Faber speaks with forked tongue

On the 22 of September Faber said this:

"Now we have a particular situation in the US whereby interest rates are at zero and the fed has made statements whereby they will not increase interest rates much. They will keep them below the rate of inflation. In this environment the worst investment, of course, is to be in cash, in the long-run, or be, even worse in US government bonds. What you want to be is in assets, whether it be real estate, commodities or in equities. And ideally, of course, you are in foreign currencies or a currency that can not be increased in its supply, like gold, silver, platinum, palladium etc."

 ..."my view is, probably over the next 2, 3 years you are better off being in equities"

It is clear that these statements can not be misinterpreted. I can find no other way to understand the statements above than he foresees a total collapse of the dollar and explosive inflation in the long-run. While I agree, inflation will likely be a problem at some point. It is likely 4 to 6 years away. Anyone who takes the Faber trade will be broke by then, yet Faber may still try to say - "I was right". Again, I think that his views are irresponsible and dangerous.

Currently he is saying:

“I wouldn’t be surprised if we’d seen the peak of the market for this year because the economic news isn’t going to improve very much. The correction in the market has been overdue for quite some time.”

A correction is not deflation...and a pullback in Gold is not deflation. He is looking for pullbacks. And, in my opinion the stated basis for a pullback is pretty flimsy at best. I would much prefer him to state some technical reason...absense of good news does not drive prices one way or the other. If absence of bad news were to drive prices then this bear market rally would not have been possible. Faber looks pretty confused and disoriented. I can understand that, this market is not rational (and no market is), but the smarter you are the more you try to rationalize it. This is why Faber is missing the big picture...he is trying to come up with a nice rational and intellectually stimulating story or thesis. That is, by the way, a great way to be entertained...but definitely not a great way to make money.

A dollar crash and inflation fit into a very marketable story... probably you can get a lot more signups for $200 if you use that story than a huge dollar rally and epic deflation.

What we will likely get in my opinion is not a pullback, but a resumption of the trend. Just look at that real estate chart that I posted previously. We have a way's to go before we even get to wave 4. And, Faber absolutely recommends real estate assets in the above video.

Another sign of a top...Dr. Martin Weiss, Phd, Md, Esq, Jr, III

Martin Weiss, in my book, is a freak. He pushed leverage short ETF's at the bottom. His options and leap trades are 90% losers if you check the actual trades...I had to do a lot of work to find a history of his option trades. Most of his trades, in general are losers and he wants to charge you $5,000 a year for advice. (see trade history below)

Interestingly, after 27 years of promoting a deflationist view, Weiss has now converted to an inflationist. Clearly, he is responding emotionally to rising market prices and to all the angry letters from people who bought leveraged short ETF's with out any risk limits. SRS which is one he was promoting at around 100 is now 10 bucks. If you followed his advice he did not advise you when the trade was broken, nor did he advise you that these are depreciating assets. The market could go down 50% in a year and this type of security could be up only 10 to 20%. Now get this, after putting everyone through this...he now is essentially saying buy long ETF's.

His announcement is here.

If this is not another sign like Faber, Grant and others...I do not know what is. Weiss has to be the worst market timing trading advice I have ever seen and now he is wrong on the fundamental side too - right at the top...is there any better time to change your view?

If You Don't by Health Insurance and Don't Pay the Fine?

Now this is progress! Go Obama...

This is not China or Russia Mr Obama.

I think Obama should start doing some of the things he said he was going to do. Its  getting rather ridiculous...what else are they going to come up with.

Politico reports:

Sen. John Ensign (R-Nev.) received a handwritten note Thursday from Joint Committee on Taxation Chief of Staff Tom Barthold confirming the penalty for failing to pay the up to $1,900 fee for not buying health insurance.

Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty, Barthold wrote on JCT letterhead. He signed it "Sincerely, Thomas A. Barthold."

Inconsistencies and Lies form the FED

These guys should go to jail...in my previous post of Alan Grayson's questioning of the Attorney for the Fed...he claimed that the increase on the Fed stated balance sheet (this does not refer or count the 14+ trillion off balance sheet increase that the fed is hiding) of 1 trillion dollars or so was based on open market transactions for agency and other securities. In this video, the fed states with high degrees of confidence that these transactions were loans and other transactions.

This guy can not get straight did they spend the money or lend it? And the General Counsel for the Fed thinks they did open market transactions and so they do not know who the counterparty was.

This is a total FRAUD...what do you think they did with the money. I think they gave it to their buddies.

Does the Federal Reserve Engage In Market Manipulation?

Watch this...Paul and Grayson are heros.

Single Family Home Prices in the US

Today, it was reported that the median price of a single-family home dropped 2.3% in August. The stock market sold off on the news. For some perspective into the all-important US real estate market, today's chart illustrates the US median price of a single-family home over the past 39 years. Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased – increased. That brings us to today's chart which illustrates how housing prices are currently 30% off their 2005 peak. In fact, a home buyer who bought the median priced single-family home at the 1979 peak has seen that home appreciate by a mere 4%. Not an impressive performance considering that three decades have passed. Over the past two months, single-family home prices have resumed their decline and remain (until proven otherwise) in an accelerated downtrend.

What's important to realize is that the rise in home prices has not reflected any of the momentum of the stock markets....or all the unabashed optimism of economists and policy markers. This chart is reflective of a market in a wave 3 decline. We still have not gotten a wave 4 consolidation nor are we anywhere near making a wave 5 low.

This is not good news for Bernake...nor is it good news for Peter Schiff or Marc Faber or those bears who recently capitulated. Lower real estate and land prices will collapse balance sheets further and blow up all those off-balance-sheet entities and SIV's to the point of no return.

Short-Term Bounce indicator

Watch for the CCI's to cross -100 at the same time and a break of that trendline.

Dow is under wedge line

New articles I am working on

1. China - stimulated for catastrophe...a dictator's depression
2. JP Morgan - insolvency masked by smoke, camouflaged by mirrors
3. The bank of the world - engineering the bankruptcy of the planet

I have been a little slow lately...please be patient. I think these are good and enlightening pieces...but its not easy to put them together.

Market Observations - Indexes at supports

This chart of the Russell 2000 Futures shows a major support at 595.4. After hours this level was touched. We should look for a bounce from these levels. If there is a break down from these levels (1039 on SPX and 589 on the Russell Futures) that would defiantly qualify as P3 type behavior. However, if we can bounce from here we may make a failed high and then take out support thereafter. We have a lot of unfilled gaps up to the 1077 area on the SP futures. I would like to see them filled. Also, there are a lot of good support levels shown on this chart as targets on the down side if we go that direction.

If there is a gap down on the open...watch for that gap to be bought.

I trade the TF futures and they are a very good momentum gauge for the markets. If they start showing downside outperformance....larger indexes will usually follow

9650 is potential support for Dow

Industrials Break Wedge

Mid caps under heavy distribution

Jim Rogers has not sold any Chinese Shares since 1999

This is one hell of a volatile ride...china may not see its all time highs for decades...quite likely it will take out its 1999 lows much sooner than that.

Jim Rogers says since 1999, when he bought his first China Shares he has never sold them. Rogers believes that after ten years China stocks will still be rising, but at the same time he has sold all stocks from the other emerging market countries.

Last year in October, he bought stocks in China again. But the Chinese shares he bought were H-shares, B shares, and S shares. He has never bought A shares, since the A shares are too expensive, and perhaps one day, China's H shares, B shares, S shares and A shares will merger as one kind of stocks.

If signs of collapse appear in China's stock market, Rogers would buy more Chinese shares. He thinks this may happen in the near future, but not at the present time , because although China's stock market is making adjustment, no one is selling Chinese stocks in large quantities. Besides, China's stock market rose 80 percent in the past six months, prices have been too high," I will not buy Chinese stocks at this time. After a year or two, I would consider buying Chinese stocks again" Rogers added

FDIC, is rapidly running out of money because of a wave of bank failures

If they believe the confidence game ponzi scheme can be held up when insolvent institutions are guaranteeing insolvent regulators who guarantee institutions...then we are in for a very rough road. As I said in my first post about the FDIC, where did all the money go? FDIC incompetence - where did all the money go?

The press is not asking the right questions....what about the conflict of interest? If you need to borrow from an insolvent institution and then have the audacity to suggest you will insure that very institution - who is going to believe you?

Posted Tuesday, September 22, 2009 3:59 PM - Newsweek.com

Banks May Bail Out the Bailout Bailing Out the Banks

Daniel Gross

Say that three times fast. Reports today suggest senior regulators, including the FDIC's Sheila Bair, are thinking about tapping the nation’s healthy banks to lend billions of dollars to rescue the insurance fund that protects bank depositors. The fund, overseen by the FDIC, is rapidly running out of money because of a wave of bank failures, and Bair would rather go hit up the banks themselves than go hat in hand to Tim Geither--who is, by all accounts, not her favorite person. There are a few reasons why this could be smart--for Bair and for the administration:

1. The debt ceiling limit is approaching, and needs to be raised. And it's always a time for the opposition to make mischief. Anything that limits the need for Treasury to ask for less borrowing capacity is a positive.
2. Bair has been tougher on the banks than Geithner or Treasury (or Congress), and is likely to continue to be. The more the FDIC is able to make and execute policy without having to rely on Treasury, the better.
3. In recognition that the healthy banks (such as they are) have been enormous beneficiaries of all the extraordinary efforts--guarantees, zero-interest rate policy, bailouts, etc.--they should make funds available to the FDIC at extremely low rates. The healthy banks have benefited enormously because the government has let them rent the government's balance sheet. It's fair to ask J.P. Morgan Chase to return the favor.
4. The great thing about the FDIC--historically, at least--is that it's self-funded. The banking industry essentially insures itself against debacles and failures. The problem in recent years is that, largely due to Congressional interference, the insurance was under-priced. Banks didn't pay nearly enough in insurance premiums. The principal going forward should be that that the industry is responsible for funding its own bailouts--whether it's through the insurance premium on deposits, which should be raised (especially for the big banks); and through the fees the FDIC is collecting for guaranteeing debt banks issue (about $9 billion so far and with the possibility of $30 billion over the life of the program). Premiums have to go up, and will. But there's a degree to which its counterproductive to jack them up sharply right now. Ultimately, the big, healthy banks will be paying more in premiums. If the FDIC borrows money from large banks, ultimately the same banks that lent the money are going to be kicking in to pay the interest.

see full article here

Transports - Highest Volume Day Since 2006

Biggest selling day EVER...look at these two charts.