Complacency Index

vs S&P500

• Dow Jones Industrial Average Adjusted For Inflation - At 16,000 resistance
• US CPI versus ECRI's FIG & TIPS Spread Inflation in US now lower than Japan
  

-------- Original Message --------

Subject:	Scam Market Bubble or Not, Complacency Is Near All-Time High
Date:	Sat, 23 Nov 2013 07:06:15 -0800
From:	Jas Jain

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Scam Market Bubble or Not, Complacency Is Near All-Time High

Attached is a graph of a simple Complacency Index that I developed in 2006 that is useful in determining good time to accumulate long-term puts.

Complacency Index = (% Bulls – % Bears) - .5*(VIX + VXN)

Jas

• Century of the DOW - Log Chart of the DJIA from 1900
• Investors Intelligence Sentiment vs S&P500
• Graph 10 & 30-Yr T-Bonds vs S&P500

Deflation Disaster

Nov. 21 Charts:

• Investors Intelligence Sentiment vs S&P500
• Graph 10 & 30-Yr T-Bonds vs S&P500
  

-------- Original Message --------

Subject:	"Deflation Disaster"
Date:	Thu, 21 Nov 2013 10:29:33 -0800
From:	Jas Jain

"Deflation Disaster"

My friend George Ure is warning his readers about the "deflation disaster." Why would anyone worry about paying less for things? It is something that people should cheer about, but George runs his website for bears who see all positive developments as a bad. Hey, George, send the money you save by paying less for things to charities. I have been enjoying deflation for the past few years like a drunken sailor by switching to higher quality Scotch whiskey, aged 18-24 years, and Cognac at very good prices. Costco carries few of them.

 

Economist fraudsters like Ben Bernanke, Paul Krugman, Ken Rogoff, etc., have perpetrated this whole idea that deflation is bad. Of course, we have created a bad econo-political system that can't deal with the good thing, but why should we continue a bad system? A People's economist like yourself should know that America had a huge period of deflation, 1871-1900, during which it rose the top of the world in terms of production displacing France, Germany and the UK. Deflation is bad for the Crooks and good for the vast majority of workers. It is very bad for all the fraudulent schemes of the govt that didn't exist in the nineteenth century US of A. So, George, whose side you are on, Crooks and bad govt schemes or the workers?

 

Three cheers for deflation! And it is coming to America and most of the civilized world sooner than you think, as I have been telling people for the past several years. Fed can't help but lose the fight against deflation. It is the weak demand, stupid! Soon you would find out who understands the US economy better.

Jas

From: GB

Subject: Re: "Deflation Disaster"
Date: Thu, 21 Nov 2013 15:08:15 -0500
To: jas_jain

Jas,

Disinflation is great, but deflation is pretty scary.

Scary like some imaginary witch is going to get you?

You can't cut people's salary (as a practical matter)

First, if the prices fall 1-2% there is no need to cut salary as long as worker's productivity is growing at 2%. But, if prices fall further and people are being laid off any thinking worker would be happy to keep the job and take appropriate cut in wages. As an American you are being unpractical here. For the Indian govt that may be a problem (strikes!) but for any practical man it is no problem whatsoever. Practical men deal with reality in a practical manner. Americans have dealt with deflation in the past and they might have to put their thinking caps and deal with it now.

but a business owner must lower his prices.

Yes, whatever the market would bear. IF you can't make a profit for a long enough time then you shut the business down and do something else.

Haven't you seen prices of many goods being lowered… Soon the company fails, and everyone is thrown out of work.

Nonsense. Companies fail even in areas where prices are going up. Failure has to do with not being able to adjust to the reality. It has absolutely nothing to do with falling prices, e.g., computers, TVs, etc.

Now aggregate demand is less, and even more companies fail.

No one guarantees demand of anything. You go where the demand is. Sometimes people need to learn to live with less. It is a good thing and not bad except for few things of necessity. We are way beyond necessities in terms of the aggregate demand.

The cycle flushes the whole system down the toilet.

Yes, at times toilet needs to be flushed! It is a very good thing. Then we begin with a clean toilet, or a clean slate.

Falling prices only work if you have a job and an income to spend.  I agree with much of what you have written over the years, Jas, but as a business owner, I can tell you that cutting salaries is very difficult.

That is why people need to save, have a cushion, and your ancestors and mine have done it for hundreds of years. I am quite sure that you come from a good stock.

Jas

Kirk's Nov 20 Graph:

• Nov 20 US CPI versus ECRI's FIG & TIPS Spread
  Inflation in US now lower than Japan!!!

The Federal Reserve and Ron Paul

• Century of the DOW - Log Chart of the DJIA from 1900
• Finisar Bull of the Day Stock at Zacks

-------- Original Message --------

Subject:	FWC: Federal Reserve Steals From The Poor and Gives to The Rich by Ron Paul
Date:	Mon, 18 Nov 2013 08:11:08 -0800
From:	Jas Jain

FWC: Federal Reserve Steals >From The Poor and Gives to The Rich by Ron Paul

Dear Dr. Paul:

You need an education in the reality of the American political system. After Wilson signed the Act that created Federal Reserve he bragged that America has strengthened the govt support for the business. FDR's welfare program countered this one-sided govt support. Of course, all this on the backs of the workers who really produce the goods and services. Over the following decades, 1940s-1970s, there was balance between the interests of various groups, maybe due to the WW II and the Communist threat. Then beginning in the 1980s American govt, including Federal Reserve, embarked on path to create the System of the Crooks, by the Crooks, and for the Crooks, to support the Big Business and the Super Rich. Now, it has been fully implemented by turning Federal Reserve into Fraudulent Reserve beginning in 1990s. Any politician who does not support these is made irrelevant as you were in the Congress.

Sincerely,

Jas Jain

-x-x-x-x-x-x-x-x-x-x-x-

http://www.safehaven.com/article/31838/federal-reserve-steals-from-the-poor-and-gives-to-the-rich

 

Federal Reserve Steals From The Poor and Gives to The Rich

By: Ron Paul | Sun, Nov 17, 2013

 

Last Thursday the Senate Banking Committee held hearings on Janet Yellen's nomination as Federal Reserve Board Chairman. As expected, Ms. Yellen indicated that she would continue the Fed's "quantitative easing" (QE) polices, despite QE's failure to improve the economy. Coincidentally, two days before the Yellen hearings, Andrew Huszar, an ex-Fed official, publicly apologized to the American people for his role in QE. Mr. Huszar called QE "the greatest backdoor Wall Street bailout of all time."

As recently as five years ago, it would have been unheard of for a Wall Street insider and former Fed official to speak so bluntly about how the Fed acts as a reverse Robin Hood. But a quick glance at the latest unemployment numbers shows that QE is not benefiting the average American. It is increasingly obvious that the Fed's post-2008 policies of bailouts, money printing, and bond buying benefited the big banks and the politically-connected investment firms. QE is such a blatant example of crony capitalism that it makes Solyndra look like a shining example of a pure free market!

It would be a mistake to think that QE is the first time the Fed's policies have benefited the well-to-do at the expense of the average American. The Fed's polices have always benefited crony capitalists and big spending politicians at the expense of the average American.

By manipulating the money supply and the interest rate, Federal Reserve polices create inflation and thereby erode the value of the currency. Since the Federal Reserve opened its doors one hundred years ago, the dollar has lost over 95 percent of its purchasing power -- that's right, today you need $23.70 to buy what one dollar bought in 1913!

As pointed out by the economists of the Austrian School, the creation of new money does not impact everyone equally. The well-connected benefit from inflation, as they receive the newly-created money first, before general price increases have spread through the economy. It is obvious, then, that middle- and working-class Americans are hardest hit by the rising level of prices.

Congress also benefits from the devaluation of the currency, as it allows them to increase welfare- and warfare-spending without directly taxing the people. Instead, the increase is only felt via the hidden "inflation tax." I have often said that the inflation tax is one of the worst taxes because it is hidden and because it is regressive. Of course, there is a limit to how long the Fed can facilitate big government spending without causing an economic crisis.

Far from promoting a sound economy for all, the Federal Reserve is the main cause of the boom-and-bust economy, as well as the leading facilitator of big government and crony capitalism. Fortunately, in recent years more Americans have become aware of how the Fed is impacting their lives. These Americans have joined efforts to educate their fellow citizens on the dangers of the Federal Reserve and have joined efforts to bring transparency to the Federal Reserve by passing the Audit the Fed bill.

Auditing the Fed is an excellent first step toward restoring a monetary policy that works for the benefit of the American people, not the special interests. Another important step is to repeal legal tender laws that restrict the ability of the people to use the currency of their choice. This would allow Americans to protect themselves from the effects of the Fed's polices. Auditing and ending the Fed, and allowing Americans to use the currency of their choice, must be a priority for anyone serious about restoring peace, prosperity, and liberty.

• Drop Your Stocks and Grab your SOX Charts - Rotation to Semiconductors?

Jas Jain on Janet Yellen the next Chairperson of the Federal Reserve

Nov 16 Century of the DOW - Log Chart of the DJIA from 1900
Nov 13 Inflation Adjusted Gas Prices - Gasoline Price Chart History

-------- Original Message --------

Subject:	Gender Politics In the US, the Case of Janet Yellen
Date:	Sun, 17 Nov 2013 12:31:38 -0800
From:	Jas Jain

Gender Politics In the US, the Case of Janet Yellen

 

Q: What is the best way to find the person "most qualified" for the job to become the next Chairperson of the Federal Reserve?

A: An academic, who has by far the worst record as the President of the most important District of the Federal Reserve, District #12, San Francisco, with 20% of the US GDP under its supervision. "Yellen's region included three of the four states hardest hit by foreclosures - Nevada, Arizona and California. The same states also led the nation in the percentage of consumer bankruptcies." Yellen was the President from June 2004 to October 2010, tenure with severe job losses in the district caused by mortgage fraud, originating in California, which led to the housing bubble, and its aftermath that caused the Crisis in 2008. If you judge someone by what happened on that person's watch then we have the economic horror story of the past 60 years transpiring right under Janet Yellen's nose. The Fed President with the best record, Richard Fisher of the Dallas District, had this to say: "Janet Yellen is a nice person but she is wrong on policy." This seals the deal for her appointment!

 

When it came to her role in the disaster Janet Yellen Sent Mixed Signals On Housing Bubble While At Fed; "mixed signals" are worse than no signals. After issuing a warning in June 2007 Fed meeting, "in a speech a few weeks later, she declared "I do not consider it very likely that developments relating to subprime mortgages will have a big effect on overall U.S. economy performance."… During the housing boom the Fed debated whether to raise interest rates to deflate asset bubbles, and she was firmly in the camp that believed it should not, Ms. Yellen said in the FCIC interview." She even used the same excuse about her own authority to check problems that Bernanke used in 2008 that the Fed didn't have the authority. Control freaks complaining about not having enough authority! And they get more authority after the previous failures!!

 

How about her competence? "For my own part," Ms. Yellen said, "I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.'s — I didn't see any of that coming until it happened." And she wouldn't in the future. The academic economist, a real-world bimbo, doesn't understand the world of derivatives and finance and the bad actors with enormous power who don't have a single penny of their own at risk. She seems completely ignorant of human nature and "…perverse incentives. Incentives that encourage people to engage in economically harmful activities. For example, if mortgage issuers are paid for the number of mortgages they issue, regardless of whether borrowers can repay the mortgage, they will have incentive to issue mortgages that can't be repaid." The American corporate and financial system is riddled with perverse incentives and those who are most likely to profit from them have created them.

 

Horrible Record of the Present and the Near Future at the Most Critical Time

Ms Yellen's  Outlook in July 2008, six months after the US recession had already begun and two months before the Crisis hit:

 

"Now I'd like to pull all of these threads together to give you my outlook for the economy. Activity has been weak since late last year, and, given the three shocks I've discussed, I expect the economy to grow only modestly for the remainder of the year, but to pick up next year."

http://www.frbsf.org/our-district/press/presidents-speeches/yellen-speeches/2008/july/yellen-risks-prospects-us-economy-san-diego/

The actual GDP (Annual Rate):

2008Q3	-3.66%
2008Q4	-8.89%
2009Q1	-5.25%
2008Q2	-0.31%

 

In California, the recession that began much earlier than the US recession was very obvious in July 2008 to even a layperson. The unemployment rate in California was steadily rising for 16 months! And she still expected the economy to grow? She was simply lying because that is what the job requires.

 

No Equity Bubble, a Bald-Faced Lie

Even before her appointment is confirmed she is lying, the most important quality in the Fed Chairperson since Greenspan who prided himself for obfuscation in his answers to the Congress, his real bosses. None of her two predecessors were held responsible for any of the problems on their watch and she knows that she can mislead without any consequence. "Yellen rejected the notion that stocks are in bubble territory, despite the major indexes hitting record highs in the context of a stagnant economy and high unemployment, pointing to the equity risk premium and other valuation metrics."

 

Her claim that there is no stock market bubble is a statistical lie based on the work of Robert Shiller, the latest winner of the Bank of Sweden ("Nobel") Prize in economics. The market valuation based on Shiller's Cyclically Adjusted (it smoothes out cyclical variations by averaging over a 10-year period) P/E is at 91 percentile, i.e., only 9% of the time the stock market was more over-valued in the past 133 years than today. One of Yellen's defenders, Fed District President James Bullard, said that we are nowhere near the 1990s. True, but that was the worst bubble of all time and can't be a measure to judge the future bubbles. If we compare to the 1881-1995 period, the current stock market valuation is at 99 percentile and the 1% over-valuation period was during Nov 1928 - Oct 1929. We are partying like 1929! But not like the late 1990s.

 

Folks, she is going to be very dangerous and in few years (less than 4 years, IMO) she would make people forget mismanagement under Greenspan and Bernanke. What she did for Arizona, California and Nevada during 2004-2010 she will do for the whole of US and some. Financial manipulators are not going to be afraid of little Jenny! It is an open invitation to fraudulent financial practices just what encouraged the mortgage fraudsters in California. Scam Market goons already got the telegraph.

 

Bad Choices Driven by Gender and Ethnic Politics

The sad fact of American politics is that gender and race/ethnicity are increasingly taken into account when it comes to high profile appointments. Obama administration has been the most blatant in pandering to groups in his appointments, but both parties have been forced to the practice by the PC climate. GW Bush campaign had identified Condom Lisa Rice (Have Condoms; Will Travel! Something that Mohammad Qaddafi took too seriously) before the final decision was made for him to run for the presidency. Having a black woman in a very important position was essential for GW Bush to blunt charges of racism and sexism that were laid against his father in terms of appointments during the debates in 1992 elections.

 

Yellen for the Fed Chair movement was in full force by feminist women for several months before Larry Summers withdrew. Her horrible record was covered up by false praise for her from politicians and other political hacks amongst economists. She is very well connected. She also happens to have the right ethnicity for the job.

Jas

SPY Sets Another Record High - ECRI's WLI Near 3-Year High

Propaganda: “Rising Home Prices Are Benefiting Everybody”

• Drop Your Stocks and Grab your SOX Charts
  Rotation to Semiconductors?

• Current Series I and EE Savings Bond Rates
  Nov. 1, 2013 to April 30, 2014

-------- Original Message --------

Subject:	MORE – Re: American Propaganda: "Rising Home Prices Are Benefiting Everybody"
Date:	Tue, 12 Nov 2013 08:27:50 -0800
From:	Jas Jain

MORE – Re: American Propaganda: "Rising Home Prices Are Benefiting Everybody"

Lando: "Oh, come on! Again the same slogans? Are these morons using the same tricks of few a years ago? Dopes have no memory. Amazing."

The same Chief Economics Editor for Bloomberg was trying to buttress the case that QE is helping the economy and "everybody" in the process. He explained that the primary tool, or mechanism, that the Fed uses to help the economy is via rising stock prices and rising home prices, i.e., "the wealth effect." The magical powers of Asset Inflation! Therefore, the best measure of the success of the Fed policy is: how much have stock and housing prices gone up

He did admit that rising stock prices now, as opposed to late 1990s, mostly help the wealthy. Then he threw in the line that appeals to born-and-bred American dopes: "Rising tide lifts all boats." The same old trickle down economics from the Reagan Era. What has actually happened since 1980s, and most evidently since 2008, is more like trickle up poverty. Just wait for the next recession and the trick up poverty would become jumping up poverty with 30-40% of Americans receiving Food Stamps. It couldn't happen without the help of born-and-bred American dopes who have no understanding of the underlying causes and incessantly engage in partisan blame game.

Jas

Kirk Here:  I get a chuckle out of how some who have the title "economist" don't understand that someone with a paid for house that had all their retirement in CDs and US Treasury Bonds to supplement their Social Security would do much better with DEFLATION as their savings would buy more and their property taxes would not go up and perhaps even go down.  As it is now, they get a dismal return on their savings due to artificially low interest rates and QE while they get to pay higher property taxes every year due to rising real estate prices.   Those of us smart enough to see this ahead of time and have diversified (with both stocks and fixed income) are doing great with the market gains more than making up for dismal return on fixed income.  As the market goes higher, I take profits so if it eventually collapses, I'll have more cash now then had it stayed flat...

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Stock Market vs. Long-Term Treasury Bonds

US Treasury Rates at a Glance
For quotes rather than graphs
US Treasury Rate Quotes

-------- Original Message --------

Subject:	Scams vs. Long-Term Treasury Bonds
Date:	Sun, 10 Nov 2013 11:43:09 -0800
From:	Jas Jain

Scams vs. Long-Term Treasury Bonds 

For 52 weeks ending on Friday, 11/08/2013, NASDAQ-100 (NDX) and S&P 500 (SPX) are up 30.3% and 28.3%, respectively. Add 2.2% dividend yield and SPX total return is 30.5%. The total return on a 08/15/2039 long-term Treasury STRIPS is –23.5%. This I would think is a result of extreme bullishness in the Scam Market, fully confirmed by sentiment surveys, and bearishness on the long-term Treasuries.

 

The long-term Treasury rates are exactly where they were on 08/13/2010, i.e., 3.25 years ago. The total return on a 08/15/2039 long-term Treasury STRIPS since then is +20%. NDX is up 85% since then and total rerun on SPX is 75%. I think that we would see reversion to the mean over the coming years.

Jas

Kirk Here:  Make sure you read "SPY Sets Another Record High While ECRI's WLI Is Back Near Its 3-Year High"

US Stock Market at a Glance
-
Median Single-Family Home Prices Adjusted for Inflation