Special: Fighting Fraud Starts With Skepticism Of Statistics Like GDP

Stocks sold off slightly on Thursday, but, over the past few days and weeks, the real money has been moving in bonds, which - in the case of the US and Germany, at least - are sporting yields at or near multi-year highs.

The cause is mostly FUD, the arcane acronym invented on the internet standing for Fear, Uncertainty, Doubt. When bond traders get riffed, the world should take note, but, since we are preconditioned to focus our collective attention on stocks, most people don't realize where money is moving and why until it's too late. Interest rates rise, money tightens and flows into bonds because they are considered more stable and safer than stocks. Businesses and consumers face higher lending costs, the economy stalls, stocks decline. The process takes many months, often years, before the eventual recession occurs. Fortunes are made and lost, mostly made by savvy bond specialists and lost by individuals and stock investors.

It's a royal screw job on the middle and upper-middle class (or what's left of it) by monetary authorities and governments that have been skimming off the top through inflation, deflation, fractional reserve banking, taxes, fees, and penalties. If you feel like you've been screwed by either banks or the government (village, city, county, state, or federal), it's because you have been... often overtly, but more often, quietly, covertly, under the cover of "we're doing what's best for you," or increased spending, deficit spending, capital "improvements" or budget windfalls to schools, tunnels, roads, bridges, fire departments, special tax districts, et cetera ad nauseum.

It's why people are voting for Trump. No kidding. American voting-age citizens fall today grossly into two broad categories: 1) Working people or retired on fixed income, getting nowhere fast, watching their incomes stagnate since 1999, paying more for everything from health care to property taxes to cell phone or internet service to utilities; 2) Welfare, SSI disability or other entitlement recipients, government employees who care not a whit that everything is going to hell in a handbasket because they either a) get a rent subsidy, food stamps, and other goodies no matter what, for doing nothing, or, b) are a government employee getting an automatic annual raise regardless of their job performance or the economic condition of the country.

In between or outside these two mega-groups are the upper-upper crust of one-percenters who make their money off interest on investments and the swath of social security and pension retirees who have maxed out on the system. That large last group vectors in and out of the working class spectrum to a large degree and some are being largely disenfranchised in the same ways that the middle class has been, especially since 2001, when interest rates began tanking and savings no longer provided a great enough return to outpace inflation.

Older folks will remember better days, when banks paid 5% interest on savings. Forget that. It's gone. Just like the social security fund, which faces default and bankruptcy within 15 years, our best days are behind us. Baby boomers will be the last generation to get ahold of the golden ring of social security. Generations X and Y will get less and millennials will likely get little to nothing. The system broke in the 80s, under Ronald Reagan (sorry, conservatives, but that's the truth), and it's just gotten worse as banking regulations were eased (Clinton and congress conspired to eviscerate Glass-Steagall leading to the global collapse) and every president since Carter has stolen from the social security fund to pay general obligations.

What's multiple times worse is that not only has the federal government stolen from the future, but they've managed to run up enormous deficits nearly every year and add to the debt at an exponential rate.

Here at Money Daily we don't expect everyone to understand economics, but we do strive to encourage people to exercise a little common sense and have basic math skills. Since what the government does with money (spend more than they take in), it doesn't take a Ph.D. in anything to discern that if you did the same, your financial condition would deteriorate, slowly at first, then all at once, sending you and yours to the poor house.

So, the government does better? How do they perform this magic? Lies and deception, mostly, through the issuance of bonds, sold to the Fed, parceled out to primary dealers and sold again to investors of all stripes. The Fed then prints more money, which is spent throughout the economy. Banks used to multiply the money supply via fractional reserve lending but they don't do much of that anymore. They use accounting tricks, balance sheets nobody can comprehend and investments form the ordinary to the arcane (CDOs, for instance) rather than functioning under some form of fiscal discipline. It's all too easy for the government and the banking system to defraud everyone. They've been doing it for centuries. It gets reset from time to time, but the same powers that were become the powers that be. It's history, if you know where to find it.

So, to the point: Just moments ago, the Deptartment of Commerce reported its first estimate of third quarter GDP, coming in at a robust 2.9%, more than double the second quarter's stumbling 1.4%, all smoke and mirrors designed to elect Hillary Clinton as president, keep the status quo firmly entrenched, and continue your existence as a docile, dumb serf. When the numbers are revised in a month, and again another month later, and again in two years, the number will be much lower, but, by that time the elections will be long over, the winners will be still partying, and you will be getting screwed, again, and again, and again.

Just wait until October's job numbers come out next Friday, the final, big lie prior to the elections. It should be awesome, but it will still be a lie.

If you aren't gardening, putting up solar panels, repairing an old car rather than buying a new one, scrimping and saving, buying gold and silver now, worry not, you soon will be.

Thursday's Tumble
Dow Jones Industrial Average
18,169.68, -29.65 (-0.16%)

NASDAQ Composite
5,215.97, -34.29 (-0.65%)

S&P 500
2,133.04, -6.39 (-0.30%)

NYSE COMPOSITE (DJ)
10,503.06, -25.13 (-0.24%)

In Run-Up To Election, Markets Remain Shaky

As outlined in yesterday's post, US stock indices have been down since the beginning of August, presaging to the positive for the challenger party in the presidential election race.

While the outcome of a Trump victory is far from certain, what is clear is that traders and speculators are taking note of the fragile condition of the US and global economies, both of which have been side-stepping into the future since the crash of 2008-09.

Markets function largely on faith and hope, despair and confusion, greed and fear, and there seems to be ample supplies of all emotions all around. Puzzling analysts is how exactly a Clinton presidency would benefit markets, if only to keep the controlling interests in charge for another four years.

That may not be the best of circumstances, as Mr. Trump points out, because the global condition is quite completely on edge politically and likely over the edge financially. Nation-states are overburdened in debt, which has found its way back to the minions, a cause for unrest and potentially explosive social events.

With all that in the marco view, US companies, in the midst of third quarter earnings season, are, as has been the case for the past three years, struggling to find profits and any reason to be upbeat for the remainder of 2016 and into 2017.

There seems to be a dull thud re-occurring in the offices of CFOs and CEOs, that being the repeating sound of falling EPS and missed revenue figures, a double whammy for investors, though not many have fled the market as of this writing.

Thursday represents perhaps the biggest day of earnings season. Alphabet (GOOG), Amazon.com (AMZN), LinkedIn (LNKD) and Baidu (BIDU) are among companies set to report after the bell. Colgate-Palmolive (CL), Bristol-Meyers Squibb (BMY), Ford (F) and UPS (UPS) all report prior to the opening bell.

These results and some economic data (durable goods, pending home sales) will shape the day's trading. With just two days left in October, there's a slim chance that markets could rally back to positive for the past three months, which would be a good omen for the Hillary camp, but it is unlikely to happen unless some major news breaks that would spur a buying panic. It's happened before, but expect more oddities prior to election day next week.

Wednesday's Final Score:
Dow Jones Industrial Average
18,199.33, +30.06 (0.17%)

NASDAQ
5,250.27, -33.13 (-0.63%)

S&P 500
2,139.43, -3.73 (-0.17%)

NYSE Composite
10,528.19, -22.00 (-0.21%)

Stocks Predict The Next President Should Be Trump

Wall Street people pride themselves largely upon their particular abilities, especially those who use other people's money (OPM) to wager, gamble, or speculate on investments.

They brag, they boast, some of them actually tell the truth from time to time about their overall performance in the markets, whether their specialty be in stocks, bonds, commodities, or currencies.

Claims by some that they have peculiar, timely, or otherwise savvy insights into the future - akin to soothsayers, fortune tellers and gypsy tarot card readers - are, as time goes by, either validated or proven worthless. A spotty track record is by no means a cause for shame or contrition. Rather, these various prognosticators continue to spew pablum, intending to coerce a generally ill-informed public that their positions are the ones that matter.

As the time until the general election dwindles to under two weeks, one thing the Wall Street elite have not - by and large - weighed in upon is the result of the presidential sweepstakes. That's probably for good reason. Like 95% of the general public, they aren't convinced of an outcome either in favor of Mr. Trump or Mrs. Clinton, but, few have expressed their sentiments on what will happen after either is elected.

While there are those who say that the stock market will take a hit if Donald Trump is the next president, few, if any, figure that a Clinton win would be bad for investors. Oddly enough, almost nobody is saying the stock market will roar whichever candidate wins.

That's a perspective that is based largely on stock market returns and historical fact. According to this CNN story, since 1944, the direction of the stock market between August 1 and October 31 has correctly predicted the outcome of the election a stunning 82% of the time.

The metric is startlingly simple. If the market is up during the three months prior to the election, the incumbent party wins. If the market is down, the challenger is swept into office.

As of this writing, that measure favors Donald J. Trump, the challenger, but only slightly. On July 29, the final trading day prior to August 1, the S&P 500 stood at 2,173.60. It closed on Tuesday at 2143.16, about 1 1/2 percent off during the span.

There are three trading days left in the predicted period. It's possible that a strong rally could lift the averages back above the August 1 level, though it is beginning to appear more gloomy for Mrs. Clinton, the more the media bashes Trump and ignores the continuous, outrageous, potentially criminal behavior of the former First Lady and Secretary of State.

With the markets set to open in about a half hour, futures are lower. If this trend continues, get ready for a Trump presidency and the ascendancy of a moralistic, populist, business-first new regime in Washington.

Change at the top and across the political spectrum would likely be a boon to the majority of working Americans. After all, they're the ones that really matter, right?

Tuesday Trauma:
Dow Jones Industrial Average
18,169.27, -53.76 (-0.30%)

NASDAQ
5,283.40, -26.43 (-0.50%)

S&P 500
2,143.16, -8.17 (-0.38%)

NYSE Composite
10,550.19, -41.12 (-0.39%)

Why Bother With This Yo-Yo Market?

Since Money Daily is still on the camping-off-the-grid-who-cares schedule, some readers (all three of you) might be wondering why.

The answer is simple. Just like the US electoral process, the stock market is rigged. It's been rigged since 2008 at least, when the wheels actually did fall off, but the central bank consortium, in association with various elected and unelected governments worldwide, managed to pull wool over the public's eyes (after a good and righteous fleecing of course) and get the global economy chugging along again.

One problem, however, remained, and remains until this very day.

The wheels fell off.

When stocks crashed in 2008 and banks were about to become entities controlled by conservators or administrators in receivership, the Federal Reserve swooped in and rescued them. All of them. Even banks and institutions in Europe. All except for Lehman Brothers, which was quickly bankrupted and sold piecemeal to entities such as Barclay's and Nomura. Other banks sucked up such failed entities as Countrywide, Merrill Lynch, and Indymac. Had they not, the bankruptcies would have proceeded as normal.

Instead of the orderly process of bankruptcy and the wholesale disposition of assets, the Fed and the banks (again, with help from the government, i.e., taxpayer money) bailed out the system, which is why it's still broken. There are pieces of failure floating all around the financial universe though rarely is a word spoken of them.

For just one instance, consider the fates of Fannie Mae and Freddie Mac, the two quasi-government mortgage institutions that are still under government receivership. Congress has been and continues to be unwilling to unwind these GSAs because all the bad would come out of them. The Fed is sitting on bad mortgages from a decade ago, the US housing market in many areas is in a shambles and interest rates have nowhere to go but down.

The Fed, the ECB and the bank of Japan - among others - have circled the wagons and there's no way out... for anybody. Prosperity is a word reserved for history books. Job growth is non-existent, wage growth is stagnant, GDP is a made up number that barely suffices to cover the ultimate fraud of excessive government and central bank intervention.

In case anyone wonders why stocks haven't budged since breaking out to new highs in July (a direct result of Brexit and resulting manipulation to hide the sins) it's precisely because there is no real market. There is no price discovery because that's been blown apart by the Fed. There's only guessing and manipulation.

What used to be the most robust and dynamic markets in the world have been reduced to pixie dust and unicorns. None of it is real. From the dollar bills we use for currency to the massive treasury bond auctions that fund the continued fantasy of a working financial system, it's all fake. Every price is contrived; there is no such thing as fundamental financial analysis.

There is only the Fed, the EU and the BOJ. And they're all phonies.

God, when will it all end?

Stocks Pop, Stop, Drop Friday; Week Ends With Losses Across The Board

With the political world in a complete media-induced frenzy, Wall Street took matters in stride eventually giving up ground for the week despite a naked attempt at a rally Friday.

The Dow was up more than 150 points early on Friday morning, but euphoria turned to skepticism as the session wore on, with all the indices slipping back toward what ended up being marginal gains.

Despite the weak action, there was the usual last-half-hour bid, which boosted the the Dow, for a while, to something of a more respectable level. The action was likely a function of short-covering, considering that there may still be short players in the mix, despite eight years of continuous gains without so much as a 15% correction. Such is the level of fraud involved in indices and trading after a full century of Fed interventions, trickery, thievery and mostly, inflation.

Still, at the end of the day, all the averages closed near the low points of their respective sessions, an ominous sign when one considers that the status quo seems to have everything under control in the political, social, and financial arenas, if, what one means by "under control" is $20 trillion of non-payable debt.

Investing used to be fun. Nowadays, it's just painful, whether one is merely watching or participating.

The NASDAQ took the biggest spill of the week, down nearly 1 1/2 percent. Oddly enough, the NASDAQ and S&P both ended the day higher, but each by less than one point. Weird.

Friday's Fumble:
Dow Jones Industrial Average
18,138.38, +39.44 (0.22%)

NASDAQ
5,214.16, +0.83 (0.02%)

S&P 500
2,132.98, +0.43 (0.02%)

NYSE Composite
10,533.83, +8.90 (0.08%)

For the week ended 10/14/16:
Dow: -102.11 (-0.56%)
S&P 500: -20.76 (-0.96%)
NASDAQ: -78.24 (-1.48%)
NYSE Composite: -91.36 (-0.86%)