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We are not expecting a smooth and normal
election process cycle in the United States next month for several reasons.
With a terrific storm about to slam the
Eastern USA and an escalation in the contentiousness of electioneering, we
can envision some real excitement and adventures for the balance of 2012.
This storm might extend the voting dates
and the party in power might cancel the election entirely (until the Libyan
news calms down and American weather subsides to near normal). Our advisors
tell us, and we have long held this view, that the opportunity for election
fraud is rampant since several states have electronic voting systems. Union
members handle and manage those machines and they vote for the
administration. The opportunity for software changes, however slight, does
exist. One tiny little adjustment could give a winning edge to one party or
the other.
We are old fashioned and would prefer to
think the system continues to have some integrity. We think voters should get
out and cast a ballot based on their research and preferences no matter how
others try to influence their voting.
If you are callous and skeptical and
decide your vote does not matter, you should not complain about the outcome
of this election, as you will have abandoned your responsibility to influence
it, small as it may be.
Many suggest that no matter which party
is elected the personal outcome for most voters may not matter. We would
argue with that and remain hopeful that our candidates are elected.
Events Affecting Everyone
Normally, on the annual calendar,
traders and investors will scramble through the more scary months of
September and October. They take profits as needed in those months and then
return to buy into the broader markets just after November 1. (May 2013 is
the next cycle of concern; that one could be a heavy seller.)
This year, the early November period appears
to be fraught with risk. At this juncture, traders and investors have been
parked on the sidelines, mostly out of markets. The cycle when they normally
re-enter near November 1 will be pushed further into next month as most all
are watching and waiting to see who is elected and how that news will affect
the markets.
If the Republicans are elected, some
traders might be long commercial stocks and base commodities. If the
president is re-elected, they might go short; it’s difficult to
measure.
Key forthcoming dates would be: (1) the
cycle just before and after November 6 (voting day); (2) the cycle near
November 12-16 when several December futures options and contracts expire;
(3) December 21, which is the Mayan calendar turn and (4) January 3 when the Fiscal
Cliff date might hit with a whammy.
In our view, the Mayan calendar turn
could be a positive event as this is a once-in-25,000-years adventure,
beginning a new and very long term cycle.
The Fiscal Cliff event is
something very serious indeed. Just recently, senators from both parties have
been in Virginia holding meetings to find a compromise for new tax
legislation. On the other hand, we see reports signaling a decision to let
the Bush tax cuts expire and let the chips fall where they may.
We see this as a very serious event.
Should the Democrats decide to let the cuts expire, many very untoward
disasters could befall the world in a rolling crash. The event would not have
to instigate serious repercussions but just the news or threat of this thing could
set off selling in markets worldwide.
Several reports said expiration of those
tax cuts would smash the national economy by at least
-1% of GDP (a big deal) and others say it is much worse. Those in power are
anxious to impose a new and heavy load of taxes, which would create more
government cash to spend and cover overdrawn accounts. However, we say the
honey-pot of taxpayer cash is not infinite. It does have a bottom.
It is our contention that the United
States is now out of a recession and has entered into Greater Depression
II. The Fiscal Cliff event, if not rectified, would add a crushing burden
to our nation and to the world that is already in a dire and weakened
condition.
Signals of weakening and commercial
failures have been startlingly more visible within this earnings quarter. You
can see dropping sales and profits in third quarter earnings reports from the
corporations as well as falling GDP in numerous international economies.
Because of our work, we are constantly
reading and regularly receive many bits of news from all over the world. Our
source volumes have picked up dramatically in new reports of delayed IPOs,
bond sales problems, falling sales, and very slow national tax collections.
Further, the job layoff numbers are coming in faster and larger. One big bank
is dropping 10,000 jobs.
We reported earlier in 2012 that Greater
Depression II would bite harder in 2013-2016. Now it’s happening.
The broader stock markets have been
propped-up for several months by central banks printing bonds, notes and
bills. However, with each new offering, the effects become more marginal. It
is obviously taking more and more printing and auction offerings to make even
modest change.
This unworkable plan has become a scary
burden for central bankers, as they know the print-print games are nearly
over. International credit in bond land is among the very last tools
available to keep the entire world afloat. Confidence in this mammoth
confidence game is nearly over.
We noticed US Treasury Secretary Tim
Geithner, has become invisible and IMF Managing Director Christine LaGarde’s comments more strident and worrisome;
particularly regarding European problems. Spain is on the brink and cannot be
saved. Those in the know, know that this is an
accurate statement, and yet Spanish leadership refuses to take a huge bailout
and be under control of the ECB-ESM and IMF-BIS gang.
Major trading charts expressing new
positions within the Dow, S&P, Nasdaq and
30-year bonds areinfull breakdown.
In nations throughout the free world and
not so free world, street violence is escalating or is near escalation.
Hungry mouths and no paychecks create dissention. Governments are trying to
quell the problems using a variety of tools, but are losing the battle.
Watch for the bond markets to flip
toward demanding higher yields for additional risk. Subterranean interest
rates will begin to rise, making it more difficult for bond people trying to
pay interest on a variety of investments.
Considering the amount of paper
outstanding and forthcoming from the USA sources, we can see how this thing
is headed for a brick wall at a 100 MPH. Some bright analysts are saying we
get nailed with a major markets event near the election. We would have to
agree as this covers a voting prelude period, the voting cycle itself and the
aftermath, which could be legendary.
Our current trading period over the last
few weeks has been weak and shaky. We cannot remember such a cycle and have
great concern over what might occur under several scenarios. Some of our
analyst friends have also expressed uneasiness. Non-trending markets signal
big trouble ahead.
We have recommended S&P shorts, gold
longs, and positions for grains both long and short, using spreads. The NYSE
is closed today for the East Coast weather event and now they plan to close
it on Tuesday as well. If the storm surge exceeds expectations, exchange
closures might go longer.
Gold and silver are sitting on strong
supports with gold at 1708 and silver at 31.82. Those numbers are for
December futures contracts on this Monday at 10:20am PST. Crude oil had retreated to 85.00 support which appears firm.
One trader bought $100 million of paper
gold positions. Gold prices are firm near $1708 with lower supports at $1655
and $1685. We could see gold at $1808 and $1850 rather quickly depending upon
what happens during the first two weeks of November. The price of $1923 was
the former high.
The general trading tone has been one of
substantial withdrawal of funds from both mutual funds and hedge funds.
Billionaires have been selling stock with both hands by the millions of
shares. They are buying gold, farmland, blue chip real estate and commodities
in the ground.
We cannot see buying into new stock
positions unless they are shorts during the first two weeks of November 2012.
If you own stocks, use risk stops on bigger companies and
take profits or hold on with juniors, knowing they should sell and
then bounce back.
Somebody please tell us when the global
bond markets crash for good and we’ll tell you when this can all get
better and we can start all over again, maybe with a partially backed fiat
gold currency.
Roger Wiegand
www.webeatthestreet.com
Contact Claudio Bassi, at Trader Track’s New York City publishing
offices for a trial subscription. Call
718-457-1426 Monday through Friday, 9:30am to 5pm or,
e-mail cbassi@miningstocks.com
Recommendations made in “Trader Tracks”
are exclusively those of Roger Wiegand and the
publication is also exclusively the editorial content provided by Roger Wiegand. TAYLOR HARD MONEY ADVISORS, INC. (THMA)
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summary of investments should not be construed as advice to meet the needs of
any particular reader or subscriber. Opinions expressed in Trader Tracks are
statements of judgment expressed at the date and time they were written, and
as such, are subject to change without notice. Roger Wiegand
is not a CFA nor an investment advisor, but a private individual who studies
the markets extensively and offers summary opinions. Before any type of
investment is made, you should always seek advice from your attorney, CPA,
registered broker, or financial advisor. There is considerable risk in market
speculation and investing. There are no guarantees regarding performance and
past performance provides no guarantee of future performance. Your trading
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AT ANY TIME Roger Wiegand believes it is
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constitutes an offer to buy or sell the securities mentioned herein. Trading
futures contracts may not be suitable for all investors. You may lose a
substantial amount of money in a very short period of time. The amount you
may lose is potentially unlimited and can exceed the amount you originally
deposit with your broker. This is because trading futures is highly
leveraged, with a relatively small amount of money used to establish a
position in assets having a much greater value. If you are uncomfortable with
this level of risk, you should not trade futures contracts. If you need a
broker, contact mine, Ryan Olson, Managing Partner, Jackson-Olson commodities
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