The Bulls*#* Markets

By: Barry_M_Ferguson

Everybody these days is a liar and a thief. We all know about US and China propaganda. Now, look at the Germans. Car maker Volkswagen was caught cheating the emissions standards in their diesel vehicles. Their biggest bank, Deutsche Bank, was again fined for cheating and stealing as they rigged libor rates. Last quarter they were fined some $2.5 billion and now they are facing an additional fine of $6 billion. Seems they were also laundering money for the Russian gangster land. Of course, there is no problem. In today’s world run by the new world order of banksters, if the bank can’t pay the fines the central banksters of Europe will just steal the money from the ignorant sheeple and give it to the bank. How do you say ‘liar’ in German? Is it ‘lugner’? 

Speaking of liars, how about a joke? Here it is - Chinese economic data! Yeah, I know. Please stop laughing.

How about another joke? Here it is - US economic data! Yeah, yeah, yeah. I know. Please stop laughing.

After all, it’s the bulls*#t that makes stock markets go higher. Very few companies actually report rising revenue. Few still report real rising earnings. Sure, companies are buying back stock, making ‘accounting adjustments’, counting ‘statutory income’ as real income, laying off workers, and pretending that ‘one time expenses’ aren’t really ongoing expenses. For instance, the banksters all pretend that legal fees are ‘one-offs’. Well, when you are in the criminality business, legal expenses are in truth ongoing expenses. It’s part of doing business. But, earnings these days come from accounting trickery.

As an example, soda sales have been trending lower for decades. Yet the stock prices of Pepsi and Coke have been rising for years. McDonald’s stock hit an all-time high this week even as revenue has declined for seven straight quarters. And, while McDonald’s claims the new breakfast menu has been a hit, many franchisees report the exact opposite. But who cares? This is a bulls*#t market. Reality and truth be damned. Stock prices must always rise to keep the elite even more elite and richer.

Then there is the political clown show in the US. The slime that passes for presidential candidates all seem to lament that the income disparity in the US is at an all-time high. Indeed. However, Ms. Clinton in particular seems a bit disingenuous on this topic as she has spent her life in politics in Washington, DC and New York. Washington DC is number one (as rated by all surveys) as having the most income disparity and New York is the worst state for income disparity. All she has done for all her life is to work to make the rich richer and the poor poorer.

Poor old Bernie Sanders laments the same issue and is yet completely clueless as to the solution. Sadly he rails against capitalism. But if Mr. Sanders had a single functioning brain cell he would realize that capitalism was busy righting the wrongs of corporate greed in 2008 until that capitalistic cleansing process was rudely interrupted. As we all recall, the banksters bankrupted themselves with all their derivative trading. Capitalism stepped in and began to reprice the stock prices of these offending companies at something close the zero. They were all going out of business. Goldman Sachs. Bank of America. Citigroup. JP Morgan. Wachovia (remember them?). Lehman. AIG. Need I go on?

But then the Congress to which both Mr. Sanders and Ms. Clinton belonged abdicated their duty and surrendered the nation to the most vile of all banksters - the FRB. Had the great bailout of 2008 not transpired, none of these bankrupt institutions would be infesting our economy today. Capitalism was cleaning house. None of these super rich banksters would be super rich today. The playing field would have been leveled by just a bit. Yet, due in part to the action of our feckless politicians who are all witless idiots, the big banks are bigger than ever, they have laid off tens of thousands of workers, and banking is more expensive than ever. And, we taxpayers are saddled with about $10 trillion dollars more in debt. And these same jellyfish politicians want us to believe they are going to ‘fix’ income disparity? Who do they think they are fooling?

Well, there are sheeple democrats and sheeple republicans who feel their political party has the plan. And that’s why we are indeed doomed this time.

And while I’m ranting, has no one noticed that Mr. Obama is Richard ‘Tricky Dick’ Nixon’s twin? Nixon bugged the White House. Obama bugged the world. Nixon ran secret bombing campaigns in Cambodia. Obama will launch a rocket from a drone anywhere in the world. Nixon had a enemy list (reporters). Obama has an enemy list (republicans). Nixon would send his goons out to visit enemies. Obama will send his goons (like the IRS or any of the many US government terrorist agencies) to shake down his enemies. Nixon conspired to limit liberty. Obama thinks government should give citizens liberty hall passes. I’m just waiting for Obama to give us the two finger ‘victory sign’ and I will swear he is Nixon incarnate.

Sorry for the rant. I don’t know how I could start off with the subject of liars lying about corporate earnings and then drift over to lying politicians (sorry for the oxymoron). It is just sad to see what the US has dissolved into. Stock prices and stock indexes around the world are now getting a boost from central banker intervention. Either zero interest rates or outright stock purchases are indeed pushing stock prices higher. But should they? Should we trust the people that are blowing the asset bubble higher by the day?

What we are told seems to be far different from reality. For instance, the US left Afghanistan because the Afghan army was trained and readied by the US military. Did you see the latest video of the Afghan recruits drilling and marching? They were lined up and when given the command to turn and march, several of them turned the wrong way. Some began to march in different directions. It was like watching Gomer Pyle. Yeah, these guys are war ready!

Medicare Part B premiums are about to rise some 50% for 7 million enrollees. Yet, seniors are not getting a social security cost of living raise because the gooberment says there is no inflation. Really? What about health care premiums? What about banking fees? Okay, don’t get me started.

Here is what we should all understand. Capitalism allows for real markets to function in that buyers and sellers continuously barter for agreed prices of goods. Buyers must see value or need in a good commensurate to the asked price. Supply and demand keeps things in balance. When central bankers buy stocks, they are not buying stocks because they see value or because they have a need. They do so to manipulate the prices higher. Falsely higher prices are bubbles. Thus, bulls*$t. 

Since a picture is worth a thousand words, let’s look at a chart of Coke, Pepsi, and McDonald’s over the last 2 years on a monthly basis. Coke is the black line, Pepsi is the blue line, and McDonald’s is the gold line. All three are up nicely during this time frame. Yet, in the soda world, diet soda in particular is losing drinkers. That is a quarter of Coke’s business as they derive half of their sales from soda. McDonald’s as mentioned is experiencing seven consecutive quarters of decline in revenue. But who cares, right? We have a bubble to attend. See Chart 1.

Chart 1: Courtesy StockCharts.com

What’s that? I’m crazy? Maybe. But check this out. We all know that the FRB intervened in the markets big time on August 24, 2015. That was the thousand point turnaround in an hour or so. I’m sure all the stocks that were selling off so violently were actually of great value and therefore the selling was overdone. Well, actually an even better performer (since 8/24/15) than our three stocks that the previous chart exemplified was the Greek stock ETF, the GREK (in red). Yes, Greece has outperformed McDonald’s, Coke, and Pepsi since August 24, 2015. See Chart 2.

Chart 2

Who’s crazy now? Enjoy the bulls8#t! Uh, I mean, enjoy the bubble!

Oh, by the way, and if anybody cares anymore, Coke, Pepsi, and McDonald's all sport P/E multiples in the mid to upper 20's. 

Barry M. Ferguson, RFC
President, BMF Investments, Inc.
Primary Tel: 704.563.2960
Other Tel: 866.264.4980
Industry: Investment Advisory
barry@bmfinvest.com
www.bmfinvest.com
www.bmfinvest.blogspot.com

Barry M. Ferguson, RFC is President and founder of BMF Investments, Inc. - a fee-based Investment Advisor in Charlotte, NC. He manages several different portfolios that are designed to be market driven and actively managed. Barry shares his unique perspective through his irreverent and very popular newsletter, Barry’s Bulls, authored the book, Navigating the Mind Fields of Investing Money, lectures on investing, and contributes investment articles to various professional publications. He is a member of the International Association of Registered Financial Consultants, the International Speakers Network, and was presented with the prestigious Cato Award for Distinguished Journalism in the Field of Financial Services in 2009.

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