Thursday, January 5, 2012

Afternoon Delight 01/05/12 - Total Control

Well, if you are confused, don't be. I know the feeling. The problem is that you are not in touch with reality. Reality check! Reality check! You must remember that you are now living in a centrally planned environment where nothing happens without some sort of hall pass from the Fed, Treasury or Obummer. It is a lot like living in China or the USSR, you just did not see the changes as they happened quietly and conspicuously over the past few years.

My how times have changed. Dump all regulation, change the accounting rules, crank up the printers and remove the 4th, 5th and 6th amendments from the Constitution and POOF we now live in a brave new world. When did all this happen Shanky, I missed it? Well, you were not looking and I can't rehash all of that, but if you google NDAA that will be a great place to start, or you can read America's Socialism Tsunami | Conservative Outpost.

You see the US may be a position where the treasury will have to borrow from its employees pension plans again very soon just to stay afloat. This used to be a problem that popped up every 6 months or so (like the Greek crisis) but is now becoming a monthly issue. Here We Go Again: US $25 Million Away From Debt Ceiling Breach | ZeroHedge. We have no budget. We have no spending controls. Things are totally done on a whim in DC and this, if not stopped by congress, will be stopped by default.

Why are we in such deep trouble? Why is it so unfathomable that the markets can go up? The main reason why is that we have a "slight" money problem. If you would like a wonderfully simple look at the current economic situation in the US jcspeiker posted this in the STB comments section today. Take a quick look at this  and then you will have the answers to those questions.

The budget explained in simple English, trying to simplify a complex thing so it can be understood...

• United States Tax Revenue:$ 2,170,000,000,000
• Fed Budget:                        $ 3,820,000,000,000
• New debt:                           $ 1,650,000,000,000
• National debt:                     $14,271,000,000,000
• Recent budget cut:               $       13,500,000,000

Now remove the 9 zeroes and pretend it's a household budget and see how we are doing.

• Annual family income:                                                  $  21,700
• Money the family spent:                                                $  38,200
• New debt on the credit card:                                         $  16,500
• Outstanding balance on the credit card                          $142,710
• Total budget cuts which some politicians are proud of $          13

It's gonna take a while to pay off that credit about we start by blancing the budget. (STB did not verify any of the figures and JC says he got it from a source on FB - I don't care - right or wrong it gets the point across - Note that total debt number now has a 15 in front of it, so it is not all that accurate and appears to be about 6 months to a year old - Note that budget cut is drastically overstated)

Market News - 

The OMFG event has been successfully swept under the carpet for now, but it is something that we all must keep an eye on. They can't just get away with stealing over a billion of client's funds can they? "MF Global unloaded hundreds of millions of dollars' worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co (JPM.N), one of the sources said. "MF Global sold assets to Goldman before collapse: sources | Reuters

With earnings kicking off next week it is time for the analyst games to begin. STB reminds you that the analysts are in on the action. The "estimates" are low hurdles that are set to be meetable or beatable. I ask that you look at this chart (shorty be scared) from Business Insider And Now, Everyone's Freaking Out About Q4 Earnings, "And now we're heading into Q4, and it's deja vu all over again." Notice any patterns?

STB loves to cover pension and SS issues (being that they are both going to fail). This trend has been happening across the globe since 2008. This begs the question, without some sort of guaranteed salary in retirement how will we all survive? We can't afford to pay our bills much less save for retirement, and our kids, well they can't pay for their education much less find a job right now, not a good situation. "From early 2013, new staff at Shell will be offered membership of a scheme without a guaranteed level of pension." BBC News - Shell closes its final-salary pension scheme

Presidential Election - 

This leaves me wondering what Gingrich is really up to. Seriously, what is the man trying to do? Is he trying to destroy the Republicon party's hope of unseating Obummer? Fine with me, anything that get Ron Paul to the top who polls very well to beat Obummer in a head to head match up. "Obama's campaign is concerned about these outside groups' potential to damage him in a general election. It would prefer a long primary battle on the Republican side and would benefit if Romney was wounded first if he ends up being the nominee." Odd allies: Gingrich, Obama align in attacks on Romney | Reuters


More saber rattling, this time from our side. Well, Israel's side at least. I ask, did the president pull the troops from Iraq so he could sent them to Israel? "Israel is moving forward with plans to hold the largest-ever missile defense exercise in its history this spring amid Iranian efforts to obtain nuclear weapons." US commander visits Israel to finalize missile... JPost - Defense

Look East? Really? "The strategy hints at a reduced US military presence in Europe, and says Asia will be a bigger priority. It also emphasises improving US capabilities in the areas of cyberwarfare and missile defence." Obama unveils new defence strategy with greater emphasis on Asia | World news |

Police State - 

This ain't right. "Residents of Leesburg, Florida were shocked to see their local Social Security office turned into a random Homeland Security checkpoint Tuesday morning, as DHS officers armed with semiautomatic rifles and accompanied by sniffer dogs checked identifications of locals." Prison » DHS Officers Armed With Semiautomatics Set Up Unannounced ID Checkpoint

Obummer Bashing - 

It is all Bush's fault, right? Dig this - "Candidate Barack Obama criticized President Bush for using ‘signing statements’ to ignore the will of Congress. But Obama’s done the same thing 20 times since taking office, and his latest effort is rankling lawmakers." Obama Embraces Signing Statements After Knocking Bush for Using Them - The Daily Beast. What a guy!

STB covered Obummer bypassing congress yesterday in detail, something he said he would never do - Well, here he goes AGAIN! "President Obama will continue his campaign to bypass Congressional opposition to his jobs agenda Thursday by announcing a new partnership aimed at helping a quarter of a million young people find summer jobs." White House ‘Can’t Wait’ To Help Young People Get Summer Jobs - ABC News

Chart of the Day - 

Sticking with the SPX 60m - You can look at any post over the past two days for more detail on what I'm thinking. Looking down near term with a possible pop to the end of January if it does not just let go here. Aiming for that little yellow box and 1235 as a first target. I've been preaching patience, and now I am losing mine (at least short term). Longer divergences followed by a sharp one do not bode well for the markets. The after hours action and the attempts at sell offs over the past two days were not all that comforting either.

GL and GB!

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