Wednesday, January 26, 2011

State Of The Dis-Union (Part 1)

It's THAT time of the year for us politicos.  Annual report time for America Corp., also referred to more popularly as "The State Of The Union" address, delivered by our President and Chief Executive.  George Washington delivered the first one in 1790, Barack Obama just orated the most recent one, Tuesday evening.

If snap opinions poll results were the appropriate guide of success, President Obama hit a grand slam. Reportedly, more than 90% approved of the ideas proposed in the speech and more than 80% said they supported the economic plan laid out   For a President whose party suffered the most stunning mid-term defeat in history, this has got be one helluva shot in the arm.

If, for some reason, you weren't a part of those majorities, I have VERY bad news for you.  According to the President (who, apparently is trained as a psychologist): "Mr. Speaker, Vice President Biden, members of Congress, distinguished guests, and fellow Americans, nearly two years into our recovery from a recession that left our financial system on the verge of collapse, I stand here today confident that America is on a path to a better tomorrow, despite all the nutjobs and lunatics out there whose behavior is, honestly, kind of weirding the rest of us out."  (,18929/).

Maybe if Dr. Obama would prescribe us nutjobs some psycho-tropic drugs, we could see the nearly two year recovery, too!

Did he REALLY say 2 years into our recovery?  The same 2 years in which the economy has lost 8 million jobs?

Well, then call me one BIG-TIME lunatic who's "weirding you out"!  At least, I have good company.

It seems you could also count the Federal Reserve among the lunatics.  Concluding a 2 day committee meeting, they left interest rates at ZERO and recommended ANOTHER $600 Billion in bond purchases:  Only in the last 2 years, have they had to employ a desperate tactic popularly known as "Quantitative Easing", by a Chairman, who has said that money might have to be thrown out of helicopters.  Figuratively, of course.

Perhaps the problem is nothing but semantics.  If one could re-define a few of the criteria for a 2 year economic recovery as:

1.  Near 10% unemployment;
2.  A "cash-based" budget deficit running at $1.5 Trillion;
3.  Municipalities and States teetering on defaulting on their debts;
4.  Massive "Quantitative Easing";
5.  Record bailouts and "Troubled" Asset Purchases; and
5.  Record home foreclosures,

then the economy must be in one helluva nearly two year recovery! 

Maybe the time has come for us lunatics to run the asylum!  Remember Candidate Obama?  He kept telling us how horrible the economy was when we had 8 million MORE people employed.  The budget deficit was half, local governments were still solvent, the Fed wasn't running the presses overtime and more homes were occupied by owners.

Candidate Obama was right!  Unfortunately, President Obama who attempted to enact Candidate Obama's policies, has run out of time to blame George Bush.  The only option is for President Obama to declare victory by altering the definition of victory.  Hell, if you set the bar low enough, even "Mini Me" could become an Olympic gold medal pole vaulter!

In Part 2, we will do a thorough "Marko's Take" analysis of the proposals set forth and run them through our proprietary "Take-Meter".

In order to deal with the issue of understanding very confusing phrases such as "nearly two year economic recovery", we have prepared a special Candidate Obama/President Obama Dictionary for those aren't fluent in both.

Marko's Take

Tuesday, January 18, 2011

It's A Mad, Mad, Mad, Mad Market

It is the best of times.  It is the worst of times.

There are a smattering of data points that suggest that the global financial and economic arenas are slowing making progress toward a legitmate recovery.  That doesn't exactly get us to the BEST of times, but by comparison to 2008, it's practically utopia.  We don't wake up every day to the news that some major company has gone bankrupt or some huge financial institution has become insolvent. 

Unfortunately, the smattering is nothing more than a smattering.  The vast, vast majority of data suggests that markets are at a top of significance akin to 2000 or 2007. 

Investors are convinced that it's the best of times.  When they do, the worst of times immediately follow.   Nothing compares to the madness of crowds at market extremes! and

According to Barron's weekly survey (, the crowd is as mad as a hatter.  Bullishness is at historically extreme low levels.  Only 19% of newsletter writers currently identify themselves as bears (  Coincidentally, the identical readings were measured at the market peaks of 2000 and 2007.

Americans in general think it's just about the worst of times according to Gallup, with only 19% satisfied  This crowd seems quite sane to me.

The trading behavior of the markets itself are mad.  The last two trading days have been outright schizophrenic.  According to Yahoo Finance, as the indices were making new multi-year highs, and after a run of 7 straight weeks of advance, an unbelievable 4% of issues traded on Friday made new LOWS!  Huh?  Would someone pull the DSM-IV off the shelf and sit this market down on the couch?  Maybe hand it a Kleenex?  Prescribe it a boatload of psycho-tropic drugs?

NOT mad are investors in the commodity and precious metals arena.  Despite the massive runup in gold, silver and the companies that mine them in 2010, sentiment is anything BUT extreme.  According to Gold sentiment analyst Marc Hulbert, gold "fever" has fallen to very reasonable levels since October, as prices have remained in a trading range  This suggests that healthy skepticism remains and thus that any pause in the action is likely temporary, or that any correction in prices ought to be fairly mild. 

In this tale of two markets, investors have two choices:  Follow the crowd which is sometimes mad but nearly always wrong, or follow "Marko's Take", which is sometimes right, but nearly always mad.

Marko's Take