DJIA 8919+3.41 SPX 957.55+2.79 VIX 23.46 -.31 Gold 953.30 +6.40 Silver 13.71 +.22Oil 65.25 -.36 RBOB (Whsl Gasoline) 1.83 +.02 Dollar Index 78.80 -.28
EURO 1.4240 +.0043 (Long Term Gov Bonds)92.464 -.90 IEF (7-10 Yr Gov Bonds)90.80 -.51XLF (Tech Index)19.35 +.07 XLE (Oil Index)49.42 -.29 XLF (Financials index) 12.18 +.05 EEM (Emerging Markets)34.68 +.04 FXI (China Index) 40.55 -.17
Earnings are coming in better than expect. Why? The corporations are cutting jobs and cutting benefits. Many are no longer contributing to their pension and 401K plans. That is slowing the rate of decent of earnings and it is making those earnings look better than analysts expected. The reason is that the analysts did not factor in the large cuts that are taking place in those corporations.
That is all great for now but down the road that means that less and less money goes into the market and less money goes into the economy from the workers of these corporations. Again I remind you that the consumer is 75% of the economy and he is getting his wages cut, his benefits reduced, and his lines of credit pulled.
It is not hard to see where this is going to end up. The expert analysts that talk to the public are saying see look at stock prices that tells you the economy is bottoming. They say you have to buy early and not miss the bottom. They say the recovery although not here now is coming. I say that is a deliberate lie.
Look at this Letter from a confused investor:
Jim: I'm totally confused and could really use your help! Harley-Davidson [HOG 20.28 0.30 (+1.5%) ] announced yesterday that their last quarter's earnings had plunged 93%, shipments of new motorcycles to their dealers had plunged, anticipated rest-of-year shipments have been revised down, and that they'll be accelerating their plant closings and starting a new round of massive layoffs! As a result, the stock's daily volume more than tripled, but the price, instead of plunging as I expected it to, surged over 8%! I don't get it! Can you explain why? How you read this? --William
Cramer says: “This is what happens at the bottom…at the bottom, strange things happen. Harley-Davidson has come down a huge amount. This is the beginning of what I think is the end of the underperformance. People want to get in ahead of that. Don’t forget – Warren Buffett bought a big stake in the company, and that’s driving a lot of buyers, too.”
Look at Cramers comments. He tells you that this happens at a bottom and he also says that Warren Buffet bought it. Very impressive. But the reality is that in 6 months this thing will be blowing out the lows big time.
I will again tell you that he called the bottom in Real Estate in Sept of 2006. Look a a chart of home builder KBH in Set 2006. The price was 48. It rallied to 56 in Jan of 2007 and by November 2008 it was 6.90. I will tell you he said the very same thing to the listeners from Sep 2006 to Jan 2007 about the housing stocks. He said that the market was telling you that the real estate market had bottomed. WRONG!!!! But it did get some buyers in and ran some shorts. The stock price had fallen in half and it looked "cheap" but in the end the markets had not bottomed and the news just kept getting worse.
That is the game now they want you to buy the "bottom" here and not miss it. But you can see by that chart that a lot of damage was yet to come. These guys are not in the business to get you in cheap. They are helping the system distribute stock. Buy the way this guy turned bullish on a bottom in May of this year so we are over 2 months into the bottom song.
I still have not added to my shorts but am getting close. I like CAT AAPL UPS V or just about anything that had better than expected earnings. I will let you know
The beat goes on......Mikey
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