The Fed and its $7.7 Trillion secret bailout to banks

This story is something that should spread like wild fire across this country so that every American understands what the Fed really did to bail out the banks with $7.7 Trillion in taxpayer money in secret. The Congress didn't know nor did many officials in government!

Click here for the Bloomberg article exposing the Fed.

Get everyone of your contacts to read this article. The 99% now have plenty of ammunition to keep their movement going. Ron Paul was right that the Fed needed to be audited and eliminated.

Ideas for the 99% Occupy movement. Idea #1

Many have been asking what are the demands of the 99% movement protesters across the country and much has been made about the lack of a coherent message. I believe since most of us are in the 99% we must offer suggestions for what we all can do.

So here is my first suggestion. Most of us are concerned about the "Too Big to Fail" banks here in the US. There are about 6 of these institutions and here are the list of the ones I remember:

JP Morgan Chase
Bank of America
Citicorp
HSBC
Wells Fargo

Anyone who is concerned these banks are too big can withdraw all their money and put them in local banks and Credit Unions. I like Community banks myself because they loan to local merchants. If the 99% withdrew their support of these banks they would be forced into shrinking and the size of their assets would shrink dramatically.

Idea #2 is in the works. If you have any ideas, feel free to leave a comment and maybe yours will be posted.

Where are the Student Protests today? Vol. 2

It was May 21st, 2005 when I wrote a Blog post titled, "Where are the Student Protests Today?". It has taken this long before some have finally demonstrated. This is the 99% Occupy Wall Street movement. Here is what I wrote back in 2005:

"As we approach June 4th , the anniversary of Tiananmen Square, and I reflect on our own history of student protests, it got me to wonder where are today's student protesters, as certainly there are many disturbing trends in America today, threatening the very fabric of our democracy as we search for bipartisanship in Congress and a more humble America in our rhetoric abroad and at home. But we still seem very arrogant as a nation with little understanding of the very cultures we are trying to change. I am not talking about Iraq here. I am talking about the "Divided" States of America, that's right, the good ole D.S.A., one nation, (partly) under God, very divisible, with liberty (until we can change those Senate Rules), and justice for (a few).

There was once a time of idealism, of standing up and being taken seriously by society, a conscience for all of us. This was the time of Student protests. Students protested the Vietnam war, the May 4th, 1970 Kent State shootings, Tiananmen Square and support for democracy in China, the outrage at the Chinese Government’s reaction to the protests and some recent protests of the Iraq war in selective cities.

As a nation, we have a lot to be angry about with our government. First there was the misleading 'intelligence' of the lead up to the Iraq invasion and then the letters of former White House General Counsel and current Attorney General, Roberto Gonzales, regarding new interpretations of what is and what is not torture. Then the pronouncements by our President that certain prisoners would not necessarily be treated in a manner consistent with the Geneva Convention. Add to this more recent assertion about additional abuse in Guantanamo and the shameless deceit to get recruits on High School campuses to enlist, and you wonder what it takes to get Student protesters engaged again. There have been some protests of the Iraq war but they fade away quickly. What captures the focus and attention of the bulk of our students today? Could it be survival, as the job market still looks bleak? Or is it just apathy? What do you think? I don’t think they care much about what the Senate is proposing in its Nuclear Option to end the filibuster and allow judicial nominations through who by the minority see as extreme in their views. Stay tuned."

I think this has merit today as well. Those brave students at UC Davis who were pepper sprayed for no reason other than they were protesting. Others on Wall Street protest as they have seen what they have gained over their lifetimes gone because of the greed on Wall Street and the Banks. Let's be thankful that the conscience of some is alive and full this Thanksgiving, even though their stomachs may be empty. Bless the 99% and be thankful for their voice and their courage. They are the best of what has made America great. Back in 2005, way before the Sub Prime problem, there was a jobs crisis (during the Bush years), but many have forgotten that. Many ill informed have blamed President Obama. Not me.

Along with your dinner today, which is a blessing in itself, maybe this will give you some extra food for thought.

Repatriating US Corporation dollars from abroad. (UPDATE)

There has been a lot of recent talk about repatriating Corporate US Dollar holdings from abroad to help US Corporations stimulate the US economy. There dollars are abroad because Corporations do not want to pay higher US Taxes. One thing to consider here is that anything which pulls money out of country banks abroad will have a negative affect on those countries and especially its banks, as banks in Europe do not have enough capital to weather the debt crisis there, as they are financing debt of Greece and Ireland and now Italy and possibly Spain. So repatriating US Corp dollars from Europe could have a very big impact on world banks and countries. This point has not been discussed at all in the media. There are over $1 Trillion dollars in banks abroad held on behalf of US Corporations.

Every action has an equal and opposite reaction!

UPDATE: 7:50am PST

It has already begun as this story unfolds. Venezuelan President Hugo Chavez ordered the central bank to repatriate $11 billion of gold reserves held in developed nations’ institutions such as the Bank of England as prices for the metal rise to a record.

Venezuela, which holds 211 tons of its 365 tons of gold reserves in U.S., European, Canadian and Swiss banks, will progressively return the bars to its central bank’s vault, Chavez said yesterday. JPMorgan Chase & Co. (JPM), Barclays Plc (BARC), and Standard Chartered Plc (STAN) also hold Venezuelan gold, he said.

“We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home,” Chavez said yesterday on state television. “It’s a healthy decision.”

Market comments for Oct. 14th, 2010

Data released this morning shows that Initial Jobless Claims were higher at 462,000. Expectations were of 450,000. Last week the numbers reported were only 450,000, so this spike is in the wrong direction. However, as usual, they adjusted the prior week's data up from 445,000 to 449,000. Continuing Claims came in at 4.399 Million vs 4.511 Million the prior week. But the 4 week moving average is up to 459,000. When you really think about it, Americans are losing jobs to the tune of greater than 450,000 a week and have been doing so for a very long time! How sad for American workers and their families. This is not a good report for President Obama going into the elections in a few weeks.

On another note, the PPI came in at +0.4%. This was the same data as reported for August. The Core PPI, year over year increase, is up only 1.6%. The Trade deficit came in at -$46 Billion versus -$43 Billion last month. Expectations were for improvement to being down to -$40 Billion, so this too was in the wrong direction. With China's currency resisting world pressure to appreciate because they have an unfair advantage I believe they will continue to defy the world and will keep their currency as low as they can. Why not, they are in the drivers seat and they know it. Even if the whole world dropped their currencies they couldn't get it low enough to match where China's currency is because their population works for under a $1 a day. We just can't compete with them nor can anyone else.

Foreclosures reached a record 100,000 last month, and the background story, which emerged a week ago, was that an investigation of Banks and their foreclosure process is being conducted. Bank of America had stopped all foreclosure processes in 50 States pending an investigation by them.

Futures are close to unchanged or slightly lower after the release of the data.

It is now clear that with the sizable debt this country has, that the way we are dealing with it is to devalue our currency so that the value is half of what it was so we can pay the debt off in cheaper dollars to China, who holds our debt, as does Japan. That is why Japan is trying to lower its currency as well so they get paid eventually relatively equivalent dollars and why China will not inflate its currency. The major world powers are in a Currency war right now. This game is going to end very badly as wealth is being transfered out of the United States.

But we are all happy now because the stock market appears to be rising, right?! How naive the American public is. That is the price we all pay for a poor education of our kids who someday grow up and are fooled by the talking heads in Washington and vote against one's own personal interest.. Education is the one answer to get this country back on track and we haven't even begun to get serious about improving education yet. That is why we get the Government we deserve.

Headlines and comments for July 13th

Ok, want to get a sense of what's going on and where the market is headed? Let's just look at the headlines from today's Bloomberg.com web site. I'll write the headline in quotes and then make a comment after each. Here they are:

-"European Stocks, U.S. Index Futures Rally on Alcoa Earnings; Euro weakens" Hmmm, why is the Euro weakening, I thought things were improving in Europe, as the Greek debt crisis had abated. Well it turns out they are now worrying about Portugal's debt, as Moody downgraded it.

-Greece Bill Sale Below EU Bailout Rate Eases Concern over Borrowing Costs" Hmmm, but what about Portugal's debt crisis looming?

-"Europe's Banks Poised to Win Reprieve in Basel on How Capital is Defined" Hmmm, I don't get a chance to redefine what my capital is. What kind of game is this? And why do they have to redefine what capital is? Haven't they had a definition all these years already? What's the old definition and what's going to be the new one? Isn't money, money? Oh, and here is the real news from the article, "A push to water down stringent standards proposed last year by the Basel Committee on Banking Supervision, and to allow more time to implement them, is led by France and Germany, according to bankers, regulators and lobbyists involved in the talks. Representatives from the U.S. and the U.K., who have sought to rein in risk-taking, are willing to compromise on how capital is defined to reach an agreement at a committee meeting that begins tomorrow, the people said." Feel better now? I don't! The games Governments are playing now threatens our very economic survival.

-"German Investor Confidence Drops as Debt Crisis Threatens to Hobble Growth" Hmmm, I thought we solved the Debt problem with 1 Trillion Euros. Are you telling us you are still worried? Now you've got me worried! It turns out that German investor confidence declined for a third month in July as Europe’s debt crisis threatens to cripple economic growth and banks undergo stress tests to prove their durability. Imagine that, they lend 1 Trillion to solve the debt crisis but then worry whether they have 1 Trillion to lend. By the way, this is the 3rd month of declining German Investor confidence has dropped. It went down to a 15 month low of 21.2 and they had expected a drop to only 25.3 from the 28.7 level in June. Hmmm, this is the only real truth out there it seems today. The German's seem to know it's a shell game. Their confidence level, or lack of it, says it all for me!

-"U.K. Inflation Slows Less Than Forecast; Rate is Above Government Target" Hasn't anybody been paying attention there? What good is a target if you never have acted on anything away from target before? Oh now you are concerned. Well the World is really experiencing Deflation if they pay attention.

That's enough to get you going on the headlines this morning from Bloomberg.com. Hope you enjoyed the recap and comments. You get the point, it's all a game of manipulation with a smattering of honesty mixed in for good measure. Read headlines for what they are really saying. There is another way to interpret each, using a more skeptical eye.

After reading all the headlines, I looked at the charts again and I do not believe we will go over 10,300 and stay above that level. And we are close as yesterday we closed at 10,1216.

Are there new worries in the markets as we begin October?

There has been a host of new data out the past 3 days that fly in the face of the Fed's Bernanke comments that the recession is over and the economy is recovering. For one, Consumer Confidence dropped for the month of September from 54.5 to 53.1. Next, the PPI also dropped for Sept. and foreclosures increased. The ISM number came out this morning too and it was also down for Sept. showing a contracting economic condition is still with us. The stock market, however, roared and had one of the best months in 11 years, counter to the economic news. Now comes this astronomical figure I had never heard before. It was the size of the Bank derivative market. Here is the headline news item followed by an excerpt from the article. (Click on the title to see the entire article.):

"Beware the Current Bull Market in Derivatives
September 30, 2009 by Matthew Goldstein

The Dow is near 10,000 again. The business press is full of stories about the resurgence in mergers, IPOs and even so-called blank check companies.

There’s one statistic, however, that should give investors pause: the growth in the total dollar value of derivative contracts at the top too-big-to-fail banks in the United States.

In the second quarter of this year, the notional value of derivatives contracts at JPMorgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC) and Citigroup (C) increased by $1.92 trillion, to $191 trillion. Shockingly, Citi is responsible for most of that gain from the end of the first quarter.
Overall, the total dollar value of outstanding derivatives transactions at the top 25 U.S. commercial banks was $203 trillion, according to the Office of the Comptroller of the Currency, meaning that the nation’s four biggest banks account for 94 percent of the industry’s total exposure to derivatives."

If this article doesn't scare you, I don't know what will. The net to me with this large a derivative market is that the true value of our currency is zero! The phrase, "It isn't worth the paper it is printed on" comes to mind!

The greed of Wall St. and the Banks have put US second to China

The headline news today is from Paul Volcker. Here's some excerpts from Bloomberg's article:

Volcker Says China’s Rise Highlights Relative U.S. Decline
By James Tyson and Michael McKee

Sept. 29 (Bloomberg) -- Former Federal Reserve chairman Paul Volcker said the rise of China and other emerging economies has underscored a decline in the comparative economic and intellectual leadership of the U.S.

“I don’t know how we accommodate ourselves to it,” Volcker, an economic adviser to President Barack Obama, said in an interview with PBS’s Charlie Rose taped yesterday in New York. “You cannot be dependent upon these countries for three to four trillion dollars of your debt and think that they’re going to be passive observers of whatever you do.”

The former Fed chairman also said unemployment at 9.7 percent will slow the pace of recovery from the U.S. recession as Americans default on mortgages and consumer loans. Moreover, commercial real estate loans are likely to cause further losses for banks.

“This recovery will be slower,” he said. “We can’t just pump up consumption and pump up housing again.”

Most of the people who did this to America were leaders in the financial system of our country and they have ultimately relegated our country to a more diminished place in the world economically. Yes, we still have strong Military power, but eventually this sellout of our way of life because of their greed will affect Military spending too. We have no other choice. We're broke while the wealthiest of Americans participated in this scam on America. They were supposed to be so smart, but couldn't they have seen derivatives produced no real products for consumers or really added any substantive assets to our country. It was all just paper (money) and it made our real wealth disappear as we have now nothing but debt and we owe it all to China.

Summary comments on market: Has anything really changed in my outlook?

The market closed the week today with what apparently looked like indecision. But to the contrary, today's market confirmed a reversal in all Indexes, the S&P 500 Index, the Nasdaq composite Index and finally the Dow. The Nasdaq closed down only 1 point but the Candlestick pattern was a Hammer. The S&P closed at 940, down only 2 points, but it confirmed the Hammer candlestick pattern of Wednesday's close. The Dow closed at 8,763, up about 13 points.

The Unemployment rate rose more than expected and closed up 9.4% for the month of May. Employers eliminated the fewest jobs in eight months in May, strengthening signs that the recession is easing, while a drop in wage growth offered a warning the recovery may be muted. The job losses were lower than expected but more people were added to the ranks as eligible workers, so the rate rose higher than expected. The country needs to create about 200,000 jobs a month just to be at break-even. When you add in the losses the rate goes higher quickly. Many commentators on CNBC and Bloomberg today said that there the real Unemployment rate is about 16% because many are working part-time and can't get a full time job. Also a number of the unemployed have given up filing for Government Unemployment Insurance Benefits, as either their benefits have run out or they have given up looking for work.

Nonetheless, the media and commentators are continually hyping we have turned a corner and that we should be out of the recession by the end of the year. This does not make any sense at all as it appears we are headed for another poor Christmas season with so many unemployed. Since the Consumer represents 70% of the economy, it seems delusional to think that we are going to be out of this mess anytime soon, let alone by year end. I wish it were true but the facts do not support the optimism.

Several other measures give pause regarding the Consumer's ability or willingness to stimulate or drive the economy. First that there are going to be new rules governing Credit Card issuance for younger people of college age. Secondly, this was not that widely reported but Consumer Borrowing plunged $15.7 Billion in April. That is both good and bad news. It is good because maybe people are only paying now for what they can afford and have stopped borrowing beyond their means. On the other hand, maybe they can't borrow because they can't pay the debt back easily. The category in Friday's report that includes credit card debt dropped at an annual rate of 11 percent in April, following an 11.2 percent plunge in March. And a complimentary story I reported earlier in the week, Consumers saving rate jumped to 5.7% in April.

The banks also made news today. From Bloomberg news: Bank of America Corp. and nine U.S. lenders, facing a June 8 deadline to explain their capital- raising plans to regulators, are relying on preferred-stock conversions for 22 percent of their fundraising. Collectively, the 10 banks told by regulators to raise $74.6 billion have announced plans covering $70.6 billion of the gap, with some including Bank of America expecting to “comfortably” beat its target. They’ll get about $15.4 billion from preferred stock conversions, a tactic that improves the gauges of financial health that the government is focusing on without bringing additional cash into the company. “Conversions from preferred to common don’t do anything; you can just ignore them,” said Christopher Whalen, managing director of Institutional Risk Analytics, in an interview this week. “It makes the ratios look better, but it doesn’t increase the capital in the house.”

And another related Bloomberg story about the banks: Analysts who have examined the quarterly profits and government tests say that accounting rule changes and rosy assumptions are making the institutions look healthier than they are.

The government probably wants to win time for the banks, keeping them alive as they struggle to earn their way out of the mess, says economist Joseph Stiglitz of Columbia University in New York. The danger is that weak banks will remain reluctant to lend, hobbling President Barack Obama’s efforts to pull the economy out of recession.

So while we hear things are getting better and that they see more "Green Chutes" there does not seem to be fact based data to support the market hype. Bill Gross, of Pimco, has started to raise the alarm as has Fed Chairman Bernanke in his recent testimony before Congress. I would listen to Bernanke and Gross as they have a front seat to what is happening here. I don't see a "V" shaped recovery but that is what the stock market movement is implying. I see more of an L shaped recovery. If that does prove to be the chart outlook, then we will retest the lows and stay in a tight range for the next 6 months to a year. This a a longer outlook than I have stated here in the past but the good news in this scenario is that we aren't going to go below the lows and are going to eventually recover. I think it is a good thing that many are saving now. It took many a lifetime to learn this lesson. But we have been affected permanently and spending patterns have changed for the foreseeable future. It may bring families closer together as well and learning new ways of being present with loved ones, without the distraction of material things. When i grew up my family would play games at home almost every Friday and Saturday evening. Looking back, those were some of the best times I spent in my youth with my family.

Market Outlook for week of May 4th

I keep saying I need a clear signal to tell market direction and the question on your mind is, Did I find any? Before I answer that here's a summary of how I look at the past week and where we find ourselves, going into the week of May 4th.

The Dow closed the week at 8,212 and this was a gain of 136 points, or 1.7% for the week. The Nasdaq closed the week at 1719 and that was a gain of 25 points, or 1.5% for the week. Those aren't big gains for the week by any measure. It felt like we were up a lot more given each day the indexes seemed to be up. Again, it feels like a smoke screen to me. The big question is how was the corresponding Volume of trading for the week. It was down again this week. So for the past 3 weeks Volume has declined steadily each week in the Dow stocks and the NYSE. However, the Tech sector Nasdaq maintained a bright spot with steady volume these past weeks with the index rising. This is the bright spot in the market to me and points to the Tech's going to lead us out of the recent big market decline from the Fall.

I have put several 6 month charts ahead of this post, worth clicking on. The first chart is of just the Dow to show the decline in Volume the past week. The second is a comparison of the Nasdaq Composite Index as compared to the Dow and the third is a comparison of the Nasdaq Composite Index as compared to the SP500. The gains of Technology seem to indicate this might be where to have been invested.

The signal I am looking for is Volume. If Volume spikes up, it won't matter what direction as direction will be clearer. Right now it is a rally lacking conviction. Now this can be a good thing as well. Many are skeptical, including yours truly, that the gains are real and many believe that we are not in a Bull Market Rally, but instead are in a Bear Market Rally. If the market can stay the course, as it has since the lows, it will eventually convert the Bears to cover their shorts and we will be on our way to a real Bull Market. But we are clearly not there yet.

The Put to Call ratio closed at 0.82, not low enough to give a sell signal but not high enough for a convincing Buy signal. To me the Put to Call would need to get over 1.05-1.20 to convince me to Buy. And it would have to get as low as 0.55-0.60 to Sell, or buy more Shorts. Some news will spark both this move and the Volume spike, but we still wait for clarity.

The news of this coming week regarding the Unemployment Rate for April has already been discounted. It will show a higher rate but a slowing of the decline over previous months. It is my opinion it will be reported at 9% or higher, getting ever closer to the 10% double digit rate most pessimistic scenarios had surmised. I do not expect this to tank the markets and do expect them to take the number in stride. More questionable will be the market's reaction to the Stress Test results expected to be released on May 7th, the day before the release of the Unemployment numbers.

If you look at the drop in Volume of the Dow index, and look at the Volume of Citigroup dropping this week, you can see a correlation. many banks had weaker Volume this week over the previous week. This can easily be seen by looking at a 6 month Chart of the volume of the Financial ETF, FAS. When they announced earlier this week that there are rebuttals by the Banks to the Treasury's Stress Test data, it quieted trading for both FAS and the short FAZ.

Add to the mix, Warren Buffet's latest comments on Real Estate and it provides an interesting back drop for the coming week. Here's what Buffet said, "There’s no signs of any real bounce at all in anything to do with housing, retailing, all that sort of thing,” said Buffett, 78, in a Bloomberg Television interview before the Omaha, Nebraska-based company’s annual shareholder meeting today. “You never know for sure, even if there’s a leveling off, which way the next move will be.”

So I leave you hopefully convinced that the market direction is still not clear, even while the Dow and S&P goes a bit higher. The only real good news is that Technology seems to be the bright spot and this is substantiated with good solid Volume. So if you believe this rally is for real, make sure you own some good tech companies in your portfolio or at least some dogs that show some life. But remember my overall advice, no matter what, preserve capital!

Bloomberg Survey

================================================================
Release Period Prior Median
Indicator Date Value Forecast
================================================================
Construct Spending MOM% 5/4 March -0.9% -1.6%
Pending Homes MOM% 5/4 March 2.1% 0.0%
ISM NonManu Index 5/5 April 40.8 42.0
Initial Claims ,000’s 5/7 2-May 631 635
Cont. Claims ,000’s 5/7 25-Apr 6271 6350
Productivity QOQ% 5/7 4Q -0.4% 0.8%
Labor Costs QOQ% 5/7 4Q P 5.7% 2.8%
Cons. Credit $ Blns 5/7 March -7.5 -4.5
Nonfarm Payrolls ,000’s 5/8 April -663 -600
Unemploy Rate % 5/8 April 8.5% 8.9%
Manu Payrolls ,000’s 5/8 April -161 -157
Hourly Earnings MOM% 5/8 April 0.2% 0.2%
Hourly Earnings YOY% 5/8 April 3.4% 3.3%
Avg Weekly Hours 5/8 April 33.2 33.2
Whlsale Inv. MOM% 5/8 March -1.5% -1.0%
================================================================

Market Outlook for May 1st and beyond

Friends and visitors, I wrote a note to a close friend tonight and thought I should post this here about my view of the market today and what I expect in the next week or so. Here's what I told him.

"I have been watching the Put to Call ratio and it has been relatively low which means higher probability of correction than a market advance. It closed today at 0.85 and opened at 0.65. I put a chart on the Blog on April 18th showing the recent year and a half range and when the number approaches the low of the range it is a sell signal and if it is at the top it is a buy signal.

So best to just sit and be as patient as one can right now, until we get a clear signal. The Volume today was a little ahead of yesterday and the market closed down, not up. When volume increases and the price drops, it is a >u>bearish sign. One other thing. I have been tracking Insider Trading and I can tell you as fact, Insiders are selling more than buying, and the amount of cash raised by selling is much more significant a Dollar amount. It has been that way since the market dropped last Fall and nothing has changed that. If Insiders saw a better picture of the economy going forward, they would be buying, not selling."

As I wrote in the previous post, the Stress Test results for the 19 largest banks are not going to be released until the end of May. Banks are most likely under capitalized as we have heard this past week by as much as $1 Trillion. These bank assets need to be dealt with by either creating good vs bad banks or something like Chapter 11 bankruptcy to wipe out shareholders, instead of using more government money. But then we are back to a lack of confidence in the banking system, a possible run on the banks or complete collapse of the banking system and President Obama isn't going to allow that to happen while he is in charge. Toxic assets are still on the books and no lipstick is going to make that Pig look any better and that is the problem!

Speaking of Swine Flu, it seems to me that current technological advances in communications using the internet, cell phones and television, has allowed healthcare officials to get a very quick handle on this outbreak, which has the effect of minimizing its affect on humanity. Contrast that to 1918, where it took weeks and months to realize what was going on and to mobilize precautionary measures for use by the public. It was too late then and I lost my Mom's parent during that period, but now, everyone in the world knows to wash their hands frequently, cover their mouths when coughing and avoid large gatherings or enclosed spaces. VP Joe Biden got himself into trouble today, for saying what everyone knows was the truth. There is something very refreshing about having a VP that is wired to just say the truth and can't help himself. You got to love him!

Stress test results on Banks delayed! UPDATE

News just out tonight. A small excerpt of the story follows:

"U.S. Bank Test Results Delayed as Conclusions Debated

By Craig Torres and Robert Schmidt

April 30 (Bloomberg) -- The Federal Reserve will postpone the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials.

The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as tomorrow, they said.

Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices."

The impact on this news on the Bank Indexes of the stock market are unknown at this time. However it may be very good news for those like myself holding the ETF Short of the Financials, a triple play, symbol FAZ. Since this ETF shorts the Financials it may get a real boost tomorrow as some bank big stops drop. The market does not like uncertainty. If they wait a whole month to release the results this is not very good for banks and shareholders. Remember, the idea of the stress tests, according to Treasury Secretary, Tim Geithner, was to bring confidence to the markets and specifically the banks. FAZ closed today at $8.31/share and I purchased it last week at $8.50/share. The market may also shrug off the news and banks could rally as it delays any news. Let's see the market's reaction tomorrow, May 1st. Many markets abroad will be closed tomorrow, as it is May Day.

UPDATE: May 1st 8:20am PST

Here's the latest news on this from Bloomberg News:

Regulators Said to Plan Stress-Test Disclosures on May 7

By Craig Torres

May 1 (Bloomberg) -- The Federal Reserve and U.S. banking regulators will reveal the results of the tests on the country’s 19 largest banks on May 7 after financial markets close, according to a government official.

The government will unveil both aggregate information and firm-specific details about the capital buffer required to absorb losses if the recession worsens, the official said on condition of anonymity.

Market news and outlook April 29th

Major data was released this morning on GDP. For the first Quarter GDP was down 6.1% and this is the 3rd consecutive quarter of negative GDP. Exports for Q1 were down 30%, the lowest since 1969, while Imports were down 34%. Consumer Spending increased 2.2%. Inventories declined 2.7%. Home Investments showed a 38% decline and Business Investment in Structures was down 44.2%.

In Pre-market the news seems to be shrugged off, as Futures are still positive with the Dow up 71. Watch the market carefully today, as we may have the breakout many of us have expected. I happen to think it has a higher probability of dropping than going up, but I am right only about 67% of the time. To me the news is very bad and I don't see why the market is still up. It was significantly less than the -4% GDP expected.

I asked myself if I have changed my spending patterns recently since the scary market decline and I would have to admit only slightly. I still go out to local restaurants, but since I don't need any new equipment or appliances, I am not really spending much.

The Swine Flu seems to be growing at a relatively slow pace, which is good. The first U.S. death was reported in Texas today of a 23 month old toddler. Hopefully this scare will dissipate and the concern lessoned. We don't need this crisis on top of all the crisis we still face. The large Banks are still very much in trouble and the release of the Stress Tests on the top 19 Banks will be announced on Monday. So the market seems to be waiting, apparently frozen at current levels. Today is also President Obama's 100th day in office and the general tone from that should be good with him garnishing a 69% approval rating.

BANK OF AMERICA HOLDS THEIR SHAREHOLDERS MEETING TODAY AND THE VOTE TO KEEP THE CEO KEN LEWIS WILL MAKE NEWS EITHER WAY. Many expect him to be outed by angry shareholders. Quite honestly if he is outed as CEO it is difficult to predict the market's reaction on Citi stock but I have bet that Banks share prices will drop going forward so we shall see what this meeting does today, to that end.

I remain pessimistic regarding a market advance. I believe this rally has been a Bear Market Rally and not the beginning of a new Bull Market. There is an emerging Commercial Real Estate crisis added to the home foreclosure problem still front and center, with each additional layoff contributing to more foreclosures in the system. Next week April Unemployment numbers will be released which will heighten the concern. Layoffs are still in the mind of Executive decision makers in many if not all businesses. This is not a good sign. Preserve Capital until the picture of the future shows more promise.

Don't forget to vote in the Mini Poll on how long the recession will last on the right margin. Vote only once per month. data will be summarized next week.

Market review of today's activity.

We did manage to go back above 7,800 on the Dow today, closing at 7,837 while the S&P 500 closed at 825. The VIX Index closed at 38.85 and the Put to Call ratio closed at 0.86. If we can make it through tomorrow above the 7,800 level it would be good as we have a 3 day weekend. Markets are closed al day Friday.

So here we are holding again and extending the time at this level. What does it mean? To me it means many don't want the market to go lower and the shorts are afraid it can go up quickly so they also are cautious. So we have a standoff right now and a tight range at the bottom of the 7,800 to 9,300 range or at the top of the 6,400 to 7,800 level depending on which way you think we are headed.

Unemployment makes this a horrible recession but the leading story in our local San Francisco paper this morning was all the homes the Banks are just keeping that have been foreclosed, rather than putting them on the market and selling them. Obviously they are hoping for better days ahead or they would be selling them. Many take this as a bad sign about the problem with the Banks. I take this as a good sign that the banks actually can see some recovery going forward. You choose what you want to believe. The more disturbing news today was brought to me by a neighbor who told me that many loans for properties are not going through approval. He quoted me that out of about 40 mortgages applications, only one is getting through and approved. He should know as he is in the business. Let's hope this frees up soon.

Paul Krugman warns us. Is anybody listening in Congress?

An article appeared today written by Paul Krugman of the NY Times and recent Nobel Laureate. I have taken the liberty to select portions of his piece and copy them below. It is must reading.

Krugman: Staving off a depression

By Paul Krugman

"If we don't act swiftly and boldly," declared President-elect Barack Obama in his latest weekly address, "we could see a much deeper economic downturn that could lead to double-digit unemployment." If you ask me, he was understating the case.

... Banks aren't lending; businesses and consumers aren't spending. Let's not mince words: This looks an awful lot like the beginning of a second Great Depression.

...It turns out, however, that preventing depressions isn't that easy after all.

The failure of monetary policy in the current crisis shows that Keynes had it right the first time. And Keynesian thinking lies behind Obama's plans to rescue the economy. But these plans may turn out to be a hard sell.

News reports say that Democrats hope to pass an economic plan with broad bipartisan support. Good luck with that.

In reality, the political posturing has already started, with Republican leaders setting up roadblocks to stimulus legislation while posing as the champions of careful congressional deliberation — which is pretty rich considering their party's behavior over the past eight years.

Here's my nightmare scenario: It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it's only enough to slow the descent, not stop it. Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy — well, you can see where this is going.

So this is our moment of truth. Will we in fact do what's necessary to prevent Great Depression II?

If you want the entire article from the San Jose California Mercury News, click here.

Use it or Lose it says President-Elect Obama. Why didn't Paulson say the same to bailed out Banks?!

In his Saturday radio address, President-Elect Obama says he is planning to give the States money as a stimulus to boost jobs and the economy, but he said, the money will have strings attached that they must use it for the specific purposes or they will lose those funds.The question I have for Hank Paulson, Treasury Secretary, was why he didn't have similar strings attached to the Banks, when he bailed them out with the TARP money approved by Congress? He should have required a certain percentage of the funds be used for loans for cars, mortgages, student loans and small business ventures. But not only didn't he require it, but neither did the Congress!

When are thse folks going to wake up. I swear they are asleep at the switch and this feels like the blind leading the blind.

Should you start buying stock now?

That seems to be on everyone's mind. Durable Goods orders were bad this morning but this indicator tells you what happened last month as does the unemployment numbers. But to determine if this is the time to get back into the market one has to ask 2 questions. First, can you afford to buy stock given your individual financial condition? I can't answer that for anyone but myself. The second question is this. What has the U.S. Government been doing with their money? Well from what I see they are throwing as much money as they can print into solving this problem. And they are "investing" significant amounts of money into the financial sector and most likely will bail out the auto industry as well. So if the government thinks banks and auto companies are a good investment at this time, why don't you?

I think it is a very good time to be buying back into the market selectively. I have been suggesting to my readers to buy Ultra ETF funds, as a way of getting in. I was asked by a reader if I sold my SSO yesterday and the answer is No. Even though pre-market looks like a down day, I am semi confident we will finish the day positively. I will either sell it near the close, hold it till Friday or Monday and see what transpires. I could take the profit and most others should have, but I tend to be patient and wait till I know more clearly the market's direction. Besides SSO is down from the closing price yesterday, BUT it is up from pre-market price, even though the market is down at the open.

I ventured into Ford Motor company at $1.49 on Friday and Monday and may buy more going forward. I like the way the chart looks these past 4 days. It hit $1.80 in pre market so we will see where it ends today. Good luck and Happy Thanksgiving.

Want to really have a positive impact on your Country? Deposit cash into your bank and buy stock Nov. 5th, Unity Day!

Many are hoping for change in this election. Obama represents that change for the majority of Americans. It has been a campaign based on a message of Hope. The youth vote is solidly behind Obama and are turning out in historical proportions to vote this year. Whether they actually do vote is still in question. But we will have the answer in just 9 short days. You are sitting there now, reading this and hoping that no matter who wins, the country is in trouble and things don't look good and they look like things are going to get mush worse. So the question is, what can you do as a citizen to help your new duly elected government have some breathing room to put together strategies for turning this country around?

There are several things you can do on Nov. 5th. First, and probably the most important, you can return money you have withdrawn from your bank and put under your mattress, back as a deposit in your Bank. Bank accounts are insured now up to $250,000. When you took cash out of your bank, you were afraid it wasn't going to be there when you needed it. Much has changed since that moment, not in a bad way, but in a positive way to ease credit crisis and unclog the financial system.

But you can now help on Nov. 5th by returning some cash to your Bank. Banks use the money to be able to lend to those who are trying to grow their business, and help those needing some short-term assistance with credit. Local Community Banks are even better places to deposit your money, as they make loans and free up credit in your local community. Larger Banks like Regional or National Banks, can lend your money all over the country and the world. So, when you deposit your cash in a local community bank, you are helping local restaurants, auto dealers, small businesses and your neighbors. If we could start a National effort to show confidence and trust in our financial institutions, by making these deposits on Nov. 5th., it would send a signal to the country, it's a new day!

Another, more visible, thing you can do on Nov. 5th, is to buy stock in the stock market. If the stock market could really rally on record volume Nov. 5th, it might help give everyone more confidence in the new Administration. I'm not asking you to jump in with all your cash, but, to be willing to invest in some good companies for the long haul that happen to be very cheap right now. If the stock market turns up, many will be affected positively and it will show the new President elect we are behind him as a country. Think about this seriously as most of the time our fellow citizens don't really feel like they make a difference. Here's your chance to be a part of something larger than yourself. The alternative is continued crisis, stress, short tempers and fear the dominant emotion. I think it's a no brainer and that's why I am proposing it.

I promise you I will take both of these actions with or without you but there is power in greater numbers. I will make a deposit of cash in my local bank account and I will buy stock all on Nov. 5th, Unity Day! If you believe in the spirit of this message have people visit here and read this for themselves at http://cdiamico.blogspot.com/

Collective mindset (herd mentality) and the implications for the economy worldwide

I have been working as an Executive Coach for 35 years and for the past 22 years I have focused on the importance of our mindset in creating the results we want in our lives. For the first 10 years I focused on changing behaviors as a way to create a result, and while it worked short term, it didn't have staying power and was quite labor intensive. Then I learned the power of "mindset", or the power of ones mind.

Today we are facing a collective mindset which has a proclivity towards seeing doom and gloom in our future and is driving us towards that very future. In the 2004 election it was fear that drove our decisions because of the fear promoted by the Bush/Cheney Administration to scare us into voting for another 4 year term for them, as they were the only ones protecting us from another attack. As sheep, many voted their fear and we got another 4 years under their leadership.

We now face the fear of a financial institution collapse and subsequent economic meltdown. This has precipitated runs on banks to withdraw cash, major drops in the stock markets and credit availability nearly at zero probability of getting any.

The collective mindset of fear is at work. How will we collectively get out of this spiral mess and what can you do? And what got us into this mess in the first place? Greed got us here and it is the flip side of the coin of fear. In part that is the answer to get us out of this at an unconscious level. The place where to look for a reversal will be in the stock markets. As stock markets go down precipitously, there is a point where some decide there is a chance to really make some money and they jump in in the final stages of the drop in stock prices, often called "Capitulation". Our stock markets have gone down almost 20%. They are ripe to drop more but there will be a bottom where the first courageous ones jump in and take a risk and buy stock. If the drop is severe enough, there will be a rebound. As the rebound is reported in the media, it should get those who have moved from fear to greed to start buying with a vengeance. The same process happened in the markets after 9/11.

It takes a lot of self confidence and control of ones emotions, to manage to do this as an individual. It is easier to be caught in the actions of a crowd and to go along with the crowd. Most individuals don't believe they really make a difference if they take an action. But the truth is that every individual does make a difference. So the way out of this is NOT to panic, not to wonder what everyone else is doing and follow along. It is best to decide what is right for yourself, being mindful whether you are following a crowd or assessing the situation for yourself.

Here's an example to test yourself. Think back when you made your last purchase in the stock market. Did you make that purchase on a day when the stock you were purchasing was going up or going down? Think about 9/11 and ask yourself did you sell at the first chance you had when the markets were closed for a week or did you buy? Most people Buy when a stock is going up quickly and they sell when a stock is dropping quickly. A select few sell when everyone is buying and buy when everyone is selling. This was the case most recently with Warren Buffet, America's finest financial Guru, when he invested in Goldman Sachs and GE.

We have a chance to influence the future we want. Barack knows that when he says "the change we need comes from the bottom, not the top" or "you are the change you have been waiting for". How can you help immediately. First, decide that the Banking industry is now under control. If you have cash you have withdrawn from your banks, return it to the bank. If we all have faith and we believe our deposits are insured now up to $250,000 from the $100,000 limit in place before the Rescue Plan, then we can help the government help the banks start to lend money again by returning our cash. We can continue to frequent our local restaurants so they don't go out of business and we can plan for a wonderful Christmas. Remember it is the Consumer who controls 2/3rd's of the economy, while the other 1/3rd is controlled by Corporate buying.

Let's ensure that our collective mindset is focused on seeing the future we want, not the future we have inherited. You have the power, as do I. Let's use it collectively for the good of all.