Afternoon Delight 05/23/12 - Nothing Has Changed

Look, it is so basic. If you do not get it by now you are a lost soul and need to get your head examined. It is all bout easing and nothing else. The markets are rigged and respond like Pavlov's dog to the slightest mention of the Fed printing to control market price movement. 

In the commentary today I posted, "Who does this sound like?"

"With Europe hitting the skids, EURUSD at multi-year lows, and the US equity market down a whopping (and terrifying) 9% from its March highs, it seems the market remains increasingly hopeful that this time will not be different in that the Central Banks of the world will print and save us once more." QE's Long Shadow Is Getting Shorter | ZeroHedge 

Now STB this morning, "There is really not much to say as the markets hang in limbo surrounded by bad news already having fallen just shy of 10% to the 38% retracement of the climb off the 1100 close in October. Twist is still on and ends next month. The FB IPO is done. Everyone appears to be waiting on the Fed and ECB to make a move or signal there is more easing to come. Why else would the markets have rallied the past few days?"

Further in that same post TD states, "we estimate (based on QE1 and QE2) that the S&P could trade down to 1100-1150 before we see Ben step in to save the world" which is a bit more pessimistic than the 1170 worst case target I have been spewing since before the 1420 top. Recently I posted that I was looking for a manufactured crash since almost this time last summer to allow for the easing call to be a layup. I got a crash and easing, but this time it appears more are coming around to my way of thinking (and beginning to use the term 'exogenous event' we coined years ago). 

Today's late price rally was nothing but rumor based BS. Something about a FDIC like insurance program for the EU. LOL, who's gonna pay the insurance? the insolvent governments or the money printing ECB? LMAO. That's funny. As Reality Recedes, Rumor Rampage Returns | ZeroHedge. What's sad is that rumors (and BS government data) are the new reality and we must deal with them as proven over the past two years. You get some fear and an oversold market and the rumors get really ripe, and thus you get a roughly 190 point pop in the DOW to close down - get this - 6.66 today. 

To understand the major issues on the table in the EU right now you should read Markets slump ahead of key EU summit - Telegraph "European markets fell heavily on Wednesday morning as investors doubted an EU summit would lead to a solution of the eurozone's problems." Since the elections changed the landscape in France and Greece the strategy that the troika followed for the past several years has been turned upside down. 

To give you a quick reminder of how bad things are on the other side of the globe ,"The ratings agency Fitch on Tuesday lowered its assessment of Japan’s sovereign credit to A+, an investment grade just above the likes of Spain and Italy, and criticized Tokyo for not doing more to pare down its burgeoning debt. 

Japan’s public debt will hit almost 240 percent of its gross domestic product by the end of the year, Fitch warned. Mish's Global Economic Trend Analysis: Japanese Debt Downgraded by Fitch; No Urgency for Japan (Until Sudden Panic Hits). Did you catch that 240% number? And no one is worried? Riiiight. 

Speaking of issues in Japan, you must bring up the unthinkable (which has proven to become thinkable). To those AFL long holders, you have been warned now about the debt and this issue for quite some time, "Chris Canine – who has 15 years experience as a health physics technician, chemist and radiation safety instructor – told Energy News that if number 4 reactor fuel pool at Fukushima collapses, Japan will be evacuated. Fukushima: If Number 4 Collapses, Japan Will Be Evacuated Alex Jones' Infowars. Think this can't happen? Think again, this is far worse than Chernobyl that has an evacuation zone that would, if in Japan, have all 40 million in the Tokyo area evacuated by now if the prevailing wind was not directly East all the time. (Just scratching the surface here - it really is worse than this)

SPX 60m - Is that blue wedge right? Down for E? I'm not sure about the possible divergences in the indicators since a lower low was not achieved, but oversold it is. The count would be for a move up here before further weakness. My upside max right now is near 1370 with a stop at my 1341 level being the first major resistance. 

GL and GB!

Sunday Evening Post

OK, here is the deal with the comments being closed on Friday's post - in order to avoid late spam (after the fact, many days after a post is up, some less desirable individuals will sneak in and post unscrupulous links that I/we do not desire), I have the comments set to "close" after 48 hours. I set that a bit tight and have moved that to three days to accommodate the weekend post.

I should be around a bit tonight as I update some charts ( I have done a bunch already) and check the futures.

SPX and the FOMC Meeting chart -

STB Morning Post 09/14/11

I can't pull it out exactly when, but I remember a period this year when the DOW minis fell over 100 points 5 out of 7 nights and wanted to crash just like the last three nights and the markets subsequently rallied out of that set up. The euro zone is driving the minis down overnight and they are rallying to "hide" the underlying weakness by the open. I'm not sure why the markets have had two green days, but they have.

I don't know how the markets can be sure of anything given the underlying issues globally and here in the US. What we have learned here at STB is that what is isn't. You can't get caught up in what "should be". The markets are totally controlled. As stated here many times the markets are all they have between them and a revolution in this country. The pension system is underfunded and on the verge of collapsing. It can not afford another "dip" in the markets as asset values give the impression (or illusion as STB likes to call it) all is well.

Yes, It Is That Bad

Nice to go away and know nothing has changed. The world is still rotting from he inside and the maggots are beginning to bore holes in the skin. The process of decay is a long slow one. The elements that the body are exposed to have a lot to do with the process and as long as the Fed keeps it warm and dry, the process will just be extended. Infinity is not an option. Once the process has started there is no reversing course.

I often compare our financial situation to a black hole and that we are on the event horizon. This is the point of no return like the edge of a whirlpool but worse. Beyond this you are sucked into the vortex where nothing, not even light, can escape.The gravitational pull from our staggering amount of debt is the collapsed star at the point of singularity. Eventually it will pull in and destroy everything that is in the outer ring until nothing is left. 


I'm of the opinion that at this time you have to have this mental outlook. You have to go to the edge. You have to understand that the financial world is collapsing around us. The unsustainable debt crated by fractional lending and the resulting collapse of credit markets can only be sustained for so long before implosion. You add up the numbers that I present here nightly? You tell me if the simple math adds up to any other conclusion? Every effort now to save something only adds to the mountain of debt that no country can support.

All we are managing to do is keep the bubble afloat. It will burst eventually and everything goes down with it. Once the first domino falls the chain reaction will be unstoppable. We have two paths to take. One, the rich get richer and the middle class gets eliminated (which is the current, wrong and bad projection). Two, we suffer such a deflated state that nothing escapes it's wrath, and we become a nation that can actually afford to manufacture things again (my preferred and I believe the eventual route). The option of some sort of global warfare will be out of the picture. No one will be able to afford it and it is possible that compassion may rule if we get the right leaders in place.

The bailouts can not continue. Do you care to explain to me where the funds will come from to pay off the current deficit? And we're gonna keep adding to it? Be realistic people. The math does not work no matter how many disaster default swaps or whatever friggin bogus instruments they decide to create to fund or insure against this mess. Billions eventually become trillions and trillions become quadrillions and so on. The fraud will have to stop at some point. Their lies and corrupt acts will catch up with them. What will the solution be? There is only one, massive global default. It is coming. I believe 1000% that it is the only exit door that exists, and I believe they know it and are measuring the move at this time.

Not if but when, times are gonna get really tough. They are setting up for it now. Why would they enact the money market limits or be discussing the socialist act of confiscating 401k assets? Regulation, LOL, have they fixed one darn thing yet? Do the lies outnumber the solutions? Does the corruption train just keep on keeping on?

You do the math. Yes, it is that bad. There will be a rosy future once the purging/exorcism is complete but not till the full frontal is experienced.

I'll just toss two relatively normal/daily occurrence articles at you from Mish this evening - again YOU DO THE SIMPLE MATH.

Cali and Illinois are friggin broke PERIOD! Illinois Pension Fund $61 Billion Underwater; State Borrows Money For 2010 Contribution; California $20 Billion in the Hole Again Get it? that is a pension fund that is $61 BILLION under funded. Care to tell me where the thousands of public servants are going to maintain their promised and entrusted living from in retirement? Bueller? Bueller? Greece ain't shit compared to this mess.

Corruption? What corruption? Did you see any corruption? I didn't see any corruption Geithner and JPMorgan CEO Jamie Dimon's Parade of Lies Exposed What were those assets worth? Oh, OK. Just put them in that pile over there.

I'll be back in the am and on a normal schedule. Sorry for the break in the action. Take care.

What A Relaxing Afternoon!

I feel great! Gonna make it a quick late post tonight. Great action this afternoon as the market told Benny and the Jets to stick it after the pop up after the announcement. I feel for those bulls that ran it up right after the statement. It is my turn to sleep well tonight and their turn to figure out what happened.

Zero Hedge had a great news day today. Tons of good stuff over there. I picked Over $7 Billion In Domestic Equity Mutual Fund Outflows In September. $2 Billion In Outflows Last Week to cover here. Simple post with a great message and chart, "ICI has released its most recent fund flow data, and while overall flows have been positive, this has been exclusively due to a ramp up in taxable and municipal fund inflows. In equities, there has not been one positive inflow since August 12. Last week saw a $2 billion outflow from domestic equity mutual funds, bringing the total for the last month to $7.1 billion. Attached are equity flows superimposed over the performance of the SPY." OK, so the market has been ramping wile the MF's have been aggressively pulling out of equities (guess there WAS something to all that insider selling going on. Look for more defections as the month comes to an end and they try to protect the QE statements.

Prag Cap has WHY DOES THE MARKET KEEP GOING UP? This is a nice step back from hearing me and the rest of the blogosphere bitch about manipulation and ramp jobs, "This is a question that confounds those on the sidelines and aggravates the bears to no end. Many attribute it to some sort of bank or government engineered conspiracy theory. Others say it is simply performance chasing by large money managers. Personally, I find the answer in the psychological."

The Market Ticker brings home Watch That Thesis! (FOMC Announcement). Don't you know Karl probably ate a hole in his chair waiting to get his hands on this one. LOL, he does a good job ripping it apart and then actually makes a trading call, "Nice shelf to get short at; take it down if we break materially over 1080. Either economic fundamentals assert themselves as deserving of these valuations or we're a solid 2,000 DOW points (and 200 SPX points) or more above where we should be. As a trade the risk:reward looks better than it has in months; you're risking ~10-20 handles on the SPX to potentially capture 200!" I agree 100% and will probably say something very similar (as I have been for a while) in the am.

Naked Capitalism (as well as ZH and now me) has Guest Post: William K. Black’s Proposal for “Systemically Dangerous Institutions”. A nice short and concise post by Professor Black on how to fix this mess, Since he has "some background" in fixing bank issues.

This is some must read juicy shit right here, ZH has Is The Fed Hiding Gold Swap Arrangements With Foreign Central Banks?. More on this will follow soon, and this emphasizes the need for Ron Paul's 1207 legislation. Folks, this is where the big boys play ball and manipulate the dollar and gold markets behind the scenes (and they say they can't predict the prices of certain assets, hell, they control EVERYTHING!).

On a side note, Mish has I Endorse Peter Schiff For Senate. I could not agree more. Peter and Rand Paul are two we need to get behind. Why am I bringing politics in here, cause we got to take the trash out and get some people in office that are not hand maidens to the ruling elite. We need some bad boys that follow their own path. You can see a recent video post I did with Peter HERE. If you have a politician that should be supported for election, send me an email and a link to their site. This election is gonna be a big deal and I want the right people promoted as much as possible.

Thanks for the views, comments and emails.

GL Trading!

Frustrating As Hell, Isn't It?

Zero Hedge - Michael Pettis Extended Interview. Want to know about China being totally screwed no matter which fiscal policy it decides to take? This is a must watch. Really good.

The Market Ticker - CORRUPTION: Reverse-Insurance?! (FDIC). "In the world we live so-called "government officials" of the FDIC feel free to engage in such sham transactions, smug in the knowledge that The American Sheeple, along with their handmaidens in Congress, can be counted on to allow a blatantly-fraudulent exercise such as this to be consummated - where the banks that are beneficiaries of FDIC insurance (and whom have also issued literally billions of dollars in covered bonds on an issuance-insurance program that has no legal basis in the foundational principle of the FDIC in the first place) not only do not have to pay for the insurance coverage they enjoy, but actually get paid to have it instead. I couldn't make stories like this up if I tried." It is shit like this that makes your head spin. This story can be read on almost every link I have in my blogroll, all with equal disdain.

Mish - "Buy The Dip" Mentality Fully Entrenched. "Thus, suggestions to "Buy the Dip" based on sideline cash not only shows a lack of understanding about how markets work, they also show a lack of understanding about how extreme sentiment is among retail investors and fund managers, even as insiders (who likely know much more about business fundamentals) are selling hand over fist. Risk is not high, it is extreme." LOL, this is the shit your fund wholesalers bring into your office to sell your advisors on.

PragCap brings us “THE FUTURE WILL BE A TOTAL DISASTER” interview with Marc Faber on Yahoo Tech Ticker. At least I know I am not the only total doomsdayist on the planet.

Via The Big Picture's daily readings you get Market Talk's The Pinocchio Recovery. A delightful little post with, "Now, I see a recovery that looks like Pinocchio: it wants to be a real little boy, but it’s really just a wooden toy that moves only when somebody pulls its strings. But everywhere, we hear people talking up the recovery as if the economy is sprinting into a new bull market."

One last post about IMO the greatest deceiver of them all. Zero Hedge - Themis Trading Responds To Jim Cramer. (Cramer video here - if you can handle it.) Will someone please que John Stewart again please.

That is enough for tonight. Fraud, lies, criminal activity, and outright lawlessness rules the day. I told you they would protect the market at all costs. It is all they have left between them and total anarchy. Expect the bullshit to continue. Quit being surprised at every ramp job. They are backed into a corner and have all guns ablazin. Don't stop being outraged at the rape of our financial system, our futures and our constitution.

GL trading.