Research for Online Investors
We have missed much of the rally of
the past two weeks with our SwingTrader recommendations, as we are negative on the current economic
situation. Our subscribers to Buy, Sell, Hold and the Dividend Champion
Long-Term Portfolio have benefited from the rally. We evidently
Silence is Golden
There is a well-known trading
strategy of predicting stock market rallies when the legislature is adjourned. It’s a play off the old adage of nobody is safe when the legislature is in
For the last two weeks, the markets
have been drifting higher on lack of bad news. Bad news is a byproduct
of politicians and bureaucrats. Not to be left wanting for long, the
Europeans are returning from “holiday” and making headlines.
Greece is struggling to trim $14
billion dollars from their budget to bring the deficit down. They have
to do this to get the next tranche of aid from the EFSF or ESM if Germany approves its
Jean-Claude Junker is the Prime
Minister of Luxembourg and chairs the Eurozone Finance Minister’s meetings. Junker is headed to Greece on Wednesday.
He will then visit other eurozone players to advise them of Greece’s progress. Bloomberg reports Greece will request a two-year extension on their adjustment program to
bring down the Greek government deficit.
Antonis Samaras, Greek Prime
Minister, is expected to visit Berlin and Paris on Friday and Saturday.
Jorge Asmussen is on the European Central Bank board. Reuters reports this morning he believes a Greek exit from the euro would be
Asmussen prefers that Greece stay in
the eurozone, as a Greek exit would be very expensive in terms of loss of growth and higher unemployment in Greece
and eurozone countries including Germany.
Reuters quotes Asmussen, “Firstly, my clear preference is that Greece should remain
in the currency union. Secondly, it is in Greece’s hands to ensure
that. Thirdly, a Greek exit would be
The Federal Reserve reports this
morning that bank deposits increased 3.3% in the last two months.
Business lending only increased 0.7%. This leaves a wad of money that
has to find a home. Since the Federal Reserve is out of bullets to buy
long term debt in their “Operation Twist” program. The Fed would like to
see banks put some of that money to work buying Treasuries.
Banks have doubled U.S. government
debt purchases in the last year. The Federal Reserve reports bank
Treasury (and other government agency debt) purchases in the last year at $136.4 billion dollars with total
holdings of $1.84 trillion. This helps the Fed keep short term interest
The Spanish IBEX stock index fell
over 2.0% today. This was its first down day in ten sessions and the
worst decline in three weeks. The IBEX has rallied 29% since July 23
(when Europeans started wrapping up business to go on holiday).
No matter which side of the “Rubik’s
cube” you look at in the Middle East, the puzzle appears to be breaking apart. The drumbeat of war seems to get louder in Israel every time we care to
The P5+1 talks between the U.S. (and
other countries) and Iran to negotiate a halt to nuclear weapons failed in June with an impasse. Syria is unleashing their military on the civilian population and Egypt has moved
tanks into the Sinai Peninsula, violating the Camp David accords between it and Israel.
The Mohammed Morsi (Muslim
Brotherhood) government in Cairo is gaining control over the Egyptian Military. Morsi is pressuring Washington for foreign aid and playing a game of ‘dare me’ in
opening communication with Iran. Iran has invited Morsi to attend the
“Non-Aligned Nation’s” summit on August 30 in Tehran.
According to Debkafile, Morsi wants the U.S. to grant Egypt a half billion dollars in foreign aid and
GUARANTEE a $4.6 billion loan from the International Monetary Fund.
My nephew graduated with an
engineering degree in May. He took a job with Schlumberger (SLB),
starting two weeks ago. Next weekend he flies to Abu Dhabi for a three
Me thinks he might see a little more
excitement up close and personal in the next three months than he expected!
Israel is preparing their country
for war. The White House doesn’t want this to happen before the Nov. 6
presidential elections. Israel has requested a firm commitment from
President Obama to attack next spring and to upgrade Israel weapons in exchange for holding off an attack. The
story was circulated last week that Iran’s nuclear program has progressed enough that Israel cannot stop it without
Higher yielding “bunker buster”
bombs will be required to reach Iran’s buried enrichment laboratories.
Even American assistance may only serve to interrupt Iran’s program by a few years. In the end, a grand showdown seems to be approaching. If nuclear weapons held by countries that seek the annihilation of Israel are off
limits, then regime change in Iran seems the only long term answer.
Again, Debkafile has the story. We will learn more about
this story in the next few weeks or see the results of an Israeli strike against Iran on the evening
I am a bit out of pocket today, as
my 92 year old father is under the weather. We should be back in stride