This Is Where People Get Ripped Off

The so called stress tests are accounting for 8.9 percent unemployment for 2009. To cap unemployment at 8.9 percent we would need to only lay off 300k people per month. We have been laying off about 500k people per month in the United States. Everyone is starting to get really excited by the 30 percent rally we have had in the last 7 weeks. Be very very carefull about buying at this time, you could be buying at a big top.
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Have To Be Long

The feds have been way too meticulous in planning the announcement of the stress tests. I have to be long Citigroup going into tomorrow.
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Why I Agree With Paul Volcker

Paul Volcker stated the other day that the future unemployment rates could stabilize at 7-10%. I agree whole heartily with his assessment. There is one major reason for this...Retirement. More than 40% of workers over 50 years of age have saved less than $25,000. Pension plans have multi billion dollar shortfalls and will either have to get the money from somewhere...hehe...or bridge the gap by negotiating pension benefits to the down side. Beyond that, since the government is spending to their limits, inflation will be very very prevalent. By the time this market reaches negative credit crunch returns of 80-90% within the next few years, most people will be holed up in a cash bunker. Their fear and emotions will keep them from investing and miss out on the coming recovery rallies. As they sit in cash, inflation will start to go haywire and they will be losing inflation minus their money market rates. example: 18% inflation minus 7% money market is a net loss of 11% per year. Long story short, retail investors will not be able to buy a bucket and many will remain in the workforce well past the ever retreating age of retirement.

Right In Step

I Like Pfizer

I am really liking health stocks right now. The health czar will be announcing where 19 billion will be going "very soon". I wouldn't be suprised if that happened to be on Thursday with the stress tests. GE is also coming out with a big announcement Thursday...what a coincidence!
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Why Keep Pushing the Stress Tests Back?

The government stress tests have been pushed back several times in the last month. Why do they keep pushing them back when we keep getting snippets of "light at the end of the tunnel" from various veteran news sources? The previous administration would leak bad news just after the close on Friday afternoons. The current Obama administration has trended toward releasing small parts of bad news, and letting the news pick them apart. Then after the "snippets have been reported to death, the real news is released, watered down and accompanied by several dovish Fed chief speeches. Here are my theories as to the reasons of delay for the stress tests...

1. They want the markets to slowly digest the horrible news as to not start a panic.

2. They want low volume markets to allow for easier and less expensive market manipulation. (See previous posts)

3. Banks need more time to enter massive insider trades in various derivatives markets that will give financial institutions more record earnings Q2. We are seeing some big activity in CDS trading as of late.

4. They want more time to disinterest the viewing public in current financial events. I.E. Swine Flu, Afghanistan, and Iraq, and pirates.
All of this is a smoke screen. The fact that they have reason to delay test results at all speaks volumes.

Nevertheless, markets continue to rally on very low volume. Many traders are hesitant to short as the market vector is following Washington and their lies and manipulation. If this type of government communism continues, it's not if there will be a revolt, it's when. The people of the United States are starting to reach their boiling points. How many years till it boils over?
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Get It?

Geithner "The vast majority of U.S. Banks have more capital than regulatory guidelines indicate". Ken Lewis "We absolutely don't need more capital". Citigroup "Regulatory capital base is strong"....and then the story from bloomberg this morning..."At least 6 banks require additional capital, according to preliminary results of Government stress tests".
So on one hand, the feds think that regulatory capital standards are great, but on the other hand, they don't. The private institutions don't seem to think they need more capital, but the feds have blatantly threatened to fire private CEO's if they don't.

Long story short, estimates put banks at another 1.1 trillion in losses and shortfall, and Bank of America at 60-70 billion. The government is at this point, politically unable to give more money away. Bank of America could convert 27 billion from preferred shares to common. However, where then does the at least 33 billion dollar shortfall come from for BAC, and where does the trillion come from for the rest of the industry?

Where will it come from? Lies. That's where it has been coming from for the last 6 weeks anyway.
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