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One Last Rally to Set the Hook?

By Rick Ackerman Posted on October 5, 2012, 12:01 am EDT Last Updated October 5, 2012, 6:55 pm EDT

Apple shares have looked like hell lately. Given the stock’s uber-bellwether status, can the broad averages be far behind? Probably not — and that’s notwithstanding the very bullish projection we put out a while ago for the Dow Industrials.  It called for a 1400-point rally to exactly 14969, and although we no longer believe the Dow can get there by election day, the target remains theoretically viable nonetheless. As a practical matter, though, we have set all of our chart-based tripwires on “hair-trigger” lest we miss the onslaught of a 2500-point plunge.  That’s how much we think the market will fall, at a minimum, when the cliff dive so many of us have been expecting for so long finally comes.

The technical logic behind our bullish Dow forecast is that the blue chip average exceeded a “midpoint Hidden Pivot resistance” at 13502 on September 13.  Moreover, it did so with considerable force and then appeared to consolidate above the pivot for nearly a week. Taken together, these signs were unmistakably bullish, and, going by-the-book, the 14969 rally target will

stand until such time as the Dow breaches a key low at 12035 from a year ago. Even so, we always keep an open mind and an alert eye, since bullish technical indicators, even long-term ones, can sometimes change overnight. For the moment, however, you can infer that we are reluctant bulls: extremely bearish in our outlook for the U.S. and global economies, but compelled by our mechanical indicators to call things exactly as we see them.

One Other Factor

Besides the stratospheric Dow target, there is another factor that could conceivably buttress the bullish argument for a last-gasp rally. To wit, the Dow is within 600 points of record highs (see chart above). If you accept the premise that Mr Market is out to cripple, maim, defenestrate  and destroy as many investors as possible, a run-up to just above the old high, 14198, would seem well nigh irresistible to Him.  Think of the hubris it would generate…the inescapable hook it would set.

But there’s still Apple — in dollar terms the most valuable company in the world — to reckon with.  The stock has looked awful lately, perhaps because investors sense that it could be a while before the company tops the bullish crescendo leading up to iPhone 5’s release. The phone itself has reportedly been a disappointment with buyers, even if it’s not possible for an item that sells so many millions of units to be judged a flop. But what will Apple do next?  That question should be on the minds of investors who have held the stock through thick and thick with the idea that things will only get better.  Perhaps not, at least for a while.

Also, we mentioned here earlier that it will be far more difficult for Apple to negotiate cut-throat deals with TV sports, TV entertainment, TV films and TV news than it was for Steve Jobs to make the recording industry his bitch.  Whatever happens, we no longer expect Apple to provide robust leadership for the broad averages in the months ahead. If the Dow is about to head-fake its way to new all-time highs nonetheless, it will be dragging Apple higher, not the other way around. Can bulls boost the blue chip average by 600 points with a 2000-pound gorilla clinging to their ankle? We’ll remain open minded to the possibility even as we continue to straddle the forecast with one leg out the fire escape.

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  • Jill October 8, 2012, 6:04 am

    John–

    True– although I have a feeling we are paying just a wee bit more to the TBTF banks, the military industrial complex, the big pharmaceutical companies, healthcare companies, huge oil companies that get big government subsidies etc. than to the folks on Disability. However, I do agree that everyone who is capable of supporting themselves should get off the dole. It is entirely ridiculous.

  • Jill October 7, 2012, 10:21 pm

    The blog & book I cited above on what could go right economically relate directly to oil & some other issues that people talk about here, if anyone is interested.

    I think that politicians do know the answer, but the question they are asking (How can I keep my job & keep myself & my friends feeding at the public trough?) is a different question than the one ordinary citizens are asking. Until we ordinary citizens fix things so that Congress people are compelled to ask the same questions we are asking, we will keep going through this.

    Some people think the answer is to vote out all incumbents. Then they vote for a non-incumbent whose campaign is financed by the same Special Interest groups that the incumbent was financed by. Not a workable solution there.

    • John Jay October 8, 2012, 5:46 am

      Jill,
      It is not just the corporations at the trough.
      I know of four people on SSDI who were flat out druggies. Two of them are dead now. The other two get every manner of government assistance since they are too “disabled” to work. The freeloading is pervasive, entrenched, and as hard to control as Burmese Pythons in the Everglades. Just like the Burmese python, the freeloaders have no natural predator to control their population growth.
      They thrive in our government environment of money for nothing, from the lowest brain fogged drug addict to MIC/GS/JPM crowd.
      No natural predators.
      An environment that perfectly suits their lifestyle.
      Hence, more of the same, piled higher and deeper.

  • John Jay October 7, 2012, 8:37 pm

    Big Tom,
    Without trying to cram the Ethanol book in a response to your questions, here are some short answers.

    1) All the corn problems, subsidies, etc.

    The author goes out of his way to point out that corn is one of the least efficient crops to use to produce ethanol.
    I believe switchback grass is four times more efficient to use for alcohol production and it grows on marginal farmland. Which brings up another objection to ethanol which he debunks. Which is that there is not enough prime farmland in the US to devote to ethanol crop production. He states there is twice as much sub prime land to farm switchback grass etc. on as there is prime farmland. The big push for corn use/ ethanol subsidies is just another rip off by big agriculture, not a first class effort to make ethanol a replacement for gasoline. Sort of like LBJ’s friend Billy Sol Estes who was getting crop subsidies for empty grain silos back in the 1960’s. Growing switchback grass etc. would also provide a great opportunity to small farmers south of the Rio Grande who could then help keep money spent on ethanol in our own backyard.

    2) Ozone from ethanol
    It is higher than gasoline only if there is incomplete combustion, It is something covered in the book in great detail. I am sure the technology exists or can be developed to keep ozone to a minimum.

    Alcohol is also used by the Russian military to power some jet aircraft and self propelled howitzers.
    Like I said read the book to get a non big oil presentation on alcohol as a motor fuel.
    And the fact that our money would no longer go to build skyscrapers, artificial islands, and ski slopes in the deserts of the Middle East.
    Remember in our system, politics and corporate greed assure that common sense solutions never see the light of day.

    • BigTom October 7, 2012, 9:33 pm

      JJ -Your points are well taken. Government it seems has gotten itself imbedded and deeply involved with a free market system here that is morphing itself into a non free market system, and in the process has thus become an inefficient, cost prohibitive, wasteful, boondoggling enterprise enriching a few at the cost of many others, not only on this issue but most others it seems to meddle in….meanwhile as you say, American dollars go to the Middle East to support anti-american terrorism, ski slopes and artificial islands etc. With governments in control and mandating so much of our daily lives I wonder if common sense solutions are any longer possible to the problems facing the modern world….As our 85 year old widowed neighbor was saying to me the other day in a conversation on a similar topic….’I know the answer and you know the answer, how come they(the politicans) don’t know the answer?’ She raises a salient point here if one is paying attention. And all the while things continually get worse. Thanks for your response to some of my points above…..

  • Jill October 7, 2012, 5:45 pm

    Interesting blog & book on what could go right economically:

    http://charleshughsmith.blogspot.com/2012/10/what-could-go-right.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+google%2FRzFQ+%28oftwominds%29

  • John Jay October 7, 2012, 5:19 am

    Big Tom,
    The eternal problem is when you match common sense solutions with big business and politics, you get California!
    Google “Alcohol Can Be a Gas!: Fueling an Ethanol Revolution for the 21st Century” by David Blume.
    He makes a great case that ethanol can easily replace gasoline, and at $4 or more for gas you would pay a lot less for ethanol. He debunks the myth that there is not enough farmland in the US to grow the crops that are most efficient to make ethanol. And that guess what, the gaskets big automakers use that are damaged by ethanol are more expensive than gaskets that can stand up to ethanol. So they go out of their way to make ethanol use impractical. Gee, I wonder why!
    Smelly, dirty, dangerous crude oil and gasoline could be replaced by clean burning ethanol with a lot less pollution.
    Link: http://journeytoforever.org/ethanol.html
    However, stacked against the common sense of ethanol is big oil, and they are not going to let it happen.
    Decades of spending trillions on OPEC crude, decades of air pollution and crude oil spills, decades of expensive pollution control apparatus on autos, all needless.
    Homegrown ethanol would have made the MENA strictly a subject for National Geographic articles and PBS shows instead of a tripwire for WWIII.
    Anyone that doubts ethanol is practical please read the David Blume book first before attacking me.
    Just ask yourself, has the federal government ever stood up for the average citizen against big business?
    Or do they crack down hard on Amish dairy farmers, $30 orchid sellers, and farmers using non GMO seeds?
    Unless the Sherman Anti Trust Act has been repealed, how did MSFT, WMT, GE, BRK, C, BAC, etc. ever get to be be so monolithic?
    Our only hope for justice lies in the fact that SEC fraud regulations are not subject to any statute of limitations, or so I have heard.
    That will always be the dream!

    • BigTom October 7, 2012, 7:37 pm

      JJ – interesting take on a pro ethanol view. Out here where I live one seldom hears pro ethanol arguments, it’s mostly about anti-ethanol. Sometimes it is difficult changing ones habits after so many years of doing things a certain way. May I offer a few anti-ethanol points of view we are use to hearing out here. 1 – the subsidy of approximately 50 cents per gallon of ethanol produced is what we are told if I am correct. So figure it’s costing taxpayers much more than that. 2- the use of corn as a bio-fuel does impact food prices at the market in an inflationary manner. Approximately 45% or 100 million tons of U.S. corn each year is taken out of the food chain and used otherwise. Though we are lucky enough here in the U.S. being of 1st world living standards and can afford the added expense so far, people in less fortunate countries are feeling the price increase because of loss of bio mass for food purchase at customary prices at the market. 3 – corn is a water and fertilizer intensive crop. Because of subsidies by the government, less crop rotation is taking place and more end product, corn, is being planted. There is the run off issue. Someway or another most all these fertlizers and chemical run offs ends back in the ground water system, or else finds their way eventually down the Mississippi drainage system and into the ever expanding ‘dead zone’ in the gulf of mexico. This ‘dead zone’ is already thousands of square miles in size. Perhaps we should be looking at ways to decrease it, not increase it’s size. 4. Awhile back I was in the Borneo region of the world. There they were destroying native habitat to plant palms, for palm seed oil for bio-fuel productions. In that process they were destroying primary ape orangutan habitat and believe it or not were clubbing young ones to death as there was nothing else to be done with them. This is only one extreme example I realize, but to have sustainable bio-fuel production to motorize this earth I believe would take an super enormous amount of land for that purpose, definitely a destruction of some ones native habitat. 5 – combustion of ethanol leads to another byproduct, it produces over twice the ozone as does gasoline exhaust and resulting in greater smog emissions http://en.wikipedia.org/wiki/Ethanol Don’t ask me how this is possible as it have been promoted as a cleaner burning fuel….6 – engines as produced today run much more efficiently on gasoline combustion thus consuming less volume without ethanol verses with ethanol. I can personally attest to that driving my own vehicles on the hiways.

      This argument can go on forever, and I am sure there are ways to shoot holes in this one as most arguments are porous. It is not to say a much more efficient way to motorize the world is not out there but I do not see ethanol efficiently replacing gasoline, but I have not read the book you refer to here either. But I can’t help thinking at current world consumption of fossil fuels where is the habitat available to replace it with bio-fuels with out the destruction of current natural world habitats? Approximately 100 million tons(or 40% of total production) of corn used annually to get a 10% ethanol solution just here in the U.S. has already caused food riots in Mexico and elsewhere. Sheesh, the numbers of acres necessary must be staggering to provide bio-fuels to drive the world, but again those answers may be in that book you refer to here, so I guess I ought to shut up and go read it. 10-15 years ago fuel cell technology was on the upswing, the newest and latest cure. What happened to that? It seemed very promising and I was even looking forward to utilizing it for my own needs. But apparently that technology got squashed. We can blame it on greedy oil production companies as that is the first place everyone eyeballs when the word gasoline or fuels are mentioned. You are right. The federal government isn’t standing up for its’ citizens, for if they did most of wall street would be in jail by now. If our legislature can legislate how many miles per gallon a vehicle must get, then they can also legislate a more efficient way to motorize this world. I lay this blame directly at the doorstep of the corrupt politicians here….JJ, thanx for your point of view…..

  • John Jay October 6, 2012, 5:20 am

    Just paid $4.89 for premium gas at my 76 station.
    Guy with an SUV there told me he can’t afford to drive it anymore. Junk yard should be filling up with SUVs and pickups again, just like the last gas price spike.
    Shell station by my house has premium for $5.09 now.
    We should see the return of the “Fuel Surcharge” in anything transportation related real quick.
    Should be good for any car dealer selling the high MPG type compacts like the Prius.
    Not so good for 11 mpg monster pickups and SUVs.
    Adjustments to higher gas prices on their way.

    • BigTom October 6, 2012, 10:11 pm

      JJ – speaking of gas, I just got done with a 3,000 mi motorcycle trip thru the NW 2 weeks ago. I always get non-ethenol gas where ever I find it. Washington, Oregon and Idaho it’s available if one looks, especially around agriculture communities. Non-E gas, as it is called, makes for a better performing engine on motorcycles, and makes for much better gas milage. When I got into N. California I stopped off at a Non-E gas distributer in Eureka and was told it was illegal to burn Non-E gas using vehicles on Californias hiways, only could be used on boats etc. and one had to sign a form when purchasing it attesting to its usage. I won’t go into the pitfalls of ethenol here but just another of a gazillion rants about a ‘huh? what’s with california?’ story. I grew up there so am not slinging mud on anyone/anything here…I paid $5 a gallon for non-e premium in Brookings, Oregon, the highest on the trip. $4.19 a gallon for the same stuff once back in Idaho…..Right around $4.00 a gallon here seems to be the floor around which the price bounces….

  • bc October 6, 2012, 4:13 am

    One thing I think is generally misunderstood about central banks everywhere is their highest priority is to protect bond holders from loss. This is true because it really is the end of their world if bonds start to slide. We see this in Europe but we don’t appreciate the truth of it here with the Fed. If equities slide and fleeing cash supports bond prices that is fine with the Fed. Systemic collapse in both equities and bonds is the only scenario the Fed watches equities for. Too big to fail means too big to take the bond market down with it. The putative plunge protection team in the bowels of the Fed , if it exists at all, is there to protect bond holders, not equity investors. No guardian angel is watching over equity investors. Sleep tight knowing this.

    • mario cavolo October 6, 2012, 5:50 am

      Interesting view bc….I”ve always said the magna carta of today’s world is to keep interest rates down no matter what and no matter how. NOTHING is a higher imperative than that in the fiscal and monetary policy of those in control. Rising interest rates are IMPOSSIBLE. They CAN’T exist. They are the devastating nuclear bomb of today’s economic world. Look at Japan. Adjust accordingly…

  • Jill October 5, 2012, 6:36 pm

    Someone asked about Rich, whom we haven’t seen on the board for a while. He is running his own site now, on which he has a service that buys & sells options. Only he doesn’t do spreads & covered options like Rick. He does the more risky uncovered kind of options. Much higher risk of loss & thus much more stressful than what Rick does. So he may be pre-occupied with that.

    I do hope he returns some time, as I also enjoyed his comments. He had some interesting political info on various 3rd party candidates for president, like on this site here:

    http://silversenator2012.blogspot.com/

  • Jill October 5, 2012, 6:25 pm

    IYT is flat for the year. Therefore, it neither hurts nor helps Mario’s case. If Mario is right, then it is about to turn back up. If the Bears on the board are right, it is about to fall through the floor. We’ll know pretty soon, I would think.

  • Robert October 5, 2012, 6:08 pm

    “2. Gary is right! (Yes, that was to get your genuine attention.) He IS right, the numbers are NOT BAD, and I absolutely support and believe in the expansionary picture of the global economic future for decades to come. ”

    This one is too easy – it’s a chip-shot.

    Mario-
    You believe the expansionary picture BECAUSE you believe that the numbers are not bad.

    Correlation versus causation. If you don’t understand the difference, you are toast.

    The fact that the published numbers align with your personal viewpoints should be a cause for CONCERN, not celebration.

    The Dow transportation index is a global indication of the pace of real economic output (real goods changing hands) ….

    Please explain how it aligns with your thesis?

    • mario October 6, 2012, 3:00 am

      Hi Robert,

      Yes my friend I purposely wrote it as a chipshot. On their face the numbers don’t reveal the whole story, the true picture. Unfortunately that’s what today’s media and politicians count on as the y shower forth their views on a naive, brainwashed public.

      Great reminder about correlation vs causation. We are all seeing how many traditional technical indicators are far less valuable s and useful in the new world order. Perhaps that includes the Dow theory. How can it possibly be valid for me to follow overbought / oversold readings on the rsi, stochasticss and Macd when HFT trading computers are doing the same thing millions of times per minute , with far more complexity and sophistication, thus negating the validity of the trading strategy?

      In terms of BELIEF, I believe I have been consistent over the years in my position that the way the economic excesses and outrages happening will manifest and balance is by continued long-term inflation / loss of purchasing power, with the masses taking the brunt of the pain.

      I am and have been squarely in the expansionary / inflationary / loss of purchasing power camp , especially as I’m living here experiencing that first-hand I suppose also influences my views. ,

      Cheers, Mario

    • mario October 6, 2012, 3:23 am

      Maumaj,

      I might suggest the difference simply boils down to timing.

      China’s central banks are equally on an expansionary debt binge and there is a load of bad debt on their books too , to be concerned about.

      But the difference is that Asia led by China is at the front of an expansionary economic cycle while the west is at the tail end of theirs.

      Another meaningful difference is that those billions are being put to good use and quickly. Beijing airport modern terminal 3 was completed in 4 years by 50000 workers working 24 hours a day. Beijing terminal took two years less, cost half as Much as London’s Heathrow terminal 5. AND is bigger than all five of Heathrow terminal s put together. There are countless similar examples.

      While in the US the money is being used only to the benefit of the banks , not lending into the economy and society.

      Cheers, Mario

  • John Jay October 5, 2012, 4:29 pm

    Latest headline on the gasoline price spike in California.
    “Temporary price hike may linger”

    Latest explanation for the drop in the unemployment rate.
    From Zero Hedge:
    “The reason is that the number of part-time people employed for economic reasons soared by 582,000 to 8,613,000, the most since October 2011”

    George W’s reply to a woman who told him she had to work three jobs to survive:
    “Fantastic, uniquely American isn’t it?”

    I’ll let you all know when $5 a gallon is the lowest price available for gasoline out here.

  • mario cavolo October 5, 2012, 3:34 pm

    HiRick and all,

    It just popped into my head to take a moment to note what we KNOW. If anyone disagrees of course don’t hesitate to speak up. When I write this kind of content, its with the hope that it is helping all of us figure out what the hell to do in response to current and future affairs across the globe. I’m not just having a chitchat, this is all very, very serious, important stuff for all of us and our families’ present and future.

    1. There is NO WAY in hell the U.S. govt is going to let the U.S. dollar RISE to economically disadvantageous levels to its country. While publicly in the media, there may be pronouncements of other reasons and strategies, the bottom line is that a massive part of keeping the U.S. economy together is to not let its currency rise too high, greatly reducing, as we all understand here, export competitiveness – a KEY to the health of the U.S.’s economic future. Related: exports to China are at RECORD levels…that’s a very good thing we need more of as the balance of global economic trends continue to shift…

    And so what do we know the FED will continue to do as needed to insure the above scenario with respect to the USD? Arguments against above?

    2. Gary is right! (Yes, that was to get your genuine attention.) He IS right, the numbers are NOT BAD, and I absolutely support and believe in the expansionary picture of the global economic future for decades to come.

    However the caveat; as well pointed out here by Rick and others: those good-looking numbers don’t account for the inflation factor, and considering that, many of them suck. (As Cam noted, a job wage today less than what it was ten years ago yet with much higher cost of living than then. As Rick noted, the NEED for two income families, a NIGHTMARE in America)

    Yes, surely my mother in law and 5 million other Chinese families are thrilled that their apt in many cities across China are worth EIGHT times what she paid for it (now a reasonable $100/sq ft across most of China’s main cities) , in fact, she can’t fathom it. (But that also happened in the states over a longer period of time. eg., Steve Job’s father bought a home in Silicon Valley in the 70’s for $21k !!)

    And furthermore, I GUARANTEE WITH ZERO DOUBT that that price will EVER fall lower again in China’s future. And yes, 90% of Chinese families own those homes and yes they have no mortgage on them.

    Ahh but, we all know that amazing state of affairs for tm does not tell the whole story because of INFLATION; the real purchasing power of a dollar in our pockets. It is MUCH more expensive to live here in China now than five years ago, and across different sectors of the population and industries, wages are not keeping up.

    I believe a painful, sneaky, deceptive inflation is a MUCH more likely future citizens of Europe/the Americas/Asia (that’s the world) will bear for many decades looking forward, than any sudden doomsday collapse, but again, we’ll see… If Rick’s deflationary collapse somehow does appear, of course even the PM’s will plunge too.

    Otherwise, in the environment we are in, real estate and PM’s and oil and commodities are great to be in for the long term having developed what appear to be quite well-formed bottoms…but I am thinking of the long term view when I suggest that is the case, NOT with respect to shorter term trading which has become a viper’s den…

    3. Crude oil – can its price go anywhere but UP as time wears on, especially considering the massive Asian/ Latin expansion which is creating annual auto-based increases in oil consumption that will continue for decades? But will fracking/horizontal technology and related huge U.S. oil reserves serve to offset that demand increase and so keep the price of oil reasonable? Does anyone KNOW?

    Cheers, Mario

    • gary leibowitz October 5, 2012, 4:12 pm

      Mario,

      Good article on oil. What do you suppose would happen with this economy if oil was to drop 30 percent from here?

      On the employment front and the dismal treatment of workers at WMT and AAPL here is an article that you might find interesting. Reminds me of the early 70’s. The numerous strikes back then resulted in better treatment and pay but started the hyper-inflation cycle also. Will this be a repeat?

      http://finance.yahoo.com/blogs/daily-ticker/wal-mart-workers-strike-better-jobs-125155301.html

    • Maumaj October 5, 2012, 5:09 pm

      With your family ties to China you seem to be the most qualified among the bloggers to answer the following question.
      I was wondering if you could write about China’s monetary system. I would tend to believe that a communist government would have full control of it’s money and would not be in a situation similar to what is happening in capitalist countries. Not having to pay interest on a mountain of debt certainly would permit a government to invest in more productive ventures. Could you please inform us on the inner workings of the banking situation in China? Thanks for any response you may give.

    • mario cavolo October 6, 2012, 5:08 am

      Part of me can easily accept the conspiracy theories and shorter term trading manipulations and trends which abound and have nothing to do with actual value and demand, including crude oil. Alas, those are mostly guessing games.

      We should be able to easily suggest that lower commodity prices including crude, will support the economy.

      Again, on the surface, that seems to make perfect sense and in a perfect world, we would have a healthy stock market based on real numbers and values and productivity, steady commodity prices based only on supply/demand, and product prices based on supply/demand.

      Instead we have games afoot being driven and played by dangerous men at the top of business and govt an banking (they are all men, by the way).

      Here’s a scenario: In a reasonable world, one could easily understand an interest to live in an expanding, growing country rather than a declining one. Again, that’s ofen a matter of timing and circumstance FAR beyond our own control, as much as we’d like to believe or will otherwise. I very much like the way Malcolm Gladwell laid this point out in his books.

      So then a person might say that they should head toward Asia led by China; and indeed,that trend is upon us.

      Further, we might say that Shanghai China is a far more attractive choice than Shenyang, China for an incoming business person. Shanghai is the hot spot of China, the center of business. As quickly as we would say that New York is a better choice than say, Tampa, Florida.

      Then we should further guess that the cost of a home in those cities would not be the same due to supply and demand. Indeed, an avg apt in Shanghai or New York is now $400 per square foot while an average home in Shenyang or Tampa is $100 per square foot.

      I am purposely suggesting this is kid stuff to understand. As Robert noted, these are correlations, and they seem to make sense.

      So then the one of us who can become rich is the one who can identify when those correlations don’t make sense, which direction they may move and how to trade them. The other one who gets rich i the one who can manipulate and control those correlations to their advantage, and that’s the big boys…

      I also further note that all of this interest to make money by trading, as a capitalist, as an opportunist,as a businessman, is NOT PRODUCTIVE in the society! The current world has truly demotivated me to be a successful, productive businessman. That’s a genuine confession. I am tired of the race, becoming more and more difficult with more and more competition. My dream is to set a few small positions in my leveraged forex account that I KNOW are correct for the next five years, make sure there’s enough margin in the account and then ask my wife to change the password on the account so that I can only go in once per six months to adjust the position, take the profit on any position which may have had big run.

      There are several possibilities where this may work:

      Corn: seems will soon begin a historic run up after it tests the current 750-700 support level. (Is it similar for wheat and soybeans, as one would expect?)

      Gold – now that the govt central banks of the world are unequivocally on the same monetary path, will gold NOT be at $3000 within 5 years? But will it decline to $1300-$1500 first, or never again?

      International Retail Consumption safe haven stocks – With China’s 200 million rising middle class to hit 800 million in the next 30 years, including their current historical baby boom, plus similar story now happening for India and Latin America. Can Coke, P&G, J&J, Yums, Monsanto, Disney, and many similar. go anywhere but UP?

      Enjoy the weekend, Cheers, Mario

    • Erin October 7, 2012, 12:45 am

      It seems there are quite a few people here who believe that this fantasy of fed induced stimulus growth by printing money, buying bonds, propping up stocks, home prices, commodities and many other forms of manipulating the true price mechanism is somehow sustainable and good for anyone. I respectfully believe you people have completely lost your mind!

      Real income growth has not been happening for years. Somehow piling up debt for growth and creating hockey stick charts of all types seems to be your recipe for sustainable growth. Really?

      We need to continually expand the monetary system just to keep the ship from sinking. How long do you believe this will go on? Without true income growth to pay for rising costs of living expenses across all asset classes this is completely unsustainable by any measure and we will have to revert back to our mean levels at some point and that day is coming closer every day. Have you people even looked at out debt levels? Is that what you call sustainable economic expansion?

      There are many smart people who post on this forum but this is just one giant ponzi scheme being run by the fed and they know it is quickly becoming out of control. When you have to use open ended money printing to sustain the system then we have arrived at the end. Corporate profits have peaked but the fudging will always continue. The world is melting down around us and people who have an ounce of common sense are starting to see what these fed policies are doing to everyone here and around the world. We will be imploding next.

      It always cracks me up when I hear Bernanke trying to explain what he is doing. He has said with this latest open ended QE program that this time he is trying for the wealth effect. Not growth thru any type of productive growth or savings, but thru the wealth effect! Did we not just go thru this with stock bubbles, then the housing bubble? Yes we did. But I am sure this will work this time! We need people to continue to spend beyond their means just to keep things moving forward. Good luck with that…

      Bernanke knows this is the end but he has no other choice…Pathetic!!!

      &&&&&&&

      Great post, Erin.

      Regarding Mario’s comment below, as I’ve noted here before, the trillions of surplus dollars that companies have piled up will never get spent. Instead, the low-interest paper in which that cash is parked will cease to exist when the financial system’s quadrillion-dollar derivatives edifice deflates to nothingness one day in the not-too-distant future. RA

    • mario October 7, 2012, 1:54 am

      Hi Erin, a core issue not mentioned often enough is that s&p companies are having excellent profit, piling up a hoard of a couple trillion in cash. Which also means they are NOT increasing salaries / benefits as they should be to their employees in line with the economic state of affairs and cost of living. The transformation of America into a land of rich kings and serfs is real, is here now and it is going to continue.

      In

    • Jill October 8, 2012, 2:00 am

      Erin, most people here recognize the problems you state. But most think these problems are caused by excessive government regulation of the “financial system’s quadrillion-dollar derivatives edifice” that Rick mentions, and will be solved by continuing de-regulation of TBTF institutions. Oh and another solution is supposedly to continue to cut tax rates, especially for the wealthiest people. That will really bring government revenue up & the deficit down, LOL. Just the normal human thing I guess. Everyone wants to have their cake, eat it too, & never pay for it.

  • John Jay October 5, 2012, 6:34 am

    Thank god we don’t have hyperinflation like Iran, Ben B is on the case.
    He’s doing a heck of a job, just like Brownie in post Katrina New Orleans.
    Premium gasoline has only gone up 10.6% since 9-28-12, from $4.33 to $4.79.
    And “shortages” have magically appeared, just like 1974.
    Contained and transitory and not included in the CPI anyway.
    What a load off my mind!
    For a minute there, I thought I was getting screwed by the oil oligarchs.

  • Cam Fitzgerald October 5, 2012, 12:17 am

    I worry when apples closes at 666. Like today.


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