learn the language of the stock market -- and I'm still at it. To my mind, it's the toughest language in the world to learn. The reason that it's so tough is that its counter-intuitive. It goes directly against our emotions.
>In fact, it almost seems that the stock market has been created to deceive us. We look at the market, and we say,"Hey, this thing is hot -- it looks like the market is heading for the moon!" But that's just a surface view. That's what the stock market wants us to think. Beneath the surface action of the market something just the opposite is happening. Stocks are being distributed under the guise of exciting volume and a big push on the part of some most conspicuous stocks.
>At other times the market looks like a dying swan, and we shake out heads and say,"This is it, this is the death of equities. Capitalism is finished, and I don't want to ever own a stock again." But we're wrong. Stocks are really being accumulated by smart money. Under the guise of the"death of equities," smart money is putting stocks away preparatory to a new bull market.
>All right, Russell, enough blather. Let's just talk about what's happening now?
>What's happening now is that the Greenspan Federal Reserve is desperately trying to reverse the primary trend of the market and the economy. The Fed is trying to revive the US economy -- via inflation. The Fed has flooded the system with liquidity and it has dropped short rates to the floor. The idea is to keep the economy going, at least until next year's election. And the way the Fed plans to do that is to keep the US housing sector boiling and to keep America's consumers spending. The Fed wants to keep that process going long enough and to the point where corporations will once again start to expand.
>I've likened the Fed's action to trying to cure a heroin addict by giving him an endless series of additional heroin injections. Will that work, or will it kill the patient? Guess we're going to find out.
>In the meantime, the stock market has been surging. It's beginning to look like the late-'90s again. Housing and the stock market have been heading due north with a vengeance.
>In the background we have three tell-tale barometers -- the dollar, bonds, and gold. Bonds have been rising, rising, rising -- until today. Why? Because the bonds are reacting to the collapse in interest rates. Furthermore, the bonds smell disinflation -- or let me put it another way, the bonds don't smell any inflation -- at least not yet.
>Gold has been rising ever so slowly. Gold is in a new bull market, and gold senses that the dollar and possibly all fiat money could be in trouble. But gold is particularly concerned with the dollar.
>What's wrong with the dollar? What's wrong is that there are too bloody many of them. The Fed is grinding them out by the multi-billions, and due to the US's budget and current account deficits, the world is beginning to choke on dollars. In fact, certain parties suspect that the US is not turning out to be the best credit risk in the world.
>After all, if you absorb a huge chunk of the world's goods and merchandise, and you pay for all those goods and merchandise with paper that you manufacture the paper at will, there comes a time when the exporting nations of the world begin to wonder whether they are being played for a sucker.
>When that happens the dollar starts to lose it's value, and wise men, worried men, turn to euros -- and gold.
>Well, that's just the background of what's going on. Of course, the stock market's initial reaction to the sinking dollar is"Hey great, this is going to really help our exports. Europe may be in trouble, but US exports have got to surge. The sliding dollar is making the euro more expensive, and while this hurts Europe, it could revive the US economy. In fact, within a few months or so, the US economy could be booming again. And before you know it, the US will be back in business."
>That's the theory anyway -- the declining dollar, the low interest rates, and the booming money supply are going to make everything honky-dory again.
>As I write a few hours after the opening of today's session, the Dow is up over 100 points and above its June 12 high close of 9196.10. The problem is the Transports. The Trannies recorded a closing high of 2556.40 back on June 4. And they haven't closed above that level yet.
>The Dow Theory warns us to distrust a move by one Average unconfirmed by the other. So it's a bit disconcerting to note that the Transports haven't confirmed the action of the Dow. Of course, the Transports could always"change their minds" and suddenly head higher and confirm. It looked as though they might do it today.
>Last Friday the McClellan Oscillator closed at a negative minus 5. That opened the door for more weakness today, but it didn't happen. This market is just not ready to go down.
>Russell hard talk -- The stock market is acting as though it's driven. As over-bought as this market is, it refuses to correct. Money is almost hysterically going into the stock market.
>What's behind this? I believe it's the Fed's frantic effort to keep deflation away and to keep the US economy from sinking. To do this they MUST keep the housing market simmering, and the MUST keep consumers buying.
>The stock market is not rising simply on the market's discounting of future earnings. I believe money is literally being"forced" into the stock market because there's almost no opportunity cost in moving into stocks. It's the same with gold. You can buy gold at this point because you're losing almost"nothing" in the way of interest in holding gold. If bonds were paying 6% you'd be losing money by holding gold or today's dividend-less stocks, but as I said, with the yield on money instrument being driven down to almost nothing, why not own stocks or gold -- or anything else, for that matter?
>On top of this, as I've been saying week after week -- THERE'S NO SELLING PRESSURE IN THE STOCK MARKET. Nobody is selling. Selling for what? T-bills that pay nothing? Money market funds that pay nothing? The Fed has driven rates down so low that the opportunity cost of holding stocks, gold, or even a house is literally nothing.
>Money market funds are now on the edge of trouble. If rates drop any further, some money market funds will be under water as far as payout. In other words, the expense of running the fund will be more than what the fund can bring in on its investments. This could put some money market funds in the red, forcing them to dip into principle -- or else produce a loss for the holders of money market funds.
>For this reason, today I switched almost all my money market funds into T-bills, 91-day T-bills which brought in.55% in the open market. Did you ever think that you'd see 91-day T-bills bringing in half a percent? This is how far the Fed has moved in its frantic effort to keep the housing boom going and to keep consumer's buying.
>I have to think that the Fed is far more worried about deflation than it let's on. The Fed has taken emergency steps to offset deflation. But there's one thing the Fed cannot do. The Fed cannot halt the wild build-up of US deficits. These deficits have resulted in dollars piling up around the world, and these dollars have allowed nations to vastly increase their productive capacity and therefore their exports.
>The straight fact is that the world is now producing too much in the way of goods and merchandise. This means that too many good are chasing too few dollars -- basically a deflationary situation. The Fed's answer is to produce so many dollars that deflation can be neutralized.
>Is this a win-win situation or a frantic running up the down escalator? We're going to find out, but in the meantime nobody's selling anything. With the opportunity cost of saving cash near zero, the FED IS LITERALLY FORCING PEOPLE TO SPEND, TO OWN -- AND TO GET RID OF SAVINGS.
>
>TODAY'S MARKET ACTION -- In two words --"Gang busters!" My PTI was up 6 to 5320 with the moving average at 5264. My PTI remains strongly bullish.
>The Dow was up 201.84 to 9318.96. There was one mover, MMM, up 2.68 to 130.48.
>July crude was up.53 to 31.18.
>Transports were up 39.90 to 2495.46.
>Utilities were up 5.99 to 255.00.
>There were 2403 advances and 895 declines. Up volume was 84% of up + down volume.
>There were 408 new highs and 7 new lows. My High-Low Index was up 401 to 2816.
>Total NYSE volume was 1.30 billion shares.
>S&P was up 22.25 to 1010.86.
>Nasdaq was up 40.83 to 16567.32.
>My Big Money Breadth Index was up 10 to 718.
>Sept. Dollar Index was up.15 to 92.79. Sept. euro was down.26 to 118.00. Sept. yen was down.23 to 85.22.
>German DAX, despite near-recession in the Fatherland, was up 95 to a recovery high of 3264. Sept. Nikkei was up.10 to 89.60.
>Bonds sharply lower -- Sept. 30 year T-bond was down 30 ticks to 121.21 to yield 4.21%. Sept. 10 year T-note was down 19 ticks to 119.21 to yield 3.17%.
>August gold was up 2.50 to 359.70. July silver was up 3 to 4.61. July platinum was up 3.10 to 667.70. Sept. palladium was down 1.00 to 165.00.
>Gold/Dollar Index ratio was up 2.00 to 387.60.
>One share of the Dow buys 25.90 ounces of gold.
>The gold advance-decline line was up 9 to 1169 -- the high was 1180 set on January 24. The A-D is close to breaking out.
>XAU was up 1.08 to 79.37. HUI was up 4.93 to 151.13 with gold shares looking strong.
>ABX up.15, AEM up.07, AU up.62, BGO up.01, GSS up.03, MDG up.20, NEM up.35, PDG up.20, RGLD up.37.
>STOCKS -- My Most Active Stock Index was up 9 to 248.
>The 15 most active stocks on the NYSE were -- LU down.02, PFE up 1.48, NT down.01, GE up.83, TXN up.37, AOL up.26, C up.95, FRE up 1.51, EMC down.09, TYC up.23, MOT up.17, XOM up.23, MRK up 1.87, FNM up 4.15, HD up.80.
>VIX was down.65 to 22.24 and option-writers have sweated a drop yet.
>McClellan Oscillator was up 50 to plus 44. I don't particularly like the look of the Oscillator -- it now shows three declining tops.
>Keep close stops under your DIAs and SPYs. You've got nice profits, don't be greedy.
>CONCLUSION -- The Fed is telling the world,"Cash is Trash! Get out of cash and buy, baby, buy." Buy what? Buy stocks, buy homes, buy cars, buy the corner lamp-post, it doesn't matter, just get out of cash and buy."
>And that's exactly what's happening. Says the Fed,"What, you dummy, you still have a little cash. Well, we may drop rates another quarter percent, so if you still have cash, you're either a boozer or a loser. Get rid of it, buy some GM, buy AOL, hell, if you must, even buy a gold stock."
>"Golly-gee," says the Prez,"things are looking so much better, maybe we should take over Saudi Arabia -- what do you think, Rumsie?"
>And it's over and out for the R-man.
>See you tomorrow.
>.....................................................................................................................................................................
>
>Is there a master plan that the US is following? Maybe, but if there isn't, one of my subscriber submits this one. Have faith, dear subscribers, there is a plan. See below --
>Dear Richard:
>In a recent posting you asked something to the effect,"does anyone have a solution to this mess?" i.e. the US economic crisis.
>The answer is yes is there is a way out of this mess and I believe that it has already been implemented. In abbreviated form it will work like this. It is based on the model of the Roman Empire.
>But first those geopolitical forces, already in place, have to be understood for what they really are. Once the geopolitical goals are accomplished then the financial solution will drop into place.
>Step One: Occupying Iraq does much more than control an oil supply. Looking at the globe, not a Mercator projection, the strategic importance of Iraq is awesome. The U.S. now has a large land based fortress (no need for vulnerable aircraft carriers).
>From Iraq the U.S. can force the Iranian mullahs out of power which would be enthusiastically welcomed by the Iranians according to my Iranian friends. Syria would be first neutralized and then destabilized and then democratized. The same for Saudi Arabia. As an aside, the U.S. public will support because we support democracy and even the ultra left will because they have to support the liberation of women, etc. In time, as the economic benefits become clear, there will be widespread support to overthrow Islamic Fundamentalism.
>STEP 2: Once the Arab nations surrounding Iraq are subdued Palestine will be without financial aid. Enough pressure can be brought to bear on both the Jews and Palestinians to settle once and for all. The choice is clear. In ancient times, the Romans would have given both the Jews and the Palestinians a choice to knock it off or be anilhated. That means both of them. The same pressure will be put on India and Pakistan and in fact, I think there was something recently that stated that one or both of them are voluntarily reducing their nuclear warheads. In any event we cannot and will not tolerate the risk of a nuclear war, however limited, in the Middle East. This threat will be neutralized.
>STEP 3: Again, looking at the globe. From Iraq, the U.S. (and its allies) can easily send troops, weapons, missels, and reach to Pakistan and India, Southern Russia, Indonesia, and Central Africa. The choice will be given to any troublemakers, as did the Romans, join the Roman (read U.S. Empire) be protected, given the right to trade, technology, modern medicine, education, capital, etc., or suffer the fate of the barbarians. President Bush made this clear when he said"you are either with us or you are against us."
>I, for one, would like to see Africa brought out of the horrible tribal devastation and disease. With our"legions", often filled with local volunteers, we can bring peace to these the regional factions with a carrot and club approach. Barbaric tribal leaders who use"boy soldiers" to fight their wars would be summarily disposed of.
>Remember the Romans brought civilization to barbaric tribes and it did it by a two fold program,"Join and prosper and be safe or our legions will mow you down." Those alliances, often uneasy, nonetheless survived.
>Of course, the"new empire" will have to cut the"have nots" in on the pie. A hungry, sick, homeless and helpless group of people are our biggest enemies. Islamic Fundamentalism is able to appeal to this cancer. And why shouldn't the Palestinians, the Nigerians, the Rhuwandians have jobs and have their children have good health and full tummies? This is biggest question! There is more than enough information and history to prove to me that we still are a just nation and that we want others to have what we have.
>The question is can we control corporate greed and get the multinationals focus on their best self interest which is to make healthy consumers out of the heathens? Assuming that we can, then the financial problems of the U.S. are easy. I have faith that this nation which has given so much of itself can control the power elite to do the right thing. The American public, not the politicians, will have to insist that the right thing is done.
>STEP 4:
>Next or simultaneously, we can easily to break the oil cartel which is an illegal restraint of trade, extortion, and which benefits no one but the ruling classes of the middle east potentates. Just think what $5.00 a barrel oil would do for a world economy now on the brink of implosion, especially the U.S., which is the most heavily oil dependent nation? $5.00 a barrel oil would be"massive tax cut", liquify the financial system, stimulate profits and the markets.
>At the same the Federal Reserve (and other world banks) are on an inflationary plan and not just a mild one. That's great for the U.S. debt problem. Since, the U.S. Treasury owns more gold than the rest of the world, our Treasury will let the price of gold rise to say $3,000.00 an ounce and the U.S. could sell whatever amount of gold is necessary to liquify the debt and pay the unfunded liabilities such as social security and other U.S. obligations.
>But first, the short positions of the gold banks would have to be liquidated so as not to cause a collapse in the futures market but that should be easy enough to do. Then let the price of gold rise (and maybe manipulated up just as it has been manipulated down for years). I don't know what price gold should be in order to liquidate the debt but some of your other subscribers can figure that out, i.e. $5000.00 an ounce, $10,000.00 an ounce? Whatever it takes.
>As a part of our world dominance, we then renogiate our trade deals. China or Mexico or India or whomever sells to us can continue to sell to us but the playing field has to be level, i.e. China's manufacturer's also have to have benefits for their employees which are equal to the US and Western Europe, i.e. if you don't have worker's compensation for injuries or health care, etc., then you can't trade with US unless there is a premium or tariff added to bring the cost of foreign goods up to what a an American company would have to pay. If the US farmers can't use pesticides then Mexico can't use them if it wants to import its tomatoes into the US.
>AT THIS POINT SOMETHING WONDERFUL BEGINS TO HAPPEN: Good and services in the world trade with other nations based on quality and not on price because once the price is relatively the same throughout the world the only competitive edge that a seller can is to offer is quality. Something that is long over due and is the very best of capitalism.
>Further, for our role as benevolent protector the world has to be pay us a reasonable amount of tribute to replenish the US Treasury for all of the debt we have created to save the rest of the world for the past 70 years starting with WWII and to maintain our Armies and Navies to keep the peace.
>China and North Korea will go along with this scheme because they have even worse economic problems and unemployment than we do and they need to trade more than they need to confront us.
>Thus, by using our military power we can stop the world chaos and at the same time bring prosperity to the world including the US and liquidating the US debt.
>While I admit that I don't like my country being the Big Daddy to the rest of the world I, for one, am tired of continual wars starting when I was a little boy in WWII and today's threat of WMD. The United Nations hasn't worked.
>As much as this will be difficult and require a substantial change in mind set THE QUESTION IS NOT WHETHER OR NOT THE US SHOULD DO THIS BUT RATHER DOES THE US HAVE ANY OTHER CHOICE?
>My guess is that some think tank has figured the above scenario and the Bush team is implementing it. It won't be easy, it will be scary, but saving the third world as well as ourselves it worth doing. The key word will be courage, courage and more courage and an enlightened media that will not make tonight's headline one of the day's"toe stabbelers."
>Richard, thanks for your continued good works. Your are free to publish this in any manner you chose. Again, if you come to Tucson, my wife and I would be pleased to buy you lunch at one of the best restuarants. I would appreciate your comments.
>Jim Robinson
>Tucson, Arizona
>A loyal subscrib
|
Thread-Ansicht
Mix-Ansicht
Reihenfolge
Thread gesperrt
