I Have a Dream
Research for Online Investors

01/13/12

It is all in the headlines.  S&P to cut eurozone credit ratings.  This knocked the U.S. market down at open this morning.  There are denials and “no comments” but the stories are probably accurate.  France will lose its AAA rating and maybe Austria.  The Netherlands and Germany look safe.

This might explain why Germany sold $4.96 billion dollars in six-month notes on Monday with a negative yield of 0.0122%  You have to be really scared to pay a country to hold your money!  The dollar gained over 1% against a basket of currencies while the euro fell by a similar amount.  After the initial shock at open the markets look like we might rebound today.

The market has opened lower on Wednesday and Thursday, only to reverse and close higher.  These are powerful signals, now if we could just get better volume showing commitment the market could see a rally.

A strong dollar has signaled lower precious metals and equity prices in the U.S for the last few months.   It was no small coincidence the rally of stocks in October was accompanied by a falling dollar.  Here is a chart of the UUP (dollar) etf for the last six months.

We started to see some divergence from this correlation in the last week of December. The U.S. market rallied along with the dollar!  Here is a chart of the SPY etf (S&P 500) divided by the UUP etf price.  A higher reading indicates a higher stock market compared to the price of the dollar.

I have taken the liberty of drawing a horizontal line on the chart.  This level is arbitrary but gives you a reference point to watch in the current market.  We used the UUP etf to signal market direction in the SwingTrader last fall.

Friday the 13th couldn’t pass without a calamity, and we had it today.  In the grand scheme this is but a hiccup and we should see the market continue to diverge from Europe’s debt problems on solid corporate earnings.

The market will be closed on Monday to give us a chance to reflect on Martin Luther King Jr.’s legacy.  He was a republican, a champion of civil rights and the recognition of all people’s worth.

The U.S. has spent an estimated $10,000,000,000,000 (trillion) dollars since LBJ coined the term ‘war on poverty’ in 1964.  It is not the War in Iraq or Afghanistan that is bankrupting America, but social safety net programs that will cost more than $1 trillion dollars in this year’s budget (twice the defense budget).

Edgar Browning, economics professor at Texas A&M University, asked in 2008 “Is crime lower today…Has illegitimacy been reduced in the low-income population…Are children of low-income families getting good educations that prepare them for productive lives…Are more children of low-income families being raised in stable two-parent families?”

Browning concludes “The answers to these questions, I submit, paint a bleak picture of the accomplishments of the American welfare state.”

MLK’s vision and hope that his children would be judged by the “content of their character rather than the color of their skin” has been lost over the years.  His children’s character has been destroyed by their actions.

They trademarked all of his images and speeches that could be protected.  They demanded, and received, $832,160 in royalties and consulting fees for using his image and quotes at the national memorial on the National Mall in Washington, D.C.  I won’t be visiting…they may have a royalty!

According to the National Park Service 'To its knowledge, no one had ever before charged such a fee.'

The Civil Rights act of 1964 was proposed by a democratic president and enacted by republicans, but has been hijacked by profiteers and used for political advantage by welfare hucksters ever since.  I have a dream…

Quote:
We fought the war on poverty…and the poor lost.---Doug Casey

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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