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EXXON IS TO OIL AS KODAK IS TO FILM

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THE INVESTMENT STRATEGY LETTER #720

EVERY DAY IS A DRAMA! 117 ‘DAZE’ AND COUNTING

Remember those boring days of No Drama Obama? Things have changed and not for the better.Today The New York Times just reports that FBI director Comey has documented that President Trump had asked him to drop the General Flynn file. Obstruction of justice?

Most recently, President Trump has sunk the credibility of his close associates of Sean Spicer and General McMasters. In Mister Spicer’s case, he became a spokesman for President Trump in saying that President Trump decided to fire FBI director Comey, because of a State Department recommendation. No sooner were the words out of his mouth, than the President countered this statement by saying that it was ‘his’ idea of fire Comey after all. Last night, General McMasters, the last of the creditable staff, said President Trump did not disclosed classified information to the Russian delegation. This morning, President Trump tweets that he did disclose classified information to the Russians as our ally against Al Qaeda. The update from McMasters is that Trump did share with the Russians highly classified material, but it was wholly appropriate. Neither Trump or his staff or the Republican Party has the temperament, maturity or experience to govern. This is a cartoon that is not funny!

This is certainly a Teflon President. In my opinion he ‘has obstructed justice’ in trying to waylay the investigation of his administration’s complexity with the Russians. He has done so by firing all of the Justice Department attorneys, not disclosing his tax reports, interfering with the House of Representatives investigation by calling its chairman Nenus to the White House and the firing of FBI director Comy, who is leading the FBI investigation into Trump connections with Russia. The latest news is that Trump warned FBI director Comey that he may have taped their conversations. Great just what ‘TrumpGate’ needs, Nixon ‘Watergate’ type recordings of White House conversations. Let’s see what they have to say. Unlikely that Trump will cooperate!

Then, there are new executive orders that will hurt the very constituencies that voted for Trump. One executive order will illuminate over-time wages and allow its workers time off instead of time and a half pay. Another executive order will illuminate the protection of our national monuments. Another will reduce the protection of credit card holder’s private information. Another will illuminate EPA jurisdiction over clean water and air. President Trump has to help of Secretary Sessions, who is working to reinstate mandatory sentences so that his pal’s investment in corporate jailing institutions will pay off. Under the Obama administration, the lessening of jail sentences for minor  violent crimes has reduced the incarcerated population by 20%. Not good for profits of those corporations and pals of Sessions who have invested in this industry. Also, Secretary Sessions, who supposedly has requested himself from the Russian investigation, now is being asked to help recommend a new FBI director.

US markets and world markets hit new highs! Why?

How can the markets throughout the world the making new highs when the Trump administration is in freefall, all our computers are in danger of being hacked, retail businesses are going bankrupt, our healthcare system for the poor and middle class is being attacked, North Korea has the capability of reaching US bases with nuclear missiles, the TrumpCare health plan eliminates federal support of pre-existing conditions while giving $1 trillion to the Republicans riches constituents, Trumps economic plan is aimed at old industries (see the latest Economist Magazine) such as manufacturing  (was 35% of the economy now 7%) and oil  (pipelines will not be needed), that are part of the old economy while new technology and global warming is ignored, while the Federal Reserve has for a Four and a half trillion dollars of bonds to sell back to the marketplace (quantitative tightening), the banks have $350 trillion in derivatives ($65 Trillion in 2008), our President constantly lies to us and the world economies continue in the doldrums? There’s so much cash around in interest rates are so low, it’s the only game in town. It’s all about corporate profits. If you pay your workers more your, stock goes down. If you lay off workers your stock price goes up.

Actually the oligarchy corporate ruling class doesn’t need to help the general welfare anymore. The multitudes of middle class and poor are NO LONGER NEEDED BY THE OLIGARCHY to fight their wars, produce  their products because of automation or even needed to buy their  products. After all, $1 billion invested at 3% returns $100,000 a day. That’s enough for all the daily necessities of being part of the United States new aristocratic royalty! There are now 2000 billionaires in the United States. Do you know what city in the world has the largest amounts of billionaires? Moscow Russia! Our palls and allies? No wonder President Trump admires them.

New Book: The Vanishing American Adult. By Nebraska Republican Senator Benjamin Sasse.

Senator Sasse earned a doctorate in history and before his election in 2014, he was a federal health official and president of Midland University, which is linked with the evangelistic Lutheran Church. He is a conservative Republican who refused to back Trump.  The Senator was critical of Trumps recent firing of FBI director James Coley. His new book is subtitled, ‘Our coming of age crisis and how to rebuild a cultural of self-reliance’, grows out of his experience as a parent of the three children he raises with his wife in Melissa Nebraska. In an interview on  NPR radio, he said they shipped their kids to farms and ranches in Nebraska to learn some big life lessons. He said he wants them to get dirt under their fingernails. He says these experiences will help build scar tissue for the sole. He thinks US parents are doing a bad job of helping our children to understand that they have to develop resiliency. He said preserving and getting through hardships makes you tough. He said that we are failing in a bunch of fundamental ways to distinguish for our children between ‘needs’ and ‘wants’ and are failing to distinguish between ‘production’ and ‘consumption’. He said this book is not an old man screaming get off my lawn! It is a question of how do we do better or please Work on my Lawn. He thinks the category of perpetual adolescents is a new thing and is dangerous. Adolescence he says is about intentionally transforming from childhood into adulthood. Being stuck in adolescence is a Peter Pan to dystonia, as children forget that Neverland is a bad place to be.  He believes it is a good thing for children to learn how to work and to help them find meaning in their work. He states, that it is not natural to have to suffer when we work, as we are made to be productive and yet the worlds we live in has a whole bunch of suffering. And what children need to understand at 10, so that when their 16 years old and 20 years old, they’re moving into a truly semi-independent state, that they have earned through an experience and memory of persevering and having gotten through hardships. He also criticizes Washington DC politicians that seem addicted to their own incumbency.

Carl M Birkelbach 5/16/2017

THE INVESTMENT STRATEGY LETTER #719

                                                                100 Daze!

100 Days   For me, the most obvious problem in last 100 days is the inability of the Trump administration to govern. President Trump decided not to attend the White House Correspondents dinner. Instead, he spoke at a rally of his own supporters in Philadelphia. This action typifies President Trump’s temperament. He is still, in his mind, running a negative campaign, rather than running the country. By the latest polls, he has the lowest rating at 36%, of any other president for a first 100 day period. He has lost almost all support from independents and Democrats. However, his base is holding, for now, with the promise of jobs, jobs, jobs! His plan is to rebuild the economic architecture of the past. Actually, his plan seems to change, based upon whomever he has last talked to, or the last television program he watched. Not being addressed, is new technology and globalization, the market forces that have shrunken the middle class and increase the number of unemployed and underemployed poor. While the rest of the world is moving to carbon alternatives, our President is building pipelines. President Trump brags about his accomplishments in the first 100 days. However, most of his accomplishments are by executive order. Most executive orders have reduce regulations such as the Clean Power Act, protection of healthcare pre-existing conditions, privacy of credit card information and EPA protection of drinking water, streams and rivers. He has been unable to eliminate and replace Obama care, build a wall or have Mexico pay for it, initiate a travel ban or to punish sanctuary cities. His main accomplishment was to point a conservative to the Supreme Court, save 200 jobs out of 1000 at Carrier plan in Indiana. The economy in the first quarter was up less than 1%. Welcome to the new economy.

President Trump’s inconsistency would be laughable if they weren’t so dangerous. One moment he is threatening war with North Korea and the next minute he’s proposing that he would be honored to meet with its leader. Recently he commented  that the economy would benefit with the government shutdown in September. Soon after that he said it might be a good idea to break up the big banks. The Trump administration has no experience in governing and his advisers appear to be just as incompetent. President Bush had a high popularity rating early and because of the September 11 terrorist attack. However he had his Katrina moment, when he failed to face a national emergency with competence. What will it be, that will cause Trump to face a Katrina moment? I doubt if his 36% approval rating will last much longer, as it becomes obvious that the jobs are not coming and he reneges on almost all of his campaign promises, I expect his base within a year or so, will falter to a 25% rating. When this happens, combined with Russian implications (see below) in his administration, I believe all hell will break loose on the downside!

AND YET THE MARKET IS UP!

Although the Republicans have shown no ability to govern, the stock market has risen some 3000 points, since the Trump election. There is an illusion, in my opinion, that what Trump is offering, is good or big business, which should be good for the economy. I disagree! The tax plan President Trump is proposing would eliminate the estate tax and alternative minimum tax. This is self-serving to the only the elite  and would have saved President Trump approximately $31 million on his alleged 2005 tax report. He wants to bring down the corporate tax to 15% from 35%. The highest tax rate would be reduced from 38% to 35%. This discrepancy, in my opinion will lead individuals to form sub chapter S Corporations to receive the lower rate. It is estimated that the Trump tax plan will add approximately $7 trillion to the $19 trillion deficit. Trump continues to blame the Obama administration for this large a deficit. However, most of the increased deficit was for bailouts of the banks, whith some $3 trillion caused by the Bush Administration. How to make up for the deficit? The Trump administration suggests that a 4% growth rate in the economy will make up the difference. The Laffer Curve isn’t called laughable without reason. Whereas, President Reagan use the Laffer Curve in an economy that was just entering a technological breakout, the Trump era is one in which the market forces of globalization and automation should be addressed. So, it’s a mystery to me why the market is rising. The good news for corporate CEOs is that their average pay as of 1992 was $2.7 million a year, rose to $14 million a year in 2000 and now it is estimated to average $21 million a year. I continue to argue that income inequality and lack of regulation, will lead to future economic debacles. The banks had $67 trillion derivatives in the 2008 debacle. They now have over $350 trillion in derivatives. This time, a bank bailout will be impossible.

WHAT SHOULD WE BE DOING? Ten Points

Sure, it’s easy to criticize, as the Republicans did during the Obama administration, but it is a whole other thing to come up with positive solutions. What do I suggest?

1) Here number one on my list is gerrymandering. The way the House of Representatives are chosen is unconstitutional. They do not represent their constituency. Democrats consistently get more votes than Republicans, but still lose their seats in the House of Representatives.  2) Voter ID also must be addressed. It targets the poor as they have more difficulty getting identification and banking privileges than the average American. There has been consistent scientific documentation that voter fraud is almost nonexistent (Unlike Trumps claim that 3 million people committed voter fraud). 3) The Citizen’s United ruling must be reversed. If corporations are individuals they are sociopaths. They are only interested in profits, executive pay, takeovers, leveraged buyouts in the increase of their share price, no matter how many workers have to be fired and communities damaged. (See four movies below to see where this could lead us) 4) Glass Stiegel must be reinstated. Banks like Goldman Sachs can sell questionable securities to buyers while they go short in their own account as they did with CMO’s in the 2008 crisis. Banks and investment banks must be separated for the same reason that the law was enacted in the 1930s. Banks do not have a conscience. Like many corporations they are only motivated by profits not the common good.  Dodd/Frank laws must be enforced. As mentioned earlier the banks have over $350 trillion in derivatives outstanding. Interest rates on  Bank credit cards are over 20%. This should be against the law. The public must be protected. 5) The country must develop carbon alternatives for energy production. This is what China is doing and the rest of the world. For instance Germany has passed a law that there will no longer be production of the internal combustion engine after 2030. Are you ready GM and Ford?  6) There are two kinds of companies that have addressed cyber security. One is companies that have been attacked and the others are companies that don’t know they have been attacked. Not only is this important for business, but also for government, as the recent hacking by Russia of our last election demonstrators.  US should sponsor free Internet throughout the United States. Technology and innovation is one way to compete in this world. 7) The other way to compete worldwide is through education. New York is proposing a plan that all qualified students leaving high school (if family income is below $100,000 a year) can receive a college education for free. Also, there should be a job training program, similar to that Germany, for those who do not wish to go to college, but wish to enter the trades. 8) Raise the minimum wage to $15 an hour. Below $10 an hour is nothing more than another form of serfdom or slavery. Raising the minimum wage, in my opinion, well actually help the economy with increased consumer spending. 9) Here is the one place I agree with President Trump. We need an $1 trillion infrastructure plan. Damn the deficit! This will create jobs, promote the general welfare and secure a safer America. 10) As Bernie Sanders continues to harp, the United States is the only developed industrial nation in the world that does not have free health care. In my opinion, the only way to keep down costs and maintain adequate quality of service is through national healthcare. We can start incrementally, by including children up to 12 years old into Medicare. We can modify Obama care, but the long run, in my opinion; I see National Health Care as the only solution

RUSSIAN SPYING?

The guerrilla in the room or in this case the elephant, which nobody is taking seriously about, is the Russian involvement with the Trump administration. There is no question that General Michael Flynn was in contact with the Russian prior to the election and received fees from the Russians, which he did not report. The Trump’s administration is saying that this man was already vetted by the Obama administration and does not have any documentation of their own vetting. This seems to be highly unlikely, as Flynn was national security adviser. Admitting incompetence would be a better alternative, than being caught in a lie. News sources indicate that this responsibility goes all the way up to as high as the vice president. Other administrative connections to the Russian connection are also being investigated by the House, Senate and FBI. In my opinion, what these agencies find, maybe earth shattering to the Trump administration. In addition, there is every reason to believe President Trump must disclose his annual tax reporting. It is paramount that the nation sees for itself if there is any conflict of interest with the president receiving income or loans from Russia, that may be influencing his decision making. There could be some problems under the emolument act which reads as follows: No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.ARTICLE I, SECTION 9, CLAUSE 8

  CITIZENS UNITED AT THE MOVIES! 

“I can only hope that it never happens. However, the effect of Citizen United reminds me of a three science fiction movies!!!

Rollerball. 1975 movie called Rollerball. It stars James Caan as the sports hero Jonathan, Maude Adams as his ex-wife and John Houseman as Mr. Bartholomew, a high-level executive of the Energy Corporation. The film takes place in 2018, where the word is run as a global corporate state. The Energy Corporation is a global energy monopoly based in Houston, which controls access to all transportation, housing, communication and food on a global basis. Energy Corporation sponsors Jonathan’s team. Jonathan’s wife, Maud Adams was taken away from Jonathan by a corporate executive, which simply exerted his power and took her. The game Rollerball is a substitute for all team sports and for warfare. It is designed to bring euphoria to the masses. While the purpose of the sport is entertainment, Mr. Bartholomew, describes it as having a “distinct social purpose”: to show the futility of individual effort. In order to defeat the individual star Jonathan, The Energy Corporation simply changes the rules, so that Rollerball soon degrades into senseless violence, which nullifies any individual effort with humiliation. In the movie Jonathan emerges victorious against the Big Corporation.  This seems unlikely!”

Handmaid’s Tale, a 1985 book and now a TV Special, The Handmaid’s Tale, a work of  fiction by Canadian author Margaret Atwood. The novel is set in a near-future in New England, in a totalitarian theocracy, which has overthrown the United States government. The Handmaid’s Tale is set in the Republic of Gilead, a theocratic military dictatorship formed within the borders of what was formerly the United States of America. It begins with a staged attack that kills the President and most of Congress with a Christian fundamentalist revolutionary uprising, called the “Sons of Jacob”.   The revolution suspends the United States Constitution, under the pretext of restoring order. The new regime, the Republic of Gilead, forms a new militarized hierarchical regime, based on Old Testament-inspired social and religious fanaticism, which creates newly created social classes, with only the elite ruling. In this society, human rights are severely limited and women’s rights are even more curtailed, as women are forbidden to read. The story is told in the first person by a woman called Offred. The character is one of a class of women kept by the ruling class for reproductive purposes and known as ‘handmaids’.”

Elysium. The 2013 film offers deliberate social commentary, which explores political and sociological themes such as immigration, overpopulationhealth careworker exploitation, the justice system, and social class issues. In 2154, Earth  most of the earth’s citizens live in poverty, on the edge of starvation, and with little technology and medical care. The rich and powerful live on Elysium — a gigantic space habitat located in Earth’s orbit. Elysium is technologically advanced with some of its technology including Med-Bays: medical machines that can cure all diseases, reverse the aging process, and regenerate new body parts. A long-running feud exists between the wealthy residents of Elysium and the citizens of Earth. The earth and its multitudes are destined to perish in pollution, drought and rising seas.”

Phase Three, (In the not too distant future) 1) All classes except the oligarchy will disappear in the financial crisis, sometime after 2018. Congress, this time, will not bailout the banks, as conservative Republicans will reject any government sponsored program. Also, without any strict regulations, the banks will be so deeply in trouble with uncollectable loans and some $350 trillion in derivatives outstanding, that a bailout this time, will be impossible. The banks will close. The New York Stock Exchange will close. The United States government will fail and all functions of government will cease to exist. The only ones that will have any money and power will be the oligarchy. Class warfare will at last come to an end, as the oligarchy will dominate. 2) All national governments worldwide will fail. The oligarchy will then be composed of approximately 2000 selected families worldwide and their Corporations will rule the world. The 2,000 families will hold their estates in walled castles, protected by a paid army. 3) All land and businesses in the world will be owned and ruled by the oligarchy. 4) Most people will be unemployed and uneducated. All those, because of their needed skills, that will have a job, will be Corporate employees and will be designated as serfs or slaves. 5) The world will be at peace at last, as law order will prevail. 6) The oligarchy will eventually move away from earth to either ‘sky lab type 2001 Space Odyssey satellites’, or when it becomes possible, to the moon or Mars. The earth and its multitudes are destined perish in pollution, drought and rising seas.” (Yes I made this up! “Sometimes fiction can be a truer reality, than reality itself”

TWO NEW BOOKS:

  • HOMO DEUS: Yuval Noah Harari, author.“There was a time when the oligarchy needed the public to fight their wars, to manufacture their goods, produce their food and buy their products. That time is quickly coming to an end. Wars can no longer be fought on either a conventional or a nuclear basis. Wars are too expensive, impractical and are dangerous to all. Manufacturing of goods and food can now be done by a few, with automation. The oligarchy no longer needs the public to buy its goods, as it is completely independently wealthy. It will no longer be to our advantage to serve the common good. Over the past century humankind has managed to do the impossible and rein in famine, plague, and war. This may seem hard to accept, but, as Harari explains in his trademark style—thorough, yet riveting—famine, plague and war have been transformed from incomprehensible and uncontrollable forces of nature into manageable challenges. For the first time ever, more people die from eating too much than from eating too little; more people die from old age than from infectious diseases; and more people commit suicide than are killed by soldiers, terrorists and criminals put together. The average American is a thousand times more likely to die from binging at McDonalds than from being blown up by Al Qaeda.What then will replace famine, plague, and war at the top of the human agenda? As the self-made gods of planet earth, what destinies will we set ourselves, and which quests will we undertake? Homo Deus explores the projects, dreams and nightmares that will shape the twenty-first century—from overcoming death to creating artificial life. It asks the fundamental questions: Where do we go from here? And how will we protect this fragile world from our own destructive powers? This is the next stage of evolution.
  • THE CRISIS OF THE MIDDLE CLASS CONSTITUTION. Why economic inequality threatens our republic.
    For most of Western history, Sitaraman argues, constitutional thinkers assumed economic inequality was inevitable and inescapable—and they designed governments to prevent class divisions from spilling over into class warfare. The American Constitution is different. Compared to Europe and the ancient world, America was a society of almost unprecedented economic equality, and the founding generation saw this equality as essential for the preservation of America’s republic. Over the next two centuries, generations of Americans fought to sustain the economic preconditions for our constitutional system. But today, with economic and political inequality on the rise, Sitaraman says Americans face a choice: Will we accept rising economic inequality and risk oligarchy or will we rebuild the middle class and reclaim our republic? The Crisis of the Middle-Class Constitution is a tour de force of history, philosophy, law, and politics. It makes a compelling case that inequality is more than just a moral or economic problem; it threatens the very core of our constitutional sy

Carl M Birkelbach

4/30/2017

 

 

 

 

 

THE INVESTMENT STRATEGY LETTER #718

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The Trump Rally or the Chump Rally?

Why I haven’t written since November 22?

I haven’t written on this blog since the Trump victory. I was shocked, as were many and needed some time to put this unexpected change into perspective. Not only was I shocked by the victory, but I am also surprised with the stock market rally (up 13%) that has become known as the Trump Rally. It is obvious that Wall Street expects huge tax cuts for individuals and corporations, a diminishing of regulations and infrastructure projects that will stimulate the economy. I don’t believe Trump and the Republicans are capable of governing and these promises (and others like health care for everybody, a wall, getting coal jobs back etc.) will be difficult to fulfill. In my last written market letter November 22, I listed eight points that I believe are negative for both the economy and the country. Now, that we are into sixty-seven days into the Trump presidency, I can see that these items continue to be monumental roadblocks to the success of the Trump presidency.

The main reason I had written the Lone Bear Letter with the Dow at 17,672, was that I believe that income inequality and a resulting oligarchy, would eventually lead to an economic shakeup that would be worse than that which occurred in 2008. In my post In a time of universal deceit, telling the truth is a revolutionary act”   George Orwell. I said, “I believe political stagecraft, through skilled manipulation of facts, has given the public the perception and the illusion of power, rather than participation in real power. Public opinion has been manipulated and nullified.  We have only ourselves to blame. Like Pogo said “We have seen the enemy and it is us”. My fear is that, this process has Big Corporations and the top 1%, dominating the financial industry” (and now the government) “has left small businesses and the investing public very vulnerable. The general public, in my opinion, has become so weakened, that it is powerless to stop a crisis from progressing.”

Although President Trump won the election with only 26% of those able to vote and has a unbelievably low 36% approval rating and a 57% disapproval rating, this narrow segment of citizen support claims the exclusive right to speak on behalf of ‘We the people’. I believe that there is a danger to the norms and institutions necessary for our Republic to function. Like all authoritarian populous leaders, President Trump is defiant to all that challenge this rule, such as judges, journalists, democrats and Congressional oversight. He declares them as enemies of the people. The president’s dark rhetoric and outright lies sound quite familiar to anybody who has an understanding of history and knows how quickly democracies die.

Can Republicans govern?

The recent defeat to abolish ObamCare and replace it with TrumpCare was a disaster for the Republicans and the big supposed closer, President Trump. With his limited knowledge of politics, he assumed that the Republican Party was unified. However, he forgot about the 40 members of the Freedom Caucus, (the former tea party members), who basically don’t believe in government. They will vote against anything (except defense) that has government involvement, which is what government does. The healthcare bill had only a 17% public approval rating, because it took away many of the advantages of healthcare privileges, with savings for the government of an estimated $1 trillion. This one trillion dollars was going to be used to offset some of the reduction of government income, that are expected to be lost by tax cutting measures, when a new tax bill is proposed. Here is why I believe a tax bill will not pass this year. 1) The administrations ineptitude in proposing a new health care plan, will probably also surface in any new tax bill. There will continue to be a leadership vacuum as many Republicans will concentrate on the deficit and debt. The tea party and many republicans has deeply held convictions that any tax overhaul should not add to the national debt. While the president is known as the King of Debt, his party is deeply concerned about debt. It is expected that he proposed tax cut and infrastructure plan, could add $7.2 trillion to the $20 trillion national debt over a decade. 2) In addition, Republicans want to include a large import tax known as a ‘border adjustment tax’ in the package. This would include a 20% tax on imports that the Republicans believe will raise as much as $1 trillion to offset cuts in individual and business tax rates.  However, retail giants like Walmart, are bitterly opposed and willing to wage a costly advertising war against this plan they believe will increase the price of products and end up raising prices for American consumers. In effect, it is a $1 trillion tax on working poor consumers, while giving a huge tax cut to the wealthy. 3) It is also possible that popular tax breaks for individuals, such as deductions for mortgage interest, charitable giving and state and local taxes will no longer be allowed. Individuals, the real estate industry, charitable groups and state and local governments are just a few of the constituencies that will revolt against such changes. 4) Now, there is also an indication that President Trump is backing away from the 15% corporate tax rate and is more likely to propose a 25% tax rate. This will be very disappointing to Wall Street, although most of the 500 S&P largest corporations do not pay any tax. 5) Lastly, the Republicans must decide whether to use a process known as ‘budget reconciliation’ to speed changes through Congress by a simple majority vote. However, because of the structures of the ‘budget reconciliation’ process, any tax plan would not be allowed to add to the deficit for the next ten years. There is a lot that can go wrong and probably will. Therefore, be warned Wall Street, we see no tax plan this year and maybe never, because as follows:

The Russian factor?

Because I had knee surgery on March 17, and therefore not being ambulatory, I was able to constantly watch CNN, Fox News and MSNBC during the most unbelievable March 20th week, since Watergate. The week began, with testimony to the House Intelligence Committee by James B Colby, the director of the FBI, which disclosed for the first time, that the agency is running an investigation into Russian interference in the US election and possible ties between Trump associates and Russia. This immediately brought up the question of why the FBI director made a disclosure about Hillary Clinton’s emails a week before the election, but no discussion about the Trump Russian inquiries which had been going on since July? Tuesday had testimony by Supreme Court nominee Neil Gorsuch and was followed with the circus atmosphere that ended up with speaker of the house, withdrawing the TrumpCare vote. It was truly, the week that was! I could go on with details, but more importantly, there is the feeling that there is not only smoke, but fire under the accusations that Trump associates met with Russians and may have discussed deals to eliminate sanctions. In addition there is a possible Watergate type cover-up that may lead to the top. If you want to get a better feel of Putin, I suggest you take a look at the CNN documentary called, ‘The most powerful man in the world / Putin  In his book New Seeds of Contemplation which  was published in 1962, Trappist priest Thomas Merton wrote: ‘The world is full of great criminals with enormous power, and they are in a death struggle with each other. It is a huge gang battle, using corporations, lawyers and policemen and clergymen as their front, controlling papers, means of communication, and enrolling everybody in their armies.” 

The house intelligent committee chairman Devin Nunes, who served on the Trump transition team, has not acted in an independent manner. Adam Schiff  (along with Senator McCain), the committees Democratic leader has suggested that Nunus step down as chairman as Nunes, last week showed President Trump information (without showing it to other committee members),that Trumps closest associates may have been ‘incidentally’ swept up in foreign surveillance by American spy agencies.  New meetings for the committee have been canceled.Sally Yates was previously scheduled to speak today.

Today, Trump tweets “Trump Russia story is a hoax.’ Methinks he protests too much. A cover-up? If there is nothing to hide, let’s do a wide-open independent investigation. The hoax was the claim that President Obama wiretapped his phones. Let’s take a look at Trumps tax records and see if any of his income has come from Russia? I think he is involved with the Russians in business. Does Trumps business associations with foreign powers create a conflict of inters that violate the emolument clause of the constitution? The latest event is that Trumps son-in-law has had conversations with the Putin’s Russian bank, which is under sanctions in the US not to deal with the Bank. The Russians say it was  about business! At the minimum, a conflict of interest? Will all those Trump Associates be allowed to testify? The truth about the Trump administrations associates being involved with the Russians will eventually come out. In the meantime, this issue will continue to be a cloud over the authenticity of the Trump administration would be eventually be devastating to Wall Street and the stock market.

Government shutdown April 28th?

Carl M Birkelbach

3/28/17

 

THE INVESTMENT STRATEGY LETTER #717

DOW ABOVE 19,000!   BULL MARKET CONTINUES?

I wrote my Lone Bear Letter on the January 25, 2015 when the Dow was at 17,672. Up until now, this was the right advice, as the DOW was  17,140 in June of this year. Then something happened! I got Trumped. Now, with the Dow above 19,000, it appears that we could be headed higher, based on a highly stimulated economy, with lower taxes, big spending and huge- huge debt. President-elect Trump should have a news conference; however, he either tweets or goes on You-Tube. We are not sure what’s going to happen first, the wall, dropping Obama care, tax cuts, spending on infrastructure, cutting regulations or extracting immigrants.

1) Although I can’t imagine a conservative Congress and Senate going along with tax cuts and at the same time authorizing a huge spending program, it could happen.  That would increase the deficit by at least $5 trillion. We know that Trump believes in debt and has had no qualms about taking it on to build his projects. Some have worked out, and some have ended in bankruptcy. The scale of consequences increases if failure occurs on a federal level. If he succeeds in this stimulus of tax cuts and spending increases, expect the Federal Reserve (GOAL OF 2% INFLATION),to skyrocket interest rates back above 10%.Net effect? Trouble!

2) President-elect Trump has lots of conflicts of interest with being president and running a brand name business. For instance, it would be natural for diplomats to stay at his Trump Washington hotel, which is negotiating a rental agreement with the federal government that owns the land. Or he could influence the building of wind powered turbines close to his British golf courses. His loans are at the Deutsche Bank. which is in trouble with the Justice department. The stock is up 20% since his election. The Trump foundation has admitted ‘self-dealing’ with the IRS. The Constitution is very clear about using political influence for personal financial gain, its called impeachment.

3) I see another problem with President-elect Trumps comments about holding money back from cities that don’t cooperate with extracting immigrants.  70% of the jobs are in major cities, how is he going to create a better economy, if the government spending doesn’t help cities?

4) If Trump increases tariffs on places like Mexico, China and Japan in international trade war may develop that will stifle world trade, as it did in 1929. This will cost jobs and increase the cost of foreign goods.

 5) He has got to produce a better economy and fast. Fast is the problem. The government doesn’t move fast and in spite of his power, resistance could delay any changes. In a way, his promises are impossible to be met. We cannot make America as great as it was in the mythical 1950s, because we had a unique situation at that time. The world’s factories had been destroyed by World War II. We were the only functioning manufacturers in the world. Therefore, we had Happy Days that are impossible to duplicate. If Apple brings back its factories to the United States, from China as Trump has requested, they will be completely automated.

 6) Over half the country is concerned about the alt-right movement of the Trump administration. Many have taken Trumps promise to Make America Great Again to mean Make America White Again. So far, his choices key administrative positions have been all white older males and some with either alt-right or hawkish tendencies. There is a Constitution that protects us against segregation and violation of civil rights. However, this clash between whites and the multi-cultural society, rural and cities, peace and doves, rich and poor, blue-collar and white-collar could intensify into very active public demonstrations. As we saw with the Hamilton protest, Trump called this inappropriate. Talk about calling the kettle black, Trump is the King of inappropriateness. A President Trump’s personality will have difficulty with living in the White House, dealing with Congress and with public outrage. Unfortunately I believe President Trump will be challenged and tested immediately after January 20, by terrorists’ attacks and aggressive moves by Russia and/or China.

7) My bear market scenario was based upon deflation not inflation. Both are destructive to an economic system. However, an inflationary scenario, together with a unstable government is not something I had considered. The results may be the same, but it may take a longer for the weaknesses to show up.

8) My greatest fear is that America will be turned into an oligarchy, similar to Russia. In a recent (Oct 22, 2016) Economist Magazine they describe Putin’s domestic policy to reduce competition to favor his oligarchs. They describe a system he developed which Kirll Rogov, a Russian political economist describes as “soft legal constraints.” To quote from the Economist Magazine, “It involves writing the rules in such a way that to observe them is either prohibitively expensive or downright impossible to follow, then handing out licenses to break those rules to the oligarchy.” Doesn’t this sound exactly like what has happened in our financial industry? The SEC and FINRA have made the rules (compliance) to run an independent brokerage firm as either prohibitively expensive or downright impossible to follow. In this way, the government has eliminated independent competition and has turned over the entire financial industry to the banks and large financial institutions. They allow Wall Street  to break the rules for the cost of a small fine, as compared to the large profit that they made in breaking the rules. In this way the large financial institutions feed the SEC, that guards their monopoly.  In my opinion, with Trump functioning without restraints, he will favor his buddies, causing the United States  to look more and more like Putin’s Russia and its economy, dominated by the privileged few 400 families (top tenth of 1%).

 Current 11/22/16

CLOSE

Dow NASDAQ S&P 500
19,023 5,386 2,202
Short Term UP UP UP
Int. Term UP UP UP
Long Term ? ? ?
Foretasted Trends DJIA NASDAQ S&P 500
Short Term ? ? ?
Int. Term ? ? ?
Long Term ? / ?
Breakout Points DJIA NASDAQ S&P 500
Short Term Up (Resistance) 19,023 5,386 2,202
Short Term Down (Support) 17,140/ 4,594 2,001
Int. Term Up (Resistance) ? ? ?
Int. Term Down (Support)  16,865 15,484  /15,370 /14,688/ 13,377  4,267/4,209/3,986/3,294  1,850/1,560
Long Term Up (Resistance) ? /
Long Term Down Fibonacci Support 50%12,000

62%10,750

2008 LOW 6,627

50% 3,000

62% 2,555

2008 LOW 1,204

50%1,400

62% 1,177

2008 LOW 666

 10 Treasury  L0W 1.37^ NOW 2.32% Gold 1,211 Oil 26.59 low Now 48.00

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST
Carl does not offer investment advice, but merely his own personal opinion. This report has been prepared from original sources and data we believe reliable but make no representations as to the accuracy or completeness. Carl, his affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold or sell a position in securities. Past performance is no guarantee of future success. Upon request, we will supply additional information. CarlBis@aol.com

 

THE LONE LETTER #10 UPDATED

THE FIRST 100 DAYS: POLICY and COMMENT

COMMENT: While the below may first appear as critical of a Trump administration, I really want to be helpful. Unlike Republicans who in 2008 wanted Obama to be unsuccessful, I want President Trump to be successful. That means pointing out flaws of his policy that can be deemed destructive. It is the same with my comments about the SEC and FINRA. I never met a person that works for these two agencies that I didn’t like. To me, this is just a matter of good people making bad decisions. To turn around BIG bank’s control of the brokerage industry is still possible. Small businesses under a President Trump administration may thrive. I hope so. However, the appointment of Steve Bannon as President Trump’s Chief White House strategist and senior counselor deserves to be criticized. He has worked as the executive chairman of a Breitbart News Network, an alt-right ideology that promotes white supremacy, opposes immigration, feminine and multiculturalism, is anti-Semitic and considers Muslims as a danger to our democracy. Following are an example of two of their headlines “Birth control makes women unattractive and crazy” “Hoist it high and proud the Confederate flag proclaims a glorious heritage.” In two months, this toxic ideology will be sitting down the hall from the Oval Office.

With the election of Donald Trump and the control of the Republican Party of both houses of Congress and eventually the Supreme Court, a radical reshaping of America is underway. Although President-elect Trump has yet to provide any specifics, outlined below are the repercussions of what he called for his campaign. In my opinion, if he follows through on his promises, there will be a further shift of wealth to the upper-class, higher prices on imported goods, higher interest rates  a substantial increase in inflation, international uncertainty, the freedom of the banks and Wall Street to create another banking crisis and increased economic weather related disasters . These policies will leave the middle and working class Americans further behind. The irony of a Trump victory is that they will wind up less well off. These policies will hurt the exact constituency of blue-collar workers that elected him

In my opinion, it appears that this vote was a backlash of white voters (a white backlash) and a last gasp effort to bring the nation back to a time before globalization and diversity. It was a vote against women seeking power and against those different from themselves. It was a vote by rural white people against multicultural city people. It was a rejection of a multicultural society and blaming it for taking jobs away from them. In particular previously privileged white voters want to bring back a time when they were guaranteed a union job at $35 an hour. These times are gone forever and now these previously privileged white voters must struggle up the ladder along with women, blacks, gays, immigrants and Mexicans. Solutions are complicated. However, the public is looking for simple and quick answers. There are no simple and quick solutions. As indicated below, a Trump presidency based on his current policy and temperament will lead to an economic collapse worse than the Bush 2008 economic collapse as follows:

Trade Policy: President elect Trump has promised an immediate attack on all trade deals and the cancellation of all presidential orders accomplished by President Obama. The president has significant authority to act unilaterally in this area. He said would put a 35% tariff on imports from Mexico at a 45% tariff on those from China. These were the kind of trade restrictions that caused the 1930’s depression. International trade is already slowing and tariffs will slow growth further, in an effort to protect blue-collar manufacturing workers. The tariffs would raise the prices of imported goods sharply and cut sharply purchasing power of every American including lower income Americans, Trump’s core supporters. In reaction to this Mexican peso plunged more than 13%. The Chinese currency has dropped to its lowest level in eighty years. The tariffs could toss China into a recession where growth is already slowing and China’s banks have given loans to questionable companies. In China, $1.3 trillion of corporate loans are owned by companies were profits will not cover their interest payments. The problem in China could trigger banks losses that could start a worldwide recession. Money is flowing out of China. Tariffs will increase the problem. While some manufacturing jobs may come back to the US as a result of the tariffs, more jobs domestically may be lost, because the average American would have less spending power. The Peterson Institute for International Economics estimated that rather than bringing back jobs, Mister Trumps, tariffs could ‘result in a trade war and cost our economy more than 5 million jobs and possibly lead to a recession’.

Tax Cuts: The centerpiece of Mister Trump’s plan to revitalize the economy is a huge $5.8 trillion tax cut. As of yet, the tax cut is unaccompanied by specifically cutting other expenses that would pay for it. Actually, President-elect has proposed more spending on defense and infrastructure. Once again the only expenses that can be cut or social and educational programs that would have helped the constituency that voted for him. It has been estimated that this would cause a $10 trillion budget deficit ballooning out of control, creating runaway inflation and possibly raising interest rates to levels not seen since the 1970s. This alone would cause an economic disaster. According to the Tax Policy Center, 61% of the tax cut benefits would go to the top 1%, who least need it and would be least likely to spend it.

Regulations: Mister Trump also has a free hand to act unilaterally to declare a moratorium on new rules and reverse many executive orders. He will have a free hand to let industrial companies reduce or eliminate the Environmental Protection Agency and for financial institutions to repeal the Dodd Frank bill. The elimination of Dodd Frank will give the banks enough rope to hang themselves once again, as they did in 2008. At a recent speech at the Economics Club of New York, Neel Kashkari, (Minneapolis Fed chief) suggests a break up the big banks needs to be done through  stricter Dodd-Frank regulations to avoid, “another financial calamity outweighing the costs of increased regulation.” The Republican party platform calls for restoring the Glass Stegall act.   Maybe there is hope? Nah! Don’t’ forget the classic THIS TIME ITS DIFFERENT by Carmen Reinhart: It tells the story of eight centuries of Financial Folly. Each time after a catastrophe, such as the Great Depression or 2008, economists agree that it could never happen again. Who could be so stupid to allow the banks to own $500 trillion in derivatives, let six banks control 70% of the US assets (too big to fail) and allow all the economic growth to go to the 1%, while eighty people own 50% of the world’s wealth?   As reported by Reuters News, a judge recently refused to throw out a private lawsuit accusing the 14 banks of rigging an interest rate benchmark (ISDAfix) used in the $553 trillion derivatives markets. That’s right; I said the $553 trillion derivative markets. That dwarfs the problem of derivatives 2008, which almost brought the banks and our economic system to their demise.

Immigration:  Mister Trump started his campaign with the promise to build a wall on the Mexican border and deport some 11 million undocumented Mexican aliens. The conservative, American Action Forum calculated the building of the wall and the cost to deporting the illegal immigrants would be from $400-$600 billion and would reduce the gross domestic product by $1.6 trillion. Mister Trump has since backed off on the 11 million and said he would start with 3 million who have broken the law. Many of these illegal immigrants have legalized children that were born in the United States. In addition most of the undocumented workers are doing jobs that many native born Americans won’t do and are paying taxes. See the movie ‘A Day Without Mexicans.’ Because, this will break up families and bring chaos to the workforce, expect demonstrations in sanctuary cities and maybe even riots.

The Environment:  Since President Nixon, voters have taken for granted clean air and clean water. What happened in Flint Michigan can happen anywhere. In addition, Republicans refuse to recognize the science of global warming. They continue to call it climate change. This unrealistic view of science will apparently be the mode of operation in the new administration. Although I’m enjoying a 70° temperature in Chicago this November, a majority of scientists, acknowledge that without environmental controls, global warming will increase weather-related disasters, putting our coastal cities in harm’s way. The new appointees in this area are backed by the oil industry. The oil industry will be in control for at least another four years. Expect the Keystone pipeline to be approved and for our cars and trucks to get bigger. Alert America! Germany just announced that it will stop producing the combustion engine for all of his automobiles in 13 years. We are going to be left behind in a world of an oil based economy, unless this administration acknowledges global warming and energy alternatives.

Health Care:  Mister Trump has said that he will eliminate The Affordable Care Act, ending free or subsidized coverage that cover 20 million Americans that are now receiving it. He has since backed off a little, and said he would continue to recommend that children will continue on their parent’s health care until they are 26 and that pre-existing conditions will continue not to be a factor in pricing of health insurance. However, there has not been a comprehensive plan proposed to assist with 20 million Americans that will not have health insurance and facing higher costs and loss of coverage. (OR the other 40 million Americans and their children without heath care insurance).BIG Pharmaceuticals and BIG Insurances companies are the winners here, once again, not the Trump’s constituency. As Bernie Sanders says,’ there’s no reason that we are the only industrialized nation that does not offer free healthcare to our citizens.’ There’s a reason now, it’s called President Trump.

Foreign Policy:  This is an area that I will hold judgment on for a while. Mister Trump has had no experience in foreign policy. You could tell by his briefing with President Obama that the responsibility of the job may be more than he thought. If anything, Trump exemplifies a strong leader. My problem is with his personality is, that he reportedly has a short attention span and has no experience in dealing diplomatically on a worldwide basis. Maybe his tough stance will eliminate problems in the Middle East. However, problems in the Middle East have been going on for 2000 years. Nobody’s been able to solve those problems yet and I doubt if an inexperienced president will be able to do so. He will have his hand on the nuclear button. I hope he handles it better than with his hand on twitter. We are all in danger in a world awash in nuclear weapons.

Income Equality: My fear is that, now with a Trump presidency, Big Corporations and the top 1%, will increasingly dominate the our economy that will leave individuals, small businesses and the investing public very vulnerable. The general public has become so weakened and disillusioned, that it is powerless to stop this crisis from progressing.  This is similar to what happened to democracy in Russia.  In my opinion, both Trump and Putin have tendencies that are vindictive and are not tolerable of criticism and have no answers for solving economic problems. The way things are going, Billionaires will become Trillionaries and an oligarchy of 400 families will control 90% of the wealth in the world.

In a recent (Oct 22, 2016) Economist Magazine they describe Putin’s domestic policy to reduce competition to favor his oligarchs. They describe a system he developed which Kirll Rogov, a Russian political economist describes as “soft legal constraints.” To quote from the Economist Magazine, “It involves writing the rules in such a way that to observe them is either prohibitively expensive or downright impossible to follow, then handing out licenses to break those rules to the oligarchy.” Doesn’t this sound exactly like what has happened in our financial industry? The SEC and FINRA have made the rules (compliance) to run an independent brokerage firm as either prohibitively expensive or downright impossible to follow. In this way, the government has eliminated independent competition and has turned over the entire financial industry to the banks and large financial institutions. They allow these companies to break the rules for the cost of a small fine, as compared to the large profit that they made in breaking the rules. In this way the large financial institutions feed the SEC, that guards their monopoly.  In my opinion, with the Republicans, functioning without restraints, the United States will continue to look more and more like Putin’s Russia and its economy, dominated by the privileged few 400 families (top tenth of 1%).

We the People   hold these truths to be self-evident, that all men are created equal, that they are endowed, by their Creator, with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness. Is a progressive compassionate America still possible? The answer I think is yes.  In the darkest hours of the civil rights movement they sang ‘We shall overcome’ and Martin Luther King said we shall persevere if we express 1) courage, 2) compassion and 3) community. Listen to the words of Nobel Prize winner Bob Dylan that were written in those dark days.

“For the loser now will be later to win
Cause the times they are a-changing

Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s the battle outside raging
It’ll soon shake your windows and rattle your walls
For the times they are a-changing

Come mothers and fathers
Throughout the land
And don’t criticize
What you can’t understand
Your sons and your daughters
Are beyond your command
Your old road is rapidly aging
Please get out of the new one if you can’t lend your hand
Cause the times they are a-changing

The line it is drawn
The curse it is cast
The slowest now
Will later be fast
As the present now
Will later be past
The order is rapidly fading
And the first one now will later be last
Cause the times they are a-changing”

Hallelujah!

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST
Carl does not offer investment advice, but merely his own personal opinion. This report has been prepared from original sources and data we believe reliable but make no representations as to the accuracy or completeness. Carl, his affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold or sell a position in securities. Past performance is no guarantee of future success. Upon request, we will supply additional information. CarlBis@aol.com

THE LONE BEAR LETTER#10

THE LONE BEAR LETTER #10

THE FIRST 100 DAYS: POLICY and COMMENT

COMMENT: While the below may first appear as critical of a Trump administration, I really want to be helpful. Unlike Republicans who in 2008 wanted Obama to be unsuccessful, I want President Trump to be successful. That means pointing out flaws of his policy that can be deemed destructive. It is the same with my comments about the SEC and FINRA. I never met a person that works for these two agencies that I didn’t like. To me, this is just a matter of good people making bad decisions. To turn around BIG bank’s control of the brokerage industry is still possible. Small businesses under a President Trump administration may thrive. I hope so. However, the appointment of Steve Bannon as President Trump’s Chief White House strategist and senior counselor deserves to be criticized. He has worked as the executive chairman of a Breitbart News Network, an alt-right ideology that promotes white supremacy, opposes immigration, feminine and multiculturalism, is anti-Semitic and considers Muslims as a danger to our democracy. Following are an example of two of their headlines “Birth control makes women unattractive and crazy” “Hoist it high and proud the Confederate flag proclaims a glorious heritage.” In two months, this toxic ideology will be sitting down the hall from the Oval Office.

With the election of Donald Trump and the control of the Republican Party of both houses of Congress and eventually the Supreme Court, a radical reshaping of America is underway. Although President-elect Trump has yet to provide any specifics, outlined below are the repercussions of what he called for his campaign. In my opinion, if he follows through on his promises, there will be a further shift of wealth to the upper-class, higher prices on imported goods, higher interest rates  a substantial increase in inflation, international uncertainty, the freedom of the banks and Wall Street to create another banking crisis and increased economic weather related disasters . These policies will leave the middle and working class Americans further behind. The irony of a Trump victory is that they will wind up less well off. These policies will hurt the exact constituency of blue-collar workers that elected him

In my opinion, it appears that this vote was a backlash of white voters (a white backlash) and a last gasp effort to bring the nation back to a time before globalization and diversity. It was a vote against women seeking power and against those different from themselves. It was a vote by rural white people against multicultural city people. It was a rejection of a multicultural society and blaming it for taking jobs away from them. In particular previously privileged white voters want to bring back a time when they were guaranteed a union job at $35 an hour. These times are gone forever and now these previously privileged white voters must struggle up the ladder along with women, blacks, gays, immigrants and Mexicans. Solutions are complicated. However, the public is looking for simple and quick answers. There are no simple and quick solutions. As indicated below, a Trump presidency based on his current policy and temperament will lead to an economic collapse worse than the Bush 2008 economic collapse as follows:

Trade Policy: President elect Trump has promised an immediate attack on all trade deals and the cancellation of all presidential orders accomplished by President Obama. The president has significant authority to act unilaterally in this area. He said would put a 35% tariff on imports from Mexico at a 45% tariff on those from China. These were the kind of trade restrictions that caused the 1930’s depression. International trade is already slowing and tariffs will slow growth further, in an effort to protect blue-collar manufacturing workers. The tariffs would raise the prices of imported goods sharply and cut sharply purchasing power of every American including lower income Americans, Trump’s core supporters. In reaction to this Mexican peso plunged more than 13%. The Chinese currency has dropped to its lowest level in eighty years. The tariffs could toss China into a recession where growth is already slowing and China’s banks have given loans to questionable companies. In China, $1.3 trillion of corporate loans are owned by companies were profits will not cover their interest payments. The problem in China could trigger banks losses that could start a worldwide recession. Money is flowing out of China. Tariffs will increase the problem. While some manufacturing jobs may come back to the US as a result of the tariffs, more jobs domestically may be lost, because the average American would have less spending power. The Peterson Institute for International Economics estimated that rather than bringing back jobs, Mister Trumps, tariffs could ‘result in a trade war and cost our economy more than 5 million jobs and possibly lead to a recession’.

Tax Cuts: The centerpiece of Mister Trump’s plan to revitalize the economy is a huge $5.8 trillion tax cut. As of yet, the tax cut is unaccompanied by specifically cutting other expenses that would pay for it. Actually, President-elect has proposed more spending on defense and infrastructure. Once again the only expenses that can be cut or social and educational programs that would have helped the constituency that voted for him. It has been estimated that this would cause a $10 trillion budget deficit ballooning out of control, creating runaway inflation and possibly raising interest rates to levels not seen since the 1970s. This alone would cause an economic disaster. According to the Tax Policy Center, 61% of the tax cut benefits would go to the top 1%, who least need it and would be least likely to spend it.

Regulations: Mister Trump also has a free hand to act unilaterally to declare a moratorium on new rules and reverse many executive orders. He will have a free hand to let industrial companies reduce or eliminate the Environmental Protection Agency and for financial institutions to repeal the Dodd Frank bill. The elimination of Dodd Frank will give the banks enough rope to hang themselves once again, as they did in 2008. At a recent speech at the Economics Club of New York, Neel Kashkari, (Minneapolis Fed chief) suggests a break up the big banks needs to be done through  stricter Dodd-Frank regulations to avoid, “another financial calamity outweighing the costs of increased regulation.” The Republican party platform calls for restoring the Glass Stegall act.   Maybe there is hope? Nah! Don’t’ forget the classic THIS TIME ITS DIFFERENT by Carmen Reinhart: It tells the story of eight centuries of Financial Folly. Each time after a catastrophe, such as the Great Depression or 2008, economists agree that it could never happen again. Who could be so stupid to allow the banks to own $500 trillion in derivatives, let six banks control 70% of the US assets (too big to fail) and allow all the economic growth to go to the 1%, while eighty people own 50% of the world’s wealth?   As reported by Reuters News, a judge recently refused to throw out a private lawsuit accusing the 14 banks of rigging an interest rate benchmark (ISDAfix) used in the $553 trillion derivatives markets. That’s right; I said the $553 trillion derivative markets. That dwarfs the problem of derivatives 2008, which almost brought the banks and our economic system to their demise.

Immigration:  Mister Trump started his campaign with the promise to build a wall on the Mexican border and deport some 11 million undocumented Mexican aliens. The conservative, American Action Forum calculated the building of the wall and the cost to deporting the illegal immigrants would be from $400-$600 billion and would reduce the gross domestic product by $1.6 trillion. Mister Trump has since backed off on the 11 million and said he would start with 3 million who have broken the law. Many of these illegal immigrants have legalized children that were born in the United States. In addition most of the undocumented workers are doing jobs that many native born Americans won’t do and are paying taxes. See the movie ‘A Day Without Mexicans.’ Because, this will break up families and bring chaos to the workforce, expect demonstrations in sanctuary cities and maybe even riots.

The Environment:  Since President Nixon, voters have taken for granted clean air and clean water. What happened in Flint Michigan can happen anywhere. In addition, Republicans refuse to recognize the science of global warming. They continue to call it climate change. This unrealistic view of science will apparently be the mode of operation in the new administration. Although I’m enjoying a 70° temperature in Chicago this November, a majority of scientists, acknowledge that without environmental controls, global warming will increase weather-related disasters, putting our coastal cities in harm’s way. The new appointees in this area are backed by the oil industry. The oil industry will be in control for at least another four years. Expect the Keystone pipeline to be approved and for our cars and trucks to get bigger. Alert America! Germany just announced that it will stop producing the combustion engine for all of his automobiles in 13 years. We are going to be left behind in a world of an oil based economy, unless this administration acknowledges global warming and energy alternatives.

Health Care:  Mister Trump has said that he will eliminate The Affordable Care Act, ending free or subsidized coverage that cover 20 million Americans that are now receiving it. He has since backed off a little, and said he would continue to recommend that children will continue on their parent’s health care until they are 26 and that pre-existing conditions will continue not to be a factor in pricing of health insurance. However, there has not been a comprehensive plan proposed to assist with 20 million Americans that will not have health insurance and facing higher costs and loss of coverage. (OR the other 40 million Americans and their children without heath care insurance).BIG Pharmaceuticals and BIG Insurances companies are the winners here, once again, not the Trump’s constituency. As Bernie Sanders says,’ there’s no reason that we are the only industrialized nation that does not offer free healthcare to our citizens.’ There’s a reason now, it’s called President Trump.

Foreign Policy:  This is an area that I will hold judgment on for a while. Mister Trump has had no experience in foreign policy. You could tell by his briefing with President Obama that the responsibility of the job may be more than he thought. If anything, Trump exemplifies a strong leader. My problem is with his personality is, that he reportedly has a short attention span and has no experience in dealing diplomatically on a worldwide basis. Maybe his tough stance will eliminate problems in the Middle East. However, problems in the Middle East have been going on for 2000 years. Nobody’s been able to solve those problems yet and I doubt if an inexperienced president will be able to do so. He will have his hand on the nuclear button. I hope he handles it better than with his hand on twitter. We are all in danger in a world awash in nuclear weapons.

Income Equality: My fear is that, now with a Trump presidency, Big Corporations and the top 1%, will increasingly dominate the our economy that will leave individuals, small businesses and the investing public very vulnerable. The general public has become so weakened and disillusioned, that it is powerless to stop this crisis from progressing.  This is similar to what happened to democracy in Russia.  In my opinion, both Trump and Putin have tendencies that are vindictive and are not tolerable of criticism and have no answers for solving economic problems. The way things are going, Billionaires will become Trillionaries and an oligarchy of 400 families will control 90% of the wealth in the world.

In a recent (Oct 22, 2016) Economist Magazine they describe Putin’s domestic policy to reduce competition to favor his oligarchs. They describe a system he developed which Kirll Rogov, a Russian political economist describes as “soft legal constraints.” To quote from the Economist Magazine, “It involves writing the rules in such a way that to observe them is either prohibitively expensive or downright impossible to follow, then handing out licenses to break those rules to the oligarchy.” Doesn’t this sound exactly like what has happened in our financial industry? The SEC and FINRA have made the rules (compliance) to run an independent brokerage firm as either prohibitively expensive or downright impossible to follow. In this way, the government has eliminated independent competition and has turned over the entire financial industry to the banks and large financial institutions. They allow these companies to break the rules for the cost of a small fine, as compared to the large profit that they made in breaking the rules. In this way the large financial institutions feed the SEC, that guards their monopoly.  In my opinion, with the Republicans, functioning without restraints, the United States will continue to look more and more like Putin’s Russia and its economy, dominated by the privileged few 400 families (top tenth of 1%).

We the People   hold these truths to be self-evident, that all men are created equal, that they are endowed, by their Creator, with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness. Is a progressive compassionate America still possible? The answer I think is yes.  In the darkest hours of the civil rights movement they sang ‘We shall overcome’ and Martin Luther King said we shall persevere if we express 1) courage, 2) compassion and 3) community. Listen to the words of Nobel Prize winner Bob Dylan that were written in those dark days.

“For the loser now will be later to win
Cause the times they are a-changing

Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s the battle outside raging
It’ll soon shake your windows and rattle your walls
For the times they are a-changing

Come mothers and fathers
Throughout the land
And don’t criticize
What you can’t understand
Your sons and your daughters
Are beyond your command
Your old road is rapidly aging
Please get out of the new one if you can’t lend your hand
Cause the times they are a-changing

The line it is drawn
The curse it is cast
The slowest now
Will later be fast
As the present now
Will later be past
The order is rapidly fading
And the first one now will later be last
Cause the times they are a-changing”

Hallelujah!

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST
Carl does not offer investment advice, but merely his own personal opinion. This report has been prepared from original sources and data we believe reliable but make no representations as to the accuracy or completeness. Carl, his affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold or sell a position in securities. Past performance is no guarantee of future success. Upon request, we will supply additional information. CarlBis@aol.com

 

 

THE INVESTMENT STRATEGY LETTER #716

 

“Father, forgive them, for they know not what they do.” And they cast lots to divide his garments.” Luke 34

Trump won! Seventy five percent of those that voted, voted for someone they felt is unqualified to be president. Uncertainty will not be good for the markets. The last time the senate, congress, presidency and Supreme Court were dominated by the Republicans. was 1928. Watch out below!

Trump’s only plan so far, is to, build a wall, brutally extract 11 million immigrants from their children, not allow Moslems into the country, eliminate Obama Care, eliminate Dodd-Frank, eliminate the Environmental Protection Agency, rewrite all executive orders, pull back from NATO and to give the rich and corporations big tax breaks. The reduction of taxes to the rich and corporations in my opinion will increase inequality and cause HUGE budget deficits, which will kill economic growth.  The elimination of Dodd-frank will give the banks enough rope to hang themselves. Deporting 11 million workers and consumers from the economy, will kill growth. Pulling back from NATO will encourage Russia aggressive behavior. Eliminating environmental controls will cause increase economic weather related disasters.

In my opinion, it appears that this was a backlash of white voters (a white lash) to bring back the nation to a time before diversity. It was a vote against women seeking power and against those different from them. It was a vote by rural white people against multicultural city people. It was a rejection of a multicultural culture and blaming it for talking jobs away from them. In particular, previously privileged white voters want to bring back a time when they were guaranteed a union job at $35 an hour. These times are gone forever and now they must struggle up the ladder along with women, blacks, gays, immigrants and Mexicans. Solutions are complicated. However, the public is looking for simple and quick answers. There are no simple and quick solutions. A Trump presidency makes the ‘bear market scenario’ I have seen coming and documented in this blog, more frightening.  I believe a Trump Presidency will lead to an economic collapse worse than the Bush 2008 economic collapse.

Expect an Oligarchy similar to Putin’s Russia

My fear is that, now with a Trump presidency, Big Corporations and the top 1%, will increasingly dominate the our economy that will leave individuals, small businesses and the investing public very vulnerable. The general public has become so weakened and disillusioned, that it is powerless to stop this crisis from progressing.  This is similar to what happened to democracy in Russia.  In my opinion, both Trump and Putin  have tendencies that are vindictive and are not tolerable of criticism and have no answers for solving economic problems.

In a recent (Oct 22, 2016) Economist Magazine they describe Putin’s domestic policy to reduce competition to favor his oligarchs. They describe a system he developed which Kirll Rogov, a Russian political economist describes as “soft legal constraints.” To quote from the Economist Magazine, “It involves writing the rules in such a way that to observe them is either prohibitively expensive or downright impossible to follow, then handing out licenses to break those rules to the oligarchy.” Doesn’t this sound exactly like what has happened in our financial industry? The SEC and FINRA have made the rules (compliance) to run an independent brokerage firm as either prohibitively expensive or downright impossible to follow. In this way, the government has eliminated independent competition and has turned over the entire financial industry to the banks and large financial institutions. They allow these companies to break the rules for the cost of a small fine, as compared to the large profit that they made in breaking the rules. In this way the large financial institutions feed the SEC, that guards their monopoly.  In my opinion, with the Republicans, functioning without restraints, the United States will continue to look more and more like Putin’s Russia and it’s economy, dominated by the privledged few 400 families (top tenth of 1%).

BELOW ARE 12 CONTINUING REASON FOR A BEAR MARKET.

A TRUMP PRESIDENCY IS #13

For the following reasons below, I believe this is a bubble that is being held up by corporate buy- backs, excessive Central Bank buying (don’t fight the Fed) and political considerations to keep the bubble fully blown during the election period.

1) The US MARKETS ARE making new highs. Now, everything is OK again? Sure!  A Citigroup analyst has reported buying is coming from Central Banks. They are creating a fantasy that all is OK, before the US election.   The BEAR MARKET decline may take longer to develop than I first thought and I am extending my 2016 FORCAST TO 7/4/2017. See below

2). Retail stocks such as Macy’s, Disney and Sears are having trouble with their earnings. Store closings are commonplace today as people are buying online. This is not good for profit margins or employment. The economy could be stimulated with a backlog of infrastructure spending. Not a chance with this Congress.

3). Gold is making new highs; while the 10 year treasury WENT TO 1.37% is a new low.  Now 1.68%.That is where the money is going. This means that INDIVIDUAL investors are very cautious. 

4). Donald Trump, continues to blurt out dangerous statements.  He recently said, “Why worry about Debt, we can print money.” That’s true, except that excessive printing of money turns into hyperinflation. If you don’t know the history of the Weimar Republic in Germany you are likely to repeat history’s mistakes. Besides, it’s the Federal Reserve’s job to monitor monetary policy. Of course a dictator, can easily appoint flunkies at the Federal Reserve, which he could control. The market dislikes uncertainty and instability. His quote of “fight fire with fire” will mean more meaningless and expensive wars~! His comments on NATO are based on financing, not commitment or global strategy. This will encourage Putin.

5).I believe most of buying has occurred because of Central Bank stimulus, continued low interest rates (-0% some places) and corporate stock buybacks in the last 12 months are a record $600 billion. If it were not this stimulus, I believe the market would be down some 20% at this point. Companies are not investing in production or innovation. this is bad for employment and the economy.

6). The middle class continues to take it on the chin. According to recent data between 2000 and 2014, the middle class shrunk from 55% to under 51%. It’s probably now below 50%. An economy  based on consumer spending of the middle class, like the United States, cannot grow without a healthy middle-class. International corporations do well for a while, as they are now. But eventually, I feel the present economic environment will lead to a deflationary economy, which will hurt all economic levels.

7). If commodity prices and companies engaged in retail sales continue to suffer, their bonds will eventually suffer and therefore the banks that are holding securities will suffer. 2008 all over again, only this time no government bailout! The ‘canary in the mine’ Deutsche Bank at 14.35 is down from its recent high of 19.46 and above its recent low  at 12.60, Also see weak charts of BCS, CS, HBC.BE, BNP.PA   WHY IS THE US MARKETS MAKING NEW HIGHS AND THE BANKS MAKING NEW LOWS? BECAUSE OF, I BELIEVE CENTRAL BANK INTERFERENCE, WHICH WILL STOP AFTER THE ELECTION.

8). China continues to show lackluster economic growth. China’s rate of loans is far above the rate of money supply growth. Right now, China is using its currency to buy as many companies in the West as it can, while it can. Just as has happened to Japan in the 1990s, we expect the same deflationary scenario to begin to occur in China. . In China, for example, has $1.3 trillion of corporate loans, one seventh of the total are owned by companies whose profits don’t cover their interest payments, a problem that could trigger banks losses equal to 7% of gross domestic product. Money is flowing out of china!

9). The central banks have done everything they can to stop inflation in Europe and in the United States with  the results  that many corporations in Europe are issuing bonds and financing them at close to zero interest rates. What this means, is that central banks cannot stop deflation. Rick Santelli of CNBC says “nobody says anything good about negative interest rates.” Central banks are helpless to stop deflation.

10). I continue to believe that economic growth in the United States is being slowed by all the income growth going to the top 1%. A recent Economist Magazine showed the upper 1% standing on top of their money with the guarded by barbed wire fence around, with the title WINNERS TAKE ALL. This is a lose, lose policy for everyone, where all boats will sink.

11) Brazil and Petrobas its oil company($500 Bil debt) are going bankrupt because of corruption. What will happen to its Bonds that the banks hold?

12) Cyber theft at the banks can’t be stopped. $80 billion, another attack right after that. Soon there will be no confidence in on line banking.

My forecasts for next 12 months TO JULY 4TH 2017 call for the Dow Jones Industrial average to be as low as 14,688 to 12,000, the NASDAQ to be as low as 4,000 to 3,000 and the S&P 500 to be as low as 1,560 to 1,400 because  (See previous market letters)

 Current 9/8/16

CLOSE

Dow NASDAQ S&P 500
18,355 5,183 2,137
Short Term UP UP UP
Int. Term UP UP UP
Long Term ? ? ?
Foretasted Trends DJIA NASDAQ S&P 500
Short Term Down Down Down
Int. Term Down Down Down
Long Term Bear Market Bear Market Bear Market
Breakout Points DJIA NASDAQ S&P 500
Short Term Up (Resistance) 18,722 5,287 2,193
Short Term Down (Support) 17,140/ 4,594 2,001
Int. Term Up (Resistance) 18,722 5,287 2,193
Int. Term Down (Support)  16,865 15,484  /15,370 /14,688/ 13,377  4,267/4,209/3,986/3,294  1,850/1,560
Long Term Up (Resistance) 18,722 5,287 2,193
Long Term Down Fibonacci Support 50%12,000

62%10,750

2008 LOW 6,627

50% 3,000

62% 2,555

2008 LOW 1,204

50%1,400

62% 1,177

2008 LOW 666

 10 Treasury  L0W 1.37^ NOW1.97% Gold 1,287 Oil 26.59 low Now 44.68

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST
Carl does not offer investment advice, but merely his own personal opinion. This report has been prepared from original sources and data we believe reliable but make no representations as to the accuracy or completeness. Carl, his affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold or sell a position in securities. Past performance is no guarantee of future success. Upon request, we will supply additional information. CarlBis@aol.com

THE INVESTMENT STRATEGY LETTER #715

All comments are on hold until after the election November 8th.   Until then, all below is applicable.

Deutsche Bank (DB) bonds dipped to the lowest level since a market wide decline in February, as a potential 14 billion-dollar bill to settle the US Justice probe into mortgage back securities, worried investors. The bank has a $2billion, 6 percent tier 1 bond that have fallen to $.72 on the dollar. The Justice Department probe may lead to a capital shortfall even if the bank is able to negotiate a smaller settlement. A capital gap could force the bank to sell new stock or default on bond payments. The bank is among the worst capitalized lenders in Europe and we have called it the canary in the mine. The stock and $12.73, is only $.25 above its all-time low of $12.48.

The US stock markets continue to edge up and making new highs! However, Bank stocks, particularly European bank stocks, are close to new lows. I expect Deutsche Bank to make a new low of 12.48, and after the election to default on its bonds. A clue to the market’s weakness is retails store closings and the reluctance of the Dow Transports to confirm new high

Sorry I haven’t written much lately. Nothing much matters until after the election. Everything seems to be on hold until then A Goldilocks market. Neither too hot nor too cold. US stocks are at all-time highs, with most Banks close to all time lows. The likelihood of a Trump presidency seem  likely, but the possibility still looms as a possibility, which I believe would be instantly devastating to the US and world stock markets. The economy continues to be lack luster, hardly growing in the first half of 2016

7/23/16 Investors are very bullish even though the headlines are showing geopolitical risk at a record high, strife in the European Union, a coup attempt in Turkey, tensions in this South China Sea, numerous terrorist attacks and rhetoric from a presidential candidate giving authoritarianism  a full embrace. Investors seem convinced that economic prosperity and good corporate profits are just ahead of us. However, for the past four quarters earnings-per-share the S&P 500 have been falling by about 12% per the year prior. The falling dollar and cheap energy prices are hurting earnings. For instance, Coca-Cola’s global sales have risen in local currency terms, but have declined in dollars for the last two years. Dollar and oil prices have probably stabilized. The economy seems to be growing just fast enough to keep demand for products moving without much inflation. (Harley any growth for the first two quarters of 2016). A Goldilocks economy. Wages and labor costs have been rising at only  an annual rate of only 2.3%. However, there is now pressure for wages to grow faster. A 5% rise in wages could lower profits by about 15%.

The biggest risk in the market seems to be coming from a political climate that is frighteningly uncertain. Hillary Clinton has promised to put pressure on drug pricing which encompasses 14% of all profits the US. Donald Trump seems to be pursuing an agenda of global trade protection, large tax cuts, an expensive wall, restructuring projects, the deportation of 11 million consumers and workers, major punishment of corporations that are US-based and want to leave the US Or have already left the US. In addition, HE is basically willing to scrap the NATO agreement. Markets don’t like uncertainty.

So where is the buying coming from??  US corporations are using my earnings and low interest rates to buy back  $165 billion a quarter of their own stock. In addition, Citicorp analysts have said that the Central Bank’s worldwide are buying stock, to prop up a sagging worldwide economy.

For the following reasons below, I believe this is a bubble that is being held up by corporate buy- backs, excessive Central Bank buying (don’t fight the Fed) and political considerations to keep the bubble fully blown during this US election period. I don’t think the markets will hold up that long, which will be good for Trump and bad for the world!

1) The US MARKETS ARE making new highs. Now, everything is OK again? Sure!  A Citigroup analyst has reported buying is coming from Central Banks. They are creating a fantasy that all is OK, before the US election.   The BEAR MARKET decline may take longer to develop than I first thought and I am extending my 2016 FORCAST TO 7/4/2017. See below

2). Retail stocks such as Macy’s, Disney and Sears are having trouble with their earnings. Store closings are commonplace today as people are buying online. This is not good for profit margins or employment. The economy could be stimulated with a backlog of infrastructure spending. Not a chance with this Congress.

3). Gold is making new highs; while the 10 year treasury WENT TO 1.37% is a new low.  Now 1.68%.That is where the money is going. This means that INDIVIDUAL investors are very cautious. 

4). Donald Trump, the nominee of the Republican Party, continues to blurt out dangerous statements.  He recently said, “Why worry about Debt, we can print money.” That’s true, except that excessive printing of money turns into hyperinflation. If you don’t know the history of the Weimar Republic in Germany you are likely to repeat history’s mistakes. Besides, it’s the Federal Reserve’s job to monitor monetary policy. Of course a dictator, can easily appoint flunkies at the Federal Reserve, which he could control. The market dislikes uncertainty and instability. The possibility of the Trump presidency, however unlikely, is still un- stabilizing to the markets. His quote of “fight fire with fire” will mean more meaningless and expensive wars~! His comments on NATO are based on financing, not commitment or global strategy. This will encourage Putin.

5).I believe most of buying has occurred because of Central Bank stimulus, continued low interest rates (-0% some places) and corporate stock buybacks in the last 12 months are a record $600 billion. If it were not this stimulus, I believe the market would be down some 20% at this point. Companies are not investing in production or innovation. this is bad for employment and the economy.

6). The middle class continues to take it on the chin. According to recent data between 2000 and 2014, the middle class shrunk from 55% to under 51%. It’s probably now below 50%. An economy  based on consumer spending of the middle class, like the United States, cannot grow without a healthy middle-class. International corporations do well for a while, as they are now. But eventually, I feel the present economic environment will lead to a deflationary economy, which will hurt all economic levels.

7). If commodity prices and companies engaged in retail sales continue to suffer, their bonds will eventually suffer and therefore the banks that are holding securities will suffer. 2008 all over again, only this time no government bailout! The ‘canary in the mine’ Deutsche Bank at 14.35 is down from its recent high of 19.46 and above its recent low  at 12.60, Also see weak charts of BCS, CS, HBC.BE, BNP.PA   WHY IS THE US MARKETS MAKING NEW HIGHS AND THE BANKS MAKING NEW LOWS? BECAUSE OF, I BELIEVE CENTRAL BANK INTERFERENCE, WHICH WILL STOP AFTER THE ELECTION. CAN NEW HIGHS LAST UNTIL THEN?

8). China continues to show lackluster economic growth. China’s rate of loans is far above the rate of money supply growth. Right now, China is using its currency to buy as many companies in the West as it can, while it can. Just as has happened to Japan in the 1990s, we expect the same deflationary scenario to begin to occur in China. . In China, for example, has $1.3 trillion of corporate loans, one seventh of the total are owned by companies whose profits don’t cover their interest payments, a problem that could trigger banks losses equal to 7% of gross domestic product.”

9). The central banks have done everything they can to stop inflation in Europe and in the United States with  the results  that many corporations in Europe are issuing bonds and financing them at close to zero interest rates. What this means, is that central banks cannot stop deflation. Rick Santelli of CNBC says “nobody says anything good about negative interest rates.” Central banks are helpless to stop deflation.

10). I continue to believe that economic growth in the United States is being slowed by all the income growth going to the top 1%. A recent Economist Magazine showed the upper 1% standing on top of their money with the guarded by barbed wire fence around, with the title WINNERS TAKE ALL. This is a lose, lose policy for everyone, where all boats will sink.

11) Brazil and Petrobas its oil company($500 Bil debt) are going bankrupt because of corruption. What will happen to its Bonds that the banks hold?

12) Cyber theft at the banks can’t be stopped. $80 billion, another attack right after that. Soon there will be no confidence in on line banking.

My forecasts for next 12 months TO JULY 4TH 2017 call for the Dow Jones Industrial average to be as low as 14,688 to 12,000, the NASDAQ to be as low as 4,000 to 3,000 and the S&P 500 to be as low as 1,560 to 1,400 because  (See previous market letters)

 Current 9/20/16

CLOSE

Dow NASDAQ S&P 500
18,212 5,260 2,148
Short Term UP UP UP
Int. Term UP UP UP
Long Term ? ? ?
Foretasted Trends DJIA NASDAQ S&P 500
Short Term Down Down Down
Int. Term Down Down Down
Long Term Bear Market Bear Market Bear Market
Breakout Points DJIA NASDAQ S&P 500
Short Term Up (Resistance) 18,722 5,287 2,193
Short Term Down (Support) 17,140/ 4,594 2,001
   
Int. Term Up (Resistance) 18,722 5,287 2,193
Int. Term Down (Support)  16,865 15,484  /15,370 /14,688/ 13,377  4,267/4,209/3,986/3,294  1,850/1,560
Long Term Up (Resistance) 18,722 5,287 2,193
Long Term Down Fibonacci Support 50%12,000

62%10,750

2008 LOW 6,627

50% 3,000

62% 2,555

2008 LOW 1,204

50%1,400

62% 1,177

2008 LOW 666

 10 Treasury  L0W 1.37^ NOW1.68% Gold 1,316 Oil 26.59 low Now 43.38  

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST
Carl does not offer investment advice, but merely his own personal opinion. This report has been prepared from original sources and data we believe reliable but make no representations as to the accuracy or completeness. Carl, his affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold or sell a position in securities. Past performance is no guarantee of future success. Upon request, we will supply additional information. CarlBis@aol.com

 

GOOD MORNING SUNSHINE-THE EARTH SAYS HELLO

Good morning sunshine, the earth says hello!

I have recently been asked, why do I continue to write this blog? It may have something to do with my age. At seventy-six and with my father only living until eighty-six, I realize my time is limited. Six of my friends and immediate family members, have died within the last year. As a warning, I suggest that you do not read the latest best-selling book ‘Being Mortal‘.  Maybe my writing has something to do with a need I have to pass on my knowledge of the markets to the next generation?  However, as I look back at my life, I feel a great deal of satisfaction with my family. Mission accomplished! I  have helped raised four children, all with advanced degrees and all independent financially. Six of eight of my grandchildren are also on-stream for a successful life. Although, two of our eight grandchildren are in need of our guardianship, I believe they will also emerge, with our help, as successful adults. My oldest granddaughter just got married in July, so the cycle of life satisfyingly continues before my eyes.

I am no longer, on any organizations volunteer boards. I feel I have done my share. I was one of the founders of the International Mountain Biking Association, the Friends of the Forest Preserve of Cook County and of RIDE, Recreation for Individual Dedicated to the Environment. I think these three organizations have made a difference in the world, for the better. I was also the chairman of fundraising for our local public television station and was on the board Bradley University for twelve years and served as development chair for the Grant Park Music Festival or six years. Did that, done!

I don’t think my desire to write has anything to do with any of the above. I think it is simply that, I have to write. It’s part of who I am and is probably built into my DNA. Like Gene Kelly in the movie, Singing in the Rain , who sang “GOTTA DANCE”!   I HAVE TO WRITE! So, as my wife and I enter our ‘Golden Years’, which my father called his ‘Rust Years”, I suggest to those of you who don’t like me or my blog, to get on with your life with joy, love and compassion. Here are a couple of tips:

GOTTA DANCE and WRITE

The Fourth Noble Truth in Buddhism is that the path for cessation of suffering is found in the Eight Fold Path. I think it is important for the reader to know these feelings and to see that there is nothing revolutionary about these thoughts. Instead, I am speaking about the common sense of peace, love, understanding, tolerance and compassion as follows:

1) The Right View.  Wealth is only one component of success. If you base your success only on what you have, what you do for your wealth or what people think of you, you’re on the wrong path.  Ego based power will only last as long as the wealth or title.  Your attachment to possessions can actually become a burden. Also, there is a tendency to keep score by comparing yourself to other people’s possessions, which is non-productive.   You can certainly reward yourself and your family with things that celebrate your success. Wealth is a motivator, but if misused, it can also become a negative.  There is a difference about what you need and what you want. You only need a modest amount of wealth to provide for adequate shelter, food and the basic necessities. However, what you want can create desires that can become unfulfilling and cause suffering. There is always something better, bigger and different for you to desire. We are all vulnerable to seduction. How many times have we heard a person say, ‘I’ll be happy if only I have that house, the new perfect lover, or this much greater wealth?  However, when they get that house, that new supposedly perfect lover or that wealth, they are still unhappy and are already forwarding for their next possession. Want and desire cannot be confined to one thing, as improper wants and desires form a continuous chain.  And those chains can be wrapped around your neck, cutting off your energy and creativity. Look at the birds or the lilies in the field. They want not and yet they are provided for.

I suggest that we use our desires to cultivate the right desires by changing our desires from things, into desire for contentment, joy, happiness, gratefulness, fulfillment, respect, awareness, empathy, peace, good health and a loving and compassionate relationship with your family, friends and community.  That’s really what people want, isn’t it?  Wealth can provide for a nice life, but after that, wealth can create stress and anxiety. Even if you are obtaining wealth for a loved one or your family, the stress and anxiety created by the pressure to perform, can flow over into the relationship, causing a negative outcome.  Also, you may be creating expectations that you may not to be able to fulfill.  One never knows when fate will strike.  Better to base your relationship on love and compassion.  In addition, the constant striving for things can have negative effects of stress on your body can cause health problems and then nobody is happy. Look what happened to Job in the Bible. He did everything right and still he was tested by this unsympatric God. In the end of his trial, all he had was the strength of his inner self to gain fulfillment. Gods message from the Old Testament, ‘Shit happens! Deal with it.”

The Pharaoh’s of Egypt thought they could take their wealth with them.  They were very wrong. If we measure ourselves only in the physical material world, even our entire planet is a just a speck of dust compared to the vastness of the cosmos. The question of “who am I? and why am I here?’ can only be answered with our immersion into the ultimate spiritual values of life.  We are part of the creative force of nature and it is part of us.  Follow the universal moral laws like – Love your neighbor as you yourself –Love everyone you meet and for those, whom you cannot love, at least have compassion and empathy for them—Do on to others as you would have them do on to you, called the Golden Rule – So you sow, so shall you reap— Everybody you see is your mirror— for every Action there is a Reaction, for everything we do has consequences. Order does not have to change into chaos. We, as mortal humans, have the power to rise above this destructive force and with our actions, bring order out of chaos. We are organizers.  We have the power to bring solutions where things seem to be coming apart.  We can apply our organizational skills and direct the flow of our mission to do good things, which can counter chaos. Also, through your giving of love, compassion and empathy, we can connect with the creative forces that will give you internal fulfillment, and you will be rewarded with a resolute soul that can withstand adversity.

2) Right Intension. I believe that this path meant that should Be Motivated by Goodness. Being a miser or being motivated by greed will sap your energy and creativity, because you are out of harmony with the universe.  You might ask what about all those wealthy aristocrats who are greedy and have gathered their fortunes through power, lies, cheating and deceit.  This kind of a question has been bothering virtuous people throughout the ages.  Responding to the lament that virtue suffers, while vise flourishes, Jesus insisted that virtue nourish the soul, while vice turns men into animals, who can never achieve fulfillment.   Fortune has a two edged sword and that everyone at some time faces both sides of the blade.   Good Fortune cannot be trusted and can suddenly abandon you through bad health, misfortune or betrayal.  No matter what fate hands you, always have the intention to do good things. Go ahead; be in harmony with the universe. When you have good intentions, it somehow helps you reach fulfillment.  If you can’t listen to your mind, listen to your body.  If you are feeling anxiety in your chest and head, think about what positive things you can do.  Go see a sunset. Smell a flower.  Watch children play. Do something creative. Write a poem.  Compose a story.  Draw a picture. Get those divine creative juices flowing. Exercise!  Find out what gets your creative juices flowing.  Always, no matter what, be joyfully and grateful inside yourself. Volunteer to help someone. Pick up thrash instead of walking around it. Hug your loved ones.  Don’t get bogged down in greed.  Let your good intentions be your guide to internal happiness. The future is created in the now moment.

3)  Right Speech. Be Verbally Aware. Some people just can’t stop talking. All their internal energy is wasted in their hearing themselves talk. For many, conversations are really one way. The one who speaks, wishes to be listen to. However, when others are speaking rather than listening, most are thinking of what to say next. Therefore, be aware of listening. Engage in face-to-face contact and if possible, eyes to eyes contact. No one’s opinion is superior to anyone else’s.  So, listen to others opinion’s with respect. Be immune to criticism of your views.  Most are probably not ready to be open to other views other than their own.  Stay on the righteous path.  Do not speak harshly of others, “if you can’t say anything good about a person, don’t say anything at all.”  So, just be careful what you say and try to engage your brain before engaging your mouth.  We are likely to find some fierce opposition to our views. It is not our purpose to convince everyone, but to merely set in place the beginning of a New Awakening. Many are called, but few will choose to follow. Speak to everyone, with kindness, tenderness, empathy, compassion and love.

4) Right Action Be Non-Judgmental. Try to stop classifying, labeling and analyzing right and wrong, bad and good.   Everything is relative. You have to raise yourself above the turbulence of your view, as seen by your personal internal dialogue, which is usually ‘a wall of worry’.  We often see things not as they are, but as who we are. Once the tumblers of decision making fall into place, have the conviction to act on your decision.  You can always change your mind if you later think you made the wrong decision.  Be flexible.  We all make mistakes.  Be non-judgmental about your mistakes and others. Analyze your decision making process and try again. Discover what you did wrong and make plans to correct that flaw.  Without risk, there would be no reward. The future is uncertain.  And that is the exciting thing about it.  The future is in your hands. Embrace the mystery.  Be grateful for the challenges.  Be flexible like a tree in a storm. When you are judgmental, you are stagnant in a fixed ideological place.  Be open to change. When you combine the dynamic energy of non-judgment with the stillness of your internal mind, then you are ready for decision making.

 5) Right Livelihood. Follow The Creative Path: How can you earn a living in this completive world and still be true to your values?  In order to solve an immediate financial problem, the pressures of the outer world can cause you to alter your good intensions.  There are many demands on each of us.  It is easy to say that we will trade in our ambitions in exchange for a meaningful life.  However, taking the high road becomes more difficult when your family is hungry and wanting. Cheating on your principals becomes easy to justify when you feel you have been treated unfairly.   Then in your mind, you can just even the score a little. You’re not cheating, you’re just restoring fairness. This justification can start with a small infraction of your moral code.  This can be dangerous, because once you start breaking rules, your brain tends to find more circumstance that justify even more exceptions.  Your cheating at work can be looked at as just another hedge against failure.  However, cheating and being deceptive is a seductive force that once started, can become addictive.  Leading an un-genuine life will suck more and more energy from your life until you collapse either mentally or physically.  So if you have started, stop now. It is never too late to stop and redeem yourself by doing good things.

Everyone has a unique gift and a special talent for a service that others desire. There is a reason for your existence. Focus on what you have to give, rather on “What is in it for me.”  Ask “What can I give” and abundance should follow.  If one thing doesn’t turn out, look at it as though that just wasn’t for you and it was the universal force directing you to open a new door.  Don’t blame anybody and don’t feel like a victim.  These are negative forces that take away energy.  Just keep on concentrating on your creative forces.  When you find the right livelihood, you will know it, because you will feel the joy. Joy does not have to be experienced only on holidays or after work. Find a place where your livelihood brings you and others joy.  Don’t settle for less. If you don’t have this now, look at alternatives.  Follow your bliss.

6) Right Effort.  Look For Solutions.   You are not responsible for the world you are in. However, you may find that you want to become a more active participant in things in which you can make a difference and make the world a better place. The process to change things in the world is difficult, but not impossible. Search within yourself and draw from a divine universal consciousness which will tell you that, change starts with one person having a firm conviction that something needs to be changed.  If enough people, along with you, feel this conviction, it can overflow into the outer collective world, where a consensus is reached, resulting in the synergy and passion necessary to facilitate the change.  The world of today, as in the past, seems to be in a quagmire of dangerous polarization, without consensus.  However don’t let that stop you, go ahead and save the world. Please join my wife and I as we try!

When you are right don’t feel pride, excitement or euphoria.  When you are wrong, don’t feel anger, guilty or anxiety.  The outcome is nothing more than the outcome. Relinquish responsibility and guilt for the outcome. It should not affect your next decision. Keep your ego in check and solutions will come more easily.  There are times to celebrate, but specifically set aside a special time for that kind of occasion. There is nothing wrong with setting a goal and celebrating after you have achieved it. However, make sure the goal has ethical value and is high enough, so the celebrations are infrequent and special

7) Right Mindfulness   Be Aware Of Your Inner Connection to Everything! Mindfulness can be achieved with an understanding of our true spiritual nature. A baby is unable to distinguish from itself and the outer world.  So, in our early life, if we could re-remember that feeling, and part of our brain does, there was a time  for each us, when there was no difference between us and the rest of the world. We were one.  If we can search deep enough, our brain can find that time when we were connected to the whole.   This form of collective consciousness is available to all of us.  After all, how do we all know what beauty and quality are, when we see it?  That consensus is communicated to us without words and yet we recognize it when we see it.   It has to be experienced to be believed.  Look at this not as a problem to be solved, but a mystery to be experienced.  Some call this connection, divine intelligence, or some call this God.  The metaphor doesn’t matter.  What is important is that you get there.

Fear and anger will kill this connection.  When you feel vulnerable, fear and anger can neutralize the positive energy juices.  That’s when you can become immobilized.  You are here, but you’re not. Your ears don’t hear what they are hearing and your eyes don’t see what they are seeing. Never make decisions when you are in that stage. Find ways out of this depression, like we gave examples of in dealing with greed under #2 Right Intention, such as watching a sunset, exercise etc.. If you are feeling deserted and depressed, do one positive thing at a time. Every incremental positive change is important.  At least you can stop the downtrend. Find a place where you feel comfortable, either in your mind or a physical place. Be quiet. Find a place where you can hear the wind, feel the sun, see the stars and breathe fresh air.  Little by little, get the internal trends moving from fear and anger to hope. Expand your success outward to others through voluntary service, or help someone in need or just spread some wealth around in worthwhile places.  There are plenty of choices. When you are bathing in abundance, the water will keep flowing if you connect with your genuine communal self.

8) Right Connection. Awaken the Awareness of Your Higher Self. I see life moving through five phases.  Stage#1) Behaving:  As a child we must obey the rules of our household and are indoctrinated into our tribe’s beliefs.  Stage#2) Becoming: As we grow older we educate ourselves to other views and have ambitions and goals for ourselves and try to achieve them.  Stage#3) Belonging: There comes a time when we form a family and become a functioning part of society. Stage#4) Being:  Next, Some have the time to be more introspective and discover our inner self.  Stage#5) Beholding: This is the stage where some can rise above the everyday pleasures of life and discover our Higher Self, where the present moment is divine. Many are called, but few are chosen! This stage is our goal as it connects with the collective consciousness.  Here, truth is eternal and unfolding.  Here, matter is only a perception and we become aware of our potential for peace, love, and happiness. Here, we have a heightened appreciation of empathy, beauty and goodness. Here, altruism and tolerance flourish.  Here, you can at last love your neighbor as yourself.  Here, you just don’t obey the Golden Rule, but you are the rule. This is the logical and culminating but yet unfinished outcome of the process of evolution. It is our destiny.

Beholding is a level of consciousness and happiness that is there for the asking, ‘Ask and you shall receive’ or ‘Seek and you will find the truth’. There will be those special moments when you will be part of the underlying harmony of creation. It doesn’t last long, but these glimpses are indications that eternal bliss is reachable for you.  Keep trying! This desired state of mind is beyond verbal conceptualization and linguistic explanation. One has to taste the Orange, to know what it tastes like. This spiritual connection is eternal, infinite and shapeless.   Maybe this will help. What if the Divine Source can be thought of as a Dynamic Flowing Process of constantly moving energy, which your mind can experience more accurately as a verb, than a noun? Beholding is a level of consciousness and happiness that is there for the asking, ‘Ask and you shall receive’ or ‘Seek and you will find the truth’.

Let us Pray: Awaken now! In this time of no time, this is the time. Speak not of judgment and intolerance, but speak of the spirit of love and compassion.  Journey with me, from fear to hope and to a new awareness of your potential.  A new world of peace, love and joy awaits you. Think not of the battle fields of daily life. Lift up your hearts to that higher self within self, to dignity and compassion. Hallelujah!  We are all Divine spiritual beings. We have no concern for anger, greed, revenge, dogma or creed, for the spirit is with us. Together we can transcend everyday perceptions and lift the veil of suffering, to reveal ourselves as one with the divine universal collective source. Our separateness is an illusion.

Enjoy Life to its fullest. Stat now!

Carl M. Birkelbach