Show-me Account Talk

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Based on that I would guess that we could run sideways a bit to bring the 200 dma lower or possible run up to the 200 dma and sell off.

I am standing my ground that a sell off is eminent but the timing is unknown with all of the intervention.

If you look at Tsunamis great mortgage post about defaults you could estimate a pull back starting in Sept '10 at we peak in defaults. That would coincide with seasonality.

But, will the .gov and Fed buy more and more bad loans?:sick:
 
Inflation

In our opinion, inflation is evil and the sole reason why human beings have become modern-day slaves. Remember, money is supposed to be a store of value, however due to reckless central bank-sponsored inflation, it can no longer fulfill this critical role. This is precisely the reason why human beings are never satisfied with what they have because nobody knows what their savings will buy them in ten or twenty years time. So, rather than enjoy their lives, the vast majority of people continue with their never ending pursuit of acquiring even more money! Unfortunately, nobody questions the inexplicable loss of the purchasing power of their savings, thus, central banks get away with financial murder.

It is our contention that inflation distorts the economy, it brings great harm to the public and it encourages speculation and mindless risk-taking. In fact, inflation acts as a poison for retired people since they are no longer able to earn more money in order to maintain their standard of living. So, thanks to inflation, most senior citizens are unable to enjoy the fruits of their labour.

Before we delve further, we want to make it absolutely clear that inflation is defined as the increase in the quantity of money and debt within an economy. And contrary to what the governments want you to believe, inflation is certainly not an increase in the general price level within an economy. Instead, an increase in the general price level within an economy is a consequence of inflation. Allow us to explain this subtle yet critical difference:

For the sake of simplicity, let us assume that America's money-supply is US$100 and this is the amount available to buy the five oranges its economy produces. Common-sense dictates that under this situation, each orange will cost US$20. Now, let us introduce a banking-cartel called the Federal Reserve, which is able to extend credit (via its debt-based fractional reserve banking system); thereby inflating the supply of money within America to US$1,000. Under this scenario, with a 10-fold increase in money available to purchase the same amount of produce, each of the five oranges will now cost a whopping US$200!
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http://www.safehaven.com/article-15493.htm
 
Plan for the rest of the month.

My plan is to position myself for a rally the last week of the month. Seasonality.
 
I'm not so worried about the mortgage charts because it's already known. The central planners already know what's coming down the line as far as defaults are concerned so they have to in turn do their magic in the employment markets where we don't know the numbers the line. I hate to sound like the herd here, but unemployment is even more important than defaults. Keep people working and maybe we can knock down those ugly default graphs coming in late 2010 and 2011. The numbers are cooked and no matter what kind of happy headline number we put out, a peek under the hood is disastrous. I'm expecting another stimulus package down the line in 2010.

The thing is, the smart players know that this whole thing is a temporary rally funded by free money and temp employment. I see a resurgence in the whole buy and hold story coming in 2010 as sell side analysts pull stats out of their ____ about how past recessions lasted an average of XX months and we're XX months away from this one and the market tends to rally for XX months as a result. With many investors funding Roth IRA's within the first half of the year, I expect the propaganda to run rampant.

No matter how you look at it, this market is under distribution pressure along with a surge in investor complacency. The Fed can only do so much here until the keg of elixir is kicked. There is no sense of risk management to be seen in the markets after we've had the biggest financial history lesson since 1930. People continue to pile on the risk assets and drink the sell side kool-aid because, hey, this is a new bull market right?
 
JPM knows what is coming.

JPM provide some of my early comments about the lenders. Jamie Diamond is cautious and thinks earnings will be less. Why?

My theory is they know the mortgage resets are coming and even if they are renegotiated with the .gov blessing the default rate is 40% and climbing.

The unemployment numbers are a lie and I will try to find a Times article that shows that. Unemployment will continue and cause more default. People will give up and walk away.

Tsunami wrote in his thread about a condo sold in the SF area and that the woman he sold it to is asking around 55% less than he sold it to her for. Why did she not just walk away and give them back the collateral? It will take time and she, along with many others, will figure it out. Walk away.

The lenders know what is coming and they are hoarding cash to cover the loan losses that are coming.

JPMorgan Chase 4th-quarter profit grows to $3.3 billion, but loan losses raise concern

The bank's credit card and retail units reflect the difficulty that consumers are having paying their debts.
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http://www.latimes.com/business/la-fi-jpmorgan16-2010jan16,0,7741255.story

The bank reported net income of $3.3 billion for the fourth quarter and $11.7 billion for 2009, or more than double what it made in 2008. The bank said profit was driven by its investment banking and private equity divisions.

But in addition to being a Wall Street player, JPMorgan Chase is also a major consumer bank, with credit card and retail banking operations, including the branch network it acquired with the collapse of Washington Mutual Inc. last year.

The bank reported fourth-quarter losses from these units, reflecting the continuing difficulty that Americans are having in paying off their credit card and mortgage debts.

The retail division, which is responsible for mortgages, lost $399 million in the quarter. In the previous quarter the division made a profit.

The credit card division lost $306 million, while the number of credit card holders making delinquent payments over 90 days increased from 2.8% to 3.6% from the third to fourth quarter of last year.

"There is a dichotomy at this time between performance in the investment bank and in the consumer side, where losses still remain high," said Shannon Stemm, a bank analyst at Edward Jones and Co. in St. Louis. "It really shows us that the short-term environment is still tough for the consumer."

JPMorgan didn't offer much hope for a quick turnaround.

"While we are seeing some stability in delinquencies, consumer credit costs remain high and weak employment and home prices persist," Chairman Jamie P. Dimon said in a statement. "Accordingly, we remain cautious."

Although its earnings overall were strong, the bank's hazy outlook for the coming year spooked investors and triggered a sell-off on Wall Street, with the Dow Jones industrial average falling 100.90 points Friday to 10,609.65. JPMorgan shares slipped $1.01, or 2.3%, to $43.68.
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A couple things to mention.

1) Markets tend to peak around the same time unemployment starts to improve.

2) This picture is worth a thousand words. The line is set at 1150 on the monthly SPX. Until we can convincingly break above that line, going long in this market is risky. If anything, it's almost time to go short, unless of course we can close a monthly candle or two above the resistance line.

spxmonthly.png


I'm probably out of the market until we get a pullback to the 50 day MA (~1110). There should be strong support down there and a nice bounce. We'll see. Good luck!
 
Mike Burk

Conclusion
The market is overdue for some kind of correction and the deterioration in new highs suggest that may have begun. The preponderance of recent breadth indicator confirmations suggest any correction will be shallow and brief. I expect the major averages to be lower on Friday January 22 than they were on Friday January 15.
This report is free to anyone who wants it, so please tell your friends. They can sign up at: http://alphaim.net/signup.html. If it is not for you, reply with REMOVE in the subject line.
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http://www.safehaven.com/article-15512.htm
 
John Mauldin

When the Fed Stops the Music

The Federal Reserve has been very clear about the fact that they intend to stop the quantitative easing program at the end of March. What that means in practice is that they are going to stop buying mortgage securities. That does two things. As Bill Gross so aptly points out, those mortgage purchases helped keep mortgage rates low. But they also financed the US government fiscal deficit, albeit indirectly. It seems that funds and banks that sold the mortgage securities turned around and bought US government debt or put the cash right back at the Fed.

Foreigners bought about $300 billion of the $1.5 trillion in new government debt. The rest came from the US, courtesy of the Fed buying mortgages. But that program stops (theoretically) at the end of March. The government still plans to run yet another $1.4-trillion-dollar deficit (give or take a few hundred billion). The question is, who will buy the debt? Foreigners will kick in another $300 billion, unless they decide to stop selling us stuff, or buy other less liquid or physical assets. So far there is no sign of that.

But as I asked last year, who is going to buy the multiple trillions in government debt that the G-7 countries want to issue? Who is going to buy another $1 trillion here in just the US? That is 7% of GDP. That means that consumers and businesses will have to save an additional 7% of GDP just to finance government debt at the federal level, not counting state and local debt. As Bill Gross concludes in his recent column (www.pimco.com):

"The fact is that investors, much like national citizens, need to be vigilant, and there has been a decided lack of vigilance in recent years from both camps in the U.S. While we may not have much of a vote between political parties, in the investment world we do have a choice of airlines and some of those national planes may have elevated their bond and other asset markets on the wings of central bank check writing over the past 12 months. Downdrafts and discipline lie ahead for governments and investor portfolios alike. While my own Pollyannish advocacy of 'check-free' elections may be quixotic, the shifting of private investment dollars to more fiscally responsible government bond markets may make for a very real outcome in 2010 and beyond. Additionally, if exit strategies proceed as planned, all U.S. and U.K. asset markets may suffer from the absence of the near $2 trillion of government checks written in 2009. It seems no coincidence that stocks, high yield bonds, and other risk assets have thrived since early March, just as this 'juice' was being squeezed into financial markets. If so, then most 'carry' trades in credit, duration, and currency space may be at risk in the first half of 2010 as the markets readjust to the absence of their 'sugar daddy.'"

This is yet another uncertainty. We simply have no idea, no relevant marker, for what happens when a country goes so cold turkey, coming off a central bank bond-buying binge. And this in the midst of a massive deleveraging and with stock market valuations basically where they were in 1987 - except there was at least large earnings growth then.
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http://www.safehaven.com/article-15510.htm
 
Good thing I enjoy watching NFL playoffs because that is a very depressing outlook on our future. Thanks for sharing though.
 
poolman said:
This video is 30 minutes and I'm glad you thought enough to post it Show-me.

This is some serious chit people.
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Thanks Poolman and Show-me!

Definitely worth the time. It sounds like nothing is good to come and no way in hell to fix it. I will continue with my plan though 401k, ROTH IRA, 30 year career, retire. Hopefully the American dream will be there when I get there.
 
Overwhelming! Information we might have suspected, but not understanding what it means - putting it in one place sure helps! ...and put together in a way for most everyone to understand... A Must View, a very well spent 30 minutes!

This is something I definately have to share -

I noticed they had what looked like a clip of from one of Del Tackett's `Truth Project' sessions - a great 8 week 2 hour class to take if you ever have the chance! -free-
Thanx for bringing it to 'talk, poolman & Show-me!:)
 
Show-me said:
God, guns, gold, gas, groceries, the big five.
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+1 on the need to prepare. It is sobering and both, left and right, see it coming. I believe bHo's and the far left wing's main goal is to destroy our economy, so we'll be beholding, as serfs, to the Feds, How can someone be so oblivious not to see what is coming.

And what of our children's future?:(
 
It's not just their future-it's also ours, those of us who are still under 60, and maybe those under 70. This thing is going to hit about the time I would normally think of retiring, and this decade isn't going to do much for keeping up with living costs in terms of investment performance, not with the $ interacting with the global economy and market. Savings to pay down debt we can't afford leads to more job losses as the economy slows even further. So they want us to spend, sure sure. Spend now before the $ declines further and buys even less. sure ticket to (hyper)inflation. talk about catch-22. :sick:
 
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