The White House "Jobs-Saved" Deception

Market price actions can be easily manipulated, however, the reality remains.

This is what I was referring to that "Spending more debt" is not creating Jobs, it is only delaying a deterioration of real wealth disaster.
http://www.cnbc.com/id/31063979/

After nearly twenty years in Washington I thought I've seen every trick ever conceived, but the White House claims of "jobs saved" attributed to the stimulus bill is unrivaled. What causes the jaw to drop is not just the breathtaking deception of the claim, but the gullibility of the Washington press corps to continue reporting it. ....

There is only one necessary data point to make the "jobs-saved" claim: an accurate measure of expected employment levels in the future. That baseline data is critical to measure what the employment level would be in the absence of the stimulus. Unfortunately for the White House, they cannot possibly know that measurement within any degree of confidence -- and they know it. >>>

Bear Market Rallies

Bear Market Rallies during 1938 - 1941: 20% - 55%



Bear Market Rallies during 1930 - 1932: 15% - 40%



Bear Market Rallies during 1967 - 1981: 30% - 75%



Bear Market Rallies during 2001 - 2002: 15% - 30%



http://trend-signals.blogspot.com/2009/03/caveat-even-though-markets-rallied.html

DOW Long Term Analysis

DOW and SPX very long term analysis as of March 6, 2009:

Best or Worst case scenario: trading in long term consolidation period or continuing death spiral?

The recent market actions are showing extreme bearish actions selling off 58% since the Oct 2007 stop resembling the 1929 and 1973 bear market scenarios. I commented on the comparative market analysis of 1929, 1987, 1997, and 2007 on my comments during 2007; and now we are experiencing the market crash scenario since the Sept/Oct 2008 crash like sell-offs. Many anticipated the market sell off since 2007 going into 2008 sell-off. The current bear market action is well anticipated by many market participants as the market sentiment can be seen in some indicators showing positive divergences comparing to the 2000-2002 sell-off -- money flow in long term as example is showing a positive divergence. The long term positive divergences can be seen on the DOW and SPX long term charts shown below. The customized Trend Strength and direction indictor which I developed is showing over sold condition as it is shown on the DOW monthly. The indicator set on major markets are showing the similar readings. Tested on the various time frame and major markets, we can see it on the DOW monthly chart, after the strong trend during the last 20 years since 1980s for 20 years, the indicators are in oversold level after the major sell-off during 1931, 1943, 1973, 2002, and 2009. This is confirming that markets are clearly oversold and show positive divergence.

The question remains whether we have seen a major bottom for the markets. As commented on my previous cycle analysis, we are now entered into major market correction period since the Oct 2007 as we can see that we are going through major financial and economic crisis such as bursting of debt bubbles bankrupting major banks such as Bear Stern and housing market crash. As noted during the last few years, the crisis which we are facing is expected as we have seen the ARM housing market bubbles and which we are still assessing whether we are seeing housing market stabilization. While it is very difficult to assess whether we have a major market bottom based on the fundamental analysis, we can better rely on technical analysis as it is more objective and mathematics. Based on my market analysis over many years, this is the case that markets do find market tops and bottoms regardless market participants' extreme sentiment. Therefore, in my opinion based on the analytical point of view, I am still holding the view that financial markets lead economy and think that this is the case for this bear market.

Given the current economic and financial condition described above, in my opinion, the best case scenario is a long term consolidation period in LT megaphone RST formation as shown on the very long term charts: DOW 1920-2009 and SPX 1871-2009 as shown below. Given the current market volatility, the long term chart is showing a distorted view as it does not show the market crash of 58% destroying many long term investors' wealth since 1996. Before commenting on the fractal scenario, given 58% correction, the long term chart should visually show the price below the mid level on the chart, but that is not the case in reality, we need to keep that in mind.

As shown on the DOW Long Term 1920-2009 chart, the best case scenario given in the current market and economic condition is that markets consolidate in megaphone RST formations in a long term. DOW has rallied almost 30 years after finding a major bottom during 1931 after the 1929 crash. It consolidated for almost 20 years during the 1970s. Then again, the market rallied during the 1980-2000. We are now in the bear market since the March 2000 top showing a long term RST formation. That is the long term 40 year cycle within the long term 80 year cycle since the 1920s. Considering the market volatility, it is difficult to predict the market direction with 100% accuracy; however, we are likely seeing a completion of the 5th wave correction from the October 2007 top. Based on the long term and short term price action analysis within the context of the fundamental conditions, I see the best case scenario is that markets are consolidating in a long term in a fractal formation of the 1930-1980 long term price action. Hopefully, this is the case, otherwise, we are heading to in death spiral dire economic condition wiping out many small investors' life time savings.

Market Analysis and Forecasts as of 2/24/2009

Markets formed H&S formations reversing from yesterday low and bounced up from the yesterday closing of SPX 743.33 with today's bounce to SPX 773.14 as signaled yesterday.

Further demolishing financial markets will not add any benefit than it has already done as many are already cleansed out of the excess and lessened inefficiencies as we can see the high unemployment rate. From a long-term view, the current unemployment rate is comparative to the rate during deep recession periods such as the adjusted unemployment rates of 9% and 10.8% in May 1975 and in late Nov 1982; however, the destruction of the financial sector is unprecedented.

The Bernanke comment on 2010 economic cycle is in alignment of long term economic cycle bottom as noted during 2006 market comments regarding 8/8.6 cycles.

Fractal formations: Markets are showing multiple fractal H&S formations in long term (since 2006) and short term (since Nov 2008)

Price and breadth positive divergences: not only market price actions show positive divergences (+D), breadth is showing +D. The $NYMO breadth chart is one example. Similar as market breadth showing +D, underlying market sentiment is showing slightly improved sentiment as noted on the COT which it is, in my opinion, a sign of commercial and large hedge funds are fading markets. This does not bode well as our economy is in verge of falling into deeper recession or depression. While extreme bearish formation scenario projects to SPX 500-600, the Technical analysis based on various methods are varied among which the EW wave formations can vary giving us different price projections.

SPX 720 +/- which markets reversed is the pivotal and critical support at which markets bounced from the support closing at 773.14.

For a retest of the bottom scenario at the supports, DOW is showing a fractal formation of several previous lower-low double bottom formations with slightly different formations as those can be seen very long term charts.

VST (very short term: intraday-a few days): Pivotal support at SPX 720 +/- with a confirmation during this week to SPX 800
ST (Short term: a few days – 3 mos) : Pivotal
IT (intermediate term: 3 mos – 1 yr) : Trading range
LT (long term: 1 yr – 3 yrs) : Long term trading range
VLT (very long term: 3 yrs – decades) : Bullish

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Recessions: 1973-1974 40% +/-, 2000-2002 40% +/-, 2007-2009 46%+/-
We are now passed the 1973-1974 40% recession sell-off as markets are sold off 50% from the Oct 2007 top into 17 months recession. Each recession period has different reasons and characteristics, while it is interesting to compare the major recession periods, the fractal formation analysis is not trading signals; therefore, it should be treated as such, not as trading signals.

Per NEBR, The major recession periods are:
9/2/1929-7/8/1932 (34 months)
1/11/1973-10/3/1974 (31 months)
3/24/2000-10/9/2002 (30.5 months)
10/9/2007- (17 months)

1Best Market Analysis and forecasts

Markets are finding no support breaking below supports SPX 750 +/- and DOW 7200 +/-. As commented earlier with the long term analysis projections and cycles, SPX 600 breakout retest will be a LT support during this bear market into 2012.

SPX 720 +/- is a ST support even though it appears to fail to retest the Nov2008 low of 752.44 as it traded to high 777.85 and low 742.37, closing at 743.33.

Intraday 60min showing +D for a couple of days.

Markets could follow 1973-1974 recession period; however, no two recession is alike.

Recessions: 1973-1974 40% +/-, 2000-2002 40% +/-, 2007-2009 46%+/-

We are now passed the 1973-1974 40% recession sell-off as markets are now sold off 50%. The current bear market is now 16.5 month old since Oct 2007.

DOW 6000 is a longer term support with the worst case 4000 support with a relative SPX support 400.

We can better remember the last three recessions, but the 1929 case is the worst of all -- which we could see it as the Bush admin effect.

Most of informed, average investors are already out of the markets since 2007. But of course, some are trapped, but the climactic sell-off was during Oct-Nov 2008. Market market action now is low-volume discounting manipulation.


SPX long term chart ~ traded to the target of 720 +/- retest of the Oct 2002 low and Mar 1997 -- 52% sell-off from Oct 2007.

Universities and colleges in higher education do not teach the truth

Universities and colleges in higher education do not teach the truth -- and also mass media does not state the reality.

Volcker is the father of American wealth destruction and Greenspan is the son of American wealth destruction for a few using high price volatility. Globalism is a fractal of what has happened to Americans in a grand scale.

In Finance, Economics, and Accounting classes -- undergraduate-graduate-doctorate programs -- do not teach the reality and the truth about our history. In higher education, the classes are taught to mislead you. In corporate world, the top executives mislead subordinates, and eventually, the deception goes up to the ladder. We are now seeing the ladder went up to very top of the pyramid -- the super wealthy, the Fed, and the Gov.

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Last stages of 30yr & 40yr economic cycle wealth destruction: The Volcker disaster which was the source of US wealth destruction

Since early 1980s, American savings was decreasing, US debt was increasing, US trade deficit was increasing, and market bubbles were forming which eventually we are experiencing massive greed wealth to a few hands using volatility.

Economy goes through cycles similar as we have four seasons, what matters is that how well the economic and financial cycles are managed. Evidently, we are witnessing Greed manipulation for a few using boom and bust cycles instead of promoting wealth for many.

When US economy didn't grow and when Americans decided to ask more during 1970s, Volcker seeded a start of bubbles which Greenspan exploded the bubble after the 1987 crash draining American wealth through a series of bubbles -- tech bubble, commodity bubble, derivative bubble, and real estate bubble, etc., now, Americans and the United States are squeezed with taxes.

For the Fed and the Gov, it does not matter whether markets or economy go up or go down as long as they create volatility to profit from. The volatility is the tool and the enemy of massive sheepsters who are fallen into the legally swindling massive wealth from mass.

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This is an example of showing many professed Christians sold to money -- those who do not deal with real issues. The core importance of what really matters. What he described is just riding a price hype bandwagon

Many financial newsletter writers are omitting reality to hype price creating higher volatility as much as possible - Schiff and Roger, as examples. In reality, deception does not have to be stating lies, but misleading by omitting relevant facts is also deception.

As noted on the earlier post, the Price Volatility is what destroyed American Wealth -- and, the big money power controls price volatility.

One of the reasons that I made the points on the last few posts is that the money greed is squeezing mass to get more money out of mass; and most do follow deception for money.

Long Term Cycle Analysis

DOW has retraced 50% of 1920 breakout which is 80yr rally since 1920 as shown on the DOW long term cycle analysis chart. I commented on the very long term market analysis in 2006 with comments on the the long term patterns of rally and consolidation period of alternating 16yr and 20yr cycles. Considering our economic condition, the better scenario would be a long term consolidation period during the 16-20 year period – from 2000 to 2018 +/- as long term cycles are not precise. Even though the DOW long term chart looks quite steep rise, DOW already retraced 50% of 1982 breakout, meaning that those who invested since 1982 would have lost 50% of their investment value. Of course, some are cashed out from financial markets. Nevertheless, since the Oct 2007, DOW has lost 50% of its value – 100yr + financial wealth. What we can hope for is that markets will consolidate in long term instead of sharp sell-off throwing our economy into severe depression. I am sure that most of us know someone who is either in economic trouble or will be in economic trouble if our economy does not rebound soon -- hopefully, we will see market stability.





A retracement to SPX 650 +/- is a fractal model of the Japanese 1990-2003.

Since the October 2007 top and with the recent financial sector crisis, we now have, many are acknowledging the resemblance between U.S. economic crises with the Japanese’s during 1990-2003. I posted my market cycle analysis during the Jun-Jul 2006 bottom calls showing the 4yr, 8yr, 8.6yr, 16yr, 20yr, 32yr, and 56yr VLT cycle analysis with long term chart analysis, for example, which I have previously shown the VLT 50yr SPX cycles and the comparative analysis chart of the SPX vs NIKK and SEC financial markets.

hiroko Tabuchi analysis on the US economic compared to the Japanese 1990s, “In Japan’s Stagnant Decade, Cautionary Tales for America” http://www.cnbc.com/id/29179715 is well served to realize what we, Americans, need to regenerate ourselves – which I commented on the subject since 2006 that we need to go through what Japanese went through to make ourselves competitive technologically and educationally performing superior to many around the world. Those who read my comments for several years would recognize my points even though I posted my thought too emotionally instead of presenting analytical points of my view.

We may have gone through, as noted many previous posts that the entire financial boom and bust is a well organized and predetermined long term economic boom and bust cycles by the big money which is controlled the world finance. As I promised, I will be less critical and judgmental, but I will express potential underlying force which is driving the world financial markets. Of course, the world economics will experience economic booms and busts, i.e. economic cycles, as planned including the magnitude or sizes of severity for this economic down which we are facing now. If we follow the Japanese model, the worst case is that US markets will retrace the decade of 1990s wealth. SPX has retraced to 1997 breakout support, SPX 741 during the Nov 2008 low. I commented on the 2010 low which the projected low can be seen on my VLT SPX monthly chart dated 12/21/2007 which I posted it for several times during 2008. We now see many traders and market analysts are mostly bearish projecting to the worst case scenario which is following the Japanese 1990s model wiping out 78% of the equity value of 1980s rallies. The comparative model of the US markets during 1990s and the Japanese NIKK during 1980s is so far showing a fractal formation suggesting that the US financial markets could also experience the similar severity of the NIKK during 1990-2003 retracing 78%. The worst case scenario projects SPX to retrace to the 1990s breakout near to SPX 370 instead of consolidating in a long term correction formation similar to the NIKK formation during 1993-2000 in a long term trading range. This is the scenario which I recently commented that the US markets are undergoing the “A” corrective wave of the Supercycle (VVLT) “V” in March 2000 instead of “C” of the Supercycle “V”.

If US markets are continuing to fall breaking the Nov 2008 low, regardless the Stimulus economic program, American sentiment will be worsen, so our economy will be continuing to regress to depression. As noted above, if the financial power house is planning to take down the US economy to depression, many Americans have no choice, but to go through the severe depression. Many including small business are waiting for our economy to improve so that they can avoid financial disaster as it is vicious cycle which is impacting many in chain reaction in a worsening spiral economic and financial disaster for many while a few % of wealthy Americans and many who are positioned themselves against the current economic downturn to become more wealthy as a byproduct from worsening economy – giving more power to the wealth which is the last stage of benefiting from the economic ruin.

Nevertheless, if our economy is maneuvered to go through less severe scenario which described above, we will see a VLT consolidation period as markets are consolidating in a range with the stimulus package until we find better ways to reignite our economy. This is the long term consolidation model which I noted recently even though this scenario is less profitable for the big money powers who are benefiting from our economic downturn. In this case, our economy will see a bounce with the stimulus package – will be able to see on SPX long term consolidation in a range below SPX 1100 +/- instead of a sharp correction to SPX 450 +/- which is the 1995 breakout, and then SPX 350 +/- which is the 1990 breakout.

With the recent pessimistic market condition, anything is possible as we could see a chain reaction deepening the current economic crisis the severe depression; however, I hope that we will see financial market bounce to help many who are going through financial catastrophe and if we see further deterioration of markets, market sentiment will be worsen and so does the Americans’ and many around the world.

8/8.6 year economic cycle bottom in 2010

8/8.6 year economic cycle bottom in 2010 ~ My opinion on contrarianinvestor analytical work on deleveraging: markets have topped, as anticipated, in Oct 2007, too late for early bears anticipation since 2004, and markets are pessimistic. A practical answer to the author's question whether deleveraging is just started is "No", but we are in the tail of the debt crisis. After shock of the debt deleveraging will continue, but the worst is over. During 2005-2008, I commented, with comparative charts, on the US Economy could follow the Japanese 1990-2000 decade pattern, and I still think that our economy will be in LT consolidation or recession before we can rebound with new bull market or economy. Successful economic rebound is much depending on successful leadership by the Obama administration, I think that the 8/8.6 year economic cycle, which I commented during 2005-2007, could influence our economy providing some stability for long term consolidation period instead of severe economic crisis in abyss. The 8/8.6 year economic cycles bottoming in 2010 will likely provide some cushion for the current economic crisis.

We've Only Just Begun? http://www.contraryinvestor.com/moprinter.htm We’ve Only Just Begun?…Yeah, that’s pretty much how we see it at this point. We’re referring to the process that is macro or systemic deleveraging. It was way back in April of 2007 that we penned a discussion entitled, “It’s Delightful, It’s Delovely, It’s Deleverage”. At that time very few folks were talking about deleveraging as a concept and economic force to come. Fast forward to the present and it’s now consensus thinking. Although the theme has been very much popularized in the mainstream press, we see very little attention to specific detail. So, in that spirit, this discussion is all about a check in on the concept and detail as to where we now stand. Nothing like the facts to illuminate the true picture, no? To the point, deleveraging is not an event, but a process. As we've explained in the past, the multi-decade credit cycle phenomenon was key to economic and financial market outcomes in the US, as well as globally for close to three decades. The whole concept of deleveraging dramatically interrupts, or really derails that cycle. Coincidentally, the Fed/Treasury/Administration are in do or die reflation mode at present. Reflation really meaning an attempt to restart what is a critically wounded credit cycle. Mortally wounded? We’re going to find out. In this light, monitoring the process that is deleveraging becomes very meaningful in terms of trying to interpret just what the financial markets are pricing in at any point in time. We believe it's also helpful in terms of trying to monitor the economic slowdown magnitude and duration issues so key to near term investment outcomes. Looking at the hard data, it's our interpretation that deleveraging has barely begun when looking at the economy and financial market broadly. Below are a number of highlight data points. Through the third quarter of last year, US consumers have not yet gone into a net debt contraction mode, but have slowed their borrowing dramatically YTD. It's a darn good bet net debt contraction is here now and will show up in quarterly numbers very shortly as official 4Q numbers are published. Below is the near half-century history of the quarter over quarter nominal dollar change in household debt obligations. In this and all like charts that follow we are not using seasonally adjusted, so we're pretty much looking at the real thing. For perspective we've included the 12-month rate of change which smoothes an incredible amount of monthly volatility. To suggest what has transpired at the household level is dramatic both on the upside and downside is an understatement. From taking on close to $350 billion quarterly in new leverage some years back, household debt grew by only $14 billion in the last quarter (3Q 2008) for which info is available. That’s absolutely a rounding error set against a $14 trillion+ economy. As we stated in the chart, the last time households actually paid down debt on a quarterly basis was 1975. We’re convinced net debt reduction at the household level lies ahead. Although we will not drag you through another chart, both revolving and non-revolving consumer credit balances have contracted with 4Q data available as of now. Bottom line being, for households the deleveraging process has just begun despite all the sound and fury over deleveraging as a concept last year. As with the macro economy, magnitude and duration of the deleveraging to come at the household level will be a key data point for 2009. The Fed/Treasury/Administration (the F/T/A) may be begging the banks who’ve received TARP money to lend, but households are telling us by the trend in these numbers that they are not necessarily willing borrowers, regardless of cost and availability of credit. As we see it, the financial markets have priced in the F/T/A response to the credit market freeze/economic slowing, but as of now the household response to borrowing inducement remains a question mark. Maybe the key question mark of the moment. If households begin a process of net debt contraction (which we believe they will), then financial markets trying to anticipate a turn in the US economy by the second half of this year will be jumping the gun in a big way. Moreover, existing 2H 2009 bottom up analyst earnings estimates are a good bet to be far too high at the moment. For now, we believe the markets have not priced in household indifference to monetary stimulus. The chart below tangentially documents the rhythm of household balance sheet cycle reconciliation over the prior half century. As is clear, never in the half-century plus period that is covered has the year over year change in household debt growth been at the record low level we see today. Does this trend dip into negative territory before the current cycle is over? We think so, which will be unprecedented, but we’ll just have to see what happens. From our perspective, equities have not yet fully priced in the ramifications of actual household debt contraction. Remember, the reality of prior half year auto sales, retail sales and residential property activity all occurred during a period characterized by slowing in household debt assumption, not net debt contraction. And in this environment was already see the year over year change in headline retail sales as the lowest level in the history of the data (dating back to the late 1940’s). As we have stated in the past, actual deleveraging has been occurring in the financial sector during 2008. THE poster child example for this phenomenon is the asset backed securities markets. The following chart is self-explanatory. Since the dawn of the asset backed markets in the mid-1980’s, there had never been a quarter over quarter decline in asset backed securities market leverage until 4Q of 2007. We already know that it’s the non-bank credit creation arena (the shadow banking system necessarily inclusive of Wall Street) that has been ground zero for broader credit cycle reconciliation in the current period. Have the markets already priced in contraction/deleveraging in the non-bank financial sector? To a large extent, you bet. Yet confidence in the sector will never be restored until investors can truly assess balance sheet risk. Given the revelations of companies like Citi, State Street and BofA lately, it’s clearly what we don’t know that’s the issue. And we’re miles away from confidence restoration. Miles. In terms of specifics, and we will not drag you through a myriad of long term charts as within the financial sector actual deleveraging (net debt contraction) is evident as we look at the REITs, funding corporations and the asset backed markets, but outside of that continued leverage acceleration is still evident looking at the banks, insurance companies, GSEs, the broker/dealer community and credit unions. As such, this data and the trends underpinning recent experience suggests there is still a good deal of deleveraging potential within the broad US financial sector itself. Although the financial sector stocks have been resoundingly hit over the past year and one half, true recovery seems a long way off given that actual deleveraging in the sector has been meaningful, but isolated as opposed to broad based. Further potential deleveraging in the US financial sector remains a high probability outcome well into 2009. The importance of this will be its ramifications for the broader economy as a whole. The non-financial corporate sector, much like its household sector counterpart, has only experienced a slowing in leverage assumption as opposed to outright contraction through 3Q of last year. As you can see in the chart, in the prior two recessions the non-financial corporate sector actually engaged in net debt reduction/deleveraging. We think it’s a very safe bet that occurs again in the current cycle. The dramatic drop in debt assumption is occurring now. The markets know this and we believe have priced this in. What remains to be discounted is once again magnitude and duration of net debt contraction that we believe lies dead ahead. Collectively the data points we have briefly reviewed above are strongly suggesting that a broad based deleveraging process has not yet gained maximum wind speed. In fact in strict definitional terms the real deleveraging process has not even yet begun outside of the asset backed securities markets as a component of the financial sector. As of 3Q 2008, quarter over quarter total US credit market debt grew by almost $730 billion. YTD that number is just shy of $2 trillion in growth. Of these numbers, federal debt grew $525 billion in 3Q of last year (accounting for 72% of total US credit market growth) and $675 billion YTD (accounting for a third of total credit market growth) at that time. We will not belabor the point as we discussed it many a time last year, but we all know Federal debt is set to mushroom ahead. A little preview of what may be to come in comparison to past experience lies below. Talk about the antithesis of deleveraging. In summation, debt growth throughout the broad US economy, exclusive of the asset backed securities markets (that is in clear deleveraging mode) and the Federal government (that is in clear leverage acceleration mode), has only slowed, but not gone into net contraction. As per the nearer term directional trends seen in the charts above, it appears households and the non-financial corporate sector are either in or will enter the process of net leverage contraction (deleveraging) very soon. Consumption, production and price deflation trends in a number of asset classes (primarily residential real estate and equities) has occurred up to this point against a backdrop of only slowing household and corporate debt growth. Just what will happen if/when household and non-financial corporate leverage begins to actually contract in nominal terms? THAT’s the key question for us as investors over the quarters directly ahead. The markets have priced in sector implosion (financial sector) and the potential for a recession of a mid-1970’s/early 1980’s magnitude. But, the broad deleveraging process has really just begun. We have a very hard time seeing this process truncated in the quarters ahead. The potential clearly exists for a multi-year reconciliation process. Have the markets already priced in a multi-year deleveraging process, with specific emphasis and implications as per consumers? That we do not believe has happened, except maybe in the Treasury market. You already know we will be monitoring and discussing these very issues as we move forward. Deleveraging is not done. As you can see, it has barely begun. Moving Toward A New Normal?…We all know by now that Microsoft missed its 4Q 2008 earnings a few weeks back. Moreover, for the first time in their history that are beginning to reconcile labor costs, as are so many firms domestically. But probably THE most important aspect of the Microsoft announcement we believe simply did not receive enough headline attention, and it had absolutely nothing to do with earnings or layoffs. Getting to the point, we want to quickly cover a very brief comment made by Microsoft big cheese Steve Ballmer with the earnings report. Without sounding melodramatic, we have to hand it to Ballmer in a big way. As we see it, his comments were absolutely spot on regarding what we believe is one of the key macro themes of the moment. We’re convinced by these simple comments that he gets it in a very big way. Sorry if you have already seen these comments, they are just so dead on we had to reprint them. “We’re certainly in the midst of a once-in-a-lifetime set of economic conditions. The perspective I would bring is not one of recession. Rather, the economy is resetting to a lower level of business and consumer spending based largely on the reduced leverage in the economy.” We never thought we’d say it, but BRAVO Mr. Ballmer. You hit it right on the head thematically, baby. We're moving to a "new normal" for the economy and corporate profits. That’s EXACTLY what is occurring, as far as we are concerned, and this is the exact set of circumstances the equity markets are in the process of adjusting to and discounting right now. Late last year we ran a series of charts comparing the longer cycle of total credit market debt growth in the US relative to the like period directional movement in after-tax US corporate profits. A snippet is seen below. Apparently like Ballmer, we are convinced the credit cycle clearly enhanced corporate profits and lifted asset values, both physical and financial. Our question at the time that still stands today is, “what happens to profits, and by extension US GDP, in a credit reconciliation process of perhaps generational magnitude?” Wouldn’t ya know it, Ballmer seems to be asking the same question. We have the distinct feeling this theme will be one of the most important to investment decision making and economic outcomes in the year ahead, and will gain in popularity as it works its way into consensus thinking. Hopefully expressed in simple terms, the prior period credit cycle was a massive anomaly. That anomaly raised US nominal GDP, corporate profits and asset values to levels they never would have experienced in the absence of maniacal credit creation. Now that the meaningful deleveraging process we have been ranting and raving about is evidenced all around us and is really still in its infancy, we believe the US economy, corporate profits and asset values are in the process of shifting downward to a “new normal”. THIS is what the current equity bear market is all about. Corporations are adjusting to this new normal by cutting costs as their revenues shift downward. Households are adjusting to this by massively lowering their intake of leverage, and we believe soon to be paying it down. Even Ballmer recognizes the anomaly is over and is acting appropriately as far as Microsoft is concerned. When will this most important of messages and conceptual thinking make it to Washington? Answer: Don’t hold your breath, okay? After all, everything we've seen from the powers that be so far suggests to us they have absolutely no intention of adjusting to a new normal, but rather are doing everything in their power to recreate the old anomaly.

Long Term "K" Winter Cycle

Some must have had long term vision since 1969 satanic bible by Lavey and after the woodstock.

It is sad that Americans still do not realize what is going on. Americans are stripped away the wealth since 1970s to this date with a mountain of national debt.

http://www.brillig.com/debt_clock/

Instead of putting their trust in GOD, Almighty, they are trusting abomination nobama.

May GOD have Mercy and Grace

SPX long term excess of tech, housing, and derivative bubbles since 1980s.

The Fed day 08Oct29

The Fed Statement
http://www.federalreserve.gov/newsevents/press/monetary/20081029a.htm
http://trend-signals.blogspot.com/2008/10/spx-long-term-excess-of-tech-housing.html
We had decades of big bubbles which we are now working off the excess. Due to the globalism, American standard of living was dwindling for decades ever since the American saving was in downtrend, 1970s. Even though we are seeing financial market melt down in 2008, US wealth was in down trend for decades when we consider personal savings level, net asset value and US national debt.

We are not living in the same economic condition as in 1970s when American saving was positive and when US trade deficit was low. Therefore, a comparison between 1970s and 2008 is illogical as surrounding circumstance is quite different.

Our economic condition is much like the Japanese in 1990, and since then, they have regenerated themselves financially and spiritually, i.e. Japanese spirit as a nation. We are not ready yet. American spirit is NOT regenerated, NOT EVEN CLOSE, far from it.

http://tinyurl.com/6pwkll

Market Signals 080617

~~ 60m ~~ as noted, intraday is pulling back. The price momentum is weakening and as noted the last two day bounce from the 6/12/08 low was on very low volume. This is a good sign as we don't want to see continuing bubbles as bigger bubbles will be resulting in bigger disaster. 60m macd is about to turn negative as well as other momentum oscillators.

~~~ $BKX ~~~ close at 65.10 after traded to 64.73 nearing to 63 +/- target. (ref 8609, 8731)

~~ LT Market analysis ~~

Weekly and Monthly price action momentum is decreasing. Note how price momentum on monthly chart shown with StochRSI set 100 is showing negative divergence on Oct 2007 top comparing to Mar 2000 top. I commented on the fractal formation analysis on my previous post. Also noted on the recent economic bounce since Oct 2002 is based on the ARM bubble after the decade bubble in 1990s. We didn't have real economic strength and growth since Oct 2002 bottom, but rather it was artificially stimulatd economic growth to avoid recession due to the big tech bubble and 911 disaster.

Previously, I commented on 8 (8.6) year cycles with charts. We now have receding 2nd 8 yr cycle ~ 16yr cycle.

Considering the recent hyperbole energy and commodity price actions after ARM R.E. disaster, we will be heading to more difficult economy since many americans are in financial trouble.

The noted above internal price action is reflecting LT negative divergence on the Oct 2007 top compared to Mar 2000 confirming the real economic and fundamental inernal weak strength. Monthly internal strength was weakening prior Oct 2007 top showing negative divergence, and now we are seeing price actions showing negative trend.

The boom and bust cycles which we had during the last two decades wiped out many americans and current economic condition is not favorable for real growth and will take longer than several month.

Other Comments on LT view (ref 9068) also previous comments

~~ Caveat on big caps ~~

I am working on hot links, but it is taking many hours. It is work-in-progess.


Markets are not what it used to be just a few years ago. Caveat on big caps, as we now have trillions of international funds are pushing around big caps and commodities for quick profit. It is apparent that the tillions are moving markets with colluded information; so, unexpectedly, markets can move strong with sudden reversal. Markets are expensive with weakening economy.


~~~ DCB market in low volume ~~~