Weekend Sept 28 2013
Here is an explanation of the debt ceiling.
Sorry but I have trouble with Greenspan's explanation that it does not matter how much we owe as we can always print more dollars, hello Zimbabwe
Bernie Williams Chief Investment Officer at USAA is doing nothing bout the debt ceiling debate. As he puts it, we just have to let the theater play out. I suspect this is a result of too much fear mongering over the sequester. Obama then hopped on Air Force One spending $100 M to visit Africa.
QQQ Outpaces Larger Stocks SPY
NYSE Advance Decline Line
This long term indicator is either coiling before moving higher or telegraphing a top. I suspect the latter.
Weekly Advance Decline Line
At stockcharts John Murphy and Art Hill are sure we are in a new bull market. Maybe but the social mood around the world as well as in the US argues against it. And if that is the case the 18 year alternating cycle has been repealed, See our newspaper column posted this week.
SPX - Five waves near complete?
Our projected top is due in November. If this count is right and Wave One equals Wave Five, three months from August will be November.
After a huge run up the bond yields are consolidating. Again many claim this shows a stronger economy. But the FED does not trust the economy to stand rates over 4% on the long bond. And so no taper, just more stimulus.
Another campaign throw off phrase was, I want US Exports to Double. This will not be accomplished with fewer regulations or lower taxes or any incentive to hire workers but by simply cheapening the Dollar. Looks like that is underway again.
Oil and the Dollar are both down. While the pullback in oil is attributed to lower tensions in the mid east, it seems to me that the 'let Putin, Assad,. and Iran do whatever they want,' is more likely to raise prices.
Gold and Silver
One can track the musings of the gold bugs at Seeking Alpha or other like sites. Their thinking seems to be that
-the Evil Empire of Big Banks in league with the FED has hammered the price of gold and silver lower
-this greatly enriched the ositions of those gold and silver bears so they are now in great shape to buy in at lower prices.
-There is massive physical demand for gold despite the fact that CEF is at a discount and the miners continue falling
-although the only action attributed to the Big Banks is gaming the market lower, for some reason there is a belief that the precious metals bull market is merelyhibernating, waiting to be re-ignited again.
-and for some reason although the bears have had it all their way the last couple of years, miraculously once the clouds clear, their bearish stunts will vanish and gold will scamper beyond $2,000 as Central Banks around the world print fiat money
-If the Big Banks got rich shorting the market, why would they stop now?
-I am suspecting there is a message in the collapse of gold and silver but not that the next bull market is right around the corner, no there is something more fundamental going on here.
The Bottom Line
We continue to expect a high in stock prices this November.
We also expect lows in gold and silver in the Oct November period.
Peggy Noonan's column A Small President on the World Stage confirms my 1973-74 outlook. In 1973-74 Nixon was swept into office with a large majority vote. But he soon got in to trouble. The markets fell with his declining fortunes. The Dow dropped 50% in those two years.
This President is not being taken seriously and no one understands what passes for foreign policy. He says Assad has to go but then lets him off the hook with no penalty for using chemical weapons. He will negotiate with Assad but not with John Boehner. And so we have gridlock in Washington DC.
So far the markets are up to new highs. As noted in our openning comments, Wall Street seems unconcerned about the fiscal cliff, impasse, sewquester, debt ceiling or whatever phrase is trouted out to describe it this time. I am guessing that impasse forms an early October low leading to a November high.
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