Sunday, April 29, 2012
This Week in Barrons – 4-29-2012
Banc of Obama?
So what’s changed? As I look up from the cheap seats, I see a landscape that includes a racial issue in Florida, an economy in trouble, a jobs and housing situation that isn’t moving in the right direction – and then elements like this:
- The Department of Labor is poised to put the finishing touches on a rule that would apply child-labor laws to children working on family farms, prohibiting them from performing a list of jobs on their own family’s land. Under the rules, children under 18 could no longer work "in the storing, marketing and transporting of farm product raw materials." Can anyone really tell me what good comes out of this? Farms lose a worker, kids lose the ability to learn responsibility – and all we’re doing is extending the "big brother nanny state". Given we produce more food per acre than anywhere on the planet, did that happen as a result of rules like this?
- In New York, the major banquet halls that host fantastic weddings, and bah mitzvahs and conferences often end up with tons of food that they were giving it to the homeless. Recently the mayor swept in with his food Nazi's and put a halt to that under the guise of what if someone got sick? So now the homeless are only allowed to get state approved food from state approved food banks, and the leftover food goes to garbage dumps.
- President Obama recently said: "America's source of economic strength has been her historical embrace of collective action, wealth redistribution, and government policies that have protected workers from the ravages of the wealthy. Prosperity grows outward from the middle class, it never trickles down from the success of the wealthy." Really? This is the class warfare mongering that I find it detestable. America was built on a lot of things, but redistributing wealth is not one of them. Telling poorer folks that their situation is all because the "evil rich man" put them there is disgusting. The unfortunate part for the President is that wealth must first be produced before it can be redistributed. Redistribution always creates disincentives that result in less wealth being created, and ALL the societies that have attempted to create wealth through redistribution have failed miserably.
When you send out hundreds of thousands of newsletters, you can bet you get a good amount of "feedback". One of the most common themes I continue to get is: "I've lost the America I knew and loved". I'm awfully concerned.
The Market:
All we needed was a wink and a nod from Bernanke and the next thing you know we are about to threaten the near term highs. As soon as The Ben Bernanke said he had all manner of tools at his disposal to make sure the economy doesn't fail, the market started going UP. Of course it shouldn't be going up and one day it’s going to come down very hard, but until it does, we have “The Bernanke Put".
We are fast approaching another one of those "could be" days. Back on April 4th the S&P topped out at 1,422, the DOW hit 13,297 (which was it's second attempt to bust over 13,300), and then the bottom fell out with both indexes pulling down very hard. With the DOW at 13,133, and the S&P at 1,403 – are we going to be challenging those levels again soon? If we get up and over those two highs, then it's pretty much blue sky ahead and we could be in for quite a bullish treat. But there are a lot of issues here. Everyone with a functioning brain cell knows it's “The Ben Bernanke’s Bucks” doing the work. Yes he said he's willing to continue pumping in the bucks and frankly he has no choice. But each day:
- The volume on the NYSE sags.
- We see more and more companies doing buy backs to boost their share prices higher.
- And we hear of more and more people extracting money from their mutual funds.
Then we have Apple (AAPL), after shedding a ton of points, they did great on earnings and jumped over $50 in a day. But now Apple is fading as the market is going higher. When the single most successful stock on the board can't continue up with the rest of the market, you need to be wary.
In other words, this market rally is really thin. It's being pushed and prodded higher, but when you look at a chart, it's a sideways mess of a chop. While I think it's possible we challenge the upper end again, I'm not so sure we're going to get past it. In fact, I feel like a bit of a sideways slide is in order for at least the beginning of the week.
One of the key things we watch is the XLF - which is the Exchange Traded Fund (ETF) for the financials. If it can clear $16.00, we are going to speed higher, but if it breaks under $14.90 we're on our way lower in a hurry. Currently it is in the middle, ending Friday at $15.50. Why is the XLF so special? Well, the way The Ben Bernanke has this market rigged, each day – the participating banks get billions of dollars to do their "Operation Twist" buying and selling. These participating banks get a very large commission for doing this, and they use these commissions to buy up stocks in other banks first, then in the broader market second. So, as long as the "financials" are still holding up, you have to consider the trend as stable.
When the biggest of the big boys either push the financials significantly higher, or pull out and they fall – that’s really the key for knowing where you should be (long or short). Again, with the XLF in the middle – we personally haven't gone to cash, but we haven't loaded the boat in our trading accounts either. Slow and steady is the game right now.
I think on Monday, they will "try" to get us going, but it will sputter out we will be left digesting last week’s big gains. But eventually, The Ben Bernanke has no choice but to announce his latest gimmick that will replace “Operation Twist” when it runs it's course in June. When that happens we will rally from that day into the election; however, between now and ‘that day’ – be on guard.
Another major situation is coming to pass in June. Because of the sanctions barring Iran from using the SWIFT system to settle their oil sales, India has agreed to buy Iranian oil in Gold. Now, that is pretty big news in and of itself, because we are seeing more and more countries looking to use anything but the depreciating US dollar. But wait – because of more sanctions imposed by the NDAA back in December, it seems that China will not be "allowed" to buy Iranian oil in conventional "yuan to dollar" terms starting in June. Now China has accumulated hundreds of billions of US dollars, and they have Gold. If they are forced to buy Iranian oil in Gold, they are going to go all out to dispose of dollars and buy up more Gold. This could a catalyst that jumpstarts the next leg higher in gold and pushes it over $2,000 an ounce. So, June is becoming a pivotal month on a lot of fronts!
Tips:
Currently, I’m really sitting in very little other than my old stand-buys of Gold and Silver:
- EROC at 9.43 (currently = 9.42) stop at 9.22
- TJX at 42.01 (currently = 42.48) stop at 41.40
- AXP at 59.09 (currently = 60.17) stop at entry
- HD in at 50 (currently = 51.92) – stop at 51
- GLD (ETF for Gold) – in at 158.28, (currently 161.63) – no stop, AND
- SLV (ETF for Silver) – in at 28.3 (currently 30.36) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .
Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .
If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.
If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog:
Sunday, April 22, 2012
This Week in Barrons - 4-22-12
This Week in Barrons – 4-22-2012
Somethin’s coming, somethin’ ______
This coming week is going to be very interesting: (a) France has elections brewing – and Sarkozy is in danger, (b) the IMF (International Monetary Fund) is meeting again, but the ‘biggie’ is (c) the FED meeting. We had Quantitative Easing #1 (QE1), then QE2, and now we’re living "Operation Interest Rate Twist" (which is the Fed buying and selling short term notes against long term notes – in order to keep long term interest rates down – to help the housing industry). There is really a classic display of economic incest here – as the Federal Reserve is owned by the very banks that The Ben Bernanke is printing and giving money to. So he can’t let the banks fail or the entire Fed fails. Anyway, "Operation Twist" is scheduled to end in June, and the minute it ends, the market will force interest rates higher. So I’m pretty sure that somethin’s coming – I just don’t know what or when. We have The Ben Bernanke meeting for two days this week, and if he doesn't announce what he's going to do about the expiring ‘Twist’, the market will be grumpy. And if he doesn’t hint strongly enough about it, the market could still pout. Why? Because the market wants its new stimulus now!
The market these past couple of months has been going thru a nasty chop. We are basically at the same exact levels we were at in February. Yep – in two months we’ve basically gone nowhere. We’re also half way between two trend lines and breaking free of either of them will either send the market higher or collapse it to the 11k region. I think we're going to move sideways in the channel for a while longer. Then in June, The Ben Bernanke will announce his new "operation" and we will then make a wild run up to the election. In the meantime however, we have just as much ability to slide down to the lower boundary of 12,700 as we do challenging the 13,300 level.
Many of you have written in asking about my continued thoughts on gold and silver. We know that at some point The Ben Bernanke's going to inject some more "stimulus" and that will cause gold to rise. Gold rises in times of uncertainty as well as in times of inflation, and if we’re printing another $1 trillion, that is most certainly inflationary. Therefore, sometime between now and the big announcement is a good time to be accumulating gold or the gold ETF. I know gentlemen like Jimmy Rodgers (who’s been very right on gold) thinks that it could dip to $1,100 – but frankly I don’t think China is going to let it get anywhere near $1,500 before they open their wallets. And remember, the Chinese have hundreds of billions of paper dollars ready to be exchanged! Also the good economists (that have been gold bulls) have recently chilled on the investment and that adds somewhat of a contrarian twist. The upcoming election is also going to be influential to gold. If Obama is re-elected, his views on Social programs will cause The Ben Bernanke to continue printing, and at that point I believe China will embark on breaking free of the US dollar – and those repercussions are hard to imagine. However, with a regime change could come fiscal responsibility and this could give the Chinese hope, but we’ll still have existing inflation to contend with. Either way gold will rise.
What about silver? I think that silver has a date with $70 (it’s currently around $30). But right now we need to live through the whole short-term, massive silver manipulation thing. The lawsuits are there, the CFTC and the SEC know the fraud that goes on – they need to allow JP Morgan and others a way out of their naked shorts, and to make as much profit as they can before they end the fraud graciously. However, we are racing headlong into a silver shortage. Not of just coins and bars, but of the industrial silver that goes into electronics, aviation, the military, etc. At some point, (no matter how manipulated) the price will go up due to supply and demand. Once we finally end silver’s naked shorting and manipulations, I suspect my $70 call for silver will be closer to $125.
The Market....
The market is not for the feint of heart right now. 200-point up-days are followed by 160-point down-days, and we end up running in place. I think we will break to the upside, but only after some wicked chop and fade before The Ben Bernanke’s next announcement. Once The Ben Bernanke announces his next gimmick, we "should" be on our way to new highs. We will head for these new highs not due to earnings or a better economy, just the simple fact that if he continues to print and hand money to the banks, the banks get a boost to their bottom lines, and they get to use the money to play in the market.
Unless something stunning comes out of The Ben Bernanke this week, I will not be surprised if the market continues to trend lower for a few weeks, and then starts firming up ahead of the next Fed meeting in early June. So, if you're carrying a lot of long side trades, please be careful.
One of the keys for me is to watch the XLF. The XLF is the symbol for the Exchange Traded Fund (ETF) for the financials. Currently, it’s just pennies over it’s 50-day moving average, and if it sinks under that, it could quickly go to its recent low of $14.95. A break under $14.95 is a clear signal that we're about to see the market dump out for a bit, as it's the banks that rule the roost.
Tips:
Currently, I’m really sitting in very little other than my old stand-buys of Gold and Silver:
- HD in at 50 (currently = 51.61) – stop at 51
- GLD (ETF for Gold) – in at 158.28, (currently 159.45) – no stop, AND
- SLV (ETF for Silver) – in at 28.3 (currently 30.65) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .
Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .
If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.
If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog:
Until next week – be safe.
R.F. Culbertson
Somethin’s coming, somethin’ ______
This coming week is going to be very interesting: (a) France has elections brewing – and Sarkozy is in danger, (b) the IMF (International Monetary Fund) is meeting again, but the ‘biggie’ is (c) the FED meeting. We had Quantitative Easing #1 (QE1), then QE2, and now we’re living "Operation Interest Rate Twist" (which is the Fed buying and selling short term notes against long term notes – in order to keep long term interest rates down – to help the housing industry). There is really a classic display of economic incest here – as the Federal Reserve is owned by the very banks that The Ben Bernanke is printing and giving money to. So he can’t let the banks fail or the entire Fed fails. Anyway, "Operation Twist" is scheduled to end in June, and the minute it ends, the market will force interest rates higher. So I’m pretty sure that somethin’s coming – I just don’t know what or when. We have The Ben Bernanke meeting for two days this week, and if he doesn't announce what he's going to do about the expiring ‘Twist’, the market will be grumpy. And if he doesn’t hint strongly enough about it, the market could still pout. Why? Because the market wants its new stimulus now!
The market these past couple of months has been going thru a nasty chop. We are basically at the same exact levels we were at in February. Yep – in two months we’ve basically gone nowhere. We’re also half way between two trend lines and breaking free of either of them will either send the market higher or collapse it to the 11k region. I think we're going to move sideways in the channel for a while longer. Then in June, The Ben Bernanke will announce his new "operation" and we will then make a wild run up to the election. In the meantime however, we have just as much ability to slide down to the lower boundary of 12,700 as we do challenging the 13,300 level.
Many of you have written in asking about my continued thoughts on gold and silver. We know that at some point The Ben Bernanke's going to inject some more "stimulus" and that will cause gold to rise. Gold rises in times of uncertainty as well as in times of inflation, and if we’re printing another $1 trillion, that is most certainly inflationary. Therefore, sometime between now and the big announcement is a good time to be accumulating gold or the gold ETF. I know gentlemen like Jimmy Rodgers (who’s been very right on gold) thinks that it could dip to $1,100 – but frankly I don’t think China is going to let it get anywhere near $1,500 before they open their wallets. And remember, the Chinese have hundreds of billions of paper dollars ready to be exchanged! Also the good economists (that have been gold bulls) have recently chilled on the investment and that adds somewhat of a contrarian twist. The upcoming election is also going to be influential to gold. If Obama is re-elected, his views on Social programs will cause The Ben Bernanke to continue printing, and at that point I believe China will embark on breaking free of the US dollar – and those repercussions are hard to imagine. However, with a regime change could come fiscal responsibility and this could give the Chinese hope, but we’ll still have existing inflation to contend with. Either way gold will rise.
What about silver? I think that silver has a date with $70 (it’s currently around $30). But right now we need to live through the whole short-term, massive silver manipulation thing. The lawsuits are there, the CFTC and the SEC know the fraud that goes on – they need to allow JP Morgan and others a way out of their naked shorts, and to make as much profit as they can before they end the fraud graciously. However, we are racing headlong into a silver shortage. Not of just coins and bars, but of the industrial silver that goes into electronics, aviation, the military, etc. At some point, (no matter how manipulated) the price will go up due to supply and demand. Once we finally end silver’s naked shorting and manipulations, I suspect my $70 call for silver will be closer to $125.
The Market....
The market is not for the feint of heart right now. 200-point up-days are followed by 160-point down-days, and we end up running in place. I think we will break to the upside, but only after some wicked chop and fade before The Ben Bernanke’s next announcement. Once The Ben Bernanke announces his next gimmick, we "should" be on our way to new highs. We will head for these new highs not due to earnings or a better economy, just the simple fact that if he continues to print and hand money to the banks, the banks get a boost to their bottom lines, and they get to use the money to play in the market.
Unless something stunning comes out of The Ben Bernanke this week, I will not be surprised if the market continues to trend lower for a few weeks, and then starts firming up ahead of the next Fed meeting in early June. So, if you're carrying a lot of long side trades, please be careful.
One of the keys for me is to watch the XLF. The XLF is the symbol for the Exchange Traded Fund (ETF) for the financials. Currently, it’s just pennies over it’s 50-day moving average, and if it sinks under that, it could quickly go to its recent low of $14.95. A break under $14.95 is a clear signal that we're about to see the market dump out for a bit, as it's the banks that rule the roost.
Tips:
Currently, I’m really sitting in very little other than my old stand-buys of Gold and Silver:
- HD in at 50 (currently = 51.61) – stop at 51
- GLD (ETF for Gold) – in at 158.28, (currently 159.45) – no stop, AND
- SLV (ETF for Silver) – in at 28.3 (currently 30.65) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting:
Please write to
If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.
If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog:
Until next week – be safe.
R.F. Culbertson
Sunday, April 15, 2012
This Week in Barrons - 4-15-2012
This Week in Barrons – 4-15-2012
Where is Everyone?
Most people are woefully underfunded for their retirement. Surveys tell us that most people are rushing into their late 60's with under $50K to their name. Add in an economic collapse, an out of control Fed, lying regulators, Bernie Madoff, and so on and we sit here asking ourselves: “Where has the stock trading volume gone?” We are trading at 46% less volume now, than we did in 2007. Today, 70% of the trading is ‘high frequency trading’ - accomplished by machines trading back and forth to one another in nano-seconds. If you discount those - the true volume levels are less than 20% of what we had in 2007! So where did everyone go?
The answer is a lot easier than the rationale. Every day for the past 4 years CNBC has talked about all the cash on the sidelines, and they are absolutely correct. Approximately $8 Trillion is parked in some form of make believe "security". America's combined demand deposits, checkable deposits, savings deposits, and time deposits have hit an all time high. Why is this – because people are tired of the lies, flash crashes, fake accounting, insider trading, screwy earnings, FASB mis-regulations, FED manipulation and finally Wall Street loosing their money! And this is why the game for Obama and The Ben Bernanke, Geithner and the entire EU is so very important. They have no choice but to try and get this market "up", and lure folks back into the market. Yes, they want it up so that they can point to it and say: "Look how great the economy is!" But they also need it up, to try to beg folks to come back to it because currently the only thing keeping our market liquid is high frequency trading. And without a ‘liquid market’ companies can’t live or hire! This is why you can have the slowest volume day in a year, and yet gain 180 points. This is why you're up 200 one day, down 190 the next. For all intents and purposes, the market is "broken". The Ben Bernanke is trying to entice people back by giving primary dealers money every day, so they can buy AAPL (and the likes) and keep the market alive. He hopes that if they rig it higher, that people's greed will take over. They'll worry they are missing the train and want to hop on.
Unfortunately the over 60 year olds are thinking: "Screw this, one more bad market crash and I'm eating dog food for retirement". The over 50’s are saying: “You want me to come out of bonds, cash and money markets, to invest in insolvent bank stocks?" We’re caught in a period that has the potential to be many times worse than the Great Depression. Consider this: in 1930 the entire population of the US was 122 million people – currently we have 47 million on food stamps. In 1930, Europe was doing well – currently Europe is a disintegrating disaster.
Unfortunately for The Ben Bernanke, I don't think the masses are coming back to the market any time soon. They'd rather be comfortable with the return OF their money, than any return ON their money. They see all the ills in living color and they wonder how on earth can the market be going up, when everything looks so dim? Then they think about it and they remember 2007 and the market crashing to 6600. Oh – by the way – if everyone did manage to come back into the market, and that wave of $8 Trillion rushed back into equities, the resultant wave of inflation would probably run somewhere in the 25% range, and ultimately end up destroying the economy and the market. So maybe it's best if everyone just stays away!
The Market:
We exist in a period that will be awfully frightening for the next few years. Not only:
- are baby boomers retiring,
- we’re having a nasty election year,
- a massive tax bomb is going to land on us soon,
- there is no real volume in the markets,
- debts are piling higher and higher,
- Spain is just one announcement away from implosion,
- we’re going to continue to see dramatic volatility;
- therefore, this market is NOT for the faint of heart!
Notice, I did not mention earnings. I did not mention them, because lately they’re an excuse to explain things more than they're a reason for doing anything. For example: Google’s estimated over 90 days ago – that it would post $8.14 B in revenue for this quarter. Now Google is basically a pay per click advertising company and is really at the mercy of how many Internet searches the public does. This week they posted earnings and guess where the revenues came in: $8.14 billion. Magic aye?
Earnings are becoming humorous. We are seeing one-time charges applied to energy, payroll, and taxes. Yet the tradebots are programmed to read and react to all the news. Tradebots today are programmed to look for certain word patterns in a press release, and based on the probability of that word string being positive or negative trade it, or fade it.
So, given we have chop – you can only deal with it one of two ways: day trade or sit on your hands. In the robo trading world we live in now, once a clearly established trend is over, (and the last trend ended in mid March) trying to hold things can get you killed.
Right now the DOW and S&P are under their 50-day moving averages. That is something that hasn't happened since November. If they don't get significantly over these averages and soon, the chances for more "correction" are very strong indeed.
In the first quarter of 2012 the NASDAQ gained 18%, while the DOW and S&P gained 13%. These are great gains for an entire YEAR, yet we got them in 4 months; therefore my finger is currently firmly planted next to the "hide in cash" button. It won't take much for me to make the move and let all that money sit in a money market doing nothing.
As the rest of this earnings season shapes up, we're sure to see big up days and big down days. However, on a technical level, I see more reason to believe the market will fall, more than I see a reason for it to climb back to the recent high at 13,300. Now having said that - more QE is coming. When QE is announced you're going to want to be very LONG as we could gain 500 points in a couple days. But since we don't know when they will announce it, the market is free to fade, bounce, fall, bounce – so please be careful out there.
Tips:
I sold the DIA puts last week for a tidy profit – that was just a matter of timing – and I’m sitting on very little other than my old stand-buys of Gold and Silver:
- HD in at 50 (currently = 50.96) – stop at 50.40
- AIG in at 30.22 (currently = 32.31) – stop at 32
- GLD (ETF for Gold) – in at 158.28, (currently 160.6) – no stop, AND
- SLV (ETF for Silver) – in at 28.3 (currently 30.60) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .
Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .
If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.
If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog:
Until next week – be safe.
R.F. Culbertson
Where is Everyone?
Most people are woefully underfunded for their retirement. Surveys tell us that most people are rushing into their late 60's with under $50K to their name. Add in an economic collapse, an out of control Fed, lying regulators, Bernie Madoff, and so on and we sit here asking ourselves: “Where has the stock trading volume gone?” We are trading at 46% less volume now, than we did in 2007. Today, 70% of the trading is ‘high frequency trading’ - accomplished by machines trading back and forth to one another in nano-seconds. If you discount those - the true volume levels are less than 20% of what we had in 2007! So where did everyone go?
The answer is a lot easier than the rationale. Every day for the past 4 years CNBC has talked about all the cash on the sidelines, and they are absolutely correct. Approximately $8 Trillion is parked in some form of make believe "security". America's combined demand deposits, checkable deposits, savings deposits, and time deposits have hit an all time high. Why is this – because people are tired of the lies, flash crashes, fake accounting, insider trading, screwy earnings, FASB mis-regulations, FED manipulation and finally Wall Street loosing their money! And this is why the game for Obama and The Ben Bernanke, Geithner and the entire EU is so very important. They have no choice but to try and get this market "up", and lure folks back into the market. Yes, they want it up so that they can point to it and say: "Look how great the economy is!" But they also need it up, to try to beg folks to come back to it because currently the only thing keeping our market liquid is high frequency trading. And without a ‘liquid market’ companies can’t live or hire! This is why you can have the slowest volume day in a year, and yet gain 180 points. This is why you're up 200 one day, down 190 the next. For all intents and purposes, the market is "broken". The Ben Bernanke is trying to entice people back by giving primary dealers money every day, so they can buy AAPL (and the likes) and keep the market alive. He hopes that if they rig it higher, that people's greed will take over. They'll worry they are missing the train and want to hop on.
Unfortunately the over 60 year olds are thinking: "Screw this, one more bad market crash and I'm eating dog food for retirement". The over 50’s are saying: “You want me to come out of bonds, cash and money markets, to invest in insolvent bank stocks?" We’re caught in a period that has the potential to be many times worse than the Great Depression. Consider this: in 1930 the entire population of the US was 122 million people – currently we have 47 million on food stamps. In 1930, Europe was doing well – currently Europe is a disintegrating disaster.
Unfortunately for The Ben Bernanke, I don't think the masses are coming back to the market any time soon. They'd rather be comfortable with the return OF their money, than any return ON their money. They see all the ills in living color and they wonder how on earth can the market be going up, when everything looks so dim? Then they think about it and they remember 2007 and the market crashing to 6600. Oh – by the way – if everyone did manage to come back into the market, and that wave of $8 Trillion rushed back into equities, the resultant wave of inflation would probably run somewhere in the 25% range, and ultimately end up destroying the economy and the market. So maybe it's best if everyone just stays away!
The Market:
We exist in a period that will be awfully frightening for the next few years. Not only:
- are baby boomers retiring,
- we’re having a nasty election year,
- a massive tax bomb is going to land on us soon,
- there is no real volume in the markets,
- debts are piling higher and higher,
- Spain is just one announcement away from implosion,
- we’re going to continue to see dramatic volatility;
- therefore, this market is NOT for the faint of heart!
Notice, I did not mention earnings. I did not mention them, because lately they’re an excuse to explain things more than they're a reason for doing anything. For example: Google’s estimated over 90 days ago – that it would post $8.14 B in revenue for this quarter. Now Google is basically a pay per click advertising company and is really at the mercy of how many Internet searches the public does. This week they posted earnings and guess where the revenues came in: $8.14 billion. Magic aye?
Earnings are becoming humorous. We are seeing one-time charges applied to energy, payroll, and taxes. Yet the tradebots are programmed to read and react to all the news. Tradebots today are programmed to look for certain word patterns in a press release, and based on the probability of that word string being positive or negative trade it, or fade it.
So, given we have chop – you can only deal with it one of two ways: day trade or sit on your hands. In the robo trading world we live in now, once a clearly established trend is over, (and the last trend ended in mid March) trying to hold things can get you killed.
Right now the DOW and S&P are under their 50-day moving averages. That is something that hasn't happened since November. If they don't get significantly over these averages and soon, the chances for more "correction" are very strong indeed.
In the first quarter of 2012 the NASDAQ gained 18%, while the DOW and S&P gained 13%. These are great gains for an entire YEAR, yet we got them in 4 months; therefore my finger is currently firmly planted next to the "hide in cash" button. It won't take much for me to make the move and let all that money sit in a money market doing nothing.
As the rest of this earnings season shapes up, we're sure to see big up days and big down days. However, on a technical level, I see more reason to believe the market will fall, more than I see a reason for it to climb back to the recent high at 13,300. Now having said that - more QE is coming. When QE is announced you're going to want to be very LONG as we could gain 500 points in a couple days. But since we don't know when they will announce it, the market is free to fade, bounce, fall, bounce – so please be careful out there.
Tips:
I sold the DIA puts last week for a tidy profit – that was just a matter of timing – and I’m sitting on very little other than my old stand-buys of Gold and Silver:
- HD in at 50 (currently = 50.96) – stop at 50.40
- AIG in at 30.22 (currently = 32.31) – stop at 32
- GLD (ETF for Gold) – in at 158.28, (currently 160.6) – no stop, AND
- SLV (ETF for Silver) – in at 28.3 (currently 30.60) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting:
Please write to
If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.
If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog:
Until next week – be safe.
R.F. Culbertson
Sunday, April 8, 2012
This Week in Barrons - 4.8.2012
This Week in Barrons – 4-8-2012
Happy Easter to All
On such an important day for so many around the world, pardon me – but I do need to mention a few things.
I don't for a moment worry about nuclear war, but I do worry about economic break down. I fear an economic breakdown will indeed lead to a complete collapse of our society. The only reason our inner cities aren't burning is that the population has been paid off with medical clinics, welfare, food stamps, etc. I guess this all boils down to faith in the Bankers. If you think that The Ben Bernanke, Turbo Geithner, and the gang that were in place during the housing bubble and crash are going to save this Country, fix the debts, and get us going – then you have nothing to fear. But, if you think that we are already unfixable and we're just kicking the can down the road until that time when everything finally just implodes – then you are indeed going to have to come to grips with a very bad vision.
Each dollar that we print lowers the value of the dollars China holds. Iran is trading oil for gold. Japan and China are now trading in Yuan instead of dollars. All around the world folks are doing what they can to get away from the US dollar. China has been a massive buyer of gold lately, and is urging the Chinese people to own it as well. In China you can have all the gold you can possibly get, but not a single ounce is allowed to leave the country. The only thing that's kept the U.S. alive is the reserve status of the dollar. I guarantee that at "some point" our reserve currency status goes away, and that will be "game over". I believe China, who is NOT in debt, will continue to shed dollars for solid resources such as oil, gold and land. I believe that China will eventually back their entire economy with gold, and at that point urge the world to use their Yuan as the global trading currency.
I’m not alone in seeing an ugly depression in 2013 to 2014. As a point of fact, Ruger (the 4th largest gun manufacturer in the US) had to suspend taking new orders because in the first quarter they produced a million weapons, and couldn’t keep up with demand. According to them, the increased demand is as a result of people looking around and thinking: “If things get ugly, I want to protect my family". If this was Ruger – just imagine how Smith and Wesson and Remington are doing?
The Market
On Friday we received the Non-Farm Payroll (jobs) report. The estimates were for about 215,000 jobs to have been created, and unfortunately we only created 120,000 new jobs. Now, the first thing I always do is to go to www.BLS.Gov and look at the "birth/death" model. This is where the government attempts to calculate - for every 1,000 individuals that lose their jobs or are out of work, X percent of them have probably gone on to open a business and hire folks. Naturally there is no paperwork, tax receipts or any proof that these jobs exist – but it’s the government’s way of increasing the ‘jobs created’ number. So how many of the 120,000 jobs created in March were due to the ‘birth/death’ model – the answer is 90,000 of them! WOW! Our government ‘made up’ 75% of that number. Double WOW!! Every day the media keeps telling me about the recovery – and yet the single most important part of a recovery is jobs, and there just aren't any. The fake number was terrible, and the real number was ‘really terrible’.
But the really important question about all of this has nothing to do with jobs. The real question is whether this jobs report will bring on QE3? And that is what makes predicting this week’s market action really difficult. Remember, the market is not at these levels due to economic activity, earnings power, a solid housing market and wage growth. The market is near all time highs for one reason only – and that is that The Fed has been printing money and has flooded the big institutional banks with gobs of money. These banks use some of this money to pay themselves bonuses, with the balance going into the markets. It’s the wink and nod deal between the banks and The Ben Bernanke who says: “I'll print all the money you need to stay solvent, and you’ll take the balance and keep this market up.” The Ben Bernanke knows that people feel richer and spend more money when they see the value of their 401k’s increase. After all – we have: 16% real unemployment, falling housing, stagnant to falling wages, and a European Union on the verge of implosion.
Last week the market had a fit and sold off when it got to read the Fed's minutes of their last meeting and there was virtually no discussion about new QE3, or any type of stimulus. So it's forever important that QE programs are never ending and are constantly hitting the market. If the market had the slightest connection to economic reality, then Friday's jobs report should send us hurtling downward. But just last week The Ben Bernanke was telling Diane Sawyer that he's not happy with the jobs picture and stood ready to do whatever it takes to get jobs created.
So is it possible that the market goes up instead of down on that lousy report? It is indeed possible. It could be the report that gives The Ben Bernanke the "reason" he needs to replace Operation Twist (the current QE program) with something new and mightier.
Please understand the insanity of all of this. In January I said that the economic reports were all going to sound wonderful - better than they have been just a few months earlier. Why? Because Obama wants folks to think that although it took a long time, he has things improving and we are on our way to glory. So everything from housing sales, to earnings, to jobs magically got better. But that put The Ben Bernanke in a box. How could he come out and say we need more QE if the economy is humming along like his ‘false’ economic reports were telling everyone? So this time they did not ‘paint the jobs report’ but rather allowed it to come in weak in order that The Ben Bernanke could come out with his next round of "accommodation" and run the market. That's what we are struggling with this week. Reality says we should plunge, but the perception that this report forces The Ben Bernanke to announce more stimulus could prevent that.
Remember the ‘good old days’ when investing was all about earnings, growth, book to sales, profit and loss? Now it's all about trying to figure out what the criminals are going to do concerning the fake money that they print.
Happy Easter. Hug your loved ones and truly enjoy their company – because in the end, that’s what really matters.
Tips:
You know that I have been anxiously awaiting a correction – and the jobs report on Friday could bring us that on Monday. That coupled with the most recent ‘beat down’ in Gold and Silver – I had to purchase more Gold and Silver on Thursday.
We’re currently holding:
- HD in at 50 (currently = 50.51) – stop at entry
- MCD in at 98.27 (currently = 98.22) – stop at entry
- AIG in at 30.22 (currently = 33.32) – stop at 32
- DIA 130 PUTS at $1.80
- GLD (ETF for Gold) – in at 158.28, (currently 158.16) – no stop, AND
- SLV (ETF for Silver) – in at 28.3 (currently 30.72) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .
Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .
If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.
If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog:
Until next week – be safe.
R.F. Culbertson
Happy Easter to All
On such an important day for so many around the world, pardon me – but I do need to mention a few things.
I don't for a moment worry about nuclear war, but I do worry about economic break down. I fear an economic breakdown will indeed lead to a complete collapse of our society. The only reason our inner cities aren't burning is that the population has been paid off with medical clinics, welfare, food stamps, etc. I guess this all boils down to faith in the Bankers. If you think that The Ben Bernanke, Turbo Geithner, and the gang that were in place during the housing bubble and crash are going to save this Country, fix the debts, and get us going – then you have nothing to fear. But, if you think that we are already unfixable and we're just kicking the can down the road until that time when everything finally just implodes – then you are indeed going to have to come to grips with a very bad vision.
Each dollar that we print lowers the value of the dollars China holds. Iran is trading oil for gold. Japan and China are now trading in Yuan instead of dollars. All around the world folks are doing what they can to get away from the US dollar. China has been a massive buyer of gold lately, and is urging the Chinese people to own it as well. In China you can have all the gold you can possibly get, but not a single ounce is allowed to leave the country. The only thing that's kept the U.S. alive is the reserve status of the dollar. I guarantee that at "some point" our reserve currency status goes away, and that will be "game over". I believe China, who is NOT in debt, will continue to shed dollars for solid resources such as oil, gold and land. I believe that China will eventually back their entire economy with gold, and at that point urge the world to use their Yuan as the global trading currency.
I’m not alone in seeing an ugly depression in 2013 to 2014. As a point of fact, Ruger (the 4th largest gun manufacturer in the US) had to suspend taking new orders because in the first quarter they produced a million weapons, and couldn’t keep up with demand. According to them, the increased demand is as a result of people looking around and thinking: “If things get ugly, I want to protect my family". If this was Ruger – just imagine how Smith and Wesson and Remington are doing?
The Market
On Friday we received the Non-Farm Payroll (jobs) report. The estimates were for about 215,000 jobs to have been created, and unfortunately we only created 120,000 new jobs. Now, the first thing I always do is to go to www.BLS.Gov and look at the "birth/death" model. This is where the government attempts to calculate - for every 1,000 individuals that lose their jobs or are out of work, X percent of them have probably gone on to open a business and hire folks. Naturally there is no paperwork, tax receipts or any proof that these jobs exist – but it’s the government’s way of increasing the ‘jobs created’ number. So how many of the 120,000 jobs created in March were due to the ‘birth/death’ model – the answer is 90,000 of them! WOW! Our government ‘made up’ 75% of that number. Double WOW!! Every day the media keeps telling me about the recovery – and yet the single most important part of a recovery is jobs, and there just aren't any. The fake number was terrible, and the real number was ‘really terrible’.
But the really important question about all of this has nothing to do with jobs. The real question is whether this jobs report will bring on QE3? And that is what makes predicting this week’s market action really difficult. Remember, the market is not at these levels due to economic activity, earnings power, a solid housing market and wage growth. The market is near all time highs for one reason only – and that is that The Fed has been printing money and has flooded the big institutional banks with gobs of money. These banks use some of this money to pay themselves bonuses, with the balance going into the markets. It’s the wink and nod deal between the banks and The Ben Bernanke who says: “I'll print all the money you need to stay solvent, and you’ll take the balance and keep this market up.” The Ben Bernanke knows that people feel richer and spend more money when they see the value of their 401k’s increase. After all – we have: 16% real unemployment, falling housing, stagnant to falling wages, and a European Union on the verge of implosion.
Last week the market had a fit and sold off when it got to read the Fed's minutes of their last meeting and there was virtually no discussion about new QE3, or any type of stimulus. So it's forever important that QE programs are never ending and are constantly hitting the market. If the market had the slightest connection to economic reality, then Friday's jobs report should send us hurtling downward. But just last week The Ben Bernanke was telling Diane Sawyer that he's not happy with the jobs picture and stood ready to do whatever it takes to get jobs created.
So is it possible that the market goes up instead of down on that lousy report? It is indeed possible. It could be the report that gives The Ben Bernanke the "reason" he needs to replace Operation Twist (the current QE program) with something new and mightier.
Please understand the insanity of all of this. In January I said that the economic reports were all going to sound wonderful - better than they have been just a few months earlier. Why? Because Obama wants folks to think that although it took a long time, he has things improving and we are on our way to glory. So everything from housing sales, to earnings, to jobs magically got better. But that put The Ben Bernanke in a box. How could he come out and say we need more QE if the economy is humming along like his ‘false’ economic reports were telling everyone? So this time they did not ‘paint the jobs report’ but rather allowed it to come in weak in order that The Ben Bernanke could come out with his next round of "accommodation" and run the market. That's what we are struggling with this week. Reality says we should plunge, but the perception that this report forces The Ben Bernanke to announce more stimulus could prevent that.
Remember the ‘good old days’ when investing was all about earnings, growth, book to sales, profit and loss? Now it's all about trying to figure out what the criminals are going to do concerning the fake money that they print.
Happy Easter. Hug your loved ones and truly enjoy their company – because in the end, that’s what really matters.
Tips:
You know that I have been anxiously awaiting a correction – and the jobs report on Friday could bring us that on Monday. That coupled with the most recent ‘beat down’ in Gold and Silver – I had to purchase more Gold and Silver on Thursday.
We’re currently holding:
- HD in at 50 (currently = 50.51) – stop at entry
- MCD in at 98.27 (currently = 98.22) – stop at entry
- AIG in at 30.22 (currently = 33.32) – stop at 32
- DIA 130 PUTS at $1.80
- GLD (ETF for Gold) – in at 158.28, (currently 158.16) – no stop, AND
- SLV (ETF for Silver) – in at 28.3 (currently 30.72) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting:
Please write to
If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.
If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog:
Until next week – be safe.
R.F. Culbertson
Sunday, April 1, 2012
This Week in Barrons - 4-1-12
This Week in Barons: 4-1-12:
Happy - April Fools Day?
The week started off with a prepared speech by The Ben Bernanke. In that speech he made it clear that there would be low rates forever, and when "Operation Twist" expires in June, there will be another ‘free money’ scheme to follow it. Well, the market loved it. But the funny part is – none of this is about the economy because Monday brought us:
- The Dallas Fed #: estimates were = 17, reality = 10 (the higher the better),
- Richmond Fed #: estimates were = 18, reality = 7,
- New home sales fell 1.6%,
- Future home sales: estimates were = +1, reality = -0.5,
- Home prices fell for the 5th month in a row (their lowest levels since 2003),
- And the individual investor keeps pulling money OUT of mutual funds as consumer confidence continues to fall!
We are seeing more and more stock buy backs by corporations. Well, with interest rates so low, most of the companies doing buy backs "borrow" the money from the bank. Then the insiders grant themselves "X" amount (millions) of shares – at the pre-buy back price. Then a company does the buy back, and with the buy back comes a natural up-tick in the stock price. When the stock price increases, those very same insiders cash in their stock option grants and make themselves a fortune. Oh, and the corporation is now saddled with the debt of borrowing all the money to do the buy back in the first place!
To go along with stock buy backs, insider selling is rampant right now as well. As an example: This week Green Mountain Coffee (GMCR -1.7%) founder and chairman Robert Stiller sold $66.3M of his stock before it plunged on news that Starbucks had developed a single-cup coffee machine to rival the Green Mountain K-Cup brewer. Stiller's sales were his largest in a single month since 2003. Was this good timing or trading on insider information?
We are truly in a very wild place as the global economy continues to tell us it's weakening. From China to Europe to the US, the numbers are just not good. Durable goods orders are down. Regional Fed reports are down. Housing sales are still down. Yet because Bernanke is willing to yap about printing dollars out of thin air, the market has been holding up. There's an old adage about the market and it says: "Don't fight the Fed". When The Fed prints money, pushes interest rates to 0, and does all manner of odd "accommodations" - a lot of money ends up sloshing around in the market. Just last week Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, wrote in a Wall Street Journal opinion article: "Last year the Fed purchased a stunning 61 percent of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis." Goodman went on to warn that the U.S. economy and markets are "at risk for a sharp correction" if conditions are not "normalized." "This not only creates the false appearance of limitless demand for U.S. debt, but also blunts any sense of urgency to reduce supersized budget deficits."
The Market:
The market continues to work its way higher despite Friday being the 3rd lowest volume day of the year. Why is it still inching higher? Is it $4 gasoline – of course not. It’s all about when The Ben Bernanke’s new QE3 is coming! The Ben Bernanke told us in his remarks: "I'm not happy with the recovery and will do what's necessary to make it happen.”
This week Jim Grant read the Fed the riot act, and blasted them for doing basically everything wrong. He even did a piece about President Harding, who saved us from a horrid recession in just a little over a year. Back in 1920, long before the "great depression" we came into a horrid economic nightmare. The excesses built up during the First World War, specifically in credit and debt had come back to bite us hard. Unemployment was soaring, production was crashing and the people were broke. Like Obama today, Warren Harding started his Presidency in the face of a massive economic collapse. Yet Warren didn't open the floodgates. He didn't demand we print trillions. He didn't come up with all manner of bizarre spending policies. No, old Warren did something quite brilliant. He told the people that basically "Folks, we're screwed. We lived like drunken sailors from too much credit and too much debt. We face horrid inflation, job losses and tough times. We're going to have to buckle down, tough it out, and pay for the mistakes of the past. It won't be pleasant, and you're all going to have to sacrifice. We have to man up to the problems, face them down, charge them off and start fresh. We don't need any wild new concepts, no untried policies. What we need to do is take our medicine and work through it." President Harding let bloated businesses fail. He cut back social program spending and infrastructure spending. He reigned in credit, and stood on principles of living within your means. Well guess what happened? In less than a single year, the economy had flushed itself, the free market rewarded the strong, and disbanded the weak and after a brief period of pain, the economy was on the road to recovery. In fact, it was one of the shortest-lived economic downturns of its type ever seen.
I've been on record for a few weeks awaiting a correction; however, every time one starts – it has been cut short by a big banker (including The Ben Bernanke) talking of more stimulus and up we go. Maybe there won’t be a correction because the bankers are afraid that if one starts – they won’t be able to stop it? Honestly, in regular markets we get normal corrections of 8%, but not in this market. This market pauses, and dips slightly, but then “boom” it runs up again.
Mr. Charles Biderman from Trim Tabs said on CNBC: “The market is rigged. There is no money coming into stocks, and yet the stock market keeps going up. The law of supply and demand still exists and for stock prices to go up, there has to be more money buying those shares.” Mr Biderman couldn't say how long this would go on - pushing the market higher. He figures at least until the election. I was however figuring we'd get a correction now and then; however, it appears that corrections are illegal now too. So, until it stops working, we have to "buy the dips" and lean into this.
Finally, some of you have written me about giving up on gold and silver. I think that's going to be a very big mistake. In the long run, nothing the Fed is doing is going to work, and at some point, people will tire of their currently (and other) holdings constantly being worth less. We've seen most of the world Governments selling dollars and buying other currencies, gold, etc. This will continue. They have to do this slowly however, or their buying will push things too quickly. I’m from a time when 12% moves take a year – not a weekend. So patience is a virtue with gold and silver – and a rewarding one in my opinion.
Tips:
I’m anxiously awaiting a correction – but we’re also quietly leaning long.
We’re currently holding:
- ANR – sold at entry
- DIA 130 PUTS at $1.80 (because I keep sensing a pullback coming)
- GLD (ETF for Gold) – in at 159.49, (currently 161.99) – no stop, AND
- SLV (ETF for Silver) – in at 28 (currently 31.33) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .
Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .
If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.
If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog:
Until next week – be safe.
R.F. Culbertson
Happy - April Fools Day?
The week started off with a prepared speech by The Ben Bernanke. In that speech he made it clear that there would be low rates forever, and when "Operation Twist" expires in June, there will be another ‘free money’ scheme to follow it. Well, the market loved it. But the funny part is – none of this is about the economy because Monday brought us:
- The Dallas Fed #: estimates were = 17, reality = 10 (the higher the better),
- Richmond Fed #: estimates were = 18, reality = 7,
- New home sales fell 1.6%,
- Future home sales: estimates were = +1, reality = -0.5,
- Home prices fell for the 5th month in a row (their lowest levels since 2003),
- And the individual investor keeps pulling money OUT of mutual funds as consumer confidence continues to fall!
We are seeing more and more stock buy backs by corporations. Well, with interest rates so low, most of the companies doing buy backs "borrow" the money from the bank. Then the insiders grant themselves "X" amount (millions) of shares – at the pre-buy back price. Then a company does the buy back, and with the buy back comes a natural up-tick in the stock price. When the stock price increases, those very same insiders cash in their stock option grants and make themselves a fortune. Oh, and the corporation is now saddled with the debt of borrowing all the money to do the buy back in the first place!
To go along with stock buy backs, insider selling is rampant right now as well. As an example: This week Green Mountain Coffee (GMCR -1.7%) founder and chairman Robert Stiller sold $66.3M of his stock before it plunged on news that Starbucks had developed a single-cup coffee machine to rival the Green Mountain K-Cup brewer. Stiller's sales were his largest in a single month since 2003. Was this good timing or trading on insider information?
We are truly in a very wild place as the global economy continues to tell us it's weakening. From China to Europe to the US, the numbers are just not good. Durable goods orders are down. Regional Fed reports are down. Housing sales are still down. Yet because Bernanke is willing to yap about printing dollars out of thin air, the market has been holding up. There's an old adage about the market and it says: "Don't fight the Fed". When The Fed prints money, pushes interest rates to 0, and does all manner of odd "accommodations" - a lot of money ends up sloshing around in the market. Just last week Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, wrote in a Wall Street Journal opinion article: "Last year the Fed purchased a stunning 61 percent of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis." Goodman went on to warn that the U.S. economy and markets are "at risk for a sharp correction" if conditions are not "normalized." "This not only creates the false appearance of limitless demand for U.S. debt, but also blunts any sense of urgency to reduce supersized budget deficits."
The Market:
The market continues to work its way higher despite Friday being the 3rd lowest volume day of the year. Why is it still inching higher? Is it $4 gasoline – of course not. It’s all about when The Ben Bernanke’s new QE3 is coming! The Ben Bernanke told us in his remarks: "I'm not happy with the recovery and will do what's necessary to make it happen.”
This week Jim Grant read the Fed the riot act, and blasted them for doing basically everything wrong. He even did a piece about President Harding, who saved us from a horrid recession in just a little over a year. Back in 1920, long before the "great depression" we came into a horrid economic nightmare. The excesses built up during the First World War, specifically in credit and debt had come back to bite us hard. Unemployment was soaring, production was crashing and the people were broke. Like Obama today, Warren Harding started his Presidency in the face of a massive economic collapse. Yet Warren didn't open the floodgates. He didn't demand we print trillions. He didn't come up with all manner of bizarre spending policies. No, old Warren did something quite brilliant. He told the people that basically "Folks, we're screwed. We lived like drunken sailors from too much credit and too much debt. We face horrid inflation, job losses and tough times. We're going to have to buckle down, tough it out, and pay for the mistakes of the past. It won't be pleasant, and you're all going to have to sacrifice. We have to man up to the problems, face them down, charge them off and start fresh. We don't need any wild new concepts, no untried policies. What we need to do is take our medicine and work through it." President Harding let bloated businesses fail. He cut back social program spending and infrastructure spending. He reigned in credit, and stood on principles of living within your means. Well guess what happened? In less than a single year, the economy had flushed itself, the free market rewarded the strong, and disbanded the weak and after a brief period of pain, the economy was on the road to recovery. In fact, it was one of the shortest-lived economic downturns of its type ever seen.
I've been on record for a few weeks awaiting a correction; however, every time one starts – it has been cut short by a big banker (including The Ben Bernanke) talking of more stimulus and up we go. Maybe there won’t be a correction because the bankers are afraid that if one starts – they won’t be able to stop it? Honestly, in regular markets we get normal corrections of 8%, but not in this market. This market pauses, and dips slightly, but then “boom” it runs up again.
Mr. Charles Biderman from Trim Tabs said on CNBC: “The market is rigged. There is no money coming into stocks, and yet the stock market keeps going up. The law of supply and demand still exists and for stock prices to go up, there has to be more money buying those shares.” Mr Biderman couldn't say how long this would go on - pushing the market higher. He figures at least until the election. I was however figuring we'd get a correction now and then; however, it appears that corrections are illegal now too. So, until it stops working, we have to "buy the dips" and lean into this.
Finally, some of you have written me about giving up on gold and silver. I think that's going to be a very big mistake. In the long run, nothing the Fed is doing is going to work, and at some point, people will tire of their currently (and other) holdings constantly being worth less. We've seen most of the world Governments selling dollars and buying other currencies, gold, etc. This will continue. They have to do this slowly however, or their buying will push things too quickly. I’m from a time when 12% moves take a year – not a weekend. So patience is a virtue with gold and silver – and a rewarding one in my opinion.
Tips:
I’m anxiously awaiting a correction – but we’re also quietly leaning long.
We’re currently holding:
- ANR – sold at entry
- DIA 130 PUTS at $1.80 (because I keep sensing a pullback coming)
- GLD (ETF for Gold) – in at 159.49, (currently 161.99) – no stop, AND
- SLV (ETF for Silver) – in at 28 (currently 31.33) – no stop.
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting:
Please write to
If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.
If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog:
Until next week – be safe.
R.F. Culbertson
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