RF's Financial News

RF's Financial News

Sunday, May 29, 2016

This Week in Barrons - 5-29-2016

This Week in Barrons – 5-29-2016:


It’s Memorial Day … Coming to a Theatre Near You

This Memorial Day there are some incredible, global situations converging.
-       Venezuela: All of the U.S. news outlets have done an excellent job of downplaying the horror that is going on inside that country.  The country is in melt down mode.  On a regular basis 5,000 people will storm a grocery store because they heard that there might be ‘bread’ inside.  Remember those Wal-Mart videos showing maniacal shoppers trampling people to death on Black Friday over a flat screen TV?  Image ten times the number of shoppers, hungry from 3 days of starvation, all hearing that a bread truck is coming.  That’s Venezuela.
-       The Middle East: A place where it’s common to experience a car bombing, a hostage taking, an ISIS strike, and of course a modern passenger jet falling from the sky – all in a single day.
-       Europe: The ECU is still clinging to its 17-nation experiment.  It’s bankrupt, rudderless, and being over-run by migrants.  They are still printing 85B Euros a month to keep these 17 zombie economies alive.  And have $8T sitting in banks accounts, in a dozen countries, earning negative interest.
-       Russia: Amazing in its calmness as the U.S. and NATO continue to move bases closer to its border.
-       China: Continues to build military bases on islands that they have created.

And just when you think that it can’t get any weirder, on the main stage we have Donald and Hillary.  First off, if any of us did what Hillary did with her e-mail server, we would all be in orange jumpsuits by now.  [https://www.youtube.com/watch?v=-dY77j6uBHI]  I think all of the current political drama is a part of a much larger theatre than: ‘Real Estate Mogul’ versus ‘Lifetime Bureaucrat/Liar’.  Presidential politics are planned years in advance – with the people simply buying tickets in November.  But this election is different.  I mean: Where did Donald Trump come from?  Am I to believe that he was just hanging out on a golf course and one day decided to ‘Give this President thing a shot’?  Am I to believe that Donald "Art of the Deal" Trump decided to put his life on parade for millions to criticize, run around the country giving speeches – all on a whim?  Donald preaches: ‘Negotiate from a position of strength.’  So there is NO WAY Donald entered this race without some form of assurance that he could win.

After all, Trump gets more media coverage than Hillary and Bernie combined.  Media normally costs money, but The Donald has gotten billions of it, for free.  Normally when the media disagrees with someone they just shut them down by cancelling interviews and erasing news spots.  The media can make you go away by ignoring you, except if you’re Donald Trump.

Why would the global elites want Donald Trump in the White House?  Surely his stance on everything from building a wall, making Iran pay, and his views on Muslim terrorists – fly in the face of globalization?  I think the reason The Donald is there is due to his bankruptcy expertise.  I've been talking about a monetary reset for a few years now, and The Donald is The King of bankruptcies.  I know this is convoluted, but what if the plan is to have a global monetary reset and discharge all debts.  You would want someone at the top you can trust, who is NOT a banker – and someone that could guide J.Q. Public through a really tough patch.  Trump would be the perfect pick.

If there is a monetary reset, and the U.S. loses it’s grasp on its global currency reserve status – all ‘heck’ will break loose.  J.Q. Public will not listen to a career politician or a banker.  But J.Q. Public may be ‘okay’ with The Donald.  Trump talks like a regular Joe – rough around the edges.  He's not political, but rather tells you his opinion.  He's been in business, and knows how to work systems.  I'm starting to believe that Donald Trump is actually the elite’s pick for President, because something ugly is coming and Donald has the history to work through it.

All I can say is: “Get out the Popcorn”, because these next few months are going to be quite a show.

The Market:
-       Today, 78% of the eligible workforce between the ages of 25 and 54 is working – versus 82% in 2000.  That 4% difference equates to 6M fewer jobs, with a rapidly increasing number being taken over by technology.
-       For the first time in 130 years, MORE men aged 18 to 34 are living at home than co-habiting.
-       Donald Trump wants to bring back all of the jobs lost to overseas workers, because he knows that job retraining won't work as well in the future.
-       Commodity prices have fallen 55% since 2015 – the same margin they fell during the global financial crisis.
-       This week was the 17th week in a row of stock market institutional selling.
-       As oil flirts with $50/barrel – most of the oil tanker ships around the world lay parked and full of oil.  From Singapore to the U.S., oil companies are using tanker ships as storage, because there's no place else to put it.
-       The Chinese devalued their Yuan again – taking it back to 2011 lows.
-       The overall manufacturing conditions are the weakest since October 2009.
-       Deutsche Bank paid $400M in fines for ‘Equity Trading Fraud’.
-       25 U.S. Non-Financial companies – control over HALF of the total amount of cash held by all U.S. Non-Financial corporations.  What makes these companies so different is that they all are technology companies that generate significant cash flow over-seas.

Memorial Day is “a day on which those who died in active military service are remembered.”  My father served in WWII, and earned a purple heart.  When Vietnam came around I was too young, and the war ended just as I turned 18.  But I lost two older friends in that affair.  For them and the millions like them I say Thank You.  Enjoy this holiday weekend, and a heartfelt tip of the cap to all of you that have served and continue to serve.

On the other hand, often the reason those brave souls were sent to fight these wars boiled down to nothing more than pure greed.  Smedley Darlington Butler (July 30, 1881 - June 21, 1940) was a Major General in the United States Marine Corps – the highest rank authorized at that time.  At the time of his death he was the most decorated Marine in U.S. history, and one of only two people EVER to earn two Medals of Honor.  After his military career had ended, Smedley wrote a book titled: "War is a Racket".  In it he said:
-       “WAR is a racket.  It always has been.  It is: possibly the oldest, easily the most profitable, and surely the most vicious of rackets.  It is the only racket in which the profits are collected in dollars and the losses in lives.”
-       “A racket is best described as something that is not what it seems to the majority of the people.  Only a small "inside" group knows what it is about.  It is conducted for the benefit of the very few, at the expense of the very many.”
-       In World War I, at least 21,000 new millionaires and billionaires were made in the U.S.  How many of these war millionaires shouldered a rifle or dug a trench?  How many of them knew what it meant to go hungry in a rat-infested dugout?  How many of them spent sleepless, frightened nights, ducking shells, shrapnel and machine gun bullets?  How many of them parried a bayonet, or were wounded in battle?”
-       "I spent over thirty-three years in active military service as a member of this country's most agile military force, the Marine Corps.  I spent most of my time being a high-class muscle man for Big Business, for Wall Street and for the Bankers.  In short, I was a gangster for capitalism."
-       “I helped make Mexico safe for American oil interests in 1914.  I helped make Haiti and Cuba a decent place for the National City Bank boys.  I helped in the raping of half a dozen Central American republics for the benefit of Wall Street.  I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912.  I brought light to the Dominican Republic for American sugar interests in 1916.  And in China I helped to see to it that Standard Oil went its way unmolested.”

And there (in a nutshell) is why Memorial Day shreds me emotionally.  I have an incredible and deep respect for our fighting crew, and a deep disgust for the greed at the top of the food chain that orders the wars to take place.  Smedley’s ideal was simple: "There are only two reasons to send our youngsters to war.  One is in defense of our homes. The other is in the defense of our Bill of Rights. Every other reason is a racket, pure and simple." 

For those of you needing a patriotic refresher: [https://www.youtube.com/watch?v=YaxGNQE5ZLA]

In terms of the market itself, after a couple of monster up days earlier this week, we ended Friday with the S&P basically at 2100 (2099.6).  That was certainly a well-done ‘work of art’ by our Central Bankers.  You see, on April 20, we closed with the S&P at 2102.  The market then traded sideways and down, hitting a low of 2025 on May 19.  Since then it has been steadily up, and we're basically back at that April high.  Do the economic fundamentals warrant a move back up to these levels?  Heck no.  But fundamentals went out with ‘my father’s Oldsmobile’, and today it's all about keeping the market up at all costs.

Our Central Bankers have engineered a ‘stick save’ from the edge of a nasty looking cliff, and now everyone is breathing a sigh of relief.  Is that it?  Do we just go up from here, and make all time new highs?  It's possible.  With just 35 more points to go for an all time high, they might as well give it a shot.  But, I think it is more probable that they run into resistance here, and start mildly selling-off around mid-week.

Enjoy the holiday with your friends and family.  If you have the time, send a good thought along to all who have served and are serving.  Thank them for keeping us safe.

I am:
-       Long various mining stocks: AG, AUY, CDE, FFMGF, FSM, NGD, and PAAS,
-       Long AMZN June 3 / 705 Calls,
-       Long MA June 3 / 96 Calls,
-       Long TSLA June 3 / 220 Calls,
-       Long TLT June / 128 Calls,
-       And Long an oil supplier: REN.

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there!

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