This Week in Barrons - 11-10-2013

This Week in Barrons – 11-10-2013

“If you like your current insurance…” … OOPS – I’m sorry!

After learning this week that (thanks to the Affordable Care Act) my own health insurance premiums will increase 47% next year, I decided to do a little digging.  [Thanks to JT for his timely assistance.]  The Affordable Care Act (ACA) is the single most contentious political action of my lifetime – outside of the Vietnam War.  It touches everyone in one-way or another, and often in profoundly personal ways.  Factually we were told:

-     If you liked your insurance you could keep your insurance – that’s NOT true.

-     If you liked your doctor you could keep your doctor – that’s NOT true.

-       Existing insurance cannot be cancelled – that’s NOT true.

-       We will make your insurance less expensive – that’s NOT true.

-       Your health information and data will be secure – that’s NOT true.

-       But what IS true is that due to all of the chaos, insurance companies are increasing their premiums.

The Manhattan Institute (this week) released a report that shows that insurance premiums, across 49 states, are increasing (on average) by 41%.  Obamacare insurance rates for younger men are increasing by 97%, and for younger women by over 55%.  The worst state is North Carolina, where some individual market rates have tripled for women, and quadrupled for men.  The rest of the world has to be looking on and saying: “USA – why are you managing this transition so badly?” 

A.   We are forcing people to buy into a virtual marketplace, that (for all intense and purposes) is a monopoly.  In theory, the ACA should have improved competition through their ‘Health Exchanges.’  Unfortunately, of the 2,500 counties served by the federal exchanges – 58% have less than 2 insurance carriers participating.  Therefore, in over half the US, we are being FORCED to buy insurance from private companies that have pricing power, market dominance, and are exempt from anti-trust supervision.

B.   Hospitals are also exempt from fair pricing laws.  If you go to a hospital, you'll get a different price (for the same set of services) depending on whether you're uninsured, on Medicaid, or have an insurance policy.  Because antitrust policy has been so inadequate for so long in the health sector, the lack of competition on the insurance side – is only magnified by the lack of competition on the hospital, pharmacy, and medical device sides.  For example: in the past 6 years, more than 250 corporate mergers have reduced healthcare competition, allowing the remaining firms to charge higher fees, and increasing subsequent insurance premiums by over 87%.  This has (however) produced a 428% profit increase within the insurance industry.

C.   The US spends far more than any other country on healthcare (almost twice the global average) – but does NOT achieve any better healthcare outcomes.  Chile, Hong Kong, and Singapore spend one fourth what we do, and achieve better outcomes and longer lifespans.  Therefore, spending more money isn't the answer.

D.   Most of our healthcare costs are incurred in the last twelve months of our lives.   Modern medicine delays natural death, better than it extends a healthy life.  Doctors understand what medicine can (and can’t) do, and therefore consume less healthcare than the average person.  An ‘Advanced Directive’ (a document that specifies what steps should and should not be taken to save their lives should they become incapacitated) has been signed by over 64% of doctors and less than 20% of J. Q. Public.  The gap is one of perception.  Let’s use CPR as an example.  CPR (that we’ve all seen on TV) was found to be successful in 75% of the cases, and 67% of those patients go home.  However, more recent studies show that only 8% of those patients survive for more than one month, and of those – only 3% lead a normal life.

E.   5% of patients create over 60% of healthcare costs.  A recent study asked if we spend more money – would we create a better quality of death?  The conclusion was exactly the opposite:  the LESS money spent during this time period produced a BETTER death experience.  It seems that no matter how much money you spend during that last year, the effort makes things worse.  A lot of the money is being spent to allow the patient to endure more bad experiences on a daily basis.  The patient’s quality of life is being decreased; all the while we’re increasing the cost of death.  We will all die.  Until we have the conversation about how we die, and recognize that we spend too much on medicine we don't need, we won't reduce our costs.

I always wondered how a fragmented country and government could produce a unified healthcare plan.  The answer is – it can’t.  So we’ll all just need to wait for Round 2 of Obamacare.

The  Market:

What a week.  We saw the European banking community (in a bizarre move) reduce interest rates by one quarter of a percent.  This surprised virtually everyone, including those in Europe.  But understand, the PIIGS nations (that crashed so hard years ago) aren't ‘fixed’ – they’re just papered over.  For example: nothing has changed in Cyprus since it’s bailout, and Spain still has it’s 45% youth unemployment.  We stand witness to the Eurozone Central bankers realizing that if they stop pushing money into the system – the system will fall apart. 

The market reaction to the move was interesting.  After a big pop on Thursday morning, our market actually rolled over and lost 150 DOW points.  Maybe (just for a few moments) everyone realized that destroying your currency, devaluing your money, and artificially stimulating your economy isn't such a hot idea after all?  

Then on Friday we received the monthly jobs report.  The estimates were for a gain of 120K jobs.  The report came out and told us we actually added 204,000 jobs in the month of October.  Honestly, with the ‘Taper’ in September, and despite the Government ‘Shutdown’ in October, you’re asking me to believe that we added twice as many jobs as were estimated?  And during this same time period (while all of these glorious jobs were being created) the labor force participation rate FELL to 62.8% - the lowest number since March 1978.  So we’re adding jobs (twice as many as expected), but the number of people employed is decreasing – to the lowest percentage in 40 years.  HUH?  How is that possible?

The market reaction to the number was very telling.  The minute the number hit the DOW fell almost 100 points.  Why?  Because if the number were true, we would be experiencing growth, and then the Fed would be forced to taper it’s QE.  The market knows that the only reason it is as high as it is, is because of QE.  The market also knows that whatever economic activity we are seeing, is solely because of QE.  Take away QE, and things fall.   So we are solidly in that area where good news is bad for the market, and bad news is great for the market.

But then something very different happened – the market turned around and surged higher.  Why?  It took the market a while to realize that the jobs number was as phony as Obama telling you: “You can keep your current insurance.”  Factually:

-       The birth/death model added 120K (of the 204k) jobs, and those jobs don’t really exist – they’re just a calculation.

-       The total number of people NOT in the labor force ROSE from 88.2M a year ago, to currently 91.5M.  If we were producing jobs – this number would be going down, not up.

-       And the employment (to population) ratio is down to 58.3% - from 58.6% in September and 58.7% a year ago.  Again, if we were producing jobs – the employment ratio would be moving up, not down.

So, the market figured out that the Government is just trying to make it look like we're not in a depression, and these ‘fake’ numbers are not going to sway the Fed.  Whew.  What a week.  After being beaten down on Thursday by 150 points, the market gained it all back on Friday.  Hope (as they say) springs eternal. 

I tend to spend a lot of time watching this market ‘digest’ it’s moves.  Lately the market has been running in place, working itself sideways, and NOT pulling back with any real conviction.  Usually these types of sideways moves mean that the market still has energy in it to move higher.  For example:  on October 29^th the market (the S&P’s) opened strong, inched higher and hit 1,772.  Eight days later (which was last Friday) we ended the day at 1,770 on the S&P.  That’s a virtually perfect sideways chart.  Naturally within those 8 days we wiggled, bounced and jiggled around, but the basic movement is sideways – not down.

When I examine the XLF (the Exchange Traded Fund (ETF) that covers the financial sector), I’m seeing that it’s MACD indicator is curving upward.  It is only about 14 cents away from challenging it’s all time high.  The XLF is the leadership that the market needs to accompany any ‘real rally.’

Therefore, between the sideways action of the market, and the performance of the XLF, one can only assume that there are more gains in store for this already wildly overpriced market.  Is that crazy?  Absolutely, but insanity has ruled this market for the last few years.  Unfortunately, one day we're going to pay for this with a major market crash, but until then, try and reap what you can.

The "trigger" (so to speak) is the S&P.  If it gets over the few intra-day highs set at about 1,775, then it should be free and clear to soar into the blue.  Over this next week we should see the market levitate to that area, struggle a bit, and then push past it.

Tips:

Looking around I still like:

-       WLT and ACI – both coal producers – both with very handsome option abilities right now.

-       The 3D printer space … SSYS / DDD / PRLB / XONE all worth a look.

-       CSIQ in the solar market – but it’s not for the faint of heart,

-       And more basics such as GILD, BTU (Peabody Energy) and POT (Potash).

-       Look at POT > 33, IBM > 181.50, and MOS > 47.50.

My current short-term holds are:

-       CLF – in at 25.53 (currently 27.20) – stop at 26.50

-       SIL – in at 24.51 (currently 12.15) – no stop

-       GLD (ETF for Gold) – in at 158.28, (currently 124.40) – no stop ($1,284.50 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 20.73) – no stop ($21.31 per physical ounce).

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, R.F. Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of his thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is the 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: http://www.youtube.com/watch?v=K2Z9I_6ciH0

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.

<mailto:rfc@culbertsons.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 11-3-2013

This Week in Barrons – 11-3-2013
 

Our Kids Are Socialists Now

After spending a week speaking and listening to virtually all of the global entrepreneurial thought leaders – hearing of their trials and tribulations – excuse me if I’m not as bullish on entrepreneurship.  Once you get past all the hype concerning ‘small business’ being the jobs engine of the future, and how many more people today are taking entrepreneurship courses in high school and in college than ever before – you get to the cold hard reality that: Due to governmental ‘red tape’ it’s darn near impossible to start a business from scratch right now.

First off – think about the ‘branding message’ any small business must create in order to tell people what they do.  And add to that, the new level of ‘political correctness’ that must be achieved.  I remember when location, religion and ethnicity were all ‘fair-game’ and often something to be proud of – not anymore!  Today, the smallest imagined perception of ‘incorrectness’ elicits ‘outrage and rebellion.’  OK, if we’re teaching our small businesses to all look and act the ‘same’ – what has all of this ‘sameness’ produced?

-       Race relations are at the lowest level that I can remember.

-       ‘Hate crimes’ are setting records in cities across the U.S.

-       And suicide is the #1 killer of current teens today!

In the world of entrepreneurship, it’s these ‘differences’ that take a small business to the next level.  Yet, pointing out those differences (in today’s ‘politically correct’ climate) could brand you with the vilest of names.  Socialism means everyone is the same in every way including: economic status, social status, color, beliefs, and message.

Secondly – think of the regulations and hoops that our small businesses are required to jump through.  The environmental extremists have pushed more people out of work than any other single item.  Thousands of companies every month can no longer afford the red tape and excessive compliance – so they either move outside the U.S. or close-up shop.  We (socialistically) have engineered the way to reduce America from a ‘manufacturing’ powerhouse to a ‘service’ economy.

Finally – just look at the numbers.  In 2012, the U.S. small (for profit) business employment rate increased by 0.1%.  Yes, for the entire year our ‘for profit’ small business community was basically flat = no job growth.  And to add insult to injury, in 2012 the small (for profit) business revenue decreased by 1.2%.  Therefore, our small (for profit) business community may have added a few jobs – but overall they made significantly less money.  On the other hand, the small (non-profit) employment community grew quite handsomely across the board, bringing Sokolowski and Geller from John’s Hopkins University to conclude: “Non-profits have been holding the fort for much of the rest of the economy, creating jobs at a time when other components have been shedding jobs.”  Currently, one out of every ten workers (outside the government) works for a non-profit.  That number is projected to keep rising with 44% of non-profits intending to create new positions throughout the coming months. 

So the new growth engine of choice is the Non-profit Organization – often termed a 501c3.  Therefore, I need to change the way I’m viewing trends and data – because creating and growing a non-profit business is very different than a ‘for profit’ entity.  As much as we talk about ‘wealth-creation’ in terms of the stock market – if you’re next JOB is with a non-profit – you had better polish/develop a new skill set in the months ahead.

The question then becomes: If you don’t like the non-profit path – what can you do about it?  I think that answer depends upon your age.  If you're under 30, you need to fight the good fight, get involved with your local election process, and try your best to get people in office that stand for the right things.  If you are between 30 and 60, then your pocketbooks will drive the results for the next 20 years, but realize it will be a long and often tedious journey.  And honestly, if you’re over 60, I would suggest that you continue doing what you can to enjoy what you've created, work on your health, and live life to the fullest.  Spend your time ‘teaching’ people what they need to do to right the ship in their life times, because Socialist children grow up to be angry adults, and that’s not a good thing!

The  Market:

This market is incredibly overbought, but that is no surprise.  However, every time I suggest a consolidation (pull-back) is coming, and one starts, the market has reversed and turned it into a ‘boom’ event.  While in historical terms a pullback of 10% was considered a true correction, in the ‘new normal’ (of the last 600 days) 2% to 3% dips are the norm, with the occasional drop of 5% being a ‘major correction’.  Therefore, I suspect one of the quick 2% to 3% dips is probably coming due, but I really don't see any serious selling on the horizon.

Thursday was the last day of the month, and at the end of the session, some managers sold stock and locked in profits.  Friday was the first day of the new month and that (as usual) brought in new cash that the managers deployed and up we went.  Usually this buying lasts a couple days into a new month, and then we often see a bit of weakness creep in.  I could easily see an up day on Monday, and then as the week wears on, a bit of a slide.  But again, as much as this market is built on hype and hope and deserves a real correction, I don't suspect we'll get one any time soon.

The Banksters had their Federal Reserve 'mouthpiece" out telling everyone that it is possible that there could be a ‘taper’ in December, and that statement caused the raid on the precious metals.  They actually need to increase stimulus and I believe they will.  However, if they come out and tell the public that there's no risk of a ‘taper’, and there is a chance that they will increase QE, the market could very well jump 1,000 points in a single day.  So, the Fed Heads are trying to manage the stock market's rise.  That is why the very minute the Fed put out its statement saying they were going to hold QE steady, Jon Hilsenrath put out a 700-word explanation of their decision and hinted that a December taper might be on the table.  Mr. Hilsenrath was appointed to make sure the market didn't go crazy.  How do you put out a 700 word article just moments after an announcement?  Easy, the Fed tells you what to say in advance of the statement.

Okay, if Mr. Hilsenrath is the ‘verbal market tamer’ (aka the person appointed to try and keep too much froth out of the market), what happens if he fails?  Well, the Fed could try a small taper of $5 to $10 Billion, and the market would suffer a major decline.  The market would get nervous as hell that QE was ending, and the froth would indeed disappear.  Therefore, the ONLY way we'll ever see a taper is if the market gets really, stupidly crazy – making unsustainable incredible gains.  In that case the Fed may toss out a tiny taper just to slow the train down.

But, because they know they really need ‘more’ stimulus, at some point they would have to retract that and the market would roar higher anyway.  Thus, just keeping the taper talk ‘the same’ and trying to ‘talk the market down’ is what they'll do.  With that in mind, we should still be on track to end this year at fresh new all-time highs.  After all, Wall Street wants to cap off this year with a Merry Christmas, and I think they're going to get it.

Tips:

A couple shout outs – one to RP for his JPM article on their silver manipulation: Ted Butler: JP Morgan's Perfect Silver Manipulation Cannot Last…

And one to JLA for his article on Bank of America thinking that: “Gold looks scary Good!”: http://finance.yahoo.com/blogs/talking-numbers/gold-looks-scary-good-bank-america-merrill-lynch-194835583.html

Looking around I am watching:

-       The coal producers ... ACI and WLT - both look good – WLT may be a little over extended … but certainly worth watching,

-       The 3D printer space … SSYS / DDD / PRLB / XONE all worth a look,

-       The Solar companies like CSIQ are doing well, and

-       Watch X (a steel producer) if it can break over $26.00

One of the more confused reactions lately has been the rise in energy stocks at the same time as crude oil and gasoline are failing.  I’ve read a million reasons why, but in the end, crude always guides energy stocks, and now we’re finally seeing reality take hold in the case of Chevron.  Chevron (CVX) just confessed that Q3 net income fell 6%, and they missed estimates by 4.5% with weak refining results offsetting higher oil and gas production.  In a nutshell:  traders are finally figuring out that you can’t make money producing more product than a weakened economy can absorb.

Gold and silver have been beaten down as I imagined they would be when the Fed told us there would be no tapering of QE.  If Gold and silver had jumped on that announcement, it would look bad for the Central bankers, so they engineered some selling for the event.  I would suggest that we're going to see a pretty good bounce this week, and SLV and GLD should make for decent trading vehicles for the bounce.  You may consider buying call options on either one, just don’t overstay your welcome if indeed we do get that bounce.

My current short-term holds are:

-       CLF – in at 25.53 (currently 27.38) – stop at entry

-       SIL – in at 24.51 (currently 12.50) – no stop

-       GLD (ETF for Gold) – in at 158.28, (currently 127.10) – no stop ($1,313.10 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 21.08) – no stop ($21.80 per physical ounce).

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, R.F. Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of his thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is the 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: http://www.youtube.com/watch?v=K2Z9I_6ciH0

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: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@culbertsons.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 10-27-2013

This Week in Barrons – 10-27-2013
 

Now You See Me … Now You Don’t!

I remember the summer movie: “Now You See Me” all too well.  However, most people miss the daily magic that is being performed by our equity markets and by our economic reporting systems.  In fact on Tuesday, we watched a transformation of the jobs report – that was as astounding as any girl turning into a tiger.

One of the biggest headaches for Obama (and for Obamacare) is that companies have decided that if they're going to go bankrupt giving mandated health care to full-time employees, they will simply only hire part-timers, and also reduce their regular staff from 40 to 29 hours.

According to Obama and Mark Zandi (the CNBC jobs report ‘talking head’), if corporations were shifting to part-time workers – it would show up in the data.  Over and over we have heard from Mr. Zandi that the data doesn’t reflect this shift – despite corporate headline after headline talking about either cutting healthcare or cutting their people to part time.  However, on Tuesday the CNBC producers made a mistake and had on (as a guest) Bob Funk from Express Employment Professionals.  Mr. Funk was also the past head of the Kanas City Fed.  Honestly, he simply ripped Mark Zandi apart.  But, he did it in such a calm, soothing manner that Mr. Zandi didn't even realize he had just been ‘given the business’.  Bob Funk said:  "I don't know where the Bureau of Labor & Statistics (BLS) is getting their numbers, or why the part timers aren't showing up in their data – because here (in the real world) we're seeing part-time employment up 123%.  Years ago, companies (hiring through us) hired 60% for full-time and 40% for part-time workers.  Today, it's exactly reversed.  40% are looking for full-time employees, and 60% are looking for part-time.  Obamacare is indeed affecting business and jobs."

It was fun to watch Mr. Funk gently (and with class) correct Mr. Zandi.  However, the real ‘magic’ didn't come from Zandi being schooled on TV, that was simply a preliminary act.  The Grand Illusion came from the unveiling of the BLS’s Jobs Report.  Although the ‘Monthly Non-Farm Payroll Report’ came out ‘inline with estimates’ with a gain of 148,000 jobs, it was the ‘Household Survey’ that produced the most outrageous illusion.  According to BLS’s September Household Survey, a record 595,000 people were rotated OUT of part-time and into full-time work, PLUS an additional 133,000 full-time jobs were created.

This makes virtually no sense.  Last month corporate CEOs were worried about:

-       The Fed beginning to taper,

-       The Debt Ceiling approaching and whether we would go over the cliff, and

-       The Government shut down.

And now you’re asking me to believe that those same CEO’s – were so ‘full of love’, that they let almost 600,000 employees go from a less than 29 hour work-week to a 40 hour and above work-week.  And, they did that in the month directly preceding the launch of the Obamacare web site.  Pull my finger.  In times like these I always remember the quote from Joseph Stalin: “It isn't important who votes.  What is important is who counts the votes.”

Honestly, Obamacare promotes part-time low paying jobs.  The BLS can hide some of the data, but real people like Mr. Bob Funk know the actual results.  Full-time work (with benefits) is becoming harder and harder to find.  Currently only 10% of our post-graduate degree candidates are finding full-time employment.  But part-time service jobs are indeed plentiful.  Obama told us that he wanted to "Fundamentally change America", and he's certainly doing that!

The Market...

Dare I say the word…bubble?  This market is beginning to look like a true 1999 bubble, and we all know that bubbles – POP. 

Every day I am forced to listen to ‘talking heads’ on financial TV tell me why this time it’s different; and why the market isn't being driven solely by Benji bucks.  They talk about our underlying economic strength.  To which, I simply point to the sell off that occurred when there was simply a ‘hint’ of QE taper – and that’s where the conversation normally ends.

Imagine being an investment analyst at a major company.  It's your job to dig into company internals, management, cost controls, expenses, sales, procurement, supply chains, supplier pricing, and more.  It may take you months to put together a thorough review of the company – before presenting your findings to the J. Q. Public.  The bottom line is: in this environment, the analyst can’t say: “The company is garbage, but it is going to go up because the Fed's printing money like crazy."  The analyst would be terminated on the spot.  So analysts across the board are being forced to find reasons why companies (that should otherwise be going down in value) – are instead – going up (in value).

Okay, so the market continues to move higher on extremely low volume.  How long can this go on?  It can go as far as the Fed’s $85 billion a month of buying will take it.  I know that's an odd way of saying things, but it is true.  There's a certain amount of economic activity and market levity that $85 billion a month will buy.  When we get to that point, the market will stagnate until they produce more QE money.  I don't know where that level is, but considering the current volume of buying and selling – there are very few players remaining with the cash to make things happen.

The SPY is the Exchange Traded Fund (ETF) that reflects the performance of the S&P Index.  For 2012, the SPY traded an average of 22 million shares an hour, or approximately 143 million shares a day.  Last Thursday (for example) we traded 73 million shares – half the average volume of last year.  So as you can see, there is NOT the same level of market participation out there this year – as there was last year.

I have heard the rumor that The Ben Bernanke could announce a surprise taper this week, and I’ve dismissed it out of hand.  Heading into a sub par quarter, with the Holidays fast approaching – it would be suicide for the Fed to pull a fast one.  It's my guess (that except for a couple 2-3% pull backs now and again) we're just going to keep slowly levitating into the yearend.

It doesn’t make sense, and no, it won’t end well.  But ‘the powers that be’ created this monster and it has to play out.  We continue to lean long.  Yes, we continue to be concerned.  We have not had a ‘normal’ 10% correction for over 520 days.  But, there’s no reason we can’t make it to 600 days.  After all, it’s just Benji Bucks anyway.

In the very short term, the SPY has a bit of a challenge directly ahead of it.  It tried to get over 1760 Friday, but came up slightly short.  If the market can't get over 1760 on Monday, we could see a small fade to start the week.

Tips:

This week I tweeted about a couple stocks that I liked – they included: SNDK over 70, PNRA over 155, and ANR over 7 – but realize that ANR reports earnings on Oct 31.  We sold CERN, CIEN, HES, LRCX, and WRN – all for nice profits.

My current short-term holds are:

-       JOY – in at 55.03 (currently 58.09) – stop at entry,

-       SBUX – in at 77.50 (currently 79.96) – stop at 78,

-       SIL – in at 24.51 (currently 13.67) – no stop

-       GLD (ETF for Gold) – in at 158.28, (currently 130.54) – no stop ($1,352.40 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 22.60) – no stop ($21.87 per physical ounce).

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

Please be safe out there!

Disclaimer:

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