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?
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.
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!
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.