Back in the Soup
Gary Kaltbaum is an investment adviser with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show “Investors Edge” on over 50 radio stations. Gary is also editor and publisher of “Gary Kaltbaum’s Trendwatch”… a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary’s Daily Market Alerts click here or call 888.484.8220 ext. 1.
From a fundamental standpoint, I continue to have ONE GIGANTIC WORRY…OUR NOW SOCIALIST GOVERNMENT! I have been castigated on TV for using names like Castro and Havana…but I mean it. Government is now more in control of our lives than ever and only looks to get worse. People who have protested against deficits are now all for them. People who were dead set against bailouts now believe bailouts are the answer to everything.
Somehow, somewhere, we have got to the point where two people control our destiny. We now have government getting involved in any business that asks for it. Imagine, letting non-banks become banks overnight without any checks and balances…and for only one reason…access to more government money, whether deserved or not. I really believe both Bernanke and Paulson are nothing more than covering up their stupidity and their mistakes…with the conjuring up of more money. The fed continues to expand their balance sheet (print money) and Paulson continues to pay off companies that are insolvent or failed. We next get Tim Geithner…but he has been a foot soldier for Paulson and a regulator of this mess…so why is that good?
Bernanke continues to provide easy money, the easiest money in history while amassing trillions in debt. I do not understand how our politicians are letting this happen considering the fact we are in this place because of easy money and too much leverage. I feel like I am living in a bizarro world. I will try to keep an optimistic and hopeful view but it is tough as I have studied the past. There has never been a time where excesses and disasters were not created out of too much leverage and too easy money.
Another point I need to make and is another reason for the problems we are in…which again is being repeated…and that is a complete lack of transparency and the hiding of losses. In my opinion, Citi, Lehman, Bear Stearns, Merrill, Goldman and the rest are no better than Enron. And actually, they are worse. They should have easily learned from Enron’s mistake…but greed overtook them. Guess who is the latest entity to hide losses and have no transparency? That’s right…our fed…who is now creating money to take over trillions in bad paper…and now refuses to divulge what kind of paper they are taking over even though the money they are using is ultimately the people’s money. How about the banks that refuse to disclose what they are doing with the government’s largess?
I am going to continue to show anger and utter disdain as to what we are seeing. I was in hopes Obama would change this nonsense but looks like he is going to put kerosene on the fire putting more power in the government’s hand. Just remember, there is going to be a price to everything we are seeing.
The one goal of Bernanke at this point in time can be summed up in 2 words…ASSET INFLATION! This imbecile is going to continue to create trillions and throw them into the economy. Shorter-term, I have no doubt this can be accomplished. Printing money infinitum can get the job done. It is down the road that scares me. Just remember, what you have seen recently comes from policies put in place by the original Mr. Bubble Greenspan years ago. I will keep my fingers crossed and hope I am wrong. I will continue to use my writings, my radio show and my tv appearances to send these messages. Remember, I was the guy who in early ’05 that said there was a credit bubble and housing bubble that was about to get in trouble. Nobody believed me then. They are listening now.
My last worry is probably my biggest worry and that is bad people are being rewarded, crimes are being covered up and no one is being investigated or indicted. Let me be clear, when Lehman reports earnings and then is called on the carpet for taking losses off balance sheet…and then puts them back on the balance sheet in the next quarter when found out…that is a crime. When John Thain of Merrill says during an earnings conference call that they don’t have to raise any more money and in days raises $8 billion…that calls for an investigation…but nothing. How about the emails from the ratings services? How about the loans from WAMU? Nothing! How about FNM? How did Franklin Raines and pals get away with a massive fraud? The main point being we will never stop bad behavior when people believe they will never be punished. We simply have a cesspool of politics, regulators and money people that are best buddies and cover each other’s a—s. We have alumni of Goldman Sachs running all kinds of government where there is a clear conflict of interest. How does a company like Goldman who has made billions…get billions in government largesse? Yup…uncle Hank! So…as I have been telling you…what happens when markets know they will continue to be interfered with? We have seen what happens…markets crash.
Ok…you can see I am still upset. Maybe it is because my beloved Giants lost to the Eagles. I just do not know how all this money is going to be paid back and I stay worried that the people running this show could not run a lemonade stand on a hot day. As far as the market, I have a lot to say.
As we entered the past week, I used the word “happily” as the market was acting better. I now can use the word “unhappily” as much of the good was undone upon coming back from the holiday. I list the problems of the past week:
FINANCIALS continue to be gross…and that is being nice. Just about every name is rolling over including the “saviors” JP Morgan and Wells Fargo. Even during the rally off the lows, I have seen no accumulation in this important area. I am also starting to see the REITS roll over again.
Leading stocks that broke out tucked their head back in like frightened turtles. Many leading names actually broke down. Let me be clear, without broad leadership, markets do not have a chance. The main characteristic of new bull markets and continuing bull markets are powerful monster stocks.
Volume on the way up was light and on the way down this past week was heavier. That needs to turn around.
The major averages that had mini-breakouts of trading ranges, failed those breakouts this past week.
Lastly, on the sentiment front, too many pundits are bullish and too many strategists are calling for a 15-25% gain in ’09. This after the worst bear market in decades. You would have thought a bear market of such kind would have scared a few.
So, while I am not willing to say the top is in off this recent move off the lows, the action is suspicious and has me worried. The characteristics of new bull markets are just not there yet. Markets are now back in the trading range off the recent lows…and my advice remains to take your time as this market has no interest in rewarding the long side in a meaningful way. We now head into earnings season. I expect the numbers to be awful. I will be watching the numbers but as usual paying significant attention to the reactions.
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