Financial topics

[Higgenbotham]

If the states do revolt against federal tax collections, as John has indicated they might, the "red" states will suffer as much or more than the blues.

The Soviet Union just sort of vanished and the individual states were on their own. If a similar thing happened in America, how the individual states would cope is an interesting question. If the USA falls apart then the US dollar vanishes, and we can assume the world financial system is in chaos.

I think Texas and Alaska have enough oil that they would be about the best off. The states that produce food are probably next best. After that things could be really really bad. States with big cities with lots of people supported by the Federal government (say Washington DC) would be devastated.

If you were thinking of moving anyway, this could be something to take into account. Or maybe even enough reason to move.

I did just that 5 years ago for some of the reasons you stated. I moved to Texas. As far as states go, in my mind it's still a tossup between Texas and North Dakota. North Dakota also has a lot of energy reserves and produces more food per capita than any other state, I believe. What about the nuclear missiles in North Dakota? I'd be interesting to see more ideas on this.

The Tax Foundation has or had a list of how much states pay into the government versus how much they get back. I distinctly remember seeing that California (at the time) received 71 cents back for every dollar paid in and that Alaska received far more than a dollar back for every dollar paid in.

[Higgenbotham]

I had a chart up on page 285 for awhile that showed a couple trendlines with a slope of 0.89 points per day, or half the slope of the downtrend line from the 2007 high to the 2009 low.

That chart apparently disappeared because tinypic became part of photobucket.

The S&P shot over the first uptrend line of slope 0.89 points per day and spent nearly all of August 2009 to January 2010 above it. After dropping below, it then overshot it by about 20 points in April.

After June 2010, the S&P was unable to get over the second trendline of slope 0.89 points per day until the formal QE announcement was made in November. The market then overshot the second trendline by perhaps 15 points before falling back below it. Today, near the end of the session, the S&P regained and closed back above this second trendline by 2 points for the first time since late June.

The end of the session would mark the length of the previous 2 521 calendar day runs, as it is 520 days and the weekend is here.

The market is at a very interesting juncture. From the standpoint of the 2 previous manic runs, it has run out of time. As mentioned earlier, call buying and other measures of sentiment are similar to how they appeared in April. As Vince stated, rising bond yields should be a headwind against this market. On the other hand, the Fed will be continuing QE2 and I believe QE1 stopped at the end of March 2010.

Besides these ideas, there are a lot of other interesting things about this market right at this juncture. I'll post more if it looks like any of it begins to materialize according to some of the potentials I see. I probably won't know anything more until near the end of next week. If this is to be the top of this market, it could get even more manic than it did in April.

[John]

That chart apparently disappeared because tinypic became part of photobucket.

If this is something you have to do regularly, I can provide
you with a directory on my web site with ftp access, if you'd like.

John

[Higgenbotham]

That chart apparently disappeared because tinypic became part of photobucket.

If this is something you have to do regularly, I can provide
you with a directory on my web site with ftp access, if you'd like.

John

Thanks John, posting charts isn't something I do regularly, but I'll e-mail you this one and maybe you can post it here.

Just a couple notes on the chart. The green uptrend lines would be the lines I mentioned with slopes of 0.89 points per day. The red dots that are connected by the red lines are the ~521 day runs. The run from March 2010 to August 2010 also happens to have a slope of 0.89 points per day, so the extension of that line is green.

There may be another small graph, a theoretical graph, I would like posted after next week if certain things happen.

[vincecate]

Ireland is delayed till Dec 15th.
http://pressreleasepoint.com/statement-imf-ireland

Congress has not yet acted to keep taxes from going up on Jan 1st. This is so close to the end of the year and this is still a big unknown.

The suspense alone could kill things.

[Higgenbotham]

http://seekingalpha.com/article/240846- ... ake-a-hike

In the current events thread, I mentioned that China will not be bailing anyone out unless Bernanke stops doing QE. Thinking more more about it, that won't work at this point because Bernanke has already proven that he can't be trusted and he continues to fib on national television. Earlier in the year, I had mentioned that Bernanke can't (shouldn't might be the better word) really print as much money as he wants to because of international political realities. This article explains some of this. It's my belief that when Bernanke announced QE2, he set an economic war into motion that is unavoidable. I read on Tuesday that the Chinese will almost certainly be raising rates this weekend. If I find that, I'll add it below. Not to say that will shatter Wall Street's delusions immediately but it might.

http://www.zerohedge.com/article/rydex- ... m-collapse

Nasdaq sentiment at multi year highs and back near tech bubble levels.

http://www.zerohedge.com/article/arms-t ... ation-1956

Arms Index (TRIN) at most extreme bullish sentiment levels since 1956.

[John]

Higgie's graphic:



http://generationaldynamics.com/gdgraph ... t-adv2.gif

[vincecate]

How much longer are bond investors going to be happy with bonds paying 2% per year when they lost 3% in one month? If it happened again next month would they panic? Two more months?

“Check writing in the trillions is not a bondholder’s friend,” Gross wrote in monthly investment outlook on Pimco’s website on Oct. 27. “It is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. It raises bond prices to create the illusion of high annual returns, but ultimately it reaches a dead end where those prices can no longer go up.”

http://globaleconomicanalysis.blogspot. ... nalysis%29

[Higgenbotham]

http://www.cs.com.cn/english/finance/20 ... 95976.html

China to shift to prudent monetary policy next year.

[vincecate]

Higgie's graphic:
http://generationaldynamics.com/gdgraph ... t-adv2.gif

It is like the whole market has gone back to "fill the gap" from the crash. Now that it has, should be ready to go down again. Strange stuff.