Thursday, August 11, 2016

Financial Summary (Update 8-10-16)

Financial Summary (Update 8-10-16)

Dohmen Update (Sean M.)

This financial summary was sent to me by a tradcatknight follower. We are close to the collapse and then Maitreya appears on the "Day of Declaration"....

The Wealthy Prepare For The Financial Crisis By Constructing Panic Rooms

Yes, there are great inconsistencies. Williams writes that instead of 255,000 new jobs, the actual number may have been zero. His U-6 unemployment number actually increased to 23%. That’s if you count all the people who have not been able to find a job in a year.

So there you can see that fudging the numbers is probably the ‘agenda,’ as we call it, at least until the end of the year. This Administration doesn’t want to go out with a recession. The stock market is easily manipulated. The numbers from Merrill Lynch’s research show that all traditional major stock buyers have been big sellers this year (see charts below). So, how can the stock market indices be at new highs? Well, it’s not market forces.

CALPERS, the largest government pension fund for government employees in the US, had a gain of around 0.7% last year. Pension funds normally try to get at least 7% per year just to meet pension obligations. They can’t do that in today’s environment. Eventually this will require huge governmental bailouts.

Carter Worth, a very good technician, said that “stocks were the worst place to be in over the last 14 months.” They returned 2%, while Treasuries were up 19%, real estate up 14%, and precious metals vastly outperformed the broader market. He apparently is not beholden to the Wall Street line of TINA “There Is No Alternative” to stocks.

Goldman Sachs (GS) issued a quite bearish report for the stock market. That means two things to us: 1) The period where Wall Street produces false bullish stories and reports to get naïve money managers to continue buying is over and 2) They have now sold their own long portfolios and are probably nicely positioned on the short side in order to profit from a downturn. This happened during the summer of 2008 as well, which suggests time is running out for the bulls. In order to prevent looking foolish when the stock market turns down, they now issue a bearish report so later on they can say, “We told you so.”

Our view is that the market indices will continue to be supported as long as Washington, together with the Fed, can fight reality. This Administration doesn’t want to go out with a visible recession. Smart and experienced money managers, such as the best hedge funds, are very underinvested because they recognize all the negatives. We heard one number that hedge funds are only 35% long.

We believe that only the election stands in the way of this happening now. Until then, they will try to keep this market together with chewing gum and bailing wire.

Now let’s look at a much broader and thus more important index, the NYSE COMPOSITE. The index includes all the stocks on the NYSE. It is now no higher than back in 2014. It is still a distance away from a new high.

Auto Company Stocks Plunge! That’s the latest ‘surprise’ in the media. Auto sales have been hyped for almost a year. We were virtually alone in saying that the numbers were phony, deceptive, and designed to “put lipstick on the pig.” You see, you are not supposed to know that the economy is weakening. The illusion that the economy is doing OK, even though the numbers have been weakening for well over a year, is being perpetuated. It helps Wall Street sell IPO’s, and it helps Washington leadership to claim that the “economy has never been better.” They have similar motives: ‘deception.’ Here is the chart of FORD. It is down over 34% since the top two years ago. That’s a big bear market for a stock. In other words, the insiders who knew the truth have been selling, while the individual investors were “hood-winked” with all the bullish opinions in the media.

The Everyday American Is Tapped Out, Spending Is Way Down

Like we discussed earlier, the ‘agenda’ for the second half of the year is to make everything look great. The Obama administration wants to go out with a celebration of economic success. We are a ‘banana republic’ now. The truth is whatever the leadership says it is. An economist from a major Wall Street firm was recently on TV trying to explain the numbers, and was noticeably sweating. That’s always a good tip-off to the reality of things. Perceptions are important, which is the reason so much effort goes into presenting the illusions that all is well.

The CEO of Apple tells investors that yes, sales and profits declined, but “not as much as had been expected.” The same fairy tale is being told by commentators on financial TV. They never ask, “Whose expectations?” We predicted the Apple sales decline late last year and people questioned our ability to forecast. But it was so predictable. The Apple CEO is too involved in left-wing politics and not involved enough in innovation. Then we hear that “people love Apple.” That’s history. Just speak with tech guys. One young, smart sales person at a major tech retailer just told me, “I don’t know why people still buy iPhones.” And then he mentioned the brand we like and called it far superior in technology.

THE REAL ESTATE BUBBLE IS DEFLATING Our analysis of critical economic and credit market factors tells us that a global contraction is underway. We have commented that the housing bubble may be bursting in some of the hottest areas of the world as well as in the US. Miami, Manhattan, and now Silicon Valley are weakening in a meaningful manner. Vancouver has had a huge rise in housing prices, which is driving locals out of Vancouver as it is no longer affordable. The buyers are mostly Chinese and many never live in the properties. They are just using the real estate as a savings account.

Other real estate bubbles are showing similar signs of bursting. The Hamptons is one. Why is a small place like the Hamptons important? Because that’s where the big money of New York and the hedge fund industry gathers. When they tighten up on their spending, it is a big warning.

Durable Goods: Economic weakness in the US can be seen by ‘durable goods orders.’ They are now down on a year-over-year basis since early 2015. Total factory orders are down 6.4 percent which is the weakest in 4 years. Core capital goods orders are down 3.7% which is the 17th decline in 18 months.

Wall Street economists have been telling us for two years how the economy will start to strengthen. Instead, it continues to weaken. The Fed looks at the month-to-month numbers, whereas they should be focusing on the long term trends. As Rick Santelli said, the Fed is now like a “day-trader.”

Italian Finance Minister Pier Carlo Padoan denied that Italy’s banks have a systemic problem. Mr. Padoan said, “We are going in the right direction, there is no risk in terms of systemic stability.”