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Wednesday, August 27, 2014

Review of US Stocks

REV(E), fast approaching new, all-time highs, should lead price above it's July high.  This unexpected rally that has quieted the bears and mystified the sideline watchers reflects strong international demand for stocks.  Political chaos in Europe only reinforces the perception of inept leadership and expectations of a crash and burn outcome for the Euro.  A smash and grab (confiscation) of European bank deposits is the most likely consequence of the crash and burn outcome; a growing probability of war within the European theater means unexpected rallies will become the norm in the years ahead.


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Capital Follows The Path of Least Resistance

The answer - both and neither. The price of US housing, the intersection of supply with domestic and international demand within localized market, is far more complicated than price, interest rates, or combination. Capital flows, while influenced by rates, also consider 'intangibles' such as the rule of law, confidence in leadership, and the potential for unexpected social, economic, and/or political changes compared to other nations, etc.  These factors, weighed simultaneously, are framed within a broader content of the business cycle that many incorrectly view as being manageable.

Headline: What matters more to housing: Price or rates?

There has long been a saying in the real estate market that potential homebuyers don't buy according to the home price or the mortgage rate. Instead, "they buy the monthly payment." The monthly payment is, of course, a combination of rate and price, but the weight of each can change dramatically.

For example, home prices were able to soar uncontrollably during the last housing boom only because risky mortgage products at the time made monthly payments minuscule and down payments often nonexistent.


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Review of Natural Gas

Natural gas, trading within bear phase, is slowly approaching a bullish setup.  It's smoothed DI provides a cleaner view of this oscillation (chart).  Bull phases or positive to negative oscillations follow bear phases.



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As a special thanks to the loyal Insights supporters, additional, market-driven money flow, trend, and intermarket analysis will be provided to Insight donors in 2014. This analysis will be revealed by an Insights key.



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Tuesday, August 26, 2014

Income Inequality Bandwagon

Right, and TV is exacerbating the stupidity of our children. Stupidity, a human condition that Einstein characterize as infinite, existed long before TV.

Likewise, income inequality existed long before elite colleges and fraternity houses. Plato first discussed the idea of classless society in The Republic. The Republic was written in 360 BC.


Headline: Former Yale professor takes on elite colleges: They’re 'exacerbating income inequality'

Is the higher education system broken? According to the New York Federal Reserve, student loan debt totals more than $1.2 trillion – exceeding outstanding credit card and auto loan debt. Students leave college with an expensive degree, but many are either unemployed or working in jobs that pay the minimum wage. William Deresiewicz, a former Yale professor and author of the new book Excellent Sheep, argues there is a way to reform higher education and it all starts with the admissions game.

He tells Yahoo Finance in the video above that admissions standards, especially at the most elite colleges in the country, exacerbate inequality because “it costs lot of money to produce the kind of kid who can get into these schools. It’s a resume's arms race that's going on in affluent suburbs. Not surprisingly, a vast majority of the kids who go to these schools are from affluent families.”

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France thrown into political turmoil after government dissolved

European austerity, motivated the ghost of German hyperinflation, has squashed entrepreneurship and curtailed investment necessary to drive future economic growth. As a result, soaring unemployment throughout Europe, especially among youth, have many questioning the direction and sovereignty of EU nations. Recent polls and resignations of a key economic minister indicate that the French are beginning to view socialism as the problem.



Headline: France thrown into political turmoil after government dissolved

France has entered uncharted political waters after the prime minister, Manuel Valls, presented his government's resignation amid a political crisis triggered by his maverick economy minister who called for an end to austerity policies imposed by Germany.

The prime minister, a social democrat who has been compared to Tony Blair, acted with characteristic swiftness in a bid to reassert his authority. His aides had let it be known on Sunday that the economy minister, Arnaud Montebourg, had crossed a "yellow line" for his dual crime of criticising both the president of France and a valued ally.

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The Fed Controls Only It's Image

Please...the Fed, despite the well-maintained illusion of control, follows market forces, not vice versa. They know it.

Headline: Pressure builds within Fed to signal new policy course

JACKSON HOLE Wyo. (Reuters) - Pressure is building within the Federal Reserve for officials to move as early as next month to more clearly acknowledge improvements in the U.S. economy and lay the groundwork for the central bank’s first interest rate hike in nearly a decade.

According to some U.S. central bankers and their close advisers, signs of economic resilience and growing anxiety about the risks of holding rates too low for too long have set the stage for an intense debate over rewriting their policy statement.


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Review of Gasoline

Soon, if not already, mainstream media (MSM), the lap dog of faulty logic and linear reasoning, will be raving about how gasoline's sharp decline, acting as a tax break for Americans, will help them spend more and the economy grow. Whatever. Good thing, the global economy, a dynamic interplay between risk, reward, and confidence can be explained by 'tax breaks' provided at the pump.

UGA, a equity-based gasoline proxy trading within a bear phase (positive to negative DI oscillation) since April 2014, has fallen to 56.69 through 08/20 (chart 1). This well-defined downtrend makes it easy to be a gasoline bear today.

Successful investor/traders, however, know that easy is an illusion created by a lack of discipline. A market characterized by the crowd as an easy short is likely not when view through the eyes of the invisible hand.


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As a special thanks to the loyal Insights supporters, additional, market-driven money flow, trend, and intermarket analysis will be provided to Insight donors in 2014. This analysis will be revealed by an Insights key.



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