Posted on 10/11/2010 7:16:03 AM PDT by blam
Markets Continue To Rise Despite Poor Data
by: Equedia Network Corporation
October 11, 2010
It doesn't matter what economic data is being thrown at us. The markets have continued to soar despite poor economic numbers, growth, and scandals. But eventually, these numbers will catch up with the markets.
It's no secret that the Obama administration is doing whatever it can to help fuel the growth in the stock market ahead of the midterm elections in November. He has to. The stock market has become a leading indicator for confidence in our economy and judging by Obama's approval rating, the Democrats could easily lose their power in the Senate. That's why they have continuously pumped money into the markets.
The Democrats know they will be taking some losses, but will try to do whatever they can to hold on to the majority in both the Senate and House - including pumping piles of printed money into the markets. Did we really think that this market rally was able to sustain itself without help?
The last monthly unemployment numbers before the midterm elections have just been released, and it shows that employers have lost yet another 95,000 jobs in September, resulting in a 9.6 % unemployment rate. Let's not forget that these numbers do not factor in the true unemployment rate in the US but is derived from a monthly survey of 60,000 households in the United States known as the Current Population Survey.
When you consider that the US has more than 310,000,000 citizens, a survey of 60,000 households doesn`t make a lot of sense. But unemployment numbers is not the only thing we should be worried about. There's yet another scandal that is rearing its ugly head.
The Foreclosure Scandal
Just when the U.S. housing crisis couldn't get any worse, the largest bank in the United States, Bank of America (BAC), is halting all sales of foreclosed houses on growing allegations that lenders have improperly seized hundreds of thousands of American homes.
They aren't the first bank to halt foreclosures. Many other lenders including Goldman Sachs Group Inc. (GS), JP Morgan (JPM), and GMAC LLC have halted foreclosures in the last few weeks after investigations began on how foreclosures are being filed.
The banks may now be getting into trouble for what appears to be yet another economic-breaking scandal that's about to unfold. Employees at both GMAC and JP Morgan have already and openly admitted that they signed off on foreclosures without checking to see if they were justified.
At JP Morgan, Beth Cottrell admitted that she and her team signed off on about 18,000 foreclosures a month without proof! But they're not the only ones playing tricks. Bank of America has already been caught committing acts of dirty bank tricks. They have:
foreclosed on a property that doesn't even have a mortgage locked out home owners who own their houses outright with no mortgage ...and even locked out homeowners who were current on paying their mortgages! But why would the banks be so anxious to behave this way? Why would politicians and the treasury departments allow them to do it? Take a look at this video to find out:
The US economy is nowhere as rosy as the stock market is making it out to be. Real economic growth should happen when the Fed lowers rates. This should fuel home purchases, home development, and more business investments which lead to real economic growth through growh in the real estate sector and business.
But even with the current 30-year fixed mortgages at less than 4.5%, and the Fed rate at all-time lows, we have yet to see any hints of real growth. This clearly tells us that we have a long way to go before our economies return to any state of normalcy.
If the Republicans manage to regain some control in the midterm elections, they will undoubtedly cut reckless spending and attempt to fix the markets the right way - which just so happens to be the long way. Republics are known to be pro-business, but will avoid uneccessary spending for short-term fixes.
That means the markets may actually suffer in the short-term if, or perhaps when, the Republicans gain control. As investors, the last thing we want to hear, or say, is that the markets are still on the brink of falling. But we need to understand the complexities at work. This scenario could easily happen based on real economic numbers, forecasted growth, deflation, stagflation, and/or inflation.
But, that doesn't mean we're not going to make any money in the markets. In fact, it means that it will only make it easier for us to choose what to invest in. From all of the economic twists and turns, we can be confident that certain things will happen:
We know the Fed will print more money - even with the Republicans in place. We know that citizens around the world are no longer confident in their countries and their fiat currencies. We know that the second largest economy in the world, China, is spending billions of dollars on gold and commodities - with more than enough money to back it up We know that when the US economy turns around, maybe 2,3, or 5 years from now, inflation will come to play. When you combine all of these factors alone, the resource sector will boom. It's no secret that the Fed wants nothing to do with deflation. Remember the speech from the Fed on September 21 which sparked the recent rally?
The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.
This means that eventually, inflation will kick in. With the amount of money being printed, inflation will eventually kick into high gear to "keep consistent with its mandate." It may take many years, but it will happen. That means increasing our emerging market exposure while we concentrate in areas that benefit from a weak dollar. That means increasing our position in commodities and precious metals.
Let's also not forget Bernanke's speech at the end of August where he stated:
The Federal Reserve is already supporting the economic recovery by maintaining an extraordinarily accommodative monetary policy, using multiple tools. Should further action prove necessary, policy options are available to provide additional stimulus. - Ben Bernanke, Federal Reserve Chairman.
Clearly, we cannot stop the Fed from printing more money. Judging by the recent jobs report and the progression of the foreclosure market, including the ARMS debacle, precious metals and commodities should continue their climb.
Over the last year, we have been waiting on signs of a new junior resource sector bull market. The first signs are already appearing and over the next few months and early next year, we should have clear indication of a new junior resource bull market.
If we continue to see strength in precious metals and commodities once the dust settles with the midterm elections, the junior resource sector should begin its boom. We shouldn't jump into deep waters yet, but getting our feet wet now certainly wouldn't hurt.
Obama had a half trillion to still spend...
Is there some stock propping up taking place?
Soros $$$
I heard a market analyst (on Fox Biz?) saying markets LOVE gridlock in DC. They also are primarily predictive of market conditions rather than reactive. The markets are making a run based on their anticipation of the oncoming Republican onslaught on November 2.
This isn’t really surprising. Companies have saved a ton of money by firing people and making whoever is left do more at the same pay. All of this cost cutting translates into profit.
Exactly what I suspect.
I think the markets love being out of fiat currency, and into anything that isn’t fiat currency.
"In my nearly 30 years of playing Ms. Market's game, I've definitely seen periods of time when bad news is good news for the stock market and vice versa. But rarely has there been an environment where both good and bad news is good for stocks (well, okay, as long as the good news isn't TOO good, that is). So, while I don't have to like it, it appears that Goldilocks has returned to the corner of Broad and Wall."
Not really. The truth is quite a bit worse than that.
The Federal Reserve is intentionally devaluing the dollar, monetizing the Federal debt and holding interest rates at historically low levels. The result is a flow of investment capital into equities and commodities, driving their prices up. Declared corporate earnings are up because they are (a) employing fewer people at lower real wages and (b) choosing to bank earnings now rather than next year when tax rates on capital gains and dividends are set to skyrocket. Meanwhile, the investment banks doing most of the stock trading (on some days, 60% of market volume is attributable to five or six entities) have been allowed to maintain as assets mortgage-backed securities whose valuations are fraudulent and whose liquidity is nil.
So if we score big in November, will Soros pull the plug on the markets?
How does that project the markets to year end? Any speculation?
“Republican Rally”.
Markets are anticipating GOP gains next month.
The bigger they are the harder they fall comes to mind
This is the kind of market behavior you get before a once or twice a century magnitude crash.
its simply inflation. Zimbawae have the best performing stockmarket
It's all speculation. That's the point. Market fundamentals mean nothing. The next phase will be another round of "quantitative easing" by the Fed, meaning a direct injection of liquidity (artificially-created credit) into the markets.
The likely result will be a continuing boom in equities (and in commodity prices) regardless of underlying fundamentals; long-term unemployment will increase and consumer demand will languish, until... the game will be up.
My guess: government stimulus will no longer have any effect as credit gets sopped up by the banks and held in reserve against mounting default risks. Our declining currency will force a decoupling of the dollar from international trade. We are becoming Japan - only worse; our savings rate is lower and our debt is astronomically higher. The market will begin a slow decline into an abyss from which recovery will take a generation.
nah, using this argument will only backfire, because its going to get ALOT worst, even after gop win nov 2. Remember the $4 trillion tax increase is coming up and gop can’t do anything to stop it. Look at the dollar index. Its now at 77. The USD is losing value, thats why all prices is going up
Gold. And Lead.
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