Some Fundamentals?

Interesting piece from #CharlesBiderman of Trimtabs on some underlying fundamentals of this market. Amazing how the tail, (the FIRE economy), thinks its wags the dog (the economy). You may want to juxtapose Biderman's comments with those from Bespoke a few days ago, considering the foundations of each's argument.

Cheaper Than They've Been in Two Decades huh?

I was down in Palm Beach over the weekend to attend an event held at the Breakers. It was my first visit to the area which I enjoyed thoroughly. I must tell you that in addition to all the exotic Ferrari, Bentley and Jaguars I saw an awful lot of vacant commercial space down there. Lots of it.

While in Palm Beach I chatted with a friend while down there who likes to read this blog who asked me. "Whats up? You haven't been posting much."

No doubt about it.

I have to admit I have little to say. People who know me realize this is something because I most usually always have something to say! Lets put aside for a moment the fact that the last time I felt this way, with very little to say, was during the culmination of both the tech bubble and the housing bubble. I'm not trying to be Gary Kaminski-esque here pounding my chest while showering myself with rose petals over my great call but it is simply a statement of fact.

I truly believe that free markets are no longer. This market has been so manipulated and distorted via Fed interventions, free money via the Fed to the too big to fail banks, high frequency trading, and above all else a virtual lawless environment that would make Al Capone blush were he alive.

I believe the elite know the ship is sinking and are stealing anything not nailed down. But you know that already and if not, now you do.

I have been trying to grasp exactly what it is the bulls are so excited about.
Earnings?
Job growth?
Housing?
Rates?
Cheap energy?
World peace?

What are the fundamentals that are so compelling as to make one want to own this market. What are the fundamentals underlying that would provoke Bespoke Investment to put out a piece Stocks are Cheaper Than They've Been in 2 Decades. The piece by strategist Paul Hickey cites among other things:

"The S&P500 is currently trading below its historical average P/E and P/B ratios, and these ratios are also at their lowest levels in the careers of a large percentage of money managers."

Regarding book value, you must forgive me if I simply take a pass on the fiction that book value in corporate America has become.

Now for those earnings.

There is no mention but I assume Bespoke is using, like the rest of Wall St., operating earnings as opposed to reported earnings. For those unaware reported earnings are GAAP earnings and operating earnings are GAAP earnings that exclude "write offs".

I like to refer to write offs -which are supposed to be one time events but seem to occur quarter after quarter- as bad stuff or bonus destroyers for management. Think 'Lucy you got some 'splaining to do' and you understand write offs perfectly.

I can already hear you asking; "Why would someone use operating earnings that exclude write offs? Aren't write offs a factual event. Of course they are. But somewhere about the late 80's as stock valuations went up Wall St. starting using operating earnings. Then in the late 90's with no way to justify the stratospheric levels of tech stock valuations and most stocks in general, the Wall St. switch to operating earnings become 'official'. It was necessary 'cover' Henry Blodget and the myriad of other Walll St. charlatans masquerading as reputable analysts used to flog pure dog shit to their customers.

You don't agree?

Okay, then how about the fact that operating earnings are notoriously unreliable with studies showing them missing the estimated targets by about 25% over the last ten to 15 years. You don't get to hear that from paid Wall St. shills as it might interfere with their bonus pool. I haven't even mentioned the revisions that invariably come out.

Take note Bespoke's last comment that these ratios are at the lowest levels in 'the careers of most money managers'. Not lowest levels in history of the markets or the sector but careers of most money managers. This is a justification in a public piece by a Wall St. firm? You gotta be kidding me? So the inexperience of the crowd becomes part of the justification for buying stocks. I won't be holding my breath for Bespoke's piece to avoid markets as stocks are at the highest levels in the careers of most money managers.

This whole thing reminds me of two things.

First it reminds me of the time I came home with a C on a test. My father asked me how I did and I replied that I got the highest mark it the class, (this was true!) He countered that's not what he had asked. I then told him I got a C to which he replied. "Great! You're the smartest of a bunch of dummies."

And secondly, reminds me of is my grandfather speaking of the go-go markets of the 60's where the phrase 'gotta get me a kid' was coined. He and many other experienced brokers had clients leave him due to their refusal to purchase shares which many experienced in the market thought were outrageously valued.

Well, Bespoke goes on in their piece to point out that;

"At the end of 2011, the S&P 500 was yielding 13 percent more than the 10-Year US Treasury,"

Do you think there is a reason equities are yielding so much. Do you think there may be some risk attached to them?

Suffice to say that, when one pulls the covers back on Bespoke's facts justifying the cheapest equity valuations in 2 decades, I haven't much faith.

Has #CronyCapitalism Won?

I've called it #CronyCapitalism for some time. But don't take my word for it. Watch what David Stockman has to say about it in excellent video below. So has Crony Capitalism won? I think so and so does Stockman who has a new book coming up entitled The Triumph of Crony Capitalism.

Bought and Paid For

I came across the following graphic courtesy of OpenSecrets via ZeroHedge, that aptly illustrate what is transpiring around us. The complete show is bought and paid for. They redacted the names above the last 2 columns. The middle one is Barrack Obama and the far right one is George Bush. Note how little these corporations, oops I mean people (right Mitt?) discriminate.

Anyone still wondering why there have been no prosecutions across Wall St. can visually see why.




You can click on the picture to enlarge it.

Yes Colin, Something Definitely is Amiss

An edited version of the article below by #ColinMcIntosh which originally appeared in @dailypaul here appeared in today's opinion section of the Miami Herald which you can view here. It's well worth your time and on a happy note if Colin is any reflection of our nations youth, we may just stand a chance.

Well done Colin.

To the GOP Establishment: Insult Ron Paul Supporters at Your Own Risk

-A Letter of Warning to our Party "Leaders"

“Don’t tread on me.”

Recently, something’s been amiss in the Mainstream Media when discussing the topic of Ron Paul’s candidacy. As the Texas congressman’s support has surged to 15% nationally in the latest Washington Post poll, the Very Serious Republicans who write Very Serious Columns and give their opinions on Very Serious Shows have changed their tune. They aren’t as confident, as cocky, or as arrogant as they used to be when predicting the 2012 presidential election.

Now, they sound scared; they sound nervous; they sound shaken. But most importantly, they sound resolute that they, and not their audience, represent the opinions of mainstream America. They are wrong, and their gamble will be costly.

In the absence of facts to support the Establishment candidates, the media has turned to personal insults, childish mockery, and deliberate misinterpretation of Dr. Paul’s lessons. Their goal, quite shamefully, is to convince Ron Paul supporters that the candidate that they believe in has no chance of winning the nomination, let alone the general election. Here are some of this past week’s headlines from around the web:

“Huckabee slams Ron Paul, says he has ‘no chance’ to win Republican nomination”- The Hill

“Ron Paul can’t be allowed to win Iowa”- Daily Caller

“Why Ron Paul Can’t Win”- Wall Street Journal

“If Ron Paul wins Iowa, does that make the state irrelevant?”- Christian Science Monitor

I have written before that this type of overt pressure from our media to change your vote because “your candidate can’t win” constitutes a form of disenfranchisement. Despite Paul’s rise to the front of the pack in Iowa, the Media still ignores that his national support from Republicans has risen from 9% to 15% in a month (Washington Post/ABC poll 12/18/11). They refuse to report the fact that he only loses 49-44 in a hypothetical race against Obama, down from 52-42 just one month ago. They will never tell us that 21% of polled Americans chose to vote for Ron Paul as a third party candidate over the hypothetical choices of President Obama or Romney/Gingrich, and this last statistic leads me to my main point: if the GOP nominates anyone besides Ron Paul, Barack Obama will win the 2012 election.

Why?

Currently, Establishment Republicans are issuing an obvious warning to Paul’s base: vote for Romney, or the Democrats will win in November. Clearly, they hope this ominous bit of advice also reaches the millions of Americans who are still learning about Ron Paul’s views. Well, Dr. Paul’s supporters have a retort: we don’t give a damn.

There are worse things than having a Democrat in the White House, and disenfranchisement is among them. We will not vote for whom we are told. We will not vote for a candidate who espouses a policy of preemptive war. We will not vote for the continuation of a flawed, costly, discriminatory drug war. We will not vote for the circumnavigation of the Constitution. We will not vote for a candidate (Romney) who has received just 10% of his campaign donations from actual people (from opensecrets.org). And we will not feel remorse for a Republican party that has abandoned us.

I am a registered Republican, but when I listen to my so-called party leaders, I become infuriated and visibly despondent. When did preemptive war become our national defense? When did the desire to police the world become so mainstream that we forgot that our nation was birthed from a

repugnance to imperialism? When did we concede that the federal government has the right to regulate our lives to the point of quiet despotism? And most importantly, when did we become convinced that our votes and voices only matter if we support the perceived frontrunner?

As an advocate of liberty, I will vote on principle over party, every time. If the Republican party took the time to educate its members on the issues, rather than simply bullying them into submission, their party wouldn’t be so splintered right now, and perhaps Dr. Paul would have a unified force behind him heading into November. Instead, GOP leaders seem committed to promoting the status quo, to increasing their own power and influence, and to keeping the $upport of moneyed interests. If the GOP Establishment is successful in convincing Republicans to nominate Romney instead of Paul, and Paul does indeed run as an Independent, Obama will win with 45% of the vote, and the GOP will have no one to blame but themselves.

-Colin M. is a senior at the Goizueta Business School at Emory University in Atlanta, GA, and will graduate this spring with bachelor degrees in economics and business administration.

Imagine the Boot on the Other Foot

#RonPaul argues for facts over fear, sound money over fiat, and the Constitution. This short (3 minute) video is dedicated to all the warfare-economy chickenhawks who think "the terrorists" hate us for our Freedoms and our Liberties. So yes, imagine the shoe, ooops make that boot on the other foot. Please share this with your friends, family and loved ones.

Neocons React to Rising #RonPaul Poll Numbers

Newly released video of neocons (and warmongering chickenhawks) reaction to Ron Paul's rising numbers in the polls. Much thx to R.G for bringing this to my attention.