The Great Magician Continues To Pull More Bunnies Out than Ever From an Invisible and Make-Believe Hat

First part from an article in Yahoo July 28:

Markets have been rattled lately by figures pointing to a slowdown in the U.S. but analysts say initial fears that the world's No. 1 economy was heading toward a second recession have subsided.

"Two weeks ago, people were wondering whether the U.S. was slipping back into a double dip," said Howard Gorges, vice chairman of South China Brokerage in Hong Kong. "In fact, corporate results are very good. The market is starting to get the message that the economy is not so bad. It's not a pretty picture, but it seems to be a slowly improving outlook that's ahead."

My take:

-- on what basis, when you have falsified accounting practices from FASB permitted by the US government, within two weeks, all is coming up roses again - incredible - the greatest legacy of the Obama administration is to build up such smoke screens and charades to convince the majority of the mindless American to re-invest their remaining dollars into corporations and entities that surreptitiously acquired Americans old dollars (hence the reason that US corporations and US Banks NOT individual Americans are sitting on 3 Trillion dollars of cash) because "they (Individual Americans) can't stand their dollars to earn zero interest" - This has to be the biggest financial ruse in the history of the United States - even besting the Great Depression by failing to even acknowledge that this too is a Great Depression - I am wondering how much longer the media will continue to play into this ruse - I have now spoken to three respected colleagues that believe much like everything else that this administration does, they will inflate the economy with numbers to ensure through November that as many democrats as possible are all re-elected and Obama's base is not shrunk. The whole process sickens me because in between we all know that the political aspect of how the market is perceived ("It's the economy, stupid") is the "Unknown factor" and can quickly derail years of technical and fundamental analysis.

That is why nothing makes sense whatsoever in investing. Therein, also lies the answer to the question of how come the Obama administration has significantly laid off on the attacking of banks, black pools, hidden hedge fund tricks, and high frequency traders even BP as well to ensure his media based global plan entitled "Recovery Summer" goes off without a hitch (just like his famous "Green Shoots" plan of March 2009). Obama is one hell of a magician and hypnotist making Americans think he has their back, while his administration most likely is cutting backroom deals with corporations to inflate the economy. This way, Bernanke aka the Fed nor the Obama Administration have to reach into their pockets to stimulate the economy and give the appearance that they are not increasing the deficit.

Very few Americans (who can think for themselves) see right through this, but the vast majority either do not see, do not care, feel hopeless, or have become lost souls of the American Dream.

One of the "recovery keys" is to prove that Europe is stabilized between the bogus bank stress tests (check), to numerous Europeans saying, "hey, we are not as sick as you think we are, in fact, we are far better off (cough, cough, cough) than you might believe.

How the US spins the unemployment numbers will be a feat - but knowing the Obama administration they have some trick up their sleeve already to give the perceived notion that unemployment and underemployment must be lower while excusing the fact that they have now extended unemployment benefits for a record 7 times. They need this final key in place to ensure re-election of as many democrats as possible.

The real question is "How long is Obama Administration going to spin numbers in either government reports or falsified corporate earnings back room deals to present a far rosier picture than actually exist" or "a not so rosy picture but much better than we expected picture".

Why can't anyone believe that America would be far better off if severe austerity measures were put in place and while perhaps painful at first, would improve the economy that much more quickly than this self-indulgence of spin at the ultimate expense of the every day American?

America Will Never Be the Same

The SEC and US Government should be ashamed of itself by letting Goldman Sachs off on 550 million fine over a least one known fraudulent transaction magnitude of which dwarfs this fine. This fine is the equivalent of a mere parking ticket for the company and represents a little less than 5% of Goldman's 2009 net income of 12.2 billion after payment of dividends to preferred shareholders or approximately a mere two weeks of net income.

By the SEC (thereby the US Government) using Goldman Sachs as an alleged scapegoat a few month ago and bringing charges against them when FINREG was in jeopardy, and then passing FINREG on Thursday, and announcing the same day two hours later that GS and SEC had reached a settlement speaks volume of corruption. Even before the announcement, clearly the corruption had already hit the trading floors as over 100,000 call options in GS traded prior to the announcement that some type of settlement between GS and SEC was coming.

There is not a single American (Goldman Sachs alum and current members of this company withstanding) who does not believe that what happened yesterday with GS represents a new low in fighting corrupt banks who have stolen billions from hardworking individuals with their clever schemes and their anticipatory hopes that most Americans are either too dumb to realize what just happened, don't care, feel hopeless to stop it, and if none of the three mentioned, will most likely have a short term memory and quickly forget about it.

This is a complete outrage. GS has committed the equivalent of the greatest bank robbery in the history of modern times, and gets off scot free.

They put together at least one known investment structure that was known to fail from the beginning, collected fees, bet against the own interest, collected more dollars, let the whole structure go belly up. Thereafter, they get bailed out by the government, AIG gives them additional money from its bail out money, GS uses all that money to trade with (interest free courtesy of the US government) and reports record earnings through out 2009 with its CEO Lloyd Blankfein proclaiming last year that Goldman Sachs does "God's Work". Meanwhile, tGS continues making more and more money off of the money that they made perpetuating fraudulent financial schemes, and then lending back to others at interest the very money that they stole from others, thereby making even more money and the vicious circle continues. Now GS wipes its hands clean and pays a minute fine for their financial crimes against all Americans. In furtherance, GS did not have to admit that they committed fraud.

I would not be surprised if the US Government and all Americans (except for GS) are now the laughing stock of the entire global community. This makes Bernie Maddoff look like a two bit criminal compared to what GS did and what they got away with.

America will never be the same country again because it sends the wrong message to all Americans and that is: If you play by the rules, you will get hurt financially, and if you do not play by the rules, then you not only get to hurt others, but you will get off scot free with the right amount of power and money.

Thursday, July 15, 2010 will represent one of the saddest days in American history - it is the day that will be forever remembered by Americans where they lost complete hope in their government to right the wrongs of others who brought America to the brink of financial collapse and let them get away with it and a consistent reminder of how the US stock markets are rigged against the every day man and woman.

The Two Most Despised Companies Cause a Reverse Rally In the Last 30 minutes

Overbought, overwrought, the S&P and Dow was heading back down expeditiously until BP announced that they have stopped the leak with their new top and a flashing news break came across that stated GS to settle with the SEC. On such news, Goldman, which low today was 137 rallied 4.4% to 145.22 and jumped additionally another 7 points to 153 plus after it was announced that Goldman Sachs would pay 550 million dollars or the equivalent of perhaps 3-4 weeks of trading revenue by the firm despite the billions of dollar. In another story, BP stated the leak has stopped and that drove BP shares up 7.6% to 38.92. With Producer Pricing Index first announced in the morning, the market dropped by about .5% almost instantly. Initial Jobless claims appeared to drop to its lowest since August 2008, however, not factored in was the seasonal factors and the reminder that more people are leaving the work force permanently. Volatility reigned once again as the Dow swung from a intraday low of 10241 to an intraday high of 10379 finishing barely negative down 7 points at 10,359. The S&P was up 1 point after swinging from an intraday low of 1080.53 to 1098.66. All of this while the 10 year Treasury note returned to a yield of 2.98%. Again, trading was anemic was 1.12 billion shares.

Fed Downgrade On The Economy Equal Flat Market?

The Fed today downgraded the economy today stating that they believe it will take five to six years or around 2015 to 2016 nearly at the end of President Obama’s second term (if re-elected) is complete. Interesting timing here. Despite the downgrade, and the initial move down in the market, in uncanny fashion, the market recovered to barely eek out a seven day UP streak for the Dow and Nasdaq.

The Dow closed up 4 points to 10367. The S&P was down less than a point at 1095. The Nasdaw gained a mere 7 points to 2249. The 10 year treasury note was up 20/32 to yield of 3.05% based on an auction of treasury 30 yr bonds that somehow brought stronger than predicted demand.

Intel should have led the technology rally today reporting earnings yesterday that was the best in their 42 yr history. Oddly, the follow through was not as great as any predicted. As expected, with people losing more jobs than ever, retail sales were down for the month of June. Volume remained anemic at 1.06 billion shares.

HERE IS THE INSIDE SCOOP FROM THE WALL STREET OUTSIDER:

Spoon: Consolidation of the market and collusion of keeping the market up during option expiration week.

Scoop: Expect a market decline coming next week of at least 400 points. The next two days expect a relatively flat market until market expiration.

Idea: Write Puts on your favorite stocks - gain a little premium

9 DAYS - 1000+ DROP, 7 DAYS - 800+ RISE

In the last sixteen or so days of trading, the DJX dropped 1,000 points-plus and then did an about face and moved back up on an 800 point rise.

This is not a game for the retail trader - they will lose out. You need a professional trader - someone who has the best interests of you at heart not that of the high frequency traders or institutional traders who play with your money up and down and make dollars every day while your account goes no where year after year .

With the Feds reporting at 2PM today expect a sell off to start - they will reiterate that growth will be slow - which for those who may not be able to read the fine print - this means that your standard of living is going to go down as credit gets more expensive and lending from banks becomes more difficult.

If you noticed the shift today on CNBC, you will see that in the last six days, the momentum of all bullish pundits coming on announcing that we have seen the bottom and all things are going up, and now today with a very slight pull back so far, the mood has changed from buoyant optimism to that of concerned optimism vacillating toward convinced pessimism.

Should we begin a descent downward, watch for very convinced pessimism to come out in full flare, very little buoyant optimism.

Remember though the market is cheap according to 1980 standards, they can always get cheaper. The value of stocks is also based on perception. If you assign little to no importance to the stock market, and thereby stocks, because you, the individual investor, in the end, never can benefit, the stock market will go down. As a reference, take a look at the housing bubble. At some point, someone said that housing is overvalued, way overvalued, and now mortgage rates are at a 50 year low.

I always wanted to see what it might be like to live in the 60's and now I am getting a chance.

A double dip, I am not sure, extreme volatility, beware - no doubt the truer course of this market.

European Banks' Upcoming Stress Tests and Its Real Purpose

Like our American Counterparts Stress Tests more than a year ago, this week begins the feared bank stress tests for the European banks. If the results are anything like the American banks’ stress test, then one can be assured that the results will be fixed to give the false impression that banks are far more stable than they actually are. The banks have lied to us from the beginning and there is no reason whatsoever for them to tell the retail investor the truth now.

We all know the results before the test has already begun. Every European bank will pass with flying colors and this will push money managers to invest or else potentially lose their job as the tests will continue to prop up of the economy continues. Such inflow of money could cause another move to the upside giving retail investors an opportunity to get out of the market at a higher price.

We all know that the banks are harboring terrible deficits, that housing is about ready to double dip, and the consumer is strained.

The purpose of the banks stress test is not for the benefit of giving the consumer the suspended belief that the economy is sound, but to push the market up, so that the bank’s proprietary trading desks can sell their positions at a better gain before the market starts to descend again so that they can increase their cash reserves while the investor loses more of their own. This is the reason for the European Bank Stress Test. Beware!

Happy 234th Birthday to USA

GASLAND Trailer 2010

We recently saw the documentary GASLAND, and were shocked. Run and see it now. It's not just the Gulf. In the meantime, watch the trailer...

Birds of the Gulf

I can't get these images out of my head.

Comments From Barron's Letter to the Editor

My letter to the editor received a lot of feedback from friends and colleagues. To read the letter to the editor on Barron's website, click here.

• They stand to loose a lot if they don't pump the stock. It is a shame we have to be so polite and not call a spade a spade.
• Blake, I couldn't agree with you more. Whether it's BP, or airline stocks after a crash, or mining stocks after a cave-in, it's simply despicable to take advantage of the suffering of others to make a buck. Bravo.
• I think it is a great commentary. I think your point is a valid one, and of course the other guys are going to tout the stick...THEY OWN IT!!!!
• Your viewpoint is right on target. There certainly appears to be some self-dealing and BP stock despite their protestations to the contrary. Good for you for pointing this out which they clearly took issue with.
• Congrats on the article. Interesting article and perspective. Raises question of whether one should focus on "socially responsible" investing or investing for profit.
  
• A letter that compels a response from the authors of the underlying piece is a success! Well done.
• I agree. F BP. They deserve to go bankrupt, and candidly, I hope they do.

Why Buying this Pariah is a Bad Thing

Buying a Pariah

To the Editor:

The June 21 Other Voices essay by Whitney Tilson and Glenn Tongue ("Buying Into a Pariah") looks like a horrific example of self-interest. Their reasons to buy BP are flawed, outside of the socially reprehensible idea of buying it at all.

They say BP stock is extraordinarily cheap. So what? The stock is cheap because the company has created one of the largest environmental disasters in modern history. There is no reason why BP can't get even cheaper, or even go bankrupt.

The authors seem to believe that, like some of our banks, BP is simply too big to fail, and that American taxpayers should be grateful that they can pay claims on this unprecedented disaster. BP isn't too big to fail. There are plenty of other oil companies, as well as alternative energy resources.

The authors' T2 Partners fund owns quite a lot of shares in BP and now needs to make up ground to get back to even. Tilson talked on TV about buying BP when the price was about 35. The authors should have told readers the amount of shares and at what prices they invested in BP. They also should acknowledge that this disaster is unlike any of the ones before.

K. Blake Golding
New York

Whitney Tilson and Glenn Tongue reply: We did not write, nor do we believe, that BP is too big to fail, in the sense that if its losses rise, it will be bailed out.

We believe the company is profitable enough to earn its way out of trouble in all but the very worst-case scenarios. We first purchased BP in the mid-30s and have continued to add to our position as it has fallen.