Saturday, Feb. 26, 2005 08:00 A PST
Buy Our Book
on Web Site
Confused by Search Engines?
Buy our book on Using Search Engines
NASDAQ to Rally?
We'll explain why for Inside Report readers this weekend, but over the next couple of months, I'm expecting to see tech stocks make a major surge in order to play "catch up" with the Dow and the S&P. It may take a couple of weeks to get underway, but the reason for our optimism is this: The Dow has jumped past a major upside barrier. leaving the S&P only slightly being. But the techs of the NASDAQ have been lagging in here, and although it is not financial advice, we'd be tempted if we were playing the market (which we're not at the moment) to buy some 3-4 month out close to the money NDX calls just for giggles and grins. Remember, this is NOT investment advice - I'm only sharing it to show you just how damaged by brain cells are...and to me it looks like the NDX is lagging.
Deadbeat Government Case Cont'd
The judge in what we call the 'deadbeat government case" (below) didn't issue a ruling on Friday. he apparently needs some time to think about things. We think this is a bad sign, but time will tell. If it needs to go to a jury trial (the next stop in the process map) then so be it...
Rear View Economics
We noticed this morning that a report is out saying the economy did better than expected during the fourth quarter of 2004. LINK. While it's nice to know that the government has a rosy picture, it's equally important to realize that such reports, by their very nature, are what I call "rearview economics." Meaning: They may tell you what went on some period in what are now historical times, but they are both old and therefore have diminishing predictive value.
Such reports are always fascinating to watch, however, because they bring into focus one of the great lies about investors. The "lie:" is that "stock markets look out a year or more into the future, assess the conditions that are most likely then based on efficient market theory, and deliver a perfect price in today's dollars. If you believe this, you'd better be sprucing up for the Easter Bunny, because the facts don't support the conclusion. When the market here's good news about recent history, it is almost sure to rally (at least early today) and do so in the face of scarier, more recent reports. Like the drops in leading indicators and confidence which are more recent and more on point.
So it is that the people's economist offers you a chance to watch the behavior of the markets and ask yourself: "Gee, is the market looking at the future in a reasonable way, or are the markets really future oriented only as far as next week's economic report?" I'd suggest the latter because the market is not about judgment (old Alan Greenspan's favorite synonym for "guess"). Rather, it's about short term greed and the quest for the "greater fools" who would buy stocks when the future is cloudy and the outcome unclear.
Our view continues to be that inflation - the kind that makes rear holes in your family's checkbook - will be much higher than "official reports" and that at least for now, our expectation is for much higher inflation ahead and with it, a decline in the real standard of living. That's what the market wants to forget when "rear view reports" come out. It's the difference between ahead of the pack, or under it. We're still down 30 points from last week's close at today's open, so you know what the hype will be.
He might not enjoy being cast as a sort of "salesman for corporatist diplomacy" but one could make the observation that George Bush, traveling to Moscow to lecture Vlad Putin on America's efforts to sell it's version of the "corporate company town/country" is apparently not being welcomed with open arms by Bush's current sales prospect, Vlad Putin. STORY. What we expect is that when Bush talks about a global movement toward democracy, he's not talking about the flip side: declining American standards of living, the housing and stock bubbles, or the millions unemployed with their means of employment jobjacked to third world countries so corporatists can play labor cost differentials to fatten their bottom lines. We expect that Vlad may have some very good economists who have noticed the same thing - thus he might be a little skeptical of the "pitch."
The "trade in that old car" foreign policy is particularly important to the neocons in the Bush closet (so to speak). Russia has been bankrolling and supplying fuel for Iran's nuclear facility and this morning, just like the old car dealership practice of bugging the salesman's office, will be implicated in the discovery of a US made listening device being found in Iran's halls of leadership LINK.
To be sure, the used car salesman imagery may seem harsh, but only if you hold prejudicial thoughts about car salesman. I don't - it's not a bad thing - it's just a "thing." You might want to think of Bush as ther "Steven jobs" of diplomacy as one German magazine has. DETAILS.
Don't get me wrong: I support our beloved Constitution and I am overwhelmed with the genius of the Framers. But, at the same time, gunpoint diplomacy and food-for-votes rings hollow given the drivers of currencies and oil.
And then there's the narco money in the background (answering one reader's question "Why did we invade Afghanistan - they have no oil?" Something better my friend - drugs. MORE. Obviously, we could get into this in much more detail but you need to do your own research and thinking in this area.
New Elliott Wave Page
Go read what Bob Prechter's crew is thinking as they weed through the debate over whether we will have an inflationary blow-off or head into deflation shortly. LINK.
Lining Up for Bankruptcies
The headline sums it all up very well: DETAILS,.
The "goodie two shoes" approach of some nations lining up for support of the Kyoto Accords on air pollution may look great. But when it comes to really biting the bullet on economic issues, many countries are not really ready to walk the talk. For example: If you propose to reduce the levels of mercury allowed to escape into the environment, guess what happens. STORY. Yes, everyone is willing to be generous, just as long as it doesn't cost anything in their country.
Arizona Reader Notice
Don't forget - if you're not doing anything at 2 PM today, drop by the son-in-law versus deadbeat government case in Mesa:
The whole thing shouldn't last more than an hour - free beers (see conditions below) for Urban Readers afterwards.
Breathing on his own, thank God and modern medicine: LINK.
This Week's Inside Report
This weekend, we'll get very deeply into something I call "saturation banding". The concept I've been kicking around with our resident fractilist G. Lammert is whether consumer saturation is smooth (as an the case of a discharging capacitor) or whether is "jumps" and is banded by key exogenous events. Subscription info...
Also, visit our online bookstore at www.urbansurvival.com/usbooks.htm
The Deadbeat Government Case
There are two sides to the question of deadbeat dads - and one side has been heartily endorsed by state bureaucrats around the nation - namely the proposition that there are deadbeat dads and they should be made to pay. OK, but only so far. What about the other side? What about the millions like me who have paid their share and then some - personally about $250,000 over 12 years of after tax dollars to raise our kids - and lost our interest in homes and so forth?
I mention this because FRIDAY there's an interesting court hearing coming up in Mesa, Arizona, that will get right to the heart of this well-orchestrated victimization of single again males by government.
In the case, my son-in-law is requesting to be made whole after he alleges the Arizona DES folks (that's a $2-billion state agency up that way) jiggered the books to make it appear he owed back child support when his figures show he doesn't. The State then illegally (he contends) impounded his tax returns, ruined his credit rating, and more to boot. The state maintains they didn't do anything wrong, but privately has asked through back channels "How much to make this go away?" The case is oral arguments over an alleged arrearage - not due if you look honestly at the records says the son in law, but DES has an odd and to him dishonest way of counting. Thus, the evidentiary hearing Friday. The case could demonstrate how to deal with states that can't count straight. It has the possibility of becoming landmark case law.
If you want something more entertaining that TV court shows, show up Friday.
Although I can't take the time off work - I'm shopping for a new home for a recording engineer school in the West Hollywood area today and tomorrow -Elaine will be our "reporter on scene" along with son Wendell Smith and will file a report after the court makes its decision.
I'm very sympathetic to mothers with children who depend on support - and like I said, I put in excess of $250,000 of money where my mouth is and was never late on support even though I ate a lot of cornflakes to make ends meet. But when State agencies act insincerely, and is alleged to have lined their own budgets at the expense of both parents, well, that's just where the line must be drawn. The State must act above reproach and in the best interests of the children, not the bureaucrats.
Yes, deadbeat dads are bad an ought to be punished. But when the state says it can't find certain key records - which the son in law has managed to find with the pages the state conveniently couldn't find - and he says jiggered the books, well, that's a treasonous breach of the public trust occurs in my book.
Consider yourself invited to watch at 2 PM Friday in Mesa if you can make it. Given public apathy about the courts (like about Patriot Act 2) I will be pleasantly surprised if anyone shows up. A beer on UrbanSurvival afterwards* if you go - ask Elaine and son Wendell Smith. It'll either be victory or an appeal party. I've got a buck on the side that says the State will try to ask for a postponement to run the clock some more. After all, that's one card bureaucrats love to play - the State outlives the honest subjects every time...
(Unlike some media, please note that I have spelled out my relationship to one of the parties and my personal bias in this story. How about more media getting straight with us about who pulls the strings? What about TV networks saying Company XYZ which spent xxx dollars on our sister magazine and related publications last year.. or Company XYZ which has two members of its board of directors who sit on the Board of our network's parent company... .as a disclosure on coverage, huh? Oh well...)
WTC Dead End
We notice an article sent in by a reader drawing our attention to the fact that no trace has been found of more than 1,100 people who were in the WTC at the time of the 9/11 attack. STORY. There are still well over 50% opf residents of New York who think it was a government LIHOP* or MIHOP** operation. (*LIHOP=let it happen on purpose" MIHOP=Made it happen on purpose...)
Although resources in the Caspian are reportedly vastly over-stated, that hasn't kept a new 1,100 mile pipeline from being built. What's interesting about the story, other than it looks like the same territory covered in a James Bond movie, is that the picture shown in the report come from the US Marines... LINK.
Implications of Oil Rig Utilization
Our extremely well-informed sources in the oil patch tell us that finding drilling rigs for offshore work in the Gulf of Mexico (GOM) is very tight at the moment. We present some background here as information, although the source notes it's nothing to be alarmed about because the industry has been in this spot before:
Those are some darn interesting facts. But what's interesting is that my source, who's a first rate exec, is not alarmed by the situation...
My source's remarks renew my faith that America's best and brightest are on the case. However, the amount of resource that China is gobbling up is amazing and we have mentioned it before.
While we don't normally go around advocating a global economic recession, that's one way that the supply pressures could be eased and the industry given time to get resource on line and get more of those hybrid cars on the road.
California to Screw Environmentally Responsible?
Not that change to a fuel efficient economy will come easily. We draw your attention to the growing support among bureaucrats to install something called a "mileage tax" in California in lieu of state gasoline taxes at the pump. the story is a bit dated, but the info is current and you need to be aware of it when considering the supply picture for energy. LINK.
This all gets back to the question of what the 'shadow government" has an agenda. Simply put: State bureaucrats want to maintain their revenue streams and not change their habits like the voters are being forced to do. It's a circular reference, isn't it? "Everyone must feel pain but me..." thinking.
Prayers for the Pope
the Pontiff is back in hospital following a flu relapse. LINK. Our prayers are admittedly a bit self serving. If our reads of Mother Shipton and Nostradamus are right, we could be at end times if interpretations are right.
Mark of the Beast:
Say, I heard this from a colleague yesterday which was interesting. "You know the Mark of the Beast in the Bible? Well in one alphabet, 666 looks like "WWW"..." Oh no! But think about it - and check out: THIS LINK
We expect the stock market to resume its decline and we see that gold is up almost a Whopper. Not as big a jump as the Deluxe Value Meal for two gains of a couple of days back, but still, better than losing an order of fries yesterday... (I like to put stock market comments in a culinary framework because so many people have lost their lunch in their 401-K's...)
Don't forget to watch the two-hour ABC special on UFO's tonight hosted by Peter Jennings. 8 Eastern and Pacific, check local listings!
Global Tipping Point?
We have assessed the day's news and come to an interesting conclusion. Although the web bot project has predicted it a couple of weeks earlier than today's date, we can see several areas now where equilibrium has been broken and the world is starting to tip. Let's start with the high level view:
First: On the rumors that something was going to happen in Washington DC, it seems as though the reports of a plot to attack the life of the President being uncovered was, at least initially, the source of concern. Now that suspects are being rounded up, LINK, the worries have not abated. One reason is the President will be in a part of Germany tomorrow which is not especially friendly toward Washington. A reader in Germany reports:
So tensions are extra heightened in German because if there was one plot, there could be more. our prayers are for the safety of our leaders in Europe above all else. A good source in the DC area tells us:
Second: Stock, commodity and metals markets all went crazy at the same time today. We noted that some of it was driven by reports that Asian Banks are dropping away quickly from support of the US dollar, a move that could have calamitous impacts in the US. Details. This event caused me to click the speed dial to Robin Landry, a long time contributor to the perspectives we hold on markets and such with the question of the day. "Is this the start of the BIG ONE Robin?"
We are not inclined to argue with Landry's assessment. Confidence could turn to mush and fear in almost no time at all because if the markets decline too quickly, they will take out the Housing Bubble and that super-heated market could take down the derives market, as we have mentioned before and again, if you haven't read the working paper on how derivatives are in more danger than many folks believe. -- Link.
Third: Oil is starting to rear its head in a horrific way. A couple of points could be mentioned, but the fact that the comments of energy banker Matthew Simmons showed up in Al Jazeera today saying that the Saudi oil peak may already be past us is a horrible thought. but you have to read it and figure out the implications. DETAILS. Regardless of your take on Peak Oil (mine is well stated by the unnamed energy from Houston whose comments we shared with your EARLIER.) you need to read Matt Simmons latest World Energy Summary.
Fourth: As a Southern California financial exec writes us about the level of "buzz" she sees going on:
Fifth: We have noted previously that the number of earthquakes seems to be running strangely - not just in the big powerhouse quakes like the Tsunami builder on Boxing Day, but in today's 6.4 in Iran which has killed several hundred. DETAIL
There's also a global distribution in the Northern Hemisphere to be considered, especially in light of the crustal type quakes (those over 75 km deep):
Taken as an aggregate view, what we see is that the global tipping point is here again, but this time, perhaps dispersed among many events, many peoples, and many places.
the only remaining question is whether is comes and goes like a big lazy ocean swell, or whether it comes roaring at us all of a sudden like one of those big surfer's dream waves on the North Beach. Time will tell...but definitely, there's an air about things building. A reader in the Mid West shares:
Yeah, that seems like a plan. but besides the tinkling of ice cubes, around our house will be a weather radio and maybe CNN on low. And oh yeah, and the Princeton EGGS are more active LINK. Click on the real time display. Call it God or Allah, the Force, or Mother Nature, the game's afoot Sherlock.
Although the market's 174 swan song yesterday would normally result in a bounce, the futures this morning are looking a bit weak. The consensus is that the market will be lower, at least early in today's trading. LINK. When the bounce comes, we expect it to be a healthy one. Applying the standby Fibonacci radio (.618) is useful. To me, it looks like a fifth wave failure. Let me explain.
On December 29th, we had a Dow close of 10,829.19. This past week or two, we almost but not quite came back to that. The Dow closing high was 10,837.32 on February 15th. The market closed yesterday at 10,611.20. Now, the February to yesterday decline was (10,837.32 minus 10,611.20 points) 226.12 points. Once the market rallies, a reasonable set of expectations would be for either a 50% bounce, 113 points or so, or a Fibonacci bounce of 139 points..
Now, if the market can get up a good head of steam in here, and rally from say only down 30 points today, that would make the decline about 256 points, and a rally of 168 points. That would "bounce us" to 10,749. Then if leg three is equal to or greater than leg one in Elliott wave terms, the next decline would be at least another 256 points from the 10749 level, but that would have us at 10,493 which is safely away from Robin Landry's trip wire point...about 10,300 where things would start to cascade downward. Just some ideas and not advice, mind you.
Lurking Rate Worries
If there's one thing that would save the economy in general, it would be a flattening of rate expectations. But the news out today from the Labor Department is pretty serious stuff.
There are a number of items in the BLS PRESS RELEASE that caught our eye. Transportation is up 4.6% annualized and energy is up more than 10%. To my way of thinking, (no doubt influenced by attended a low priced business school, not a "name brand like Stanford") energy will eventually infiltrate the less inflationary looking indices. Like "Recreation" up only 0.9% for the year. Wanna know why? Motor homes were out of favor last year and besides, there's no snow in many ski areas for skiing so no pricing power in the market. Duh. Other "meaningless optimism" may be found in apparel (up just 0.3% annualized) but that's before cheap goods from the tsunami zone are purchased from shelves. With global warming, folks don't need as many clothes...
Small towns in the South (like our ranch in Texas) are experiencing the sharpest percentage of increase (4% CPI increase in the past year - http://www.bls.gov/news.release/cpi.t03.htm) but we still prefer the slower speed, lower blood pressure, and cleaner air of Texas to the madness of the people in LA - it's like there's something in the water here.
Update Your Antivirus
McAfee is raising the threat on another virus. LINK Like the country can afford another threat like this. Anyone besides me want to support my modest proposal to make deliberate software attacks a capital offense? Death penalty included if there is directly attributable loss of life. Innocent web bots are one thing, but deliberate data hacking is another.
Speaking of computer primes: You have noticed that Choicepoint stock has had its ass kicked since the data boner that involved upwards of reportedly 140,000 personal files being stolen? STORY.
Catch Up Reading:
A couple of readers apparently enjoyed our piece on how to make the economic system honest - by getting rid of interest payments in money and replacing them with payments only as a portion of the goods or services rendered. If you're not a subscriber and find the topic "In the Devil's Interest" intriguing, then by all means click here to get subscription details. The $30 a year won't break you...but if it does, click over to our BOOKSTORE and buy our $10 book on "How to live for $10,000 a year..."
Be sure and take in some of our free "services". For example, there are our discussions groups (free, enter as a guest), the library and archive area, and also our "Street Level Economics" series of reports from people just like you *(e.g. people with no wool left over their eyes). Links to all this are on the left.
Is Something Coming?
I have had several calls today from people who ask what the hell is coming. The reasons for the calls:
It's almost like something is coming. The President, Sec State and key members of congress are out of DC and I had one reader report that "government looking types were in Home Depots and other hardware outlets in the DC area early today buying up flashlights, tarps, rope, and so on." The same reader reported that bottles of Everclear and anything that looks like medicinal alcohol has been swept off the shelves in the DC area.
Now, not to be an alarmist here, but if you're in the DC area, and have first hand reports, please CLICK HERE to send them. I want to know with 13,000 citizen reporters out there what is going on that is causing the odd behaviors. I want to know what odd behaviors you might have noticed today. I will collate this and put up a special report if warranted before 8 PM Pacific tonight. But clearly, if the rumor mill around the net is right something big is about to happen - and it doesn't sound like bird flu.
Maybe it's all just normal swirling of rumors on the net. But you tell me...
America's favorite cowboy (with apologies to Gene Autry and Roy Rogers) is in Europe where he's convinced 26 countries to help with the Iraq reconstruction, made necessary at least in part by our bombing the bejeezus out of the place. STORY. All he needs now is to wear a white hat...
But, say what you will about the U.S. acting like an international gunslinger, the policy does have some merit. For example, the president of Syria says his countries forces will soon withdraw from Lebanon, no doubt the decision was prompted by the U.S. military presence just east of his country. DETAILS.
We read with interest the comments of Mikhail Gorbachev, who seems to think the West's treatment of Russia verges on patronizing. STORY. Gorby pictures a Russia more influential in shaping international strategic cooperation.
As I explained in last week's column, one of the outcomes from global warming is a shift of weather patterns. The LA area is about to set all kinds of recording LINK although our main points so far are these: LA is significantly wetter than Seattle this year. And, how long before the land of the Anasasi returns to enough moisture to support crops? Aren't we like there? Death TOLL is five so far.
There was a large quake in iran late Monday (US time) STORY This is apparently more of the global changes of the earth that are driving investments without people coming to think about it. The web bots still out are reporting other oddities as well, such as Venice gondoliers are still having problems with mud. It's like that part of the world is slowly raising up and leaving mud flats were canals used to be.
Nearly 200 a goner. DETAILS.
Here Goes Gold
I don't know if you have been watching things, but ever since the PPI came out last week, the "yellow dog" (gold) has been working its way higher. having bounced off ouir target $410 range, gold is up almost five bucks since we put bytes to phosphors (charts above). Is $480 by June really in the cards? Owning a bit of the stuff I would sure hope so, but on the other hand, it's a very ill sign for the economy.
Speaking of which: Some pundits are writing about the good news with the long bond stopping its downward trend line. First comment: The road to hell is never straight. Second comment: A month does not make a trend, and inflation expectations out that far are a mine field.
Older than We Thought
There's one heck of an interesting mystery coming out of South Africa lately, and it involves very old metal spheres that seem to have been manufactured by some kind of intelligence as the metal involved doesn't occur naturally: STORY. Our guesses on what they might be are pretty simple. They could be the equivalent of CD's to some of our forbearers, long lost to history. or, they could be remnants from some kind of ET contact 3-billion years ago!
Iran Goes in June
According to one-time weapons inspector Scott Ritter, the administration is planning to tackle Iran in June of this year: DETAILS. This is one of those stories that we fear may be true. The idea of the U.S. withdrawing from the region seems to be a forgotten cause with reports that the new U.S. embassy facilities being built in Iraq will be set up to handle 1,800 employees. That doesn't sound like a scaling down on the U.S. presence in the region, does it? Ritter also talks about the "cooked" elections in Iraq, so the article does bear reading, if you're skipping the details. Another good article is how it may be a "limited attack".
What makes no sense? The plans of the Administration to cut back or close 425 military installations detailed at military.com today.
Peak Oil Real?
We get letters from readers on an almost daily basis trying to convince us that the possibility of Peak Oil is being over-hyped in order build government control over the masses. One such example is HERE. While there's a certain appeal to attacking the Peak Oil concept, we're seeing enough evidence in money flows that it looks real. Some things to consider:
Look at the board here: The government would not go to war, and the oil companies would not spend money they don't have in order to secure existing and additional resources if the problem wasn't real. There is just too much money flow saying yes, Peak Oil is real, for us to conclude otherwise. Besides, even if it were not real, denial is a dangerous state of mind. We have an oil-fire economy and if the oil even hesitates, the big bad global depression shows up overnight.
Updated: 10:45 AM Monday
Although I have issued my "kiss of death" to the rally by entertaining the bullish case over on the subscription side of the site recently (A couple of weekly closes over 10, 827 would do that) it looks like events are overtaking us here. because it's marked "not for quotation or citation", I won't quote from, nor will I cite the paper at LINK I might also draw your attention to pages 25-26, but I will do so very carefully without citing what to read there...
When the web bot project came out and predicted even worse rains than our last bout here in Southern California, I was prepared to be skeptical. But sure enough, the little software applets are right on the money again. Here in Burbank, though midnight local time last night, we were staring at a mind-bending. As we go to phosphors this morning, the LA rain gauge has collected more than 17.63" year to date compared with a "normal" of 6.59" LINK. That's 2.675 times normal. Phoenix is even wetter, proportionately. 4.65" YTD precip versus a normal of 1.36 making their "excess precip factor " 3.42 times normal. What we're looking for next will be the whole set of unintended consequences from this kind of rain - we wonder, for example, how early crops will do in the Imperial Valley out East of town.
Avian Flu Fears
Not to get you worried about such things, as it is Monday after all, but time to start thinking about how to deal with Avian flu when it gets here - as it's looking more and more like it will: STORY. Let me see, if Congress & the FDA goes ahead with CODEX and takes simple home remedies and many over the counter drugs off the shelves as they are threatening to do (not to mention including vitamins) this will make it possible for more people to die. Yup, sounds like more FDA collusion with the baddies of the pharmacy industry to us.
Far Out Department
Did UFO's say Hands Off Moon?
We have mentioned in passing several times recently that there has been a major increase in UFO stories coming out of India in general, and the Kashmir-Pakistan border area in particular. But not we'd like to bring to your attention news flying around the Hindu media that India may have been told not to send men to the moon or else... An interesting STORY even if not substantiated by multiple "official sources."
We Be Jammin'
There's a new - and highly illegal new toy on the market - portable cell phone jammers: STORY. Sounds like something to bring along to the movies next time...
Movies: Elaine and I went out Saturday and saw Constantin - a very good movie, especially if you are either Catholic or well-read in religious literature. I won't give away the plot, except to say that the politics of Heaven and Hell are involved. The movie that I'm really waiting for - and the trailer looks great - it the new "Sahara" - based on the Clive Cussler novel by the same name. DETAILS. Out on April 8th, so there's time to get some work done before I go get in line for that one. It looks to us like the start of a James Bond/Indiana Jones kind of genre. I'm just finishing "Black Wind," his latest novel.
Because it's a bankster's holiday, I will not get the Monday morning "final edition" up until about 7:30 AM or so. Some organizations are working today - and besides fire and police departments, we note that UPS will be delivering today.
News from Elliott Wave International
Write when you get rich,
George Ure, The People's Economist
Bulldog Editions when noted are the "early editions". Check back later for a more complete update. Bulletins as warranted. Normal byte times are 8:30 AM (or earlier) CDT Monday-Friday. Weekends as the spirit moves us.