A Happy Birthday!

Well, I just turned 54 today.  I know the people in the Gulf do not like my birthday as another hurricane is coming ashore.

Gas prices continue to rise along with food prices.  As far as deflation, consumer confidence dropped sharply. I find it interesting that the headlines are positive and the consumer is getting more negative. I think we know who is right as the consumers need to pay the bills everyday and are more exposed to the "real economy" than analysts on Wall Street.

Be safe and Good luck!

Don

The Main Problem In America

Do not look for the Federal Reserve or Central Banks to help much over the next year.  The problem has taken a long time to develop and now needs a long time to correct the imbalances in the Economic system. While many people have been focused on other events, the main issue is Germany's court will need to rule on further use of the EFSF or ESM facility by mid September. 

Please look at the look below for the main issue in America today.  I found the comments interesting.

http://finance.yahoo.com/blogs/daily-ticker/middle-class-broke-pew-study-reveals-real-problem-155018682.html

I sound like a Broken Record

The stock market is a rigged game as far as I am concerned for short-term traders.  Do not get into believing short-term news events.  Short sellers continue to get squeezed out on any new news of ECB or Federal Reserve stimulus plans either real or perceived by investors.  Usually the market moves up before any Central bank action and then falls sharply on the "actual event".  Time and time again any further action has not worked.  Continue to hold VIX and UUP as fundamentals have not changed.  My opinion is that further central bank action is a long-term negative for the stock market as investors continue to "hope".

While we are waiting for some real economic change, I am looking for some positive groups or sectors for some long-term investments.  Some real investment potential is ahead and as long-term investors you may want to take a look at Senior Living REITS, Heath Care REITS, and natural gas for potential positive areas once the major top is in place.  The market has been prone to a sharp collapses in a short period of time so be ready when the drop occurs.  The recent move up is not a surprise as Central Banks continue to manipulate investor sentiment. What is a surprise is most trading investors continued to be drawn into investing at peak prices by these actions.    

ECB comments to save the Euro are coming up short

A few weeks ago I made a comment about how a court ruling snag in Germany would prevent the Eurozone from using the EFSF or the future ESM to be able to buy Spanish and Italian bonds. The ECB comments last week appear to be false as they wait for court rulings due in Germany on September 12, 2012. In addition all 17 members of the Eurozone need to approve a change in the rules to allow sovereign bond purchases by the EFSF or ESM. Do not look for the ECB to act until all countries agree.

Investors will start to realize that not all countries in the Eurozone will agree to bail out weaker nations soon.  Please read the interesting article from CNBC for further details.

http://www.cnbc.com/id/48456183

The main points are as follows:  A final decision would follow after September 12, when Germany’s top court rules on the ratification of the ESM, which will replace the existing EFSF, the paper said.  Analysts point out that there are significant obstacles to such a move. The ESM cannot come into force until Germany approves it. “This is all speculation which is completely unjustified at this stage,” Alistair Newton, political analyst at Nomura told CNBC.

In addition, all 17 euro zone members would need to agree to such a move, and the Dutch and Finns have already expressed their reluctance.

ECB please save us!

Well the Fed meeting has come and gone and the real hope is that Central Banks around the world will flood the system with money and start a real economic recovery. The hope is now on the Central Banks to solve the world economic mess as political leaders cannot.  Talk is cheap and the ECB is now on the hook saying that they will flood the system with as much money as it takes to solve the issue. When I first researched the issue, the European problem last year the amount of funding required for banks and the governments to just finance debt and deficits was over $2 trillion dollars. I am sure the problem is larger now as the economies are sinking into recession.  So, if the ECB does not announce another major $800 billion plan tomorrow look for the markets to crash.

On another subject, I certainly believe individual investors are losing faith in the stock market due to high frequency trading.  Back in 1987, the crash that day was partly caused by program trading.  Look for the same meltdown again, and afterwards people will be pointing fingers again. 

http://finance.yahoo.com/news/latest-market-glitch-shows-trading-174547006.html