Baby-Feeding Dad Signs With #Reds

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Thanks Cincinnati Reds

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The Federal Reserve is Topsy Turvy [Yes I am old] But Can Be Improved

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The Federal Reserve has been slow to act for fear of market reaction. Here is proof.

  1. Kept balance sheet high for too long. Quantitative Easing (QE) has gone on too long.
  2. Drank the unemployment Kool-Aid and ignored other signals.
  3. Looked at CPI as temporary and ignored Wage Inflation.
  4. Did not increase frequency of meetings to once a month during tumultuous time.
  5. Reacted rather than be proactive.
  6. Targeted inflation at 2% when the previous 50 years averaged 2.5% inflation.

The Federal Reserve can take these steps to fix some things.

  1. Meet monthly.
  2. Reduce Balance sheet aka stop QE.
  3. Increase interest rates 0.25 each month and avoid 0.50 increases.
  4. Assume recession is coming and be prepared to stop tightening.
  5. Set inflation target at 3%.
  6. Add non-voting younger University Economics Professors to board.

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Explaining #BREXIT

Why is this such a shock and what does it mean?.

brexit

 

SHOCK

The financial world is in shock  because they like the status quo.

The BREXIT was approved because the world aka the 99% including Britain wants change, any kind of change.  Which of course explains Donald Trump’s success in the US.

The polls probably did not reflect the last minute decision makers and instead reflected the people who were able to be polled aka the retired people on the street who had time to answer silly polling questions.  These are generally conservative people who do not like change.

WHAT DOES BREXIT MEAN? 

Well the financial world is in turmoil because they also do not understand what this means.  So you can expect the stock markets around the world to be very negative for quite a while.  There may be enough negativity that we may experience a recession, which a number of respected economists have predicted for months.

ANALYSIS

Change is coming.  The demographics show the population is becoming more diverse aka less Caucasian.  Also the young voters are saying “We are tired of inequality and of politicians paid by the rich to do their work.  Your generation had your chance.  Now it is our turn and we are going to do something different.”

If you want some other financial advice, see this.

https://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/

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#FederalReserve aka #Fed Discovers Gold – Fools Gold

No.  I am NOT talking about the movie, Fool’s Gold.

foolsgold

I am talking about the Fed finding wealth and a strong economy where there is none.

Like the little boy who cried “Wolf!”,  the Fed keeps saying “The Economy is good!”

Here is the fool’s gold the Fed uses to keep saying :The Economy is good!”

1. Auto sales are up.  Well they were up until the recently released May report showed a drop of 6%.  The recent auto sales were propped up by easy credit but now they have run out of buyers.  Here are details.

http://www.reuters.com/article/us-usa-autos-idUSKCN0YN4K0

2. Home sales are up.  Well they were up until the June 1, 2016 report.  Again home sales have been boosted by easy credit and low interest rates until now. Here are details.

http://www.cnbc.com/2016/06/01/mortgage-applications-drop-because-of-rate-uncertainty.html

3. Unemployment is down.  Well unemployment has dropped to 4.7% but the recent jobs report announced June 3, 2016 showed a shocking one fifth the average number of jobs created.  Unemployment went down because more people have given up or are retired. Here are details.

http://money.cnn.com/2016/06/03/news/economy/us-economy-may-jobs-report/

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Here are the real concerns the Fed should be looking at.

1. Freddie Mac and Fannie Mae.  These firms have been using derivatives to hedge against interest rate changes and lost $475 million last year. Here are details.

http://www.marketwatch.com/story/freddie-mac-may-need-another-taxpayer-bailout-next-week-2016-04-29

2. US Productivity.  The statistics show it went down 1% in the first quarter and now one of the Fed members says it may go down again this month. Here are details.

http://www.reuters.com/article/usa-fed-evans-productivity-idUSU8N16O051

3. Corporate Bond Sales.  These are still high and may match last year’s record in order to finance other mergers. Here are details.

http://www.bloomberg.com/news/articles/2016-04-28/get-ready-for-a-big-wave-of-u-s-corporate-bond-sales-in-may

In summary, the 2008 bailout involved lower interest rates.  But the Fed should have raised interest rates in 2011 instead of maintaining the ridiculous 2% inflation target.  Here is how:

https://michaelekelley.com/2015/03/27/the-kelley-monetary-policy-rule/

Or if you want more information on whether a recession is coming or not, read this.

https://michaelekelley.com/2015/03/02/why-another-recession-is-coming/

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The Fed is chartered with controlling inflation and encouraging job growth.  One Fed member recently said they are too busy to add a third task aka improving the economy.  Well they have dropped the ball on job growth which would have improved the economy.  Here is what the Fed could have and still can do for job growth.

https://michaelekelley.com/2014/03/28/federal-reserve-can-create-jobs/

Good luck out there.

#Revenge Knows No #Religion Even In #Syria

People that are so angry that they seek revenge are in a hate zone.

vader

REVENGE

Examples of haters that sought revenge include Adolf Hitler and Star Wars’ Darth Vader both of whom sought to eliminate an entire race and were not religious.

But why do so many terrorists seek revenge and appear to have religion?

RELIGION

First the religion part of the question.  Muslims will admit that the terrorists say they have a religion but in fact the beliefs of terrorists do not resemble Islam.

Secondly many terrorists are from Syria or are Syrian supporters.  Why?

SYRIA AND WISCONSIN

Syria is about the size of Wisconsin.  Imagine the Governor of Wisconsin decided he did NOT want to step down and really wanted to keep his power.  First he started bombing his adversaries and then started bombing everyone.  Next he started using chemical weapons against his citizens.  Finally outside parties started bombing its citizens.  What do you think the people in Wisconsin would do?

Wisconsinites would migrate to another state.  That is exactly what is happening with Syrians in Europe.

Meanwhile a small percentage of Syrians decided to take revenge for the people that bombed their cities for several years and destroyed their lifestyle.  This could be people that supported President Bashar al-Assad or people that did not support him.

Thus you have terrorists trying to get revenge against several countries.

SOLUTION

So how do we solve this crisis?  We stop bombing Syria and start rebuilding it.  Shouldn’t there be money in the Defense budgets to fix returning soldiers as well as rebuild the cities we destroyed?  Some will say that is going too far.  But can we agree to at least stop the bombing?

Can I have an Amen, Ameen or Shalom?

 

Why GLD Is Bad and GOLD Is Good

Friends, here is why the GLD fund aka ETF is the worst investment if you like GOLD.

gold2confetti

1.  GLD Is Paper Gold

GLD is actually the SPDR Gold Trust Electronic Traded Fund.  It is a promissory note for GOLD.  It is backed by physical gold but the real ratio is controversial.  See

http://www.forbes.com/sites/afontevecchia/2011/11/15/is-gld-really-as-good-as-gold/#7b10e4f93ca1

2.  GLD Is Supported By The Fed Which Wants the US Dollar High and Gold Low

In a previous post, I discussed how the US Dollar and GOLD move in opposite directions.

In that post, I explained that the Federal Reserve wants to keep the dollar high so to do that, it depresses GOLD prices by encouraging the sales of paper GOLD.  See

https://michaelekelley.com/2015/07/20/dear-fed-plz-raise-gold-price/

3.  GLD is a CDO aka Tranche

Remember the Great Recession of 2008?  It was brought on by CDOs and tranches based on bundled mortgages.  GLD is a tranche aka a bundle of paper gold.

Statistics prove that 13% of CDOs before the Great Recession were sold to multiple buyers.  It is like selling an acre of land in Florida multiple times.

https://michaelekelley.com/2015/01/28/remember-cdos-theyre-baaaack/

4.  Paper Gold is rumored to be oversold by 200 times

You need to read this.

http://www.zerohedge.com/news/2015-11-30/paper-gold-dilution-hits-294x-comex-registered-gold-drops-new-all-time-low

5.  GLD Has Lagged Gold Mining Stocks Year To Date

NEM, a gold mining stock, is up 34% from 01/01/2016 to 2/5/2016.

Meanwhile GLD is up only 10% from 01/01/2016 to 2/5/2016.

That is probably because investment companies are avoiding GLD.  So NEM is a GOOD investment right now not GLD.

 

Here are Solutions when a Recession Comes

https://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/

 

Here is Some More Information

Lessons From How The Great Recession Happened and What A CDO Is

http://www.ase.tufts.edu/gdae/Pubs/te/MAC/2e/MAC_2e_Chapter_15.pdf

Good luck!

PS  I own NEM and care about you but I cannot be held responsible for your decisions.

VIX Predicts Pits While Pundits Have Fits

VIX, measuring stock market volatility, last spiked this much in 2007.

vix_predicts_pits_while_pundits_have_fits

Coincidence?  This spike in VIX is predicting a recession (aka the pits) much like it did in 2007.

The result is recession-deniers aka pundits are having fits.  They are saying, “This can’t be happening.”

Meanwhile, believers in the predictability of VIX are saying “It is deja vu all over again. (Thanks to Yogi Berra)

Here are some other signs of a possible recession.

https://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/

/https://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/

https://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/

http://www.zerohedge.com/news/2015-07-27/when-will-we-ever-learn/

Here is how to prepare yourself.

https://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/

Good luck!

Elizabeth Warren will be the next Vice President

Elizabeth says she is not running for President.  But how about Vice President?

elizabeth

Okay.  I will take that as a maybe.

Young voters of the Jon Stewart generation are clamoring for truth in politics.  And they know (cue the Carly Simon music) nobody does it better than Elizabeth.

The “quit screwing the consumer” Congresswoman, has high admiration from all members of generations x, y and z.

Therefore, Elizabeth is the obvious choice for clinching the Democratic primary.

So Bernie or Hillary, which of you will be the first to get her in your camp?

PS The Carly Simon song would make a great tune on the campaign trail.

Koch Brothers Spent Millions To Prove Moon Hoax

The Koch brothers are determined to reduce Government waste including NASA.

koch_nasa

How did they do it?  By spending millions to interview current and former NASA employees and officials.  They sent teams of paid employees to search all of NASA facilities especially the Johnson Space Center where stages were supposedly set up to test space suits and moon equipment.

On the grounds of the Johnson Space Center, two stages were found to house thousands of dollars of video and sound equipment and several scenes like those recorded during moon landings.  They even found a stiff American flag.

A box of video outtakes was found which had very good quality sound and video.  This proves that the quality was intentionally made worse to simulate the long distance the video would have to travel.

Xylophones wrapped in aluminum were found which purportedly were used to provide feedback and muffled sounds to make the recordings seem distant like.  All of this has come to light thanks to the Koch brothers and their vast wealth.  Now the Koch Brothers intend to use it to discredit NASA and eliminate it once and for all.  HOAX indeed.