Tuesday, July 15, 2014

Tuesday, July 15, 2014

Good Morning America,

I went to the doctor yesterday in order to get an x-ray on my foot.  Well, I went to the clinic where one sees whatever sort-of-doctor (because we don't have doctors any more only doctor's assistants) is on duty.  

After waiting for 40 minutes in small jail-like room with no communication from anyone, I wondered. 

When I arrived at the clinic, I appeared to be the only person there.  I sat in the waiting room for 25 minutes, and no one came in and no one left.  The receptionist was there, but she barely spoke English.  Then an assistant (we have no nurses at the clinic) took me into the back, weighed me, and found out how tall I was.  (My weight is out of control, by the way).

I was then left in my jail cell (with an unlocked door which is a mistake on their part for someone like me).  I waited.  I meditated.  I finally left after 45 minutes never seeing or hearing from anyone. 

Wow... that was awful service, may I say.  By the way, I now carry insurance because ObamaCare requires me by law to carry insurance.  I never carried insurance before, and I paid for my doctor services at the time of service.  At the same time, I've been going to the clinic for 13 years, and it has always been friendly, English speaking, service oriented until yesterday.  Is that the way ObamaCare patients are going to be treated now?

Small Business Outlook

Summary: 

·         Yesterday followed the pattern I laid out before yesterday's opening.  The market opened up, continued to move higher until 8:00 AM PDT, and then consolidated with a downward bias the rest of the day. 
·         I would like to be able to write something that would make a difference to you, the reader.  Everyday I attempt to provide information or comments that would make a difference to me if I was reading.  Your comments are appreciated.
·         One of the most important pieces of news today will come from the Fed Watchers, as they analyze (to death) Janet Yellen's speech at 7:00 AM PDT.  She will be jawboning about monetary policy as she testifies before the Senate Banking Committee.  Pundits will be looking for clues to the timing of interest rate hikes.  For the most part, Fed Watchers are pretty sure the Federal Reserve of the USA is in no hurry to raise rates.  Any hint by Dr. Yellen that the Federal Reserve is concerned over inflation, and the stock market prices will have a negative reaction.
·         Microsoft is planning for a another round of layoffs.  As far as what is being reported, this is part of Microsoft's plan for Nokia.  This is a restructuring plan that may be greater than the 5,800 job reduction in 2009. 
·         Here is some good news for the USA.  (I think it is good news anyway.)  Volkswagon is going to invest $900m in its manufacturing plant in Tennessee.  USA sales of Volkswagon products have been going down in the USA, while other car company's sales in the USA have been going up. 
·         PRICE  --  I've remained with the view that asset prices (stocks, bonds, commodities, and so-on) are what they are.  Even if a person were to invest completely on fundamentals, rarely would fundamentals analysis and price be in complete harmony.  I would suggest, all markets are like auctions where the price is set by buyers.  Price explores what buyers are willing to buy for.  If an asset is bid to high by the auctioneer, there will be no buyers.  Price recedes, until there are buyers.  Buyers at auctions exhibit the same behavior (in my opinion) as buyers do in the stock and bond markets every day.  I've written and published papers on how this works, and the CME market profile provides software that may (or may not depending on your viewpoint) that tracks auction market action on CME products. 
·         GOLD?   Well yesterday's drop in price sure brings into question all the hoopla about Gold has reached a bottom, and gold is ready to explode to the upside.  Speculators will certainly be nervous, and they will likely abandoned their gold positions they have taken during the $100+ runnup over the last few weeks. 
o   I believe the rally over the last few weeks has been based on expectations that the inflation genie was escaping the bottle, and the Central Banks would not be able to contain it.    
o   In order for inflation to happen, global growth would have to pick up, and that has not happened. 
o   What has changed in the last 2 weeks?  The answer depends on who you want to believe.  Fact is that underlying commodity prices such as cereals and gasoline are dramatically falling over the last 2-3 weeks.  This is not just a little fall either.  Crude is barely above the $100 mark.  Agricultural commodities have crashed (not just gone down) in some cases as Corn has fallen from $5.20 per bushel to $3.78 in two months.  Corn feeds cattle, and cattle prices are (finally) beginning to fall.
o   France's economic news is bad folks.  Bad!  Germany looks good, but it also looks to be turning down.  China is struggling.  Canada's unemployment is the highest it has been since last summer.  And as you know, Spain, Portugal, Italy and Greece are having troubles in the banks again. 
o   Is Gold indicating deflation?  No, not on a single day's trading.  Gold's price may indicate that it moved too high too fast, and as geo-political problems begin to subside and commodity prices receded, that deflation dragon is fighting back against the inflation genie.  As usual, we retail investors are left with conflicting government reports, conflicting asset prices, conflicting monetary policies and just general uncertainty. 
o   What should you do?  Have a plan to invest in the stock market, with an eye to increasing your asset portfolio that can earn even during deflationary times.  Cash is king in deflationary times, but that is only true when deflation is obvious. 
o   YET!!!!  the preponderance of global economic evidence (China, Germany and the USA) suggests the worldwide recovery is still ongoing.  I write about inflation and deflation in my newsletter, and how to measure it.  The war between the two is still ongoing, with last month inflation beginning to overtake deflation for the first time since 2007.  Will July change that picture? 

·         The market will open up.  Look for price to consolidate (up and down) in the first 1/2 hour until Janet Yellen begins testimony at 7:00 AM.  Any hawk like comments on interest rates, may send the stock market prices in the USA into a significant move down.  If she is dovish, then she will show she does not have consensus in the FOMC. The markets won't like that either.  Bernanke started this freedom of speech of the voting committee members.  It appears to be out of control at the moment, in this person's viewpoint.  If Dr. Yellen appears to lose control of them, equity prices will suffer immensely.     

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