Thursday, June 7, 2012

Financial Astrology: Is JPM Another Lehman?

The following is an except from this weeks premium newsletter by Karen Starich, who uses astrology to forecast events in the financial markets. Discover how Astrology Traders can give you an unparalleled edge in trading.

This week my emphasis is on the current market correction, the trend going forward, bonds , oil, an update on Harley Davidson (HOG), and the probability of QE3. I want to stress here that what I see coming for the markets is going to become more severe going into August. There are reports that JP Morgan could be another Lehman, and from what I see in the astrology I will have to agree.

I had a conversation with Jeff this week about something I noticed from my notes in an old ephemeris. I often write notes in my ephemeris when key events occur for easy reference. For the month of September 2000 I had made notations about the market correction that began on September 4, 2000. What was interesting to me was Saturn’s position at 0 Gemini when the market reached a peak near 1525 on the S&P. Astrology is a continuum of events set in motion from the past so there is no coincidence that we have a rare eclipse at 0 Gemini that is preceding another downturn.

Bill Clinton signed the Gramm-Leach-Bliley Act November 1999 repealing the Glass-Steagall act and opening the door for “too big to fail” banks and “Financial Armageddon!” Transiting Pluto was oppose the U.S. Uranus when the bill was passed, meaning the country was suddenly being pushed into sweeping new circumstances that would force the country to go back to the past in order to repeat an old pattern that would create hardship in order to transition into new and inventive ideas. The past that we are going back to is similar to circumstances in the 1930′s when Glass-Steagall was originally signed into law amid corrupt banking practices. Keep in mind that in 1999 the transit was Pluto oppose the United States Uranus in, and in June 2012 we have an exact square of Pluto and Uranus in the sky, the reconciliation of the past is coming due, this time internationally because of what the Clinton administration set in motion in 1999. I should also note here the euro was established in 1999.

Inflation WARNING: A surprising country could be on the verge of a "stealth" default

If there was ever an article that should spark every British citizen to immediately shift their savings into physical gold this is it. Basically, proposals are on the table to change the way inflation is calculated for bonds that payout based on the rate of change in prices. Unsurprisingly, they are purposely attempting to use an alternative measure of inflation that allows substitution (so when people can no longer buy a steak and must spend the same amount of money on spam this shows up as no inflation)! If this goes through, it is blatant theft. This is why owning TIPS in the U.S. is a total fool’s game. They will mark inflation to whatever level they want at the end of the day. To whatever is most convenient at the moment. You know, just like the banks mark their balance sheets. But don’t take my word for it…

Key quotes from the FT article:
Holders of some UK index-linked gilts could see more than 40 per cent wiped off the value of their bonds, according to M&G Investments, as a result of technical changes to the way the retail price index, which underpins these “linkers”, is calculated.

The mooted changes are designed to eliminate “unjustified” causes of the persistent gap between inflation as measured by the RPI and the normally lower consumer price index, narrowing the “wedge” between the two measures by altering the way the RPI is calculated. Some industry figures believe the gap between the two measures could be eliminated entirely.

“To eradicate the wedge altogether would be tantamount to an event of default,” said Ben Lord, portfolio manager at M&G.

Full article here.

Marc Faber & Jeremy Siegel : Buy Stocks Not Bonds

Marc Faber, Siegel Agree: Buy Stocks Instead of Bonds ,"The ECB should ensure all the deposits of the major banks in the euro zone," says Jeremy Siegel, of the Wharton School at The University of Pennsylvania. Meanwhile Marc Faber, "The Gloom, Boom & Doom Report," shares a bearish view on China. Harry Wilson, former Silver Point Capital partner, weighs in.

McAlvany Weekly Commentary

The Pain in Spain is Now Becoming Plain

A Look At This Week’s Show:
-Capital is fleeing Spain at over 50 billion per month
-Dow Theory system declares a Bear Market Confirmation
-Correlation of all paper markets limits “safe-havens” outside of gold

Is the Table Set for a Mania in Precious Metals? / by Jeff Clark / June 6, 2012

It may feel like I’m out of touch with the precious metals markets to broach the subject of a mania today, but I think the table is being set now for a huge move into gold and silver.

There are, however, very valid reasons to reasonably expect a mania in our sector. For one thing, manias have occurred many times before, but the main issue is that a mania in gold and gold stocks is the likely result of the absolute balloon in government debt, deficit spending, and money printing. Saying all that profligacy will go away without inflationary consequences seems naive or foolish. Inflation may not attract investors to gold and silver as much as force them to it.

Now, one could make the argument that any rush into gold and silver will be muted if no one has any savings, especially given that demographers say a quarter of the developed world will soon be retired. But even if individuals are wiped out, the world’s money supply isn’t getting any smaller, and all that cash has to go somewhere.

I wanted to look at cash levels among various investor groups to get a feel for what’s out there, as well as how money supply compares to our industry. Data from some institutional investors are hard to come by, but below is a sliver of information about available cash levels. I compared the cash and short-term investments of S&P 500 corporations, along with M1, to gold and silver ETFs, coins, and equities. While the picture might be what you’d expect, the contrast is still rather striking.

Corporate Cash and M1 vs. Gold and Silver Instruments


Collapse At Hand: Paul Craig Roberts

Ever since the beginning of the financial crisis and quantitative easing, the question has been before us: How can the Federal Reserve maintain zero interest rates for banks and negative real interest rates for savers and bond holders when the US government is adding $1.5 trillion to the national debt every year via its budget deficits? Not long ago the Fed announced that it was going to continue this policy for another 2 or 3 years. Indeed, the Fed is locked into the policy. Without the artificially low interest rates, the debt service on the national debt would be so large that it would raise questions about the US Treasury’s credit rating and the viability of the dollar, and the trillions of dollars in Interest Rate Swaps and other derivatives would come unglued.

In other words, financial deregulation leading to Wall Street’s gambles, the US government’s decision to bail out the banks and to keep them afloat, and the Federal Reserve’s zero interest rate policy have put the economic future of the US and its currency in an untenable and dangerous position. It will not be possible to continue to flood the bond markets with $1.5 trillion in new issues each year when the interest rate on the bonds is less than the rate of inflation. Everyone who purchases a Treasury bond is purchasing a depreciating asset. Moreover, the capital risk of investing in Treasuries is very high. The low interest rate means that the price paid for the bond is very high. A rise in interest rates, which must come sooner or later, will collapse the price of the bonds and inflict capital losses on bond holders, both domestic and foreign.

The question is: when is sooner or later? The purpose of this article is to examine that question.

Let us begin by answering the question: how has such an untenable policy managed to last this long? (more)

Watsco Inc. (NYSE: WSO)

Today's article focuses on a stock approaching a 52-week high. As a reminder, when it comes a stock hitting a 52-week high, I prefer to look for ones hitting a "NEW" high. To clarify, this would be a stock that hasn't hit a new 52-week high in quite some time. In addition, and more importantly, I want the stock to have broken through a key area of resistance. This way I know that it wasn't just any move higher, it was a key breakout.

Watsco, Inc. is the distributor of air conditioning, heating and refrigeration equipment and related parts and supplies in the HVAC/R distribution industry. As of year-end 2011, the company operated from 542 locations in 38 states, Mexico and Puerto Rico with additional market coverage on an export basis to Latin America and the Caribbean, through which it serves more than 50,000 contractors and dealers that service the replacement and new construction markets. The products Watsco distributes consist of equipment, including residential central air conditioners ranging from 1-1/2 to 5 tons, gas, electric and oil furnaces ranging from 50,000 to 150,000 British thermal units, commercial air conditioning and heating equipment and systems ranging from 1-1/2 to 25 tons, and other specialized equipment.

To review Watsco's stock, please take a look at the 1-year chart of WSO (Watsco, Inc.) below with my added notations:

WSO has been trading mostly sideways from February until present, while running into a clear resistance at $75 (navy). After falling below the $70 support (green) level in May, the stock has worked its way back above that $70 level and looks to be heading towards $75 again. The $75 resistance meets my definition of a clear resistance level that would signify an important 52-week high breakout if WSO could manage to break above it. IF that were to happen, the stock should probably be heading higher.

The Tale of the Tape: WSO has formed a key resistance level at $75, which would be a 52-week high breakout if the stock can break above it. A long trade could be entered if WSO breaks above $75 or pulls back to $70, with a stop set below the level of entry.