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Archive for February, 2015

The US Republic is a remarkable State of Being, true to the founding Father’s American’s have established a Democracy, despite the likes of Obama. Yet the loss of responsibility to vote for an adult, shows that even incompetence in a President is not enough reason for the people to go to the polls. That a candidate is Mormon, is more cause not to vote – The Constitution of the United States in Article VI, Section 3 (National Debts) clearly states, “but no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.” So much for Conservatives who are always decrying their Constitution. Saying their literal interpretation of the Constitution is a ‘standard belief’ of their political party.

The Presidency of the US centers around five separate put linked responsibilities or rather jobs. Most modern Presidents and  attempted to fulfill two. Some Presidents have been forced to fulfill specific responsibilities. They are:

COMMANDER IN CHIEF – CHIEF EXECUTIVE – HEAD OF STATE 

         CHIEF LAW ENFORCER – HEAD OF THEIR PARTY

Each of these roles is as important as the rest. Yet we have an American President fulfilling ONE – Head of His Party. The sad reality is the American Public has little knowledge of their Presidents responsibilities and are therefore unable to determine the job he is doing. Having a job description is the first way to qualify a person for that job or to reconsider him during his review to retain that job. If one has an employee who fulfills only part of his job he would be dismissed. Being elected due to one’s race and not their experience or ability leads to conflicting consequences.

As Commander-in-Chief of America ( Article II, Section 2, [1] The President shall be Commander in Chiel of the Army and Navy of the United States,’) one is responsible for protecting America and the World from Tyrant’s as well as injustice. Not performing ceremonial roles and ignoring those serving. A President must have a policy that he is committed to and implements. As in business a leader establishes a strategy and then delegates its implementation. Being Commander-in-Chief requires a global perspective of peace and freedom that is protected by decisive awareness and the ability to decide right from wrong. Obama has failed to perceive the need to protect all of us from these issues as he has wandered through his eight years of leaderless endeavors. Perhaps he should be told that the US has freed more people on earth in 100 years than at any other time in the history of mankind. Fed more people in 70 years than at any other time in the history of mankind. Help educate and medically care for more people in 200 years than at any other time in the history of mankind. As Churchill said, “the Americans may not get it right at first, put they do in the end”.

As Chief Executive, Obama has wasted every opportunity to lead by compromise and implementing a management style that others would follow. Failure to generate budgets of value has forced the Congress to operate the government by Continuous Resolutions. That has created bad management and corrupt practices that continue unabated. His cabinet has poorly run their departments from Veteran’s Affairs to the Treasury, that manages the IRS. All leading to major political embarrassment and hardship.  While having good intentions upon election Obama had no knowledge of executive leadership. Leadership in Government has one thing in common with leadership in business, solving problems everyday. To do so a good executive learns how to delegate and how to compromise. Both actions Obama has failed at miserably.

One of the most engaging roles as the President is Head of State. State Visits of the worlds Heads of States can develop personal relationships. State visits show the world the countries America chooses as allies and trading partners. Again, Obama has ignored this valuable aspect of his Presidency. Obama has failed to even engage in this job to secure global awareness of America’s role as a friend to others. Obama has not developed any relationships that would prove indispensable when global problems arise. In short, Obama has no friends, matter in point Israel. Not only is Israel the only Democracy in the Middle East but their people constitute one of his parties most important constituents. Both he has ignored and insulted as the Head of State and as the President.

Article II, Section 3. “he shall take Care that the Laws be faithfully executed” establishes the responsibility as Chief Law Enforcer for the President. Through his Attorney General the President is to up hold the laws of the land, not to ignore or pick and choose what laws are to be enforced. Attorney General Eric Holder has been abysmal at his job, an obvious reflection of his President. Obama has taken it upon himself on several occasions to make statements about specific instances that he perceived as wrong. Made judgment calls that were wrong and then ignored the fact he created racial disparity and anger in doing so. While at the same time ignoring Federal Laws regarding Immigration for political reasons, tax laws that allowed his employees to target and abuse his citizens. Ignored veteran assisted laws, in doing so allowed the abuse and failed care of American Military Heroes. The failure to charge, prosecute and convict individuals in the financial industry for obvious fraud in the near collapse of the global banking system due to mortgage-backed securities sales, trading and manipulation. How the electorate could possibly not see his incompetence in this job and still have voted for him, is a reflection of an electorate that is more persuaded by a President’s rhetoric and self-gratification, than his job performance.

Ah, but there is a job Obama has performed endlessly. He has excelled at and pursued with mad abandonment. Obama as the Head of His Party has traveled more miles (more than for all the other roles he should fulfill combined) to raise hundreds of millions of campaign dollars for himself and party members he endorses. Obama has spent more political capital traveling in Air Force One with members of his party than solving other problems that require his attention. He shares the company of tax evaders, racial bigots (Ferguson, Missouri is over 70% African American) and inept politicians. All who have self-serving agendas that do not solve any problems, but exacerbate problems to maintain their own positions of power.

It is no wonder that Obama’s popularity has floundered. Obama’s only other particular interest as President is self-gratification by spending an immense amount of time in personal pursuits (like golfing). A narcissistic pursuit by Obama of recognition hidden behind political fund-raising to achieve enhanced celebrity recognition and not leadership recognition, allows one to easily conclude – Obama is not nor has ever been qualified to be President.

One may conclude Obama is a good father and husband. One responsibility shrouded in privacy and the other in a daily schedule recorded for his legacy. But what were you doing the night of Benghazi, to many beers, perhaps. Which, as clearly stated in your biography you are capable of. Perhaps, instead of being under the bleachers you were on the third floor of your residency. Where were you when veterans care collapsed, or political operatives used the IRS to assault Americans and then pleaded the 5th, while your Attorney General did nothing.

As parents we all know that a new-born child growing to infancy will cry. A child that is beginning life learning and gaining knowledge and experience. Obama makes us all feel like wanting to shake a screaming baby – but you can’t. Less than    two years left in this childhoods term. Perhaps America will decide to elect another infant as President, even though she at 70 would be the first woman celebrity elected.

Americans might choose instead,  to elect an adult that deserves to be President .

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With the price of oil down, cause and effect are obvious topics for discussion. The Talking Heads would have you believe it is due to over production. Wow, were have we heard this before. Remember the 70’s and the world was running out of oil. Then there is, that US fracking is the cause. Which is leading America to oil independence and will be a global game changer. Others claim that the global economy is in a down trend. Or that the US dollar is over valued. Then there are those that believe Saudi Arabia is concerned with the US massive increase in oil and natural gas production. In September the Saudi’s announced they had 500 oil rigs they could ship to the US to develop the newly generated American Oil Rush. Good luck getting the US Congress to agree to that.

The truth, all of these factors are in play. But the real reason oils is down is because the equity markets around the world are sitting on a precipice. There is no natural redistribution of shares occurring and the global traders have to set up a new principle trade to replace equities. While the global debt market for government and corporate funding is massive, it is also exclusive. Only qualified traders can participate while individuals still play with an investment of 10%. Most important, the fees are small.

Equities are heading to a major decline due to a massive over-supply of shares from the American Baby Boomers. One must also mention the US banks. Using their billions from the US government bail out, decided to drive up the equity markets over the past seven years, rather than lending it to rebuild America. The banks and traders know they have to reposition themselves in a new market to survive the equity down turn that is inevitable.

Capitalization of public companies come in two forms, value and shares. What isn’t being discussed is the massive number of shares issued by the primary corporations that make up the equity markets. There are ten companies on the NYSE that account for over 70% of the trading everyday. This fact applies to all global exchanges, who have primary stocks that make up the everyday averages of these exchanges. They are all principal companies to the global market in awareness and growth. But they also are have huge share capitalization. Of course there are individual exceptions that participate in the reverse: Amazon: 465 million shares vs Apple: 5.8 billion shares or Chipotle: 31 million shares vs McDonalds: 973 million. They both trade due to financial success but their share value is also a result of their share structure.

Shorting stocks has been the standard for making markets in stocks viable for a 100 years. With interest rates so low, there is nearly no cost in holding a short position. Shorting stocks is a principal source of revenue for traders on a daily basis. Institutional Traders, Hedge Funds, Mutual Funds and Pension Funds all require the short trade to run their computer trading programs and futures trading models to generate trading profits ever day. The key to shorting is being able to borrow the stock sold from a third-party to maintain the short. Otherwise the short can not deliver on their short position. The short pays a fee for borrowed funds and borrowed shares to maintain their position. This is the reason that the talking heads always reference that a rise in interest rates cause the market to drop. The cost of short positions goes up so the traders drop the market to cover their shorts and then reset markets to establish new short positions. The general public is unable to compete or in most cases understand this trade to participate.

So why OIL, because it is a global commodity used every day and being shipped by sea. Time, is on the side of this trade and so are global events. With the equity markets unable to convince two generations (65-85 & 85-05) to invest and the Baby Boomers retiring,  an inevitable tsunami is upon us. With no redistribution of existing equity shares occurring and new IPO’s continuing and being sold institutionally, an over whelming number of shares in the market will result in the reversal in global markets.

This is why oil prices fell and the traders are setting up a new and larger oil play. Right now the oil market is being reset to clear out short positions and inventories. Once completed the price will be reversed and moved to over US$100. As oil rises we will watch as all other equities start to slide. We are in the seventh year of the equities market cycle. By October 2015 the NYSE (DJIA) will have fallen to 9500 to 1000 or lower. This downturn will start with oil at US$75 (by May) and accelerate in September as oil trades over US$100.

There is more reason behind this, WTI and Brent have traded with a spread of 10% for years. Why? Europe has been the ‘goat’ for the benefit of Russia. But Putin has now, like other oil tyrants gotten greedy and power-hungry. The global markets are more powerful than any individual country and will not allow tyrants to determine commodity values. With the US about to position itself as the worlds largest deliverer of natural gas and being oil independent, the global game change is set. With the rest of the world buying oil at Brent prices, North America will set a new valuation for WTI. The spread between WTI and Brent will grow to 50% to 70% and the traders will have a new market to handle the lost trading in equities.

This is not a conspiracy or a plot, it is just business. There are simple rules to the market, buy low sell high and short an over valued market. My next column will explain the most recent use of these rules, 1999 – 2001. Remember the ‘DOT COM BUBBLE’, another example of the traders bait and play. History in the financial markets does repeat it self, it is called survival.

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