Read Scott here on iBankCoin and also at http://www.createcapital.com/
Joined Jan 19, 2010
717 Blog Posts

FIOS is Sick

FYI, I’ve upgraded my Verizon Fios today, now getting 80 mbps down 36 up. My cost for the Triple Play is an additional $5 per month…

So glad we bought VZ at $29.50 when the Street hated it…

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Clowns to the Left of Me, Jokers to the Right…

Who is the moron who has decided that there should be a renewed allocation into the ex-leadership technology stocks?

Apple, Google, Priceline, Amazon. And after that a plethora of smaller, speculative names are reaching for the sky. Plus, every economically sensitive Transportation stock is up big today.

With the market indices blasting over their intermediate term resistance and the top of the trading range and yearly highs in sight, markets are doing their best to give you the impression that everything is now fixed and OK. In fact, market participants (HFT or otherwise) are telling you that the “All Clear” is being given now.

The risk is that on Thursday, Dr. Bernanke says the same shit and then really weak economic numbers present themselves. But it has been proven over and over again that the weaker the economy and the more fraught with danger that the financial system is faced with, the higher the market will go.

The Central Bank Training Facility has promised nothing short of unlimited liquidity and the markets care only about that. In fact the money the FED pumps serves to boost asset prices at the expense of any and everything else. The Capital will never “leak” into the real economy otherwise we will be faced with the hyper-inflation that many Old Timers fret about.

So there is ZERO RISK in unlimited capital creation so long as it stays locked in the closed loop of the banking/investment world. At this pace, new all time highs will be around the corner, just as soon as GDP turns negative for 2 quarters in a row.


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Expect the Expected?

I’ve often said that “Free Money Trumps All”, and so far during this extended Credit Crisis, it has.

Even Jim Cramer has taken my infamous “Pavlovian Response” commentary and applied it. Where have I heard that before? PAVLOV1 PAVLOV2 PAVLOV3 That’s always nice to see.

Interestingly that now, as the domestic and world economy are on the brink of finally shrinking and banks insolvency is inescapable, there are plans and hopes for a new and massive intervention. This hope has been responsible for the markets miraculous recovery from the weak employment report of two weeks ago and has somewhat changed the tone and tenor of the “just buy the dip” market participant (HFT).

But now EVERYONE JUST KNOWS that regardless of the fundamental situation, the markets MUST RALLY during Policy Response. Everyone, including the most bearish are resigned to that expectation. A full 100% of market participant believe it. So guess what? Expect a massive, sell the news response shortly after the suckers have committed.

Maybe I’m wrong but I think we’re hitting the wall with a giant splat. And on that note, enjoy your weekend!

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REALITY CAN WAIT, yet again.

So, the Spanish Bailout rumor, which rocketed markets to their best weekly gains of the year, were faded on the news of the $125 billion bailout. It looked like the European Bailout Committee may have reached the point of diminishing returns.

But what was I thinking? It is simply a ridiculous assertion to think that markets, in their infinite wisdom of always being “right” would begin to reflect the reality of the European Banking Cartel coming to a ignominious end.

There is just way too many expectations and hope that Chairman Bernanke will fix the problems with money. And once again, the expectations are for economic news to be so bad, and the fundamental and monetary situation to be so dire as to guarantee trillions in newly minted money to save Banks, Investors, Inside Traders and Chinese Party Members.

And today, with Jamie Dimon of JPM strutting on Capital Hill and proving how smart Wall Street is compared to our elected officials (losses be damned), market participants (long only) get another free pass.

Everyone’s eyes are peeled to June 20-21 when our Uncle Ben will save the day. Heaven help us if he doesn’t.

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Almost every professional, and many lay investors know that the world’s financial system broke down in 2008 and the Central Banks of the world have attempted to transfer Bank Risk to their own Balance Sheet. But saving the banks from their epic and giant fuck ups will take more money than the world has, or could realistically print.On Saturday evening, Spain announced a Big Bailout. Lot’s of money promised but few details.

Just two weeks ago, markets began to fall in earnest after dripping lower for weeks and the pending failure of the European System was to blame. But then, mysteriously and out of the blue, markets had their best week of the year last week. Never mind volume was lower than during any other advance in this Central Bank controlled market. Obviously the Policy Response was leaked to people with Capital and they bought big.

But last weekends news has officially Jumped the Bailout Shark, meaning that it won’t help. You see, everyone expects that more Bailout Money will mean higher equity and commodity markets like after past “aid”. But after a certain point, maybe this  point, it won’t mean that at all. Maybe it will mean just the opposite. I don’t know if we’ve hit that point, but it feels like it today.

The stated goal in the Free Money Regime is to buy confidence by boosting stock prices. Most investors now know that “boosted prices” are not justified or sustainable without solving the problems first. The way to do that is to make the debt disappear and dismantling the investment status quo. That will be a long and hard battle before we can rebuild. The fact is that the best performing issues are classically defensive says a lot about the current market.

Don’t get me wrong. I don’t want the world to end and I don’t want another Great Depression. But Bankers, Inside Traders with Friends in High Places, and the families of Chinese Party Members should not be the only beneficiaries of all this free money.

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Gee, We Better Get Asset Prices Up!

Do you know what a POLICY RESPONSE is? It is free money given to banks and used to buy (inflate) assets to combat deflation.

Just take a minute to think about this clearly. What Central Banks want are higher prices in order to prevent lower prices.

Imagine if you went to the supermarket and milk, which is usually $3 and is now $5. And the sign says “On Special for this Week Only”. Would you be in a hurry to buy the milk?

That is what you are doing if you chase a market bolstered, levitated, inflated by the Central Bank POLICY RESPONSE of free money. Only a stupid asshole would clamor to buy. Right?

If you are an individual investor, should you “Just Trade Price” and chase the artificially induced rally because it is going up? How high will inflated prices go? How long will they be inflated? No amount of analysis will suffice. Few have that kind of information, unless you get a call from Washington a day before POLICY RESPONSE is announced.

Sure, going into this week, markets were very oversold and we were due for a sharp bounce. Markets made back all that was lost since early in May in just two days. Historically, that kind of action is clearly one of a Bear Market. But with free money, who knows.

My advice in buying the great European companies with big yields still holds true. And owning cheap and unique franchises does too. But don’t be a sheep for they will be slaughtered.

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