Thoughts about the market, the economy and not all stimulus projects are equal.

The Dow has hit 11,200 this morning and is within 58 points of its 52 week high. I had said this rally would go to the 11,200 level in mid September and that prediction has be validated.

Where from here is the big question? I believe that before the election the Bulls want to drive the Dow and the S&P 500 above their 52 week highs. Then we will have the election and the finality of what the political implications will become evident. Will it be gridlock or will something get done to turn this economy around and solve the unemployment problem. The Country needs real jobs and I personally think it would be a great time for infrastructure repairs and a time for some great National project, like an East-West Speed Railroad system, so we didn't need to take an airplane or car to go coast to coast in a more efficient green way.

I have always wanted to take a high speed rail train across the country, as I experienced abroad. Amtrak just doesn't do it. That would be a project I could get behind. How about you? There is a project to build a High Speed Rail train from LA to San Francisco, which many would use, if it becomes a reality, but I am afraid I will be too old by the time it is completed. The Federal government has given $2.25 Billion of the $8 Billion allocated under the American Recovery and ReInvestment Act (ARRA) to this project. The project must be complete and operational by the Fall of 2017 for CA to get the Funds. The four sections eligible for stimulus funding are: Los Angeles to Anaheim, San Francisco to San Jose, Merced to Fresno and Fresno to Bakersfield. However, in order to accomplish the goals set out in the stimulus program, the Authority believes it is clear the funding must not be spread among the four sections, but rather concentrated in one of them.

I have attached a map below of the proposed route for any Californians who haven't seen it. Additional information may be obtained by going to this link at The California High Speed Rail Plan.

If we could start the branches for a National High Speed Rail system, we could then join the pieces to form a national network. This endeavor would add such a wonderful treasure to our country as we are at the beginning of the 21st Century. President Eisenhower left a generational legacy with the InterState Highway system. It is hard to conceive what our country would have been like had Ike not foreseen this project when he did. It is an invaluable treasure for our transportation needs and so too would a High Speed Rail system be, which was designed for a more green, efficient way to cross this great land. I would like to see this in my lifetime, wouldn't you?

The lesson of this ramble is that not all stimulus is equal. Some stimulus have real long lasting benefits, if you can think beyond today. Can you? This is why voting is so important. If you vote you can make an impact and if you don't vote, you have left the decisions about your future to someone who only cares about themselves. The Tea Party and the Republicans have declared no more spending! Reign in Government, is their cry. To me that means no solutions to our current problems. The Democrats want some stimulus targeted for this type of project and other Green solutions. Did you know that freight rail systems get 436 miles on a gallon of gas? Vote and vote wisely this election. Elections have consequences! Your future depends on it as well as that of your children. It really is an important election.

Market review

So Continuing Claims are down a bit today and the Weekly Job Claims are down a little over 8,000 but you would think by the commentary on CNBC this morning that everything was turning for the better and we are almost at a point where we are coming out of the recession. Bah, humbug! You can't believe that hype really, can you? I surely don't. Look folks, let's face it, many are on vacation and things are slow in business this summer, including layoffs. Restaurants might be surviving based upon summer vacation visitors and many stylists might be getting some business because people wanted their hair done before their vacation. But I tell you things are no better out there and this Fall, which by the way is only 2 months away, is going to bring back more unemployment. Don't be lulled by complacency that things are truly better, by just buying into an overbought market. You will surely be disappointed and lose some capital if you do. Next week they will have the Unemployment report for July and while it currently stands at 9.5% unemployment in June, I expect a creep up for July, maybe to 9.7%.

But remember the Consumer Confidence numbers came out this week and were down from the previous month. June numbers from the Conference Board for Consumer Confidence was 49.3 and in July it was 46.6 and when the economic outlook is good this number is usually over 90 to as high as 120. So most Americans don't see things improving going forward, and are concerned about whether they will have a job or not. Many writers of economic newsletters are wondering about whether there is sufficient capital to truly have a free market right now and they fear it is manipulation that has created this rally. I am concerned about this too. It is in Wall Street's interest and now the Federal Government to have the stock market rise to give us all the confidence that things are getting better and therefore we should trust the stock market with our capital and invest. I would like to share one line of a recent report I have seen and must keep confidential. Here it is: "even if the Chinese lent the U.S. all their $2 trillion, it would only cover this year’s U.S. borrowing. Where is the U.S. going to get next year’s? Because next year, it’s going to need even more. Let me be as clear as possible. There’s no way out of this without major structural changes. It’s not going to be just a disaster. Catastrophe is a better word."

The Put to call ratio is about 0.92 and the VIX closed yesterday at $25.61 and remember what I have said all along: Preserve capital and we will have a major stock market correction sometime before the Options expiration for October. We are still in the range from 7,800 to 9,300 on the Dow and have not gone above that level yet. If you want to try to capitalize on the move up in the market, go for it but have your hand on the trigger to sell. You have to have the time to watch the market to be able to do it though.

What's wrong with our Nation's Educational system

Would you like to be a teacher? Do you think we get the best people in the teaching profession? Why aren't you willing to consider being a teacher? Does it have anything to do with the Salary teachers make? What would it take to get you to consider becoming a teacher? If you have answered these questions for yourself, here's some interesting data. How much would it cost us to really make a change in the teaching profession and once again be the best-educated citizens on the planet?

There are 2,997,748 teachers in Public schools. Their average base salary is $39,857 although some can make double that after many years in the job but it is rare.

Total Funding for Public Schools is broken down as follows:
The Federal Government pays about 7.3% of all the costs.
Your State pays 49.7% and your Local government pays about 43.1% through Property taxes.

Now here's how to change the system. If the Federal government picked up the costs to double the base salary for teachers from $40,000/year to $80,000/year as a base salary, the costs would be an additional $240 Billion dollars. If at the same time teaching became a year round job, with generous vacations but still not as much as they get now, we would attract a very capable and motivated work force where the standards for the teaching profession could garner the best possible people teaching. To put these costs into perspective, the cost of the Iraq war is $415 Billion dollars so far, not including related costs due 25,000 Iraq Veterans because of sustained serious injuries and understandable mental illnesses, as a direct result of the Iraq war. Where are our priorities? What do you think?

For more data on teaching and the source of the data above click here.