WALL STREET MARKET SUMMARY 7/8—7/31/13

8/11/13

THIS IS MERELY ARE RECAP OF WHAT THESE GUYS THINK ABOUT THE MARKETS ETC—

People are being to use credit cards again. Revolving credit debt peaked in 7/2008 at $1.0 trillion then promptly tumbled to a low of $834.0 billion in 4/2011. credit card sales volume is up 10% to $105.2 billion-a new record.
With the federal government becoming the biggest lender backing student loans, our government has lent $462 billion in additional loans since 2008. By the way you and I are on the hook if these loans go bad or are FORGIVEN. The government is making out like a bandit.
The “large retailer accountability act” would force big box retailers to pay minimum wages of $12.50—who would that hurt—take ward 8 in DC, 94% black and 38% poverty rate. Washington has the third highest income inequality gap in America after Atlanta and Boston. So where will they find jobs when the big box ones will cut back.
Backed by unions they want Mickey D to double the people wages. The narrative these days, however is we must reward those that haven’t made the effort that somehow those with the least amount of education should be rewarded with larges increases in wages.
Did you know in Spain 20% of adults under the age of 30 have never had a job!
Did you ever think the Dow would be at an all-time high and there’d be no fanfare? There is a legitimate fear of Fed money printing and US debt levels but timing when they trip into irreversible disasters id difficult and shouldn’t stop anyone from investing and building up a war chest for that day. Too many people are watching the rally from the sidelines.
Consumer confidence has been slowly diminishing as it is becoming apparent that the recent increase in mortgage rates and prices at the gas pump are starting to frighten consumers that were previously looking forward to better things to come. In fact and also discouraging, the index of expectations 6 months form now. It Projects the direction of consumer spending declined to 73.8 in June form 77.8 the month before.
The US slowdown is hurting UPS plus the overcapacity in the airfreight market, a customer downshift to lower-priced services and slowing US industry activity.
They seem to think that the fed will maintain its easy-money policies for the long run.
The phrase from Ben Bernanke that is resonating in Wall Street at the moment is “the economy still needs highly accommodative monetary policy for the foreseeable future. The market is overly fixated on what the fed is up to and to be honest I don’t sense a huge change of view from the latest communications. The prospect of lower rates for longer means a 10-year treasury yields are back down to 2.6% for 2.7%.
With manufacturing conditions are still relatively weak and this should not have any effect on the fed’s current course of actions, that is its bond buying program should remain intact.
CHINA, solar industry has been in somewhat of a tug-of-war of late due to scrutiny by the EU over dumping. Talks between China and the EU have preliminarily set out a potential rule whereby China would be allowed to sell 10GW of solar goods to the EU but then would be subject to tariffs after that. The industry is already dealing with an oversupply issue that has made is somewhat tough to turn a profit. New government investment and tax breaks for acquisitions and mergers within the industry as well as for restructuring plans as a way to facilitate consolation in overall production capacity and to reduce the over saturation in the market. China’s Internet population is now up to 591 million as of the end of June. Users are 26 million or 4.6%, the penetration of Internet among the total population in china is just 44%. It’s 85% in the USA.
In an effort to spur growth and give banks more freedom to set borrowing cost, the Peoples Bank of China said it will remove the floor on lending rates offered by the nations financial institutions. They will not let their GDP growth slip below 7%
OBAMACARE, 86.7% insurance cost will increase substantially, 10.9% plan to outsource more, 6.5% plan to fire or refrain form hiring, 5.4% will shift from full time to part time.
The PPI is showing signs of increasing prices for consumer these are expected to passed on in a couple of months.
Volume is drying up and even good earnings reports aren’t moving the needle.
BERNANKE, he begins his statement focused on housing on the same day we see yet another decline in he mortgage applications and major misses on housing starts and building permits. On jobs he was really honest saying the situation is “far form satisfactory” pointing out the unemployment rate remain well above its longer-run normal levels. Verdict—the fed isn’t going to buy into a phony unemployment rate driven by millions of job dropouts and tons of part time jobs. Also we have a crisis of chronic long-term unemployment that threatens to create a new permanent underclass of formerly proud Americans workers. The beauty of the stock market is you can believe anything you want as a basis for investing or not investing. Everyone’s got a theory. Inflation while anemic by official accounts still eats away at cash in banks accounts and gold has taken a major dump.
Great companies can make money and take market share in a $16 trillion economy. This was Bernanke’s answer o a skeptical congressman when asked why the stock market was higher. The mistake Bernanke made was not saying the market is up on the underlying global economy. If we were to tighten policy the economy would tank!
His testimony emphasized that headwinds for the economy and tepid inflation might keep the easy money policies in place longer than the fed indicated last month. And this of course invigorated market further, leading the Dow to new highs, making this a great trade session.
DETROIT, “we refuse to let Detroit go bankrupt—Obama 2012. Moodys’s has downgraded Detroit and Chicago in part to pension liabilities, the inability to raise revenue and the inability t to contain costs. One of the big problems for these cities, is in additional to lavish pensions and other retirement promises made during boom times. Perhaps the final nail in the coffin of Detroit was runaway crime that drove the city’s most productive citizens and their huge checks into the suburbs. The city has been spending money it didn’t have and now must figure out how to live within its means and pay its massive deficit. It’s estimated that $247 million in property taxes and fees went uncollected in 2012 from more than 150,000 (47%) of owners, mostly out of defiance. There were at least 77 blocks were only a single homeowner paid their property taxes.
A possible cause is word city officials severely inflated property tax rates, in fact one report says officials are leveling taxes at 10 times the selling price of properties by discarding 94% of sales made last years
Detroit is one of the homes of progressivism in America, which helped to make wages better but at some point began to push businesses out of the city. High taxes and tough unions made competition so difficult industry in the city suffered. 47% of the population was functionally illiterate. Good news is graduation rates is above 50% hitting as high as 65%, but the dropout rate is still 20%.
Currently eight of the top ten employers in Detroit are government, education and healthcare. Private businesses are on 19% of employers and there is simply no way the city can ever get back on its feet with a model that relies on high taxes to create jobs as people flee the city. Their ability to stand erect without government iad has almost vanished. One bright star is Dan Gilbert of Quicken who has bought 9 buildings, s parking structures and 1 lot.

The cycle of poverty will never be broken with government programs higher taxes for the rich and businesses or artificially high wages. It can only be broken by individual that demand more of themselves. By people that reject the notion of victimization, and embrace the idea life isn’t fair but can be altered.
Greece took 3 decades of the kind of nonsense we’ve endured for last four years before it cracked. Look what Obama has been able to do in 4 years. In a recent speech Obama used the word “inequality” more often that the word “growth”. He continues to make excuses for people that aren’t trying hard enough while dismissing those that have to the point of belittling them. The way the word is used says that those have actually pulled themselves up are indebted by those that haven’t.

AP survey the gist of the report is that white
America has all but given up hope of the economy, settling for a new paradigm that means harder times and lost American glory with fewer opportunities. The reports paints a shocking portrait of an American that sys 80% of adults in the US face near-poverty, government subsidies and joblessness. This certainly belies the white house assertion the economy is stronger after escaping the worst recession..
The number of white single mother households living in poverty with children surpassed blacks in past decade, propelled by jobs loss and fast rates of out of wedlock births, 17% white children living in high poverty neighborhoods from 13% in 2000, 62% white Americans rate the economy at poor, 19 million whites living in poverty and 76% of white have experienced some form of economic inequality. Not what you hear from the left. 46.2 million or 15% of the population live in poverty.

Sources—charles payne, carlos guillen, david urani,

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