FREE... ALWAYS COSTS YOU SOMETHING

Check out this awesome video that just makes you want to stand up in pride about the state of our nation.

GET YOUR FREE PHONE





LET THEM TAKE CARE OF ME!
I didn't start looking into this issue due to the "Obama" stuff, but mainly because I saw the "free phone" commercials on television and wanted to know more.  What is scary about the video is that it reveals an attitude of "get what you can, cause its free" and then goes on to reveal the category of eligible candidates ranging from Social Security, Disability, Welfare, and more.

I once did a post that discussed the notion that our government has created an entire generation of experts in welfare programs.  Essentially that many work harder maximizing their benefits and status as receivers of free stuff than they do in actually trying to get on their own.  I recalled the terrible situation in New Orleans where there were literally generations of families on the government dole.

WHAT'S IT LIKE TO BE POOR
"Rather than changing the system and educating the public there, we created a legion of benefit experts that could exploit all of the provisions of social security benefits, welfare benefits and all other types of assistance. 


TOUGH QUALIFICATION STANDARDS
In these tough time where many people are unemployed or underemployed and everyone including states and the government are pinching pennies, I'm sure there are pretty tight controls over who can get these phones, right?  The video below examines the process and criteria for obtaining this wonderful benefit.






EVERYONE IS IN ON IT
The video clearly demonstrates that our society has declined into a full-blown communist system where the entire goal is to get what you can from the government.  Communistic systems are bureaucratic, brutal, controlling, and most of all, corrupt.  Every participant attempts to use the system to maximize their benefit.  This is why you have dependency at the bottom and an extreme level of power and wealth at the higher levels.

In the video, we see that participants take 3, 4, or 5 phones and perhaps even sell them for $20 or $30 when they need cash.  The sales guy doesn't care, he is rewarded to give out as many phones as possible because he only earns when he "sells" the phone.  He doesn't care about qualifying participants and determining if they already receive benefits.  Finally, the cell phone company also wins because they get to bill the taxpayer.  Government program leaders measure the success of the program by counting how many phones are being used, so there is no incentive to crack down on abuse or waste (this is just like the food stamps program by the way).  Government employees are measured in how effective they are at signing people up.  In this system, the only loser if the stupid guy who actually pays his phone bill as he is the one paying for the program.

WHAT ABOUT YOUR BILL?
As I examined my bill last night I really got motivated to write this post.  I am one of the few that still continues to fight the trend and I still retain a home land-line simply for business back-up reasons.  If there were a hurricane, flood, or other emergency, I want to ensure that I have some way to communicate with clients.

Having said that, I will admit that this phone line is barebones and is simply a land line.  The base cost for the monthly service with AT&T is $21.18 a month.  Not expensive, yet not cheap if you think about the fact that this phone is used for 2 or 3 calls a month.

The killer here is that the base cost is not all I am required to pay!  Click on the graphic below and note the details of the bill that includes the surcharges, fees, and taxes.  All in, the "other" expenses total an amazing $12.62 per month!  TAXES AND FEES TOTAL 60% OF THE COST OF THE LINE!!!
Are you kidding?  60% taxes and fees?  This is worse than the taxes for cigarettes, alcohol, or even gasoline!

While the Universal Service Fees for both the state and federal portions are relatively small ($.91 and $.83) they are still adding to a completely insane situation that is clearly out of control.  I am tempted to simply move the number to a service I use that gives me a virtual number and is forwarded to my cell phone.  In a sense, I keep the number and it goes to my other phone.  This costs an all in $5.00 per month.

Finally, when you actually consider that my business requires me to have three cell phones and many other telecom products I find that I am paying a significant amount each month in the form of taxes, charges, and fees.  In total, these charges are well over $100 a month.

In conclusion, watch this last video by Arkansas Congressman Tim Griffin who has tried to pass legislation to clean up the abuse and theft of our money.





So heck, why don't you just get your own, "FREE PHONE TODAY".  The problem with all this free stuff is that it causes us to lose our independence, our ability to foster self reliance, and ultimately, it looks like it has caused us to lose our integrity as well.  There really is a cost for all this free stuff.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/ 

5% FALL IN THE TRANSPORTS DEAD AHEAD!

BREAKING DOWN THE TRANSPORTS
I've been watching the transports closely since FedEx (FDX) and Norfolk Southern (NSC) both lowered earnings expectations last week.  The transports chart ($TRAN) looked weak, but today's action including the big rollover into the close caused me to want to put a chart up for your examination.

5% MORE AT LEAST?
Based on a couple of key things, I think we will see another 5% drop in the transports to bring us at least to the 4700 level where we'll hit the lower portion of the descending channel and also the previous upper resistance line that should now serve as support (look at April of 2010).

WATCH YOUR ALTITUDE FEDEX
FedEx had a big failure and now must hold this $84 level or $75 could be a realistic target on the short side.

The weekly chart of FDX pictured above also shows that the 14 day EMA has crossed over and below the 40 day EMA which is a longer term swing trade indicator suggesting a decline.

NORFOLK SOUTHERN (NSC)
Although not pictured here, a break of $62.75 on NSC should usher in a drop to at least $57.00.


WHERE IS THE GOOD NEWS?
A global slowdown seems undeniable at this point and the turn in the transports signals at least a 5% move lower.  With all the positive news like the Fed announcement, this round of ECB lies, and the APPLE 5 release, where will the positive news come from to reverse this move?

I have had more "bullish" conversations with friends over the last two weeks than I have had in four years.  It would seem that the Apple 5 release has brought the bulls out of the woodwork and they literally have no fear and certainly no desire to lock in gains.  I would suggest we are really ripe for a rip lower to rob Mom and Pop of 10% to 20% just to remind them who runs the show.  Queue another Flashcrash Wall Street!

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

DESTROYING BIRTHDAY DREAMS - DEREGULATION AND GOVERNMENT

Photo by Ewan

CELEBRATION
My daughter loves balloons.  I suppose most kids like them, but for some reason this twelve year-old absolutely is crazy for them.  Earlier this summer in August I found myself driving all over town in a vain attempt to find a place to purchase helium-filled balloons to ensure that her birthday celebration would be perfect.

I went to our normal place to buy cheap balloons, the Dollar store.  As a "value" kind of guy I learned quickly that it is the same helium in those balloons and it is simply a waste to pay more at a grocery store or one of those party stores.  Why pay $2 or $3 when you can pay $1?  Unfortunately, to my surprise, I was told they didn't have any helium.  I shrugged this off and went to another discount store only to find that they too didn't have helium.  In desperation, I shrugged off my frugal ways and went to the local high-end grocery and party stores knowing that they would have the gas to fill the balloons to make the birthday perfect.  Not a chance.

HELIUM SHORTAGE?
Once I got home I couldn't resist doing some research to attempt to find the cause for this apparent balloon nightmare, the issue it seems has several causes.

First, there has been some maintenance of a helium pipeline in West Texas.  This pipeline carriers 30% of the world's supply of the lighter-than-air gas.  The July pipeline update caused supplies to be rationed.

Helium production facilities in Algeria, Poland, and Australia also have production stoppages or slowdowns.

There is another  reason though that as the pipeline was shuttered we saw major supply disruptions.  It seems the world is in a transitional phase as a hand-off is happening where government is essentially going to turn over responsibilities to private industry and the transfer of responsibilities is less than perfect.

In Amarillo, Texas the US government runs the Federal Helium Reserve.  This natural cavern is the depository for most of the US supply of helium.  In the 1920's as a result of the war effort, the US government took over the responsibilities of maintaining supplies of the important gas and still does today.  In 1996 though, Congress passed legislation to terminate government control of the reserves and get out of the business handing it to private industry in 2015.

Since we are only two and a half years away, it is important to see new supplies of helium coming on line from private companies here in the US, however firms in the industry complain that the government's role in the Helium Reserve is causing problems for any new producer.  This issue is that the US government sells its current supplies at below market production costs (some say as much as 20% below) and therefore any new firm cannot compete.  While several firms might take the plunge and brave initial losses to gain a foothold in the space, there are other issues that muddy the water.  Congress is now considering extending the handoff period and therefore adds more uncertainty to the industry.  Why would any business invest and face losses when there is the threat that the US government won't exit and won't stop distorting the market?  This is just another example of how the government OR NOW THE THREAT OF THEIR ACTION simply destroys capital investment and job creation.  This is the exact issue we see now in the broader economy and why employers are refusing to hire.  They believe they will face greater taxation, greater regulation, and greater unknown burdens from the encroaching hand of government.  Why would you do more for potentially less?  Why would you take risk if you might get crushed by the government?

FUTURE HELIUM OUTLOOK?
(International Balloon Association)

 "The BLM is currently legislated to operate through 2015 with 10-15 years of reserves on hand. The crude helium suppliers that currently feed the pipeline are seeing a reduction in production and there is only one new plant scheduled to come on stream in the US in the next three years. As plants in Qatar,Algeria, and Russia become fully operational they will be expected to supply the growing demand in Asia and the Middle East allowing US exports to slow down. Depending on the pace of growth in the US helium market, the US may become an importer of helium from the new foreign sources previously mentioned.  Until that time, technological research to decrease the need for helium as an input to the production of other goods and services is underway while the science and medical industries look for ways to recapture and recycle helium." 

REALLY IMPORTANT
Helium is very critical in MRI technology as helium cools the magnets that are the key components in the imaging devices that are used in the medical fields.  If helium is not available, the MRI magnets will melt.  The industry cannot deal with shortages of the important gas.

SHORTAGE?
In reality, there really isn't a shortage, I think we are just seeing some short term disruptions that will pass.  The key will be to ensure that a good handoff exists between government and private firms and that as international supplies come on line that US suppliers make strong connections to make sure we can continue maintaining an uninterrupted supply of this important resource.

TRADING
I wanted to highlight a couple of the firms in this space.  Ultimately, I don't think helium's shortage or lack of it makes much of a difference to either of these firms, but it is a good opportunity to look at some firms I normally don't watch.  Based on the charts of Praxair and Airgas, I don't think I would touch them for a long play at all.  PX is at the lower portion of an ascending channel and is facing stiff overhead resistance.  I don't think it would take much to drop into the up 90's.  In addition, its paltry 2% yield doesn't make it an attractive yield candidate either.

PX - PRAXAIR

ARG - AIRGAS

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

11 THINGS THAT BLOW MY MIND.....

CAN YOU BELIEVE THIS IS TRUE?
I'm up at midnight on a Friday night and just am confounded with random thoughts about how crazy life is and what a screwed up world we live in.  We live in the most awesome country in the world where each and every day people work to try to make it unawesome or convince us that it isn't awesome.  We are blessed beyond the wildest imagination of any human civilization that has lived (even the entire world is healthier and wealthier than ever), yet the benefits of this blessing has made us desensitized, dependent, and frankly ignorant.

Here is simply a quick list of things I'm pondering that are just awe-inspiring in a very negative way.  Many are political, and perhaps that is because so many of these thoughts are just pent up frustrations.

1)  IS THIS OUR BEST?  We have two candidates that are battling for the position as President that are complete goofs.  Can't we do better?

Obama is an inexperienced dreamer who bases the implementation of policies on nothing more than utopian best-case hopes without real practical substance.  Without Hitler-like oratory skills and amazing superficial charm, he wouldn't have gotten elected to city council in an Illinois township.

Romney is a Wall-Street silver-spoon that may have wonderful pedigree, but he has a tremendous inability to attract people to him personally, has difficulty connecting to the 99%, and is just about as bad as Obama when speaking in an unscripted forum.  While his message is sometimes on point, he is simply brutal to listen to with that whispery voice.  I think he is a foreign policy noob just not as naive as Obama.

2)  FREAKING CUT THE DARN BUDGET
Do either one of them understand we are spending too much?  Romney's plan for spending reduction is to cut government spending in each year by 2016 by $500 Billion (if GDP is at 4%).  We are on track for a $1.2 Trillion deficit this year and there is no way you are going to get to 4% GDP if you are cutting government spending.  And there is no way he can repeal Obamacare, it is a lie.  I'm sick of it.

Obama is even worse, there are no cuts in sight for this guy, and his Senate hasn't even passed a budget in 3 years!  What makes us think he'd even submit a budget and have it approved after another election?

3)  IPHONE MANIA 
If I see another report of some stupid kid with the latest IPHONE 5 gleefully prancing around excited to have the newest electronic device that will be thrown away in 18 months, I'm going to puke.  When obtaining a new phone is the climatic personal achievement in one's life for a week, month, or year, you have a great indication that your generation and or your country is in total decline.

4)  THE FED WILL PRINT TILL WE REACH FULL EMPLOYMENT
HA!  This is probably one of the funniest jokes I've heard.  The Fed's actions pretty much assure us that we'll never reach full employment.   How's that record high September gas price on the lowest demand for fuel in 15 years treating you?  If the FED ever gets us to full employment we won't be able to afford to drive a car and fill it up to get to work.

5)  NFL REFS AREN'T BEGGING TO GET BACK ON THE FIELD
I think it will only be one more week and old NFL refs will agree to just about anything to get back on the field.  There have been a few minor screwups, but nothing major.  As long as the scabs don't blow a game this weekend, the old refs will sign any agreement the NFL owners put in front of them.  And rightly so, I'm so sick of unions.  The refs are not the focus of the game and as we've seen, we can do without the best of the best.  How an NFL referee deserves a pension is only an argument that a union could try to justify.

6)  WE BELIEVE ANYTHING THE ECB SAYS
How many times will it take investors to realize that the ECB says whatever it can to make the market happy and then it checks with its member states that actually have to approve it..  I'm tired of rallies based on unactionable promises without any substance.

7)  WE HAVE ALMOST 47 MILLION ON FOODSTAMPS
We have almost 15 percent of the US population obtaining free food from the government and we are questioning if our leadership in Congress and in the Oval office (or running against him) are the right people for the job.

8)  OUR ELECTION DEBATES ARE OVER WHO IS GOING TO BUY THE PILL FOR WOMEN
We have the stupidest media in the world.  Any viable candidate would answer every distraction like this simply by saying, "WHAT THE FOOK DOES THIS HAVE TO DO WITH GETTING AMERICA BACK TO WORK?  THIS IS A DIVERSION AND I WON'T EVEN DISCUSS IT".  If Chris Christi, Santa Claus, or Margaret Thatcher were running and said that, they'd have my vote in an instant.  Of course we don't have a candidate that can clearly focus on what matters, we have to discuss past tax returns and videos of Romney speaking about the 47% that would never vote for him.

9)  PENALTIES FOR OBAMACARE
I haven't heard anyone speaking about 2014 and the impact it will have on small and even large businesses.  Here is what I'm looking at with many of my clients.  How would you like it if you had this happen to you?

Here is an example of a 50 full-time employee company that doesn't offer health coverage AND has at least 1 that will use the health exchanges (which they all will).  (If you employ under 50 full-time employees you are not subject to a penalty.....yet).

The large employer does not offer coverage, and one or more full-time employees receive credits for exchange coverage. The annual penalty calculation is simply the number of full-time employees minus 30, times $2,000. In this example (i.e., 50 full-time employees), the penalty would not vary if only one employee or all 50 employees received the credit; the employer’s annual penalty in 2014 would be (50-30) x $2,000, or $40,000

Get that $40,000 just went POOF for this owner because he decided to own a business and have 50 employees!

Now before you give me the line that he is rich and making lots of money, think again, this is a small burger franchise that pays these people minimum wage.  Essentially, Justice Roberts just hammered this guy and raised his employee cost significantly.  Is it his responsibility to give health benefits to a guy he employs?  Why is it his responsibility?  Who came up with that?

Imagine you owned a liquor chain or clothing store or any other business.  Imagine employing 500 employees.  How would it feel to now have to pay $400,000 more in expenses just because Congress and the President make back-room deals and passed a law that we'd have to pass to know what was in it.

I'm guessing that every business owner with 50 employees might suddenly need to let one or two folks go due to the downturn of the economy.  I would, wouldn't you?  If that incremental one employee saves you $40,000 you'd be an idiot not to fire them or make them a part-time employee.

10)  CAN YOU TRUST EITHER SIDE OF THE CLIMATE CHANGE STORY
I have to admit it, I think there is an angle where someone is actually making big money on climate change and the green, earth-love religion.  Yes, I recycle like crazy, but I'm not a big believer in man made global warming or even "climate change".

First, when we have to change the name of the movement, errrr religion, you know we are missing the whole story.  We started with "Global Warming" and now we have "Climate Change".  I'd love to see a definitive study that rules out volcanoes and solar activity as the source of global warming.  I don't want to destroy economies based on the fact that "man has to be the cause."  Also, I am not sure if I want to sign up for anything that includes every bank and trading institution that suddenly is excited to trade carbon credits.  Clearly big money is at play if these guys are involved and it would make sense that global warming skeptics and supporters would throw gobs of cash to spin stories and propel governments to create regulations.

11)  THE ILLINOIS TEACHER'S UNION'S PENSION REDUCED THEIR RATE OF RETURN ASSUMPTION TO 8.0% DOWN FROM 8.5%.
Are these guys nuts?  Until we reduce the rate of return assumption for all pension plans to 3% or 4% there is no way that we'll ever be able to have a real conversation that will be based on sustainable math.  How is a pension going to ever make an annual rate of return of 8% and not take excess risk?  Wouldn't we want to build these plans with a cushion that builds in the ability to under-perform the 100 year average of the stock market?  Aren't pensions allocated a little differently than the stock market?

Yes, I know, if we changed the pension return assumptions to 4% it would require the plans to kick in significantly more and all of these unfunded liabilities would be immediately due and frankly unpayable, but are they payable now?  Isn't this just one of the many lies we all see plainly yet the entire system simply avoids discussing.  The pension system in the US is so much like the Madoff Ponzi scheme and our government and large companies are all participants.  Better hope your pension payments aren't greater than that US PENSION guarantee of $48,000 a year.

EXHAUSTED...
Ok, that is it.  I've been typing for about an hour and a half and I'm tired of sharing my inner rants.  Let me know if I missed any and if I offended any of you believers of the Green Religion please show a bit more restraint than the practitioners of the Religion of Peace and don't murder twenty or thirty people around you, torch cars, and foreign embassies, or leave nasty comments on the blog.  Have a great weekend.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

MINING FOR PROFITS - SILVER UPDATE

Photo by Florian

THE NO-THOUGHT WAY TO PRINT MONEY
I wanted to revisit the silver and metals trade and check in on our latest call post QEIII that all metals would be awesome.....forever and beyond.  Since Bernanke made his unlimited and unending threat just like Draghi to sterilize and monetize away every bond on the planets, we have suggested that it is quite a good strategy to simply buy metals, watch, and wait.

So far, that mindless and plodding strategy has paid off and we haven't even had to be patient since just one week ago QE has essentially blasted SLV into the stratosphere with an overhead test coming at $35.00

SLV CHARTING (Click on the Chart for a Better View)
http://scharts.co/QGaYV9  - WEEKLY CHART

Let's look at SLV's chart and I'll pull out some items that suggest we are going higher and I'll also highlight points that at least make me believe we'll slow a bit and digest these very short-term gains.

THE BULLISH CASE
First, we note that the QE announcement pushed SLV out of its declining channel which had been holding since the peak in silver of May 2011.

There was a crossover just yesterday on my charts of the 14 Week EMA and the 40 Week EMA AND it was upward sloping.  This is a longer-term indicator of significance and has proven for me to be a powerful tool in making very profitable longer term swing trades.


The daily CCI chart I add to the bottom of my SLV has also shot into wildly bullish territory.  The guy I picked up the use of this indicator from calls this the Crazy-Investor Indicator and it really measures the herd mentality of the market participants.  In this case, when the CCI goes into the "Green" area this is a significant signal that there is real momentum.  You would stay out and not purchase when in the red.

CCI - CHART FOR SLV

THE BEARISH CASE
I see a couple of things on the chart that might cause you to pare positions if you were a shorter term trader in hopes of loading up again in the future.

Overhead resistance at $35.00  There is no doubt that the $35.00 level for SLV has been rejected twice now and this will be the third attempt to thrust through that area.

The green Bollinger Bands I use are set at 2 standard deviations above and below.  Notice how SLV nicely fits in that moving envelope and can only briefly ever plow through these levels.  Obviously trading prices above or below the outer bands suggest you should quickly reduce position or buy and this is why I use them.  In the most recent case, SLV has been hugging the upper Bollinger band and in fact has been outside them for several weeks.  This does leave me wondering if we're a bit overdone in this most recent move.

FINAL SLV THOUGHTS
The $35 level will once again fall and SLV will move higher eventually, but not yet.  In the short-run I do think that all the "good news" is out and we don't have much to look forward to except for the bad stuff (China and Europe slowing more than anticipated).   Headline concerns like continuing short-falls in the periphery of Euroland, Greek elections in October, and the looming fiscal cliff and elections will serve to put a lid on SLV's upward trajectory until we see more inflation information in the coming month.

(EDIT)
CHART OF GOLD
I was looking at a few other charts and so wanted to post this one of gold as well.  Clearly $1800 is strong overhead resistance.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

CFOs DON'T CARE ABOUT MONETARY POLICY

CFOS ARE LESS OPTIMISTIC
We received a "gift" from the Federal Reserve yesterday that included unending monthly mortgage bond purchases.  I have another post in the works to help examine the decision by the Fed and uncover what the impact will be on the economy and the market.  Before we delve in the Fed action, I wanted to highlight a new piece of information brought to us by the Fuqua School of Business at Duke University.

As usual, I present to you the quarterly release of the CFO Sentiment Survey.  The survey is important because it provides us a global and domestic examination of what CFOs think about the economy and also their own firm's growth outlook.  I like the CFO angle because these company leaders often have a more realistic assessment of true industry and market direction and how that will impact them financially and operationally.  I often suggest that CEOs can't help but spin and sell a positive outlook because they are wired to promote and push and therefore are often glass half-full (or sometimes glass all the way full) and CFOs tend to just look at what is in the glass.

Let's examine what the most recent survey stated.


SEPTEMBER CFO SURVEY - http://www.cfosurvey.org/12q4/PressRelease.pdf
CFOs admitted in this quarter's results that they are more negative than previous reporting periods.  The financial managers suggest that they have curtailed hiring plans and have reduced their spending budgets as well.  The executives also stated that their capital spending plans would not change even if interest rates fell another percent or two, which suggests that Fed policy to lower rates would have little impact on real companies.  CFOs also stated that they would not change any of their investment plans even if interest rates ROSE 1% which further underscores that the Fed's work is not really going to have a material impact in a traditional business environment.  Clearly the Fed is targeting housing and also attempting to provide banks with more liquidity.

TOP CONCERNS
I like the CFO Survey because it also asks the finance chiefs to list their major concerns.  This survey noted that profit margins, health care cost, maintaining employee morale, and finding qualified employees were their greatest worries.  Europe's recession is also an issue on their radar and very importantly we find that companies are concerned about governmental regulations.



DETAILED RESULTS HERE
I've cut and pasted an image here to examine the survey results.  You can see that this quarter's growth estimates have been reigned in significantly.  If you'd like to examine the pdf, simply click this link - PDF OF SURVEY RESULTS

JOBS AND THE FOOLISH FED
Ultimately, companies are slowing their growth and that includes their capital spending and hiring.  While we keep hearing that the Federal Reserve is acting to support "full employment" it seems like that is a "fool's errand".  Company leaders are stating quite clearly that interest rates don't matter and lower or higher rates won't impact their decision to add more headcount!

Recessionary concerns are important as US firms look across the pond and worry about economic slowdowns visiting our shores.  While the Fed continues to try to work magic, domestic firms are trying to figure out how to balance the powerful impact of greater governmental regulations and cost requirements with the ability to actually run their businesses.  FIRMS ARE NOT HIRING BECAUSE THE REGULATORY OUTLOOK AND MANDATED COSTS ASSOCIATED WITH HIRING IS UNCERTAIN.  The Fed can buy mortgage bonds all they want, but until government gets out of the way, regulatory uncertainty will be a critical barrier to employment growth in the next year.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

ALL IN - ECB PUSHES ITS LUCK

Photo by Phil 

STRONG MOVE
Ok, I admit it, I am one of those people that watch the World Series of Poker on ESPN every year.  It's not because it is good television or even that I like poker, it is simply that I like watching people attempt to win using a number of interesting strategies.  Sometimes players will be loud and almost belligerent, others will be quiet attempting to hide any emotion and even covering their eyes and wearing hoodies, finally others will talk and blab in an effort to throw off their opponent.  The competition is a perfect mix of bullying, guile, and negotiation all in a venue that is shockingly rewarding to the final winner.

BINARY EVENTS
We've discussed how the markets continually are positioned to offer binary outcomes and frankly I hate them!  We face some serious issues this week where the direction of the market will certainly trade based on two huge headline events that happen tomorrow (Sept 12) and Thursday.  First, the German high court will weigh in on the constitutionality of the ECB's measures and determine if there is a violation of the German constitution.  Second, the Fed will meet and the market expects some further market stimulus probably in the form of continued low interest rates, cessation of payments on excess reserves, and more "twisting" by targeting the yield curve and buying specific treasury bonds. It is pretty obvious, if the German courts rules against the ECB's moves or the Fed only partially delivers stimulus in the form of more QE, we probably see markets go down significantly.

DRAGHI GOES ALL IN
As if there wasn't already pressure on the German high court, ECB head Mario Draghi  doubled down in the past couple of weeks and issued statements that the ECB would begin unlimited bond purchases of countries that had yields that "were not reflective" of real market pricing.  In otherwords, the ECB just promised unlimited bond purchasing to manage rates and keep them under the critical 6%, 7%, or 8% level (who knows what really is critical now as 6% was the key rate).

By issuing this promise, Mario Draghi simply pushes all the ECB and Euro's chips into the pot and has demanded that market participants fold in the face of an overwhelming and serious threat.  The question that investors, traders, and speculators must ask is, "Does Draghi really have anything in his hand?"

ROYAL FLUSH OR HANDFUL OF CRAP?
So, despite the back drop of the two headlines this week, the real story is the ECB's head and his promise to save the Euro no matter what.  The bet sounds convincing and seems to have been exactly what markets needed to hear to drive investor confidence higher.  I've read a number of bullish stories that emphatically state that the Euro is saved and there will soon be a rush to purchase fire-sale priced European assets as the fix will stabilize markets and put a floor under them.  The USD and Euro have been trading like it is Draghi's pot too.

So what could lead us to believe that perhaps the ECB Chief doesn't really have a royal flush?  What didn't get much attention in Draghi's announcement is that all of the unlimited purchases would be contingent on the nation receiving aid to comply with full austerity measures and submit to the IMF and ECB conditions.  In otherwords, Spain and Italy will be required to become Greece-like and bow down and implement processes they just haven't been willing and able to do.  In otherwords, Draghi's promise is based on the requirement that distressed nations reign in spending and raise taxes even more.

PUSHING PEOPLE AROUND
In reality then, Mario Draghi probably has nothing in his hand, but he probably was able to win the pot as his competitors don't have a strong hand that would be worth challenging such a bold and overwhelming bluff.  Effectively, the ECB has played a similar hand to what the Fed has and the all-in moves force reasonable players in the markets to simply bow out and hope they can survive and capture a hand on better terms.

Ultimately, sterlization of bond purchases won't do the trick and rates for distressed sovereign nations will get out of hand, but the Fed's and ECB's strategy has nothing to do about winning long term, these players are only interesting in winning the next few hands and extending the game as long as possible.

While I don't think we'll see any shocking news coming from the next two days, I suggest that you review your positions and watch for a continued move higher in commodities and metals.  While we are promised that sterlization and QE hasn't produced inflation we need only look to the charts of gold, silver, oil, and corn to note that central banker promises, bluffs, and all-in bets produce commodity charts that go up and to the right.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

GOLDILOCKS - METALS UPDATE

AMAZING PUSH HIGHER
Gold, silver, and pretty much all commodities have been on a tear recently.  I had updated a post several weeks ago mentioning that silver was a strong buy and thought that we might see resistance at $31.50.  I never posted that post here on the blog, but put it up on Tim's blog www.slopeofhope.com .  I suggest you visit his site daily.  Anyway, the title of that post was POUR SOME MONEY ON ME - SILVER UPDATE from August 12th.  In the post I suggested that everyone was supportive of the Fed that is supportive of the policies that will push silver and other commodities higher.  With unlimited bond buying promises from the ECB and a Fed meeting on the 13th, the commodities markets went into overdrive and quickly blew through all previous areas of overhead trouble.

Levels on SLV to watch now include $35.50 and $42.50.  Please note, I used SLV, not silver in this chart!

Finally, enjoy this bullish video from Frank Holmes and Jonathan Barratt as they discuss the outlook for gold, silver, wheat, and other commodities.

BIG WEEK THIS WEEK
Key things to watch this week are the German High Court ruling on the legality of the ECB bond-buying actions (Wednesday) and on the 13th, the Fed will come out an stimulate us again.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

MARKETING WORKS - FOODSTAMP UPDATE

SNAP IS AWESOME!  GET YA SOME!
The government's Supplemental Nutrition Assistance Program has been a powerful success by any measure.  While hard economic times have certainly driven participation in the program in recent years due to the "Great Recession", longer term trends suggest that the foodstamp initiative is amazingly effective at adding to its roles.

The government released June data this month and highlighted that more than 46.67 million Americans are now receiving food assistance.  The new figures show that we have erased the recent drops in participation in February and April and have pushed to new record highs.  We are 3.3% higher than a year ago and 1/2% greater than last month.

DIFFERENT WORLDS?
Stock markets would have us believe that things are better and the outlook much more positive, how can we justify equity index gains and the record participation in government food programs?  We must look only to a massive effort by the last two administrations to drive up enrollment.  The USDA under the leadership of George Bush and President Obama have emphasized participation in the program and we've even had tremendous marketing efforts on television and radio to get the word out that free food is available.  The USDA is spending almost $3 million dollars to get eligible participants to apply for the service in California, Texas, Ohio, and New York.  They are specifically targeting the elderly, working poor, unemployed, and of course.....hispanics (why this group is singled out I have no idea, as if they wouldn't fit in the other highlighted groups??).

TERRIBLE STORIES
The USDA has stepped up its efforts saying that there are more than 1 in 4 eligible people in the US that still haven't applied for the benefits they are eligible to obtain!  Take a look at the video from CNN below.  As I watch this I am simply mortified for this family that they have endured 4 years of struggle.  The frustration they must feel and the shame they obviously feel is terrible as they wouldn't agree to show their faces on camera.  As much as I can empathize with them,  I am also disturbed by the lack of creative thought and noticeable lack of initiative their entire family has shown.  I can guarantee you that the father could start his own small cleaning business or janitorial supply business and earn more than the $18,000 annually the family has made as he labors as an hourly worker.  In addition, I find it hard to believe that the wife isn't working too.

After four years, I would hope that they had improved their situation and I am sure that they do too.  I just almost believe that these "safety nets" have created a group of people that are incapable of being self-reliant and creating their own success.  Clearly they didn't have significant savings as they said they were broke immediately and clearly they have some situation that prevents them from undertaking heroic measures to address their situation (possibly some health issue?).  While I am sorry that the son cannot go to college, I am left wondering why he isn't working and contributing his earnings to his family?  The family has had food assistance, free living (not paying their mortgage), and obviously other benefits too, the question is how will they get out of this mess?  Will they just continue to hope for a corporate job, or will they endeavor to try something new?  My guess is that Obama or Romney won't be able to help someone that clearly hopes to be restored to his previous position and station in life.

SAFETY NETS ARE TRAPS - GOVERNMENTS CREATING DEPENDENCY
Instead of ramping up food program expenditures, I would rather see the government get out of the business of trying to serve more folks.  If a government program must be created, make it mandatory that recipients enter a technical job training co-operative as we continually hear that America lacks skilled labor and jobs at specialized manufacturing plants are plentiful.  I am choking as I'm writing this as it sounds like I'm advocating more government, but it seems as though it is inevitable that the government is going to spend, spend, spend, perhaps it is more reasonable to demand where they are going to allocate it.

The USDA sees lots of new candidates out there and we've seen how effective they are at using marketing to reduce the stigma associated with the lack of desire or inability to provide for basic needs for a family.  I guess we can only predict that we'll see increased role size and more than $80 Billion in annual program expenditures in the near future.  One has to wonder what is wrong with the 85% of the population that isn't using foodstamps, I'm guessing it won't be long till some are enticed to join the program.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/