DO NOTHING - YOU'RE IN NO MAN'S LAND

THE FED GIVETH....
We are hours away from hearing about the blessings that the Fed will bestow upon us and the market is slightly down.  It is at these times we need to pull back and take a look at a longer perspective and look at what might be ahead.  Wall Street is hoping that Uncle Ben will uncork something truly unanticipated, but in reality his options are pretty limited.

In general, the consensus is that the Fed will go forward with Operation Twist where they attempt to buy longer dated treasuries and sell shorter dated ones.  The impact of this will be to drive longer term interest rates even lower (Grandma, you happy about that?) and possibly move up shorter term rates.

REAL IMPACT? - NOT A CHANCE
If Operation Twist is implemented and successful, we probably won't see much real improvement on the regular Joe or on business owners as people and businesses simply aren't borrowing and lower rates won't make much of a difference.  It will have an impact on banks though, and this could really hurt them as they essentially fund in the short term and lend long, so this compresses their margins and drives their funding costs higher and reduces their income potential on lending.  I think this is why you are seeing all the bank stock prices fall.

THAT EURO ISSUE JUST NEVER GOES AWAY
The Fed is already trying to bail out Europe by providing swap lines where ample dollars are available no matter how horrible business conditions are and in fact we are seeing almost everyone BUT the Fed walk, (no run!) away from European banks.  This week we've heard that major corporations in Europe are taking their reserve deposits from  banking institutions and trying to deposit them directly with the ECB rather than risk losing money at a bank.  That is an indication of confidence isn't it?

So here is the deal, we don't really know what the real impact will be besides that it will move the markets.  If Benny doesn't oblige and give us something awesome, you could see the markets drop significantly.  If the Fed gives us some great news and tells us that free money will be available to the financial elite forever without any cost, we could easily rocket to the April highs from earlier this year.  From my perspective I think we are in a no-man's land right now as you look at a 4 year chart of the DJIA.  Dating back to July of 2008, we were right at 11,750 right before a nasty fall all the way into March of 2009.  Guess where we are right now?  You got it, right at 11,350.  We have some support at 11,050.

This chart tells me that we are playing around in a range that I don't want to trade until I have confirmation of a direction.  If we see real disappointment I might hold off and not even attempt a buy till real support at 9,800.  If we rocket higher with a vengeance and blow up and through 11,800 that might be a nice area to buy.

Even if I am a buyer, you cannot forget that Europe is just one week, month, or year away from having Greece default and blowing up the whole Euro experiment.  It is doomed and it is just so amazing to me to see Greek politicians put their citizens through hell to avoid a lesser hell.  The obvious problem is that Greeks are going to hell, it just would seem rational to go to one of your choosing, rather than going to one that is picked by the IMF or ECB.  If the Euro falls, the dollar automatically gets huge inflows and you can wipe away any stock market gains for the last couple of years.  It is hard to say what would happen to gold at that moment, probably a huge spike and then a fall.  I mention these things because they will happen and we need to be aware of it no matter what our independent banking cartel does 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/

LET THE LIQUIDITY FLOW SAYETH THE FED

WHEN HE COMES OUT FROM UNDER HIS ROCK, PAY ATTENTION
We should have known something was up when Timothy Geithner was making the rounds doing interviews and proclaiming that there would never be another capitalistic banking failure ever (another Lehman event).  At that moment we should have simply went triple long everything as this was the signal that QE III was underway.  Read the following Bloomy article regarding Fed coordination with everyone to save....well everyone.

Call me a little gun shy as I didn't plow everything into longs.  Unfortunately, we all should have seen the signals as big money was buying transports and they were up over 10% in two days....it's such a hard thing to keep a secret.

UP, UP, AND AWAY FOR A WEEK OR TWO
Here is the current view of what I think could happen.  First here is a chart of $SPX where it is really a nice chart.  I think 1230 could be upper resistance, especially since the 50 day SMA is right there.  That might take us a day or a week to get there, but if you really think about it, a week is about how much time we'll need to find out that Greece has spent through its latest allowance and is in need of another infusion of cash!  This is a great pre-boost before the Sept 21st Fed meeting.  This would normally be when I suggest that the Fed is going to move forward with a full court press of official QE III, but today's inflation numbers might make them pause and do a double secret QE III.

The way things have gone lately make me suggest also that a push through 1230 would mean that 1260 could be the next level of resistance.

Let's also not forget our old buddy GLD.  As much as I hate it, the chart says this thing is going to track back to the area I've mentioned before at 162.50.  Gold needs a good riot or two in Europe to resume it's parabolic ascent.

I'll post a bit more later this evening.  Lots of going on.  Don't be confused by my sudden bullishness, we all know that the ECB and FED coordination means nothing, we are just pretending it matters and we are going to let the bots take our stocks higher.

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/

CORZINE - GEITHNER LIES BECAUSE HE CAN AND MUST

I found an interview on CNBC today of Jon Corzine speaking with the David Faber and Mr. Booyah.
Overall, the 17 minute interview is not that entertaining, but I have pulled out a few items that DO need your attention.





CORZINE ON EUROPE - (1:00 to 3:00)
They need to be calm.  Germany has got the money and therefore has the power.
Leaders there need to use overwhelming force. (SPOKEN LIKE A BANKER - translation is that the world needs more liquidity and free money without limitation!)
Really only the major players matter.  It all comes back to Germany.  Consensus around the core leadership is the key.

KEY MOMENT -  (3:10)
3:10  Cramer asks question does Geithner really believe what he is saying? 
Corzine says, "Geithner is not going to say that he wants a weaker dollar."

Goatmug interpretation -  So here he have an admission from a former Governor and former CEO of Goldman Sachs that the Treasury Secretary will lie boldly to the entire world.  (Interestingly the transcript of the interview is NOT correct here and does not reflect this exchange.)  I know that this could be interpreted as just a fleeting example of what Geithner cannot say, but you have to think, of ALL the examples, this is the only statement that really matters from a Secretary of Treasury.  This may be a slip frankly, Geithner says he believes in a strong dollar all the time (and lies) but his actions clearly refute these statements.  (Cue the Chinese students laughing at him again.)  So, in other words, Corzine shares with us that Geithner lies about the dollar because he can..... and he must.

WHAT DOES CORZINE THINK NEEDS TO BE DONE? (paraphrased at 7:00)
"All of the players need to think and act in a coordinated way.  They must silence the Finance Ministers and their employees and allow only one message to be provided.  They need to lay a big bazooka on the table to stimulate the economy." 

Goatmug thought - Once again we have Corzine begging and pleading for government intervention in a massive and coordinated way.  We needs us some stimulus or else these markets just won't go up!

Enjoy.

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/

9/11 FAITH AND DOUBT AT GROUND ZERO

10 YEARS TO REMEMBER
I saw a portion of a video this week and I wanted to make it available to you.  Below is a Frontline PBS video about the 10 year anniversary of 9/11.  As readers will recall I was an analyst and trader at the time that the towers were attacked.  I did not live in New York at the time so I was not in physical danger (that we knew of), but I am quite moved still at these scenes and as humans we always tend to place ourselves in a situation and view things through the lens of "that could have been me". 

I know many traders and brokers in New York and Chicago that lost close fellow employees and friends and somehow they continued to work and survive.  I am very patriotic and love my country, but I hate how politicians and the media have hijacked this event and am turned off every time I hear how we were attacked, but we won.  No one in the US won, and I refuse to try to make myself feel better because we invaded a country full of poppies and killed thousands of men that think they are attacking us for their own good reasons.

I am very emotional today as I rewatch this video and see the images of men and women throwing themselves from windows above the impact areas in the buildings.  I cannot imagine the fear and utter despair that caused those actions.

I don't know how I feel about this video as it shows so many men and women who are survivors of victims of 9/11.  The perspective in the video is that many have lost faith in God and I would even say have a hate for Him.  I cannot sit in judgement of them nor can I understand their loss and pain.  I can say that I am troubled by so many of their comments and beliefs 10 years later.  I have to remind myself that PBS is probably delighted to show a God-less and God-hating perspective since many very liberal perspectives agree with that.  No matter what their ultimate agenda in showing the film, I want to share it.

FOUNDATIONS SHAKEN
Without doing much more writing I want to state emphatically something that we all need to understand as we watch these people grapple with their faith and core beliefs about God.  I continued to hear in the documentary that many of the people had perfect lives, were blessed, and felt very close to their Lord.  However, now that they have suffered a loss they feel abandoned and are wrestling with how God could allow these terrible things to happen to them.  I believe and know that many of their feelings of loss and God's betrayal stem from a misunderstanding of who we are and why we are here.  The bible and Jewish texts tells us that we are created to worship Him and serve Him, it never promises a perfect life without sadness or loss.  I hear the pain of many in the videos and they are angry and pained but suddenly attribute it all to Him.  I sense that they had a deal with God that they made up, "God you give me everything I want and I'll follow you".  I don't think this is the vision and the covenant that God has in mind for any of us.  In fact, God says, "Give up everything and this will demonstrate your love".

Giving up everything is hard and I can't begin to say that I am at that place of achieving it.  I hate that these people lost so much and it pains me deeply to see that they have lost their loved ones AND their faith and confidence in the one true person of God that can heal and restore them in that place of sorrow.  In that sense, perhaps evil did win that day in that it revealed the deceptions of our hearts in 9/11, that we felt that God was here to serve us and when that wasn't true we rejected Him and sought to blame Him for our wrongly formed and unmet expectations.

  (This embedded video is part 1/7, as they finish you can go to the next one.  This is helpful because you can watch the video as you have time.  I've put the link to the original video at PBS below, if you have time you can watch it all there without seeking for the next chapter.)

Watch the full episode. See more FRONTLINE.

http://video.pbs.org/video/2120639608/

I posted this commentary with the intent of sharing my feelings and thoughts that provoke me to tears.  I do not mean to offend anyone that suffered a loss, I truly cry and share anguish with you although I cannot imagine the sorrow you must endure.  With this loss though, it is imperative to have a true foundation of where we sit in relation to our Lord, without it we will be consistently disappointed and our wrong view will ultimately damage our eternal salvation.

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/

AS BEARISH AS YOU WANT TO BE.....

FEELS LIKE 2007
I will have to admit for the last 3.5 years I have been bearish.  I recall thinking I was making the mistake of all mistakes in early December of 2007 when I moved all of my retirement assets from a "normal asset allocation" to 100% cash because bond market action and economic factors looked really poor. 

Despite the powerful and relentless rally where I have been forced to buy garbage stocks that had no reason to go up (along with some quality names) I felt deeply that all of the purchases were simply "trades" rather than investments because the fuel used to propel the market's launch was clearly going to run out.  Friday's job figures were the cherry on top of smoke signals that have been telling us that the economy's fuel tanks have been jettisoned and we've discovered that there have been cracks in the ship's fuel containers.  In other words, the report marked the beginning of the end and the beginning of all sorts of other nonsense.

14/40 EMA CROSS IS VERY TROUBLING.
The 14/40 EMA is something I've used for quite a while to look at long term trends.  While I would normally be jumping up and down screaming to short this market because this indicator has been so reliable for so long, one only needs to look back at the last time it happened to find a reason to pause.  When was it you ask?  Well of course, it was last August before we had the incarnation of QE 2!  The tsunami of new mind-boggling liquidity for liquidity's sake unleashed the fury of velocity-less fiat and made asset prices soar. 

Now I have read some information that has said that the slope of the EMA's has a lot to do with the validity of the signal, and that is notable. In the 2010 crossover, the moving averages were not both downward sloping. In the two other previous crossovers in the last 10 years they were, and the results were devastating. I am posting a long term view of the information and you'll need to click on the image to see something a bit clearer, and this is also a weekly view of the 10 EMA / 50 EMA (sorry my system can customize these for some reason!). But the results ARE clear. A downward sloping crossover is not a good thing and has led us to the tech collapse in 2001 and the financial crisis in late 2007.

IS THE QE STORM COMING AGAIN?

Do I think that a QE 3 could be around the corner?  Of course.  The jobs report and complete slow down of the US economy and European economies is more than enough justification for more monetary fun from the boys at the Fed.  The problem we may face though is that QE 3 and its future iterations are have less and less of an impact on asset prices in terms of magnitude of moves and in terms of the duration of time they are working.  In essence we are getting less bang for our electronic bucks.  There is no doubt that they will try and they will do whatever they can to continue to stimulus.  The only problem is that the economy doesn't need more money, it needs solvency, real buyers, confidence, and truth.  Additional ramps up in the Dow of 1000 points don't deliver conviction that everything is alright with Bank of America or European banks, and it certainly doesn't give a small employer confidence to hire new people when they believe that our economy is slowing again.  

FINANCIAL CONDITIONS ARE RECESSIONARY

Also, the Financial Conditions Index has confirmed that we are "all in" when it comes to recession.  As you recall, any figure under zero indicates a recessionary period. 

So, yes, I'm as bearish as I have been and I have the economic stats to back it up and the sour mood is going to be a feedback loop over the economy that makes its prospects worse and worse.  European recessionary issues are also looming there and we have a full blown banking crisis about to explode in the next month.  Real estate markets in Australia are also beginning to show the stress of a blowing bubble.  I've got all the reasons in the world to be as bearish as I want to be, I simply keep it in check because I know that Team Fed is meeting on September 20-21st and they'll be looking to gun the markets and make everything look better.  Trouble is, they can't.

I'm short a lot of things, many of which I posted the other day, however I am not short gold.  As long as the European banking situation is brewing, I will continue to stay long gold as there is a real fear that the Euro may collapse and as I've noted before gold is simply the "un-currency" despite the chart that needs to revert to its mean. - CHARTS TO WATCH.  No matter what the charts say, we are finally going to get an answer to who is bigger and badder?  Are we going to find that the FED is so big that they can overcome the biggest bearish signal we've had in 3 and 1/2 years?  Perhaps, but with all the problems in Europe they better get working cause the calendar is against them.  I will post the economic calendar later, as it is important.

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/