UNCOMMON INDICATORS - SAME RESULTS

I found an interesting video on CNBC (yes, all fluff and they try to make all things positive).  The CNBC gang interviews Nick Colas who tracks internet searches on Google to attempt to find trends that might indicate where companies and the economy are going.

Clearly everything in the economy is not roses as he responded several times, "that's a tough one" meaning that because the search term was showing up more and more that didn't mean that things were getting better.  Essentially this interview highlights one of my issues with the CNBC hosts, they enter into the interview with the thought that these indicators are to reveal bullish information, hence the panelist is in a position to defend the data and almost apologize if the data is negative.  Truthfully, it isn't hard to figure it out, you just examine the results, question it, and then accept it.




Here are the search trends he follows;

GOOGLE SEARCHES FOR HOME BUYING - I get this one, I hadn't thought about that.  I would state though that I'm hearing more and more complaints from realtors and mortgage lenders that they can't get buyers that can get financing.  In my city this is really blowing up potential deals and causing slow sales. 

SEARCHES FOR USED CARS  - He doesn't share with us the numbers for used cars, but this would be useful to see if folks are going to try to buy new cars or buying used.  I keep hearing lots of optimism from the auto industry about their growth prospects and how things have changed.  I wanted to examine these indicators for myself and so I used the Google Automotive Search Index results as a high level "smell" test.  Interestingly the index values show a couple of striking things.  First, we are currently at a level that is much higher than last year, which was horrible.  This is wonderful and you can see how the executives at the manufacturers are excited that things are looking up.  Despite the good news, we see that this is also a level that is similar to 2007, which wasn't exactly awesome.  On top of that you must account for a growing number of searches as people are using media and search more, much more than they did 4 years ago, so this too should make us pause a little.  Finally, we have just exited the typical peak point in sales and searches in terms of seasonality.  Last week I posted a chart on GM, I'm not getting long anytime soon. - GM CHART FROM 7/22/11.  Take a look at the Google Search Index for Autos below.

SEARCHES FOR GUNS -
I'm not exactly sure that guns are a great indicator of improving financial health as Nick tried to spin this.  His angle is that guns are a $300 to $500 durable good like a washing machine or refrigerator.  Somehow I'm not thinking that gun searches are a marker that citizens feel confidence in an improving economy.  I believe that folks feel like the system is breaking down and the government cannot protect them.  Perhaps folks aren't looking to prepare for Mad Max times, but their search for the best gun for them may mean that they are concerned about the increasing risk of break-ins and their security.  Oh yes, if you are in the market for guns you might consider the Mossberg 500 or 590 and the Glock 23 as a starting point in your research.

SILVER AND GOLD -
We've discussed this at great length, people across the world are buying gold and silver as the un-currency and as an inflation hedge.  If "investors" are looking to buy gold and silver, they don't have a lot of confidence in traditional investments. 


FOOD STAMPS -
The Goatmug Blog tracks food stamp usage every month, but I like the idea of watching these trends to see how many searches are being performed in real time. This approach may give us insight into what numbers will look like several months in advance.  Regular readers know that we report these dismal figures in the monthly update and last month's figures show that almost 45 million people are on the roles and as the panelist described one in five families receive food stamps.  How disgusting!

GOOGLE TRENDS

If you have a desire to check out some of these you can look at Google Trends to examine word searches and also you can use this link in Google Finance - http://www.google.com/finance?q=GOOGLEINDEX_US:AUTO

I did searches for durable goods and other items and many of the results show how poor the us consumer is right now in terms of discretionary spending.  Durable goods searches are at 7 years lows, but it is beginning to tick up compared to last year's horrible totals in year over year trend!  Wow! 

At the end of the day I like this approach it may give us a view of coming changes in trend in a real time format.  At least Google's spying is good for something 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 at http://www.goatmug.blogspot.com/



WELCOME TO THE THEATHER - 1984 STYLE

WORLD MARKETS ARE THE FOCUS
I heard today that the President and CONgress were rushing to try to get some type of debt ceiling done (temporary or not) before Asian stock markets opened for the week (Sunday evening in USA time).  I'm struck by this because I'm simply floored by the fact that these politicians are spending any time focused on what equity markets are doing rather than focusing on the task at hand.  What I'm getting at is the notion that they are scurrying around to avoid a fall in markets shows me that this is all just a big show for the markets! 

Yes, this isn't some new revelation since the timing for all major announcements seem oddly planned EVERY single time to coincide with a Sunday night bombshell or options expiration Friday.  As I've noticed these events I've pinched myself saying, "no, it's just a coincidence".  However, after having an entire arm covered with red whelps, I am finally of the mindset that a game is being played to juice markets and keep them elevated. 

The story here - http://www.foxnews.com/politics/2011/07/24/leaders-seek-debt-deal-before-asian-markets-open/

"White House Chief of Staff Bill Daley warned Sunday that the financial markets are starting to have doubts about the ability of Washington to strike a debt deal, as lawmakers scramble to come up with a plan before Asian stock markets open.



The Asian markets will start to open Sunday evening Washington time, ahead of the Dow opening in the U.S. Monday morning. U.S. officials are cognizant of the possibility that a failure to outline a path forward by then on how to raise the debt ceiling could roil the markets."

Now give me a break!  We have several days until this deal needs to be done, and rest assured that our friend Ben Bernanke is quite willing to buy up all the debt in the world to keep us from having an interest rate problem.  I saw Tim Geithner on tv telling us how irresponsible those Republican politicians are being and how the apocalypse will be unleashed if something isn't agreed to immediately.  While the warnings are grave we can retain a sense of confidence in our financial overlords as every other problem we've faced in the last two years has been met with a change of the rules, a bending of all reality, twisting of economic paradigms, and a moratorium on basic math.  Forgive my tongue and cheek approach to the drama, but I personally don't think there is any chance of a deal not getting done, and with hours to spare they'll unveil another monstrosity that will solve nothing and only ensure that Amerika's future is just a bit dimmer. 

WASHINGTON GENERALS WOULD MAKE GREAT REPRESENTATIVES
Have you been to a Harlem Globetrotters game?  I love them and go every time I have a chance.  Those guys are funny and entertaining and the kids think they are a blast.  My kids haven't figured out that the Washington Generals (the perennial opponent of the Globetrotters) are laying down so the Globetrotters can win.  My kids don't realize that the entire game is a show and there is no competition going on down on the field of play.  Likewise, I think the entire drama unfolding in CONgress is simply a ruse where each side of the isle is attempting to make the most out of the situation.  They are all on the same team, they are just wearing different jerseys to keep up the facade that a competitive game is under way.

So, with that realization, I want to give you the opportunity to watch a movie you may have seen a long time ago.  You may have read it in high school back when they actually tried to teach you important ideas and challenge you to think.  The entire theater that is Washington relies on all of us buying into the divisions of a two party system where one can be good or one can be bad based on our frame of reference.  Let's face it, we all like to be on a team!  The problem sets in when you discern that neither one of these teams is good. 



I will leave you with these thoughts and questions from the movie.

Ignorance is strength!

The party gives them exactly what they want.

How do you know what exists?

I encourage you to watch it.  How Orwell would have ever imagined the things he did when writing it is amazing.  I am awed by the idea of the screen in every home and building monitoring every action.  It is very much like today.

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/

ARE RARE EARTHS A GOOD BUY HERE?

I had a discussion about the rare earth elements and the ETF for those firms (REMX).  These firms have all clearly had great bounces and REMX is actually now in an upward channel.  Upper resistance in the upper channel is $26.40, if we charge through there we could see $27.00 quite easily. 

If REMX bounces around the channel top and heads back down we could see a move to $25.00.
While the purchase of REMX gives you exposure to many rare earth metal miners, most folks that are in this trade aren't in it for a 5% move, they want more potential for upside and don't mind the volatility.  Let's look at another option here for some rare earth dynamite.

REMX

MCP
While REMX looks like a fine set up that is still bullish, please view MCP (Molycorp).  MCP has rocketed off a low around $51.50 that was posted almost 10 days ago!  Wow!  Just observing this move makes we want to hold off on buying into that, expecting some sort of slow down and retracement.  The bulls will need to observe $62.00 closely.  If MCP can powerfully move through that resistance level then a move to $66 or even $71 could be at hand.  Those that feel like the stock needs a breather could take a short here and work for a move back down to $57.50.

The bottom line here is that if the overall macro picture continues in the same vein of a stronger Euro and weaker dollar, we'll have the underpinnings of a sizable move in MCP.  If for some reason reality wakes from its 2 year slumber and the USD drives higher, MCP could face substantial headwinds along with the rest of the equity markets and commodity markets.   

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/

I THOUGHT WE MADE MONEY ON THE BAILOUTS....

More great news from our government!

Chrysler bailout hands the US $1.4 Billion in losses.

We are now getting details about the cost of the bailouts from the last several years that were made to various industries.  As I think through this, I am still torn regarding the use of taxpayer money to attempt to save private industry.  It doesn't escape me that these businesses are huge employers and these firms are in the manufacturing area of the economy.  Yes, this is the exact area that I continually say we need, however I would feel better about the entire mess if the recipients of the government help were truly made clean and whole.  In addition, I'd feel better if these firms were non-union firms because the existence of these unions simply means that these companies will be broke again in a few years.  Interestingly, most of the firms that did receive most of the bailouts (outside of banks of course) were all unionized firms.  Further, my feeling is that we essentially stepped in to help extend the life of failing businesses that were uncompetitive, not creative, and not managed to remain in business. 

LOSERS ARE HAPPY ABOUT LOSING
The story I've highlighted draws out that the Chrysler bailout will end up costing Americans $1.34 billion.  At the end of the day, Chrysler was sold to Fiat and now control of the firm in not in US hands any more.  Below are a few quotes from the story above;  

"As part of the loan agreement, Chrysler was given until 2017 to return the bailout funds. If it had taken the full term, the interest accrued on the loans could have significantly reduced the government's losses.  (BUT IT DIDN'T DID IT?!)

Overall, $1.3 billion will not be recovered from the bankrupt Old Chrysler, but Massad still called it a "major accomplishment."
That's because the government originally expected it would lose much more on the auto bailout. Initial estimates from the Congressional Budget Office in 2009, predicted the government would lose $40 billion on the overall auto bailout.
Now it estimates, by the time the $80 billion program is completely wrapped up, taxpayers will have lost $14 billion."

I don't know about you, but I don't recall any Treasury official or any politician telling me we would lose money on any bailout.  I certainly don't recall hearing President Obama telling us that we were going to lose $40 Billion!  Only a government worker can be happy about losing $1.3 billion and consider it a success.

While we didn't lose $40 Billion we are probably going to lose $14 billion.  In government circles, that is nothing, but isn't that the problem with Washington?  Part of the Patient Protection Act of 2009 implemented a requirement to force business owners to produce 1099's for any purchases they made that were over the amount of $600.  The purpose of this legislation was to try to catch small business owners that did not recognize cash income.  Thankfully, this facet of the legislation was removed as lawmakers heard from businesses about the trouble and hardship it would place on them.  Guess how much that was going to raise in IRS revenue?  $17 billion!  So think about it, we are happy about losing $14 billion while in a blink of an eye the government was going to create a nightmare for small business, essentially creating piles of paperwork, and putting a strain on EVERY business in the USA for almost the same amount as we are happy to lose on the auto bailouts. 
GM'S A SUCCESS ISN'T IT?
Of course we are not done with the losses.  Remember GM?  We were planning on unloading the stock we received from that IPO as a result of their bailout, but since going public, GM stock has traded under it's IPO price.

"Treasury Department is now likely to wait until mid-August or September to hold a secondary offering for the company’s stock, people with knowledge of the matter said previously. At the initial public offering price of $33, Treasury must now sell the remainder of its shares at an average of $53 to break even."

 

Hmmm.  I'm not sure if we're going to see $53 any time soon.  What about you?

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/

MR. ROBINSON MOVES TO A NEW NEIGHBORHOOD

Remember Mr. Robinson?  This brings back childhood memories doesn't it?




While it is fun to go back and watch those SNL episodes a real life Mr. Robinson is taking advantage of the real estate crisis in Flower Mound, Tx.  It seems like his neighbors aren't too happy, but I applaud his ability to do great research and use the system to his advantage.  I'm not really sure why his neighbors don't support his action other than the fact that it seems as though he may have the ability to get a better deal than they did.  Ultimately this could be a win-win for them and him.  I normally wouldn't play the race card, but it does seem as though that may be a factor as well.



Personally I'd rather see people take advantage of a bad situation versus have the asset waste away.  Think about how our government went out handing out the "bail outs" to our banks and industries.  What if they would have simply paid a check to each family for $100,000 or $200,000 but made the requirement that each person had to pay off outstanding debts with that newly printed money.  Essentially this is what happened, but the money skipped you and me and went to banks while they were able to keep your obligation as a liability on the books.  Isn't that simply a travesty? 

No, I'm no communist or socialist, but think about it.  Your government printed and borrowed money through huge deficit spending to "create" jobs that were green jobs or were going to be stimulative.  We've learned that the creation of those jobs cost more than $200,000 each and those jobs did  not last.  Have you forgotten all of the programs that have failed?  TARP, Cash for Clunkers, homebuyer tax credits, and Shovel Ready Jobs were just a few.  While the government was spewing money to huge multi-national firms that pay little or no taxes (GE) folks like the original owner of the house in Flower Mound were laid off and lost their homes to foreclosure.  In this case the mortgage company that actually wrote the loan (and kept it) also blew up.  Where were their bailouts?

Good for this guy, I hope he gets the property and I hope that he maintains the home and I hope the neighbors grow up.

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/