My new podcast episode is out.

My new podcast episode is out.

My new podcast is out.

My new podcast is out

My new podcast episode is out.

Budget deal is unequivocally bullish for stocks, economy. Buy the S&P and take a vacation until March 2017.

The biggest negative factor that we have been talking about here--the debt ceiling--is now out of the way until March 2017. We are in the clear, having averted what could have been a disastrous default of the entire U.S. economy.

With this new budget deal the amount of fiscal stimulus will be significant. Not only does the Congressional Budget Office anticipate a spending increase of over $230 billion over the next two years, the additional spending of $112 billion implied in this budget deal means that spending over the next two years will rise by nearly $340 billion.

That is significant and it means two things for sure:

1) The economy WILL NOT go into recession

2) You can go buy stocks now (buy the S&P Index, it's simpler) and basically take a vacation until March 2017. You will be handsomely rewarded.

I don't care what anyone is telling you about the deficit, they are going to be wrong. And if I end up being wrong here in my prediction, feel free never to read this blog again or mock me from now until forever.

Oh, and one more thing...the dollar will fall because some pricing power will return to foreign exporters. And if and when the euro rises it won't be because it has become "harder to get." It's all about price, not quantity. People should know that.

P.S. If and when the Fed raises rates (and they will) that will be an added fiscal stimulus. Those who have been saying here, that it doesn't work that way, can also call me out as ignorant if it in fact doesn't end up to be bullish.

Look at this...Ben Carson's totally clueless response to a question on the debt ceiling. He makes Obama look like an monetary genius!!

WHAT KIND OF FUCKING CLOWN CLASS DO WE HAVE WANTING TO LEAD THIS COUNTRY????

Here's what supposedly "brilliant," Ben Carson, said when asked about the debt ceiling.

"Let me put it this way: if I were the president, I would not sign an increased budget. Absolutely would not do it. They would have to find a place to cut," Carson insisted in a Wednesday segment with Kai Ryssdal of the American Public Media radio program "Marketplace."

The interviewer persisted...

Ryssdal pressed: "To be clear, it's increasing the debt limit, not the budget, but I want to make sure I understand you. You'd let the United States default rather than raise the debt limit."

"No, I would provide the kind of leadership that says, 'Get on the stick guys, and stop messing around, and cut where you need to cut, because we're not raising any spending limits, period,'" Carson asserted.

Absolute idiot.

People...we will NOT avoid a default. I am telling you. NOT.

I see the Dow trading back to the low, 17,000s, but not doing much after that

The U.S. stock market is in "recovery" after the irrational plunge of late last week/early this week. It's coming back as I said it would, however, I don't see the Dow going much above the low, 17,000s for now.

We're really going to have to wait until the new fiscal year and what Congress decides with respect to the debt ceiling. Failure to raise the debt ceiling will have very damaging consequences so this bounce back in the stock market could be the rally to sell if you are into shorting stocks (which I am not).

If they raise the debt ceiling and continue on the spending path that is forecast by the CBO (spending increases by $250b) then we should have another very decent year for the market.

Don't look at the deficit. It might even be a surplus in 2016. Then what are people going to say?

Jon Perr — Economists Warn of GOP Threat to U.S. Economy

Add to all this that a weak economy likely benefits the GOP in 2016.

PERRspectives
Economists Warn of GOP Threat to U.S. Economy
Jon Perr

Stocks and economy could be in trouble

Recently I have been commenting that the projected, $4.3 trillion in topline government spending is not going to be sufficient to  keep the economy from achieving anything more than zero growth and actually, we probably had negative growth in the first quarter because when the revision comes in later this month it will take into account the huge trade deficit.

Normally, a $4.3 trillion spending pace would be excellent. Indeed, that would only be the second annual spending increase since 2009 and it would be far larger than the measly $10 billion we saw last year versus FY 2013. (This year projected near a $200 billion increase.)

The size of that increase might already be in trouble, but I'll get to that in a minute; it's not the reason for my worries.

My concerns stem from the fact that we are seeing a serious slowdown in Personal Consumption Expenditures, which is the largest component of GDP and additionally, an actual contraction in State and Local Government spending.

Those two elements of GDP are conspiring to put growth in negative territory and while some say it was just a weather related abberation, I am not so sure. We may get a better sense on Friday when the April jobs figures are released, but if they're weak once again (and the numbers from the Daily Treasury Stateement ARE NOT encouraging), then it seems it could be more than weather at play.

All of this would be bad enough on its own, but I also alluded to the fact that the pace of government spending in the last month has been starting to slow. Early on in April spending for FY 2015 was running about $110 billion above FY 2014, but that number has recently dropped to $94 billion. Still a nice positive, but not on target to hit that $200 billion increase year-over-year.

What's also bad is the following:

1. We are currently operating under a debt ceiling and without a budget agreement out of Congress
2. The debt ceiling has not had an impact yet and Lew has not had to really engage extraordinary m easures to pay bills because tax revenues have been on the high side.
3. However, tax revenues will start to fall off significantly if the economy is indeed in a contraction, which I believe it is.
4. That's when the debt ceiling and all kinds of hell will break loose.

What does this mean for the markets?

1. Stocks are in trouble.
2. The dollar is in trouble (Bill Gross may actually get one right!)
3. The Fed will not raise rates and that whole entire expectation will get blown up.
4. Bonds  likely to rally sharply and Fed could engage in new monetary measures, but only after significant time and disruption. This is not the Bernanke Fed nor is it the Paulson Treasury. These people WILL NOT MOVE  QUICKLY.

In addition, fiscally, it looks like a train wreck because every single policy maker out there, no matter whether they're on the right or the left, thinks we have to balance the budget. So does the public.

What it all means is that this could end up to be a really bad ride.

So, I think here's the way to play it:

1. Sell the dollar.
2. Hedge your stocks or stay in cash and wait for a time to buy aggressively, but it probably won't be for a while.
3. Step aside as the real estate bubble implodes, especially in the high priced bubble areas like NYC. (Manhattan, for sure.)

My podcast for today. Stocks, budget, outlook.

Podcast for March 17. Politics. Stock stall. Outlook.

Debt ceiling forecast: The Good, the Bad and the Ugly

My thoughts on the likely debt ceiling/budget negotiation outcomes. Happy St. Patrick's Day!

Here was my prediction on the debt ceiling back in November. Let's see what happens.

Back on November 7th of last year, right after the midterm elections, I made the prediction that the Republicans won't raise the debt ceiling. Rather, they'd come up with some cockamamie scheme to "deal" with it with spending cuts.

So, here's what I said will happen.

And so it begins...Treasury tapping Federal worker retirement funds in order to pay bills

So here it begins once again. The Treasury is raiding money from Federal employees' retirement funds so that the gov't can pay its bills because these assholes in Congress still want to play around with the debt ceiling.

(Read it and weep here.)

The president has a few easy ways around this, i.e. the 14th amendment and the platinum coin, but he's shown himself to be too timid or, preferring spending cuts that hurt the economy and especially, the middle class and poor.

The debt ceiling is relic of the gold standard that is inapplicable under today's monetary system of free floating non-convertible currency. But it remains in place out of ignorance and political expeiency.

Monday: the Debt Ceiling is back on.

Well, the time is here. We've finally arrived. I've been talking about this since the midterm elections last November. Congress has to do something aobut the debt ceiling because as of Monday, the government is operating under this hard constraint.

Jack Lew at Treasury can jiggle things for a while, but the debt ceiling will have to be raised or kept in a state of suspension or else the government goes to "balance budget" mode of operation. And if that happens the economy and stock market (and possibly the dollar) will take a nosedive.

Are you prepared for this? Are your investments prepared? Are you ready to trade the currency markets and make some money off of this?

One day left to sign up for my course. It's all next week, March 16-20.

Click below to enroll.

My podcast for March10. Stocks down hard. More debt ceiling. Obamacare. Great FX calls by Matt Franko.

Here's my podcast for March 10. Stocks down hard. More debt ceiling. Great forex calls by Matt Franko.

My podcast for Monday, March 9

Here's today's podcast. McConnell, GOP, debt ceiling, stocks, economy.

If SCOTUS kills the subsidy part of Obamacare, the economy will feel it and stock rally will be over

The Supreme Court will be hearing arguments soon on whether or not the government subsidies given out under Obamacare are legal. If they strike down the subsidy part of the law--and that's a distinct possibility--then the law itself will be impaired and might not survive.

Even if the law survives, removing the government subsidies could result in a serious blow to the economy and could send the stock market tumbling.

Subsidies aside, Federal Government  spending on health care has increased significantly since the law went into effect. In 2012, before the mandate, Federal outlays for Medicare and Medicaid totaled $814 billion. In 2013 when the mandate to have insurance was postponed for a year, spending on Medicare and Medicaid was $845 billion, an increase of 3.8%.

However, in 2014 when the law took effect, health care spending surged by $84 billion to $929 billion, a 10% increase. We will probably see another $16 billion more for this year.

Here is how the  last three year looks with this year projected.

You can see from these numbers how much the economy can potentially lose. We can go back to very near the pre-Obamacare spending numbers, which means lopping off about $100 billion annually from total spending. That would be a big hit, not to mention the other economic destruction that would come from not raising the debt ceiling. The latter would put the Federal government on a "balanced budget" mode of operation, which would be a disaster.

$133 billion in tax refunds have been sent out so far!

So far $133 billion in tax refunds have been sent out according to the Treasury. (Individual and business.) That's more than last year's $130 billion at this time.

In addition, we'll probably get another $55 billion to  $60 billion in March and another $50 billion in April. That'll equate to a $240 billion stimulus over these three months alone. You don't want to sell into that, but you DO want to keep  an eye on what these idiots in Congress (read: Republicans) do with the debt ceiling, which will have to be raised sometime around mid-month.

We've got plenty of financial (money) firepower coming into the economy over the next two months and we've already gotten a huge injection in February, however, failure to raise the debt ceiling or, keep it suspended (as it is now) will be a HUGE red flag for stocks and the economy.

Stay tuned.

(BTW...this was all taught in my Daily Treasury Statement course...plus a lot more!)

I'm taking bets on how long Bill Gross lasts at Janus

I am taking bets as to how long Mr. "Who's gonna buy them now" remains at Janus. (How long Janus will have him, that is.)

As if right on cue, Gross pens his investment outlook on the Janus website right at the moment when every asset market was hitting rock bottom. Gross said that when 2015 is done there will be "plenty of negative signs in front of returns for many asset classes."

 Let's face it, Gross is as cold as ice. One of my most effective trading strategies back in my days when I was a floor trader was to fade the guy in the pit who was cold. All the savvy floor traders knew of this tactic.

 And no one has been colder than Gross.

 Who knows? I could be wrong. Maybe the Republican controlled Congress bails out Gross's bearish bets by not raising the debt ceiling in March. But I'm even starting to think that's not going to happen either. Bill Gross...I give him 10 months at Janus. Then he'll be out; working for some no-name hedge fund.