Tag Archives: Executive Orders

If The Fed Has Lost Control, Will The Government Impose More Control?

Financial Markets, Housing Market, Market Manipulation, U.S. Economy, , , , ,

I stand by my prediction that 2016 is going to be a horrible year for the world in general. I am a great fan of both David Stockman and Paul Craig Roberts and if you conflate their views the world is going to be a disaster economically, financially and geopolitically.  – John Embry (email conversation this past weekend)

I find it fascinating that, sometime between the close of trading on December 31st and the start of trading in 2016, the JP Morgan’s equity Einsteins all of a sudden decided that the stock market “might” be overvalued.  Per Zerohedge, JPM released a strategy report suggesting that the new robo-trading trading them in 2016 might be “selling any rallies.”

But what changed?   The stock market has been overvalued for several years.  It was still overvalued from a strict fundamental standpoint when the S&P 500 bottomed out at 666.79 in early 2009.   It has been insanely overvalued for the better part of the last three years.  No one could see that until Sunday night?  All of a sudden JP Morgan has decided that “equities are not attractively priced anymore?”

I suggested in my blog post this past weekend that Thursday’s Fed funds event might be indicative that the Fed is losing control over the markets – Is The Fed Losing Control?  I’m wondering if what happened on Thursday with Fed funds rate contained more predictive power than any of us imagined possible…

I opened up the latest issue of my Short Seller’s Journal with this comment:

The current stock bubble is now about 30% bigger than the previous two bubble tops – 2000, 2007. One difference between now and the last two bubble peaks is that the underlying fundamentals are significantly worse now. Just one example is the amount of Government debt outstanding. At the 2000/2007 peaks, Treasury debt as a percent of GDP was 55% and 57%, respectively. Currently, Treasury debt as a percent of GDP is 109%. Keep in mind that the Government also now guarantees FNM/FRE debt, which would add another $7 billion, roughly, to the $18.8 trillion in Treasury debt.

The point here is that the “gravitational pull” from the underlying fundamentals will eventually override the Fed/Government’s ability to keep the stock market propped up.

My feature stock of the week is down 4% today vs. 2% on the S&P 500.  My “Quick Hit” idea is down 6%.

Why all of a sudden JP Morgan (and others) have decided that the stock market is overvalued today but it wasn’t last Thursday is beyond me.  The excesses and insanity that culminated in the brief financial system collapse in 2008 are even bigger and more pervasive now.

Quietly AAPL stock is now down 23% from its all-time high in 2015.  Doesn’t this mean that AAPL is in a “bear market?”  If AAPL were continuing to hit new all-time highs the financial media would be in our face with the virtues of the iPhone and stoking anticipation for AAPL’s next product flop introduction.

I don’t know if today’s early morning action in the stock market will be another “false flag” gap down followed up by a massive rally in the last hour of trading.  We’ve seen this “movie” several times overUntitled the last year, as the S&P 500 forms what appears to be a massive rollover – click image to enlarge.

What I find horrifying – and what is getting lost in the shuffle of today’s market activity – is that fact that Obama is getting ready to flex the muscles of dictatorial control with his threat to issue an Executive Order mandating gun control.  Doesn’t anyone remember that Obama is the guy who based part of his 2008 platform on reversing all of the Unconstitutional Executive Orders executed by Bush and who promised to reduce or eliminate the use of EOs?   Anyone remember?  Anyone?   I remember vividly.

My point here is that as the Fed loses control of the financial markets, I fully expect that the Government will impose tighter Totalitarian control over the country.  I also expect that the populace will rollover and say “thank you, may I have another?”

China turned off its markets after its stock market dropped over 7% last night.  Everyone with whom I’ve discussed this today has expressed disdain.   But the U.S. Government has imposed the ability to implement the same shut down in a limit-down move.  Why has this not shocked everyone?   The duplicity of Americans, even highly educated ones, is incorrigible – if not completely tragic.

All of the highest beta, highest p/e and most overvalued stocks relative to their true underlying fundamentals are getting shellacked today.  AMZN is down nearly 6% and NFLX is down nearly 7%.  The homebuilders are down 2.5-4% across the board.  It’s going to be a profitable year for those who take the leap into the world of shorting stocks.  My Short Seller’s Journal is, up to now at least, a unique publication that focuses on ideas for shorting the market. I also offer risk management advice and include some ideas for using options.  It’s a monthly subscription with weekly reports delivered to your email.  You can access this subscription here:  Short Seller’s Journal.

Obama Strengthens United States’ Role As A Global Terrorist

Financial Markets, U.S. Economy, ,

It’s a “For WhomThe Bell Tolls” kind of dynamic.  The U.S. accuses scores of countries and ethnic sects of conducting terrorism all over the world.  And yet, the U.S. in reality is the world’s biggest and most dangerous terrorist:

We have brought torture, cluster bombs, depleted uranium, innumerable acts of random murder, misery, degradation and death to the Iraqi people and call it ‘bringing freedom and democracy to the Middle East’. How many people do you have to kill before you qualify to be described as a mass murderer and a war criminal? One hundred thousand? More than enough, I would have thought. Therefore it is just that Bush and Blair be arraigned before the International Criminal Court of Justice.  Harold Pinter, 2005 Nobel Prize Acceptance Speech – excerpted from this Paul Craig Roberts article:  LINK

As a means of bolstering America’s ability to conduct acts of sovereign-inflicted terrorism, Obama just signed an Executive Order – recall that Obama promised to abolish the use of Executive Orders when he ran for President in 2008 – that gives the President the ability to impose sanctions on individuals or entities that engage in “cyberattacks” which are deemed to “threaten” U.S. national security or the economy – Washington Examiner.

The power imbued in that EO is frightening.   The U.S. has already egregiously abused this power when the C.I.A. placed blame on North Korea for the Sony cyberattack and imposed sanctions on Pyongyang.  Remember that?  As it turned out, North Korea had nothing to do with the attack.   No less an internet security pioneer than John McAfee (McAfee anti-virus) issued a statement guaranteeing that the United States’ “intelligence” sources were wrong:  International Business Times.

The real crux of this matter is that the further the people of the United States let the Government deviate from the Bill of Rights in its implementation of control and power, the closer this country moves toward a complete totalitarian Government.   The power of the President to issue and authorize “Executive Orders” is one of the most dangerous forms of Government omnipotence.   They need to be abolished.  This particular EO gives the President the power to unilaterally go after anyone or any country for something deemed “a cyberattack.”

It makes me shutter with absolute horror to think about the capricious nature of this Executive Order, considering the power it gives the Oval Office to decide what, and by whom, constitutes a “cyberattack.”   There is no “check and balance” mechanism which prevents the President from inflicting serious damage on an individual or entity which might in truth be innocent.  North Korea, for example.

Obama promised to remove the use of Executive Orders from Oval Office.  Now he implements them more freely and whimsically than his vile predecessor.   I said shortly after Obama was elected that he would likely turn out to be a worse President than Bush. So far he’s making my prediction look easy…