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September 26, 2009 | Permalink | Comments (9) | TrackBack (0)
September 21, 2009 in Technical Analysis | Permalink | Comments (25) | TrackBack (0)
September 13, 2009 in Market Economics | Permalink | Comments (10) | TrackBack (0)
"On September 5, Mr Obama gave the latest in his weekly series of radio broadcasts to the nation. For most of the northern summer, the number one item on Mr Obama’s agenda has been his $US 1 TRILLION “health plan”. This plan is facing mounting opposition from the American people and is facing an uphill struggle in Congress. It is said by the US media to be the “defining issue” of Mr Obama’s fledgling presidency.
"One would have expected it to be the subject of his talk. In the event, the health plan was not mentioned. Instead, Mr Obama chose to talk about the need for Americans to “save”?! Yes, you read that right. While their government borrows and spends at rates never before approached and while Mr Obama puts all his considerable rhetorical skills behind yet another $US 1 TRILLION government “program”, the American people are being urged to “save. But as one would expect in this context, “saving” has a very specific meaning to the US government. Mr Obama, with Treasury Secretary Geithner and Fed Chairman Bernanke right behind him, wants this saving to be done exclusively by means of “US Savings Bonds” (aka US Treasury debt paper).
"The Fed has stated that they will end their program of directly buying US Treasuries with newly created Federal Reserve Notes (US Dollars) next month. It is becoming clearer almost every day that foreign central banks are fast losing their formerly insatiable appetite for Treasuries. Clearly, a new “buyer” must be found - and FAST! Hence, Mr Obama’s fire sale chat to his fellow Americans. Your Country Needs YOU!!: Mr Obama announced a four-pronged plan to induce Americans to increase their “savings”. All of these initiatives are covered under the heading of “administrative actions”, which means that they do NOT require Congressional approval. They are apparently scheduled to come into force immediately. The headline item is a change to US tax forms which makes it possible for any American getting a tax refund to choose to take the refund in the form of a “savings bond”. All that is required is to tick a box. White House officials promptly pointed out that there are about 100 million tax refunds a year in the US which average about $2000 each. We’ll do the “math” for you. If everybody ticks the box - that comes to $US 200 Billion - enough to fuel current US federal government spending for about three weeks. The government won’t have to worry about servicing these bonds, something that they do out of future “general revenues” anyway. Treasury “Series I Savings Bonds” are currently “earning” 0.00 percent.
"The other administrative actions are along the same lines. The first simplifies creating 401 (k) (retirement) plans for employees of small businesses while making enrollment automatic unless the employee specifically declines. Another automatically increases the amount put into these plans, again unless the employee specifically declines. The third allows employees to direct unused vacation pay into a retirement account instead of taking it in cash. All of these new “initiatives” are said to be based on the latest behavioural research. This research has come to the not very startling conclusion that people are more likely to “comply” with a proposed course of action if they have to make a decision NOT to participate. Note here that the one initiative which does not conform to this - yet - is the BIG one, the taking of tax refunds in the form of Treasury debt paper. We wonder how long that will last. If the Obama administration was confident that they could continue to fund their “deficit spending” by means of foreign and Federal Reserve buying of Treasury debt, these “initiatives” would have been kept in reserve. They have not. These are last ditch attempts to continue to fuel a bankrupt “system”."© 2009 The Privateer
Here we have the bare bones of an Argentine solution, right out in the open and announced by the President. This completely changes the rules and potentially the playing field for US approved tax-deferred retirement plans. You may choose to continue to bet on the old rules. I don't.
September 06, 2009 | Permalink | Comments (15) | TrackBack (0)
September 03, 2009 | Permalink | Comments (9) | TrackBack (0)
The stock markets are barely off last week's highs, but sentiment has gone quite bearish again. The 2cs of bearish sentiment has risen from 88 a week ago to 111 tonight!
We seem to get occasional spikes up of 25-50 SPX handles and then "fake a top" and move down a bit for a few days. What a great strategy!
The political-economic news is dreadful day after day, and it is driving public opinion or vice-versa. I read somewhere today that pro/con presidential sentiment is the major driver of the four year cycle (not a new idea) and therefore the markets. More on that another time, but it's imperative to try to put the news aside and look at market sentiment and other breadth data without emotion. Mark Hulbert looks at subscription newsletters for clues, instead of market data as in the 2cs, and this is his conclusion:
http://www.marketwatch.com/story/contrarian-analysis-of-stock-market-2009-09-29