Dontcha Get it?I truly do understand why so many people have absolutely no idea of the insanity that our global financial situation has become. I understand it because the politicians, the Federal Reserve, and the Main Stream media make absolutely sure that the truth never reaches you, ONLY their agenda is for your ears.
Let me give you a very recent example. CNBC is the "go to" station when it comes to the masses watching financial TV. If the masses think they're going to hear some truth about the economy or stocks they turn on CNBC. So, when one of their talking heads says something, the mindless masses usually just go with the flow. Well, they were doing a remote news spot from Washington concerning the debt ceiling and defunding Obamacare. Their "news" reporter was John Harwood.
Harwood is an American journalist who is the Chief Washington Correspondent for CNBC. He also writes for the NY Times, so you can imagine he leans pretty far left. Real left. So, anytime there's a political angle to some headline you can bet he's going to stress that the Conservatives are wrong and Obama is right. Well, on Monday, he was doing his snarky mocking of Republicans for continuing to try and defund Obamacare. Then he said something that I'm sure the Uninformed masses took as Gospel. I'm paraphrasing here, but I'll be awful close to the exact words. He said "
I talked to Mark Zandi the very well respected economist just yesterday and he said there's absolutely no evidence that Obama Care is responsible for companies laying off, cutting hours or the amount of part time to full time workers. The Republicans should think about that...."
That right there is an abject, bald faced lie of the highest order. There are MOUNTAINS of EMPIRICAL evidence that companies are reacting to Obama Care by cutting workers to under 30 hours, Reducing full time employees and replacing with part time employees and removing or replacing their current insurances. This so called "correspondent" will say anything to make the Republicans look stupid. But, here's the sad part. How many completely vulnerable CNBC viewers just took what he said to be Gospel? Many. Very many. And, that's sad because this Zandi guy is a Governmental apologist, and Harwood is an Obama drone. He flat out repeated a direct lie as a fact. Welcome to what passes for financial TV in 2013.
Well, if CNBC can mislead folks over something as blatantly wrong as that, is there any wonder that folks don't understand what's behind all this QE? Is there any wonder why the average guy in the street doesn't understand why Gold is being manipulated? Is it any wonder why no one has a clue what's happening on a Macro Scale? No it isn't any wonder, it's planned that way. The White House and Wall Street are joined at the hip. Neither one wants the masses to know what they're really up to. Thus we have what passes for reporters tilting the news to make their points. Does the Fed want you to know that they can't save the US economy? Nope. Does Obama want anyone to know that his only achievement in 5 years is putting in place a healthcare system that will harm the economy and anyone with a brain doesn't want? Nope. Does Wall Street want the lumps to know that the banks are still insolvent, and there's still 700 Trillion in derivatives floating around? Nope. Does the Fed want the lumps to know that QE is destroying them and stealing their wealth, while simultaneously "handing" it to the billionaires like Buffet or Druckenmiller? Nope.
This is why we often get "push back" over topics we discuss in these letters. It seems "crazy" to people that only get spoon fed the main stream pablum that "TV" puts out. They figure we must be "conspiracy nuts" or worse. Nowhere does this "show up" more than when we're discussing Gold. Very few people that listen to CNBC can imagine that there's very big players right up to central banks and Sovereign nations manipulating the price of gold...and for reasons they'd rather you didn't know. It sounds loony to them. Well, you'd be best off to ignore the "well respected" economists on CNBC and listen to folks that warned you about the 2008 meltdown. Not a single one of the main stream talking heads, from Ben Bernanke himself right down to this Zandi puppet and Cramer and the rest of the jokers warned people that we were going to melt down. We did. The International Forecaster did. Peter Schiff did. Just a very small handful. Oh and by the way, for the most part we were mocked and called nuts for predicting it.
Here's a question for any of you "main stream" sort of folks. Let's go with some commonly held "notions" for a moment. Gold is supposed to go higher if there's a fear of inflation. Okay, well the dictionary description of inflation is "a rise in the money supply". Now you can try and argue that the Fed isn't printing money, and increasing the money supply all you wish, but the bottom line is that he's printing money out of thin air and "buying" things ( bonds/MBS's, etc) with it. This is NOT sterilized money, sorry. Okay, so if Gold was going higher over "inflation" fears, why did it get smacked down by over 40 bucks just two days after Bernanke announced that there was no taper to his QE program? It's true folks. The day Bernanke said he wasn't going to taper, Gold soared for 50 bucks. The next day it cooled off and by Friday it was down 40 bucks.
If he's going to continue to print, doesn't it make sense that gold should have continued up? Why did it get smacked down and to this day continues to be red? Does that make sense? Do any of the main stream talking heads have a really good explanation for you? Of course not. Some don't really understand what's going on and others simply chose to lie about it and refuse to tell you about what's really going on behind the scenes. They aren't allowed to tell you even if they do have a clue. Their "leaders" won't let them.
Most of the baloney you're going to hear is that gold sold back down because they're going to taper in October. Or because Bernanke has stated he wants to end QE by mid 2014. Both of these explanations sound cute, and are palatable for the main stream masses that are quite fond of being led astray. But they're both baloney. Let's consider Bernanke wanting to end QE by mid 2014. Does anyone with an ounce, oh wait... okay a gram of brains... think unemployment is going to be under 6.5% by then? Or that we'll have solved our debt problems? Or that the things that got us in the mess we're in will be all gone? Of course not. All he had to do was hint that he was going to taper in September and the 10 year benchmark yields went nuts, going from 1.5% to just shy of 3% in "no time". That scared the hell out of him.
This weekend I'll lay out why Gold always gets punched down after these insane QE announcements. I'd do it in this one, but it would make the letter too long for many of the Email inboxes to deal with. Just understand that you're being mislead on the reasons folks. And...the real reasons are pretty messy. But the thing you need to come away with today is that NOTHING the main stream tells you about the Fed, or the economy, and especially precious metals is right. Nothing. They are not allowed to mention what is really going on. Well I am, in fact, it is my job. So, stay tuned and we'll lay that out for you on the weekend.
The market...So, we had a big up day on Fed day, but since then we've lost all that. The S&P had fallen from about 1729 high to about 1695 in the pull back. But then they rescued the 1700 level on the S&P, and dug in their heels on Monday.
Today the heels broke. All day the market flirted with green, and in fact the DOW was up 30 points around noon. It seemed like they were willing to make a stand. But heading into the last hour of the day things went south, and then in the last half hour the wheels fell off. From a high of up 30, we ended the day with the DOW off 66 and the S&P lost the 1700 level, closing at 1697.
What's the problem? The problem is the continuation of the issue I talked to the Insiders about. The Street was so very convinced that Bernanke was going to taper, they put on a bunch of swaps, trades, hedges etc, to deal with it. But he didn't taper the QE and they had to then figure out how to unwind all that. Then of course you can add in the Masterpiece Theatre that's being played out at the Congressional level concerning the Debt ceiling. That's got some of the players nervous about Credit ratings, etc.
I expected the fireworks on Friday, as they had to rebalance the S&P and they were changing the components of the DOW. So, for the close on Friday, we knew it was going to get wild. Then Monday, seeing them at least "try" to hold the levels, we figured they'd already dug in their heels and were going to slug it out and hold us up. But no, they obviously weren't happy with the fact that their plans concerning what to do about Bernanke hadn't been finalized. Basically, they're running around sort of nuts here.
Bernanke has basically blown things up. He sends his idiot henchmen out to the media to give hints about what they're thinking, the market senses they're all on the side of a taper, then he does the shuffle on them and reverses course. I told you all for months that I did NOT think he'd taper, he can't taper. But he had everyone so convinced, that even I said that "okay, I think he won't at all, but if he tosses out a token 5 billion taper, I'd understand it. He painted himself into a corner".
The problem is that now the Street has NO idea what to do next. The minute Bernanke said no taper, he sent the idiot Fed heads out into the media to start the talk about how it might come in October. Did you know that between yesterday and today 8 of the Fed chiefs were out making statements? And what Is the market supposed to do about it? They listened last time and got burned. Now they wish they'd all just shut up.
My feeling is that there's not going to be ANY taper at all. This economy cannot handle a taper, and with the Holidays coming up, and all the tensions over debt ceilings, and credit ratings, they won't want to rock the boat. Bernanke told us that any taper would be dependent on the economic reports coming in to where they're warranted. Well, they haven't been. He can't justify it. Besides, the second he does taper, rates will soar, and we're not able to grow with these incredibly low rates, how could we with higher? We can't.
I think we might be stuck in a sideways chop and slop until they solve this debt dilemma, and then I suspect we'll begin a run into year end. Could we really get a big time classic 10% correction here? We could. If they push us over the cliff and the Government shuts down, the shouting and screaming will be loud enough to kick off a profit taking money grab, so we have to be careful until they work out what ever deal they're going to come up with.
All that said, we do have a nice collection of stocks that will perform well once the market signals that it is okay to buy something and hold it for more than a few minutes. I think that if we can put the Government shut down behind us, and get a deal we can live with, the market will begin to figure Bernanke's out of the picture and hey, if Yellen is appointed, she's going to make Bernanke look like a horrible conservative Hawk. She'll print at the drop of a hat, and will probably have to.
I'll see you Sunday with the explanation of the Gold situation and what's really going on.
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