Deflation vs. Inflation

* “The number of workers on jobless on jobless rolls is declining is an encouraging sign for the U.S. Economy, although the decrease partly reflects people exhausting their state benefits “ Some economists say this is consistent with what happens near an end of a recession. The FEDS say new claims, when smoothed out over four week averages, are actually declining. With this, there’s no doubt we’ll hit double digits, over 10% in unemployment later this year, which doubles to over 20% when those that are unemployable, still cannot find jobs, and are caught in declining industries, the homeless….you name it. Each % of unemployment the American people pay for.

*Bernanke is not planning to turn the spigot off at the Central Bank, that interest rates would stay low. So following this World Bank Chief Economist Just Lin says that a “surge in excess capacity world wide could lead to a global “deflationary downward spiral”.

Japan is forecasting two years of price declines, which showed us how to mess up back in the 1990’s when they had a blowup in the banking sector and a collapse in the real estate market.

I see deflation, not inflation, as the enemy. Unless the economic engine in the U.S., and now over the world, can get cranking, with money being spent, deflation could keep occurring.

Learn More About Less

Trader MP recently sent me a portion of an article. First, I've added my Floydian thinking, and secondly taught a bit about the 50 stock position level we work from

"The hot sectors for this decade (and probably the next) are oil, oil services, metals, China, Latin America and commodities.
These are the sectors sucking in and spitting out the big cash. Fortunes are being made in these sectors on both the long and short side." Floyd: I can believe "hot sectors" for the next month, but cannot predict in any way longer term what a "hot sector is"
So instead of playing all 46 sectors, I've narrowed down my focus to just five equity sectors plus commodities. In each of these sectors, I've become extremely familiar with the trading patterns of the winners and losers in each group.
Now That You're Focused, it's Time to NARROW That Focus
Floyd: This is straight out of Richard D. Wyckoff, the famed trader of the 1920's that my Dad trained under.These were times for no ETF's or mutual funds, but the theory is the same:
"Become an expert at NO more than a total of 50 stocks, and never hold more than a few positions. Do NOT study other stocks, do not read about them, do not care about them. Chart, study, and learn from a "position sheet" you create of the 50 stocks you are going to study, and become an expert in this.As an example, I have bought and sold Apple (AAPL) since it went public, have traded options and the stock itself, and would anticipate I have traded this position alone over 500 times during that time period. I KNOW Apple, and I am an expert by years of studying just this, and my other core position stocks".
To narrow my focus even further, I chose just one ETF from each group and have become an expert in how each representative ETF trades. Within my five favorite ETFs in the equity sector, I've further narrowed my focus to two to three stocks in each group. So from a global list of 12,000 stocks, I have now gone down to a very manageable list of five ETFs and 10 to 15 of their component stocks.
The moves in these stocks and ETFs are amazing. I mean, it's really incredible -- just in the China sector alone, we've seen 100% moves in some of the ETFs!
So, it pays to specialize -- in fact, it pays very well. Because just as quickly as the markets take them up, they tear them down.
When you start specializing by sector, you gain massive clarity and focus. This clarity provides tremendous confidence as you catch these securities on the way up and short them on the way down.
So, my message this week is to narrow your focus. Get clear about where you want to "spend" your mental focus and energy. Refine your approach to just a few sectors and a few big, liquid, volatile stocks in each of those sectors and begin to get a feel for how they trade. Do the same for the ETFs that cover those sectors as well.
Start to simplify your investment and trading choices.
Floyd: He's very right here and Premium Subscribers to our www.bluechiptoptions.com service receive the core of the Wyckoff study that is the core of how I trade stocks and options, "without noise", and always being an expert in the same subjects.
Quoted from: Teeka Tiwari
http://tycoonreport.tycoonresearch.com/articles/778021757/easy-ways-to-boost-your-profits-part

How the Economy IS US: The story of Bill and Lenore

Bill and Lenore are in their early 60's and own a small tanning salon. They have been in business for 7 years, and have invested all of their money in this business. For the first five years they made money, both working the salon 7 days a week, and paying their bills on time.They were unable to gain a credit line, outside of use of a Bank of America credit card, and a second mortgage they took on their Florida home.In the past two years the home they owned, not above their means, has plummeted in value by 40%. The second mortgage they took was a complicated ARM based second mortgage that increases despite prime rate, and effectively was sold to them by an astute and slimey mortgage broker as a short term way to borrow money at a low rate to expand the business.
We know the story. The home is now "underwater" in value, the second mortgage has ballooned in payment, and their tanning business is off by 40% over the past 8 months, as discretionary spending has been cut.
Bank of America they now owe their full line of credit to, 35,000, at 13.99 to 22.%. You can figure when they will get out of this debt.They called Bank of America and were able to negotiate a 8.5% rate, and a locked in payment that they would guarantee , but of course this payment is higher than they can afford.
Their business, in today's environment, cannot be sold. The large mall they are in will not negotiate lower rents with any tenants, forcing evictions in lieu of setting precedent, and Bill and Lenore now have 20,000 to their name. They just cashed out their IRA's to create this $20,000.
Where does this couple go in America? They have no insurance.They have no money, no home to sell, no business to sell, and few skills they can market well in their 60's.
Fiscal conservatives will tell us this is Bill and Lenore's fault: No due diligence done on second mortgage. Allowed credit card to hit limits, should have stopped spending. Should find other jobs to supplement their diminishing business.On and on.
Here's how I see it.
1. The second mortage game had no end rules, so every "stupid" person in the world could fall for it, and they did. 2. As a small business they played the credit card game to stay afloat. It's common practice to how businesses run when they are unable to qualify for loans. 3. We as a country have a responsibility to ourselves to love ourselves. 4. There is no free lunch, but there are handouts. There always have been.
Lack of regulations have now allowed banks to choose to double rates, change fees, and "force" "delinquency" write offs.
As the economy hits 10% plus unemployment, which is truly 20%, and savings go up (FEAR) we now have half the nation questioning "it's not working" to the Obama plan that has been in play less than 6 months.
Big goverment is always ineffective. Small government, that of the Republican "speak" but never do, always rewards the rich, and destroys the middle class. 540 people, the Senate and Congress, control our destiny.
Bill and Lenore-I'll bet they have liquidated their store, vacated their lease on the run, not paid the creditor, and soon will be foreclosed on their home as all income will stop.
What will happen then? And, what is our responsibility as a people?

Silly People fighting over Silly Things

There are obviously enough idiots in the world to create the mess we are in. Often people "fight" or "argue" over the obviously stupid. Here's an example: http://www.ledger-enquirer.com/news/story/778482.html
I would rather have Obama, not born in the U.S., as President than Shooter Cheney.Does anyone in their right mind think this type of effort will actually get the President of the U.S. "voted out", because he was not "born in the U.S.A?"Constitutionalists like this follow the "rules", but miss the obvious. True time in our news reporting, our legal system, and even our "thinking" is wasted when we hear "Obama cannot be President because he was not born here".This logic would thusly preclude: "no president shall send us to war unless he/she has fought in a war?", which sounds logical. Logic is often illogical, just as in the stock market. For example, how about "noone can be President unless they have worked a "real job" outside of govt for three years and not been fired".Yawn. We waste our mental resources on the impossible.

America is NOT a superpower. We just want to be

The following article from famed author Deepak Chopra helps us all understand the changes in our country.

DEEPAK CHOPRA: Can We Stop Being a Superpower, Please?

As you read this article, remember that during the 8 years of Emperor Bush and Shooter Cheney we worked very hard to alienate as many countries as we could,and to be become the symbol of the "fat and rich".

Much of what we are doing now as a country is rebuilding our relationship with the world, and as we are now a Global Economy, it is imperative we learn to "partner and negotiate".

Just an opinion here, but if you know me, I'm filled with them.

The Changes in Journalism

We all know: newspapers are dead. Soon, our news will be in snippets, off Twitter, Huffington Post, online "baby versions" of newspapers, and web/media sources of small videos or miniscule articles about something. Conservatives believe that newspapers already lie and skew the news. Liberals believe the news never carries complete facts.
And, the average American can read to the 8th grade level, why the USA Today was first marketed from TV look like "news stands", complete with color pictures, and simple articles.
The death of journalism as we know it will and can be good and bad. Snippets we read will have incomplete information, and if we as people are not smart enough to ferret through the facts, who the author is, and what they are really saying (not just the snippet) we'll know only what we have read.
Someone must pay for there to be journalism. Ads pay. Online ads will pay less, so the paid journalists will become fewer than those "bloggers" attempting to sell their books, or become known.
The genre will shift.
For the trader it means several things:False facts will proliferateInformation overload, often incorrect, will "trigger the market"Only the truly educated trader/citizen will be able to see "past" what is "presented" to them.The solution is READING. Study points of view written by educated men and women that show a true reflection of society.
Recommended Readings: Bloomberg News, Harpers Magazine, The Atlantic, Rolling Stone (don't laugh, cutting edge politics), The Nation, articles by Roubini and Krugman, true economists studying the effects of the market, not guys working at "firms" trying to get press for themselves.
There is no such thing as free news. We must know this, and we must "smartly" anticipate the incomplete information we are reading, about the market, and about our world.

Identifying False Facts

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHcr2O3tkOCo
The obvious will show that "things are improving".The market may take this as "the real estate market is gaining ground". Oops. One in every two homes being sold in the U.S. is sold out of foreclosure.Skews those "happy facts" a bit, doesn't it.
The Floydian Lesson: Read information, but do not believe interpretation.