Markets Still Up. T Shirts and Bailouts. Cash for Appliances. Update April 20, 2010

Marc's Notes:

The Dow continues its ascent and looks to possibly assault 11,500 with a possible target of 11,750. Will it? Who knows! Fundamentals sure don’t support it, yet the markets can stay illogical longer then one can stay liquid, so never “fight the Fed”.  We will take any UPS in stocks we can and for as long as we can.

Bailouts continue with 300 million allocated for Cash for Appliances. This program is a lot like cash for clunkers where the Federal Government pays you to go to Best Buy or Sears. Combine this with all the other bailouts and stimulus money and its no wonder Wall Street thinks its getting better.
Look, the bottom line is this. Your “recovery” is like any other “recovery’ of any other banana republic that just prints (therefore borrows) the money to foster it. The fact remains that consumers are not spending so the government is. If that makes for a good “recovery”, then there would never have been nor never be any recessions, as when they occur, a government could just print its way out of the problem.
But government spending does NOT make a recovery because the government has to BORROW every dollar it spends. Its like a no good brother-in-law trying to improve his credit card debt problems by using another card to make the first cards payment. Sure, he appears ok for a little while longer, but the problem has NOT BEEN SOLVED.

So for now, we see more demand for goods, driven only by government spending, and much like cash for clunkers did, and the housing credit did, now even MORE Americans have taken on MORE debt to the banks, and now even more people will go into bankruptcy in the future, unable to pay the debt off.  And programs like these only pull forward future demand, so the actual future demand will be lacking and sales will slump even worse when the programs run out. Much like when the stimulus money runs out, the nation will again spiral downward in deflation and an economic slump.

And one other thing, the people who utilize these credits and stand in line for a $200.00 rebate usually are the modest or low income folk who SHOULD’NT be buying ANYTHING. They NEED the rebates because they are LOW INCOME.
Get it? Low income folk shouldn’t be BUYING NEW APPLIANCES or NEW CARS or HOUSES. My, my, the stupidity.

Look for more bankruptcies, more defaults, which in turn will bring more bank problems, which will bleed over to more pension problems, more investor problems, and MORE BAILOUTS. This is going to end badly. Trust me on this one.

Meanwhile Greece got its bailout last week, yet now investors smell a rat and interest on Greek bonds are rising again. There is the thought that “it won’t be enough”.
Sound familiar?

Expect Portugal, Spain, Italy, Ireland and others to step forward for their bailouts soon. My guess is the next bailout won’t be so easy to obtain. Remember, the other nations that are in the Euro family have to pay THEIR money to bailout the others. No one likes bailing out others so I suspect as more nations get into trouble, the Euro will falter and you may see either a “needy” nation like Greece or Spain kicked out, or a solid nation like Germany just opt out. By “opting” out, they no longer have to pay for another nations’ spending habits. We will wait and see but I expect something “wicked” this way comes.

Back on the farm, the U.S. farm that is, housing continues down. As goes the housing markets, so goes the nation. Another “announcement” will be forthcoming for another house bailout, as foreclosures are mounting. There are simply too many homes and no way to pay for them all. You will see home sales drop after this current “credit” expires in May. That drop in sales will show up in the JULY figures and beyond. Then a new mortgage program will arise. (Again!)

No improvement in unemployment. The only good news in all of this is the “skewed” news put out by Washington to get you into the market. But beware; insiders (company execs) are dumping stock by the truck loads while Mom and Pop are convinced to load up. Folks, this is a suckers rally and it will end badly. Many “technical” indicators suggest a correction is coming, probably in May or sooner. We wait.

The US Dollar is holding still but that is only due to the FEDS buying its own debt. Strange you say? Yes, it really is. Listen to show # 3 “Monetizing” to get a handle on how this is done. So far the world continues to lend us money, albeit at a slower rate.
Look for one more dollar rally then a slow erosion in its value is probable. We will load up on interest rate funds then. Right now we hold RRPIX per our previous letters and shows.

Gold and Silver are holding nicely and never did correct into the lower range possible of under $1,000.00/oz.  (Gold). It is possible a spike in the price of gold is coming but when the stock market turns down, so will the gold price, so stay clear of any new gold stock positions at this time. You should be holding UNWPX at around 14 and others I suggested during the last 4 years for nice profits. Continue to hold them.

Offshore money: I am again looking now into moving money into Australia into the PERTH MINT program which is holding gold in Australia, covered by the Australian Government and insured by Lloyds of London. This is for another “leg” of diversification. I will update you on my progress. Also EVERBANK is apparently coming out with another “Market Safe” CD. I will advise you as I see the details. This may be a no risk way to hedge against inflation, yet be insured by FDIC:  a nice combination.

T Shirts are now available on the website. They are COOL and we get lots of compliments. Check it out. They are low cost and way too snazzy! Go to T SHIRTS on the menu bar on the left or click on this link to view:

http://moneymanagementradio.com/Tshirts

No upcoming shows in April but on May 6th, I will cover HEALTH CARE.

I am almost finished with the January Pledge Drive consults. Hoorah!
I now have slots opening up in May for those wishing to meet with me. Email us. I will probably not be doing many in the summer so hurry if you wish to meet. The spots usually fill fast as I only do one or 2 a week or so.

All for now,
Marc