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!
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