It seems like the Feds and their relentless pursuit of a speedy economic recovery have pointed their direction towards the mass U.S. media in order to capitalize on the slow June trading month. Major banks rallied by the bunches, with the likes of Citigroup (NYSE:C), Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), American International (NYSE:AIG), Wells Fargo (NYSE:WFC), and Morgan Stanley (NYSE:MS) leading the way. Earlier in the week, we wrote an article which highlighted the “50 Hard To Believe Statistics of The U.S. Economy”, though dispelling the more current economic updates, thus we felt a round 2 in this fight was necessary to deliver the knockout punch.

Looking at the financial U.S. markets this week, everything seems to be nice and rosy, but what happens when retail investors begin to once again take profits as the options expiration deadline came and went?

It seems that Mr. Obama has given up on the idea of natural economic stabilizers and decided to plow through all roadblocks by the use of mass media, paving the way for yet another ‘flash crash’ in the major exchanges. Quickly thereafter, many highly touted sources such as CNN Money, Reuters, Bloomberg, to name a few, began sugar-coating the reports rather nicely to prep up this dramatically quick rally in order to give a false sense of optimism. Indeed, in a week’s time, somehow, someway, they went from describing our doomed nature to praising the speedy and effective recovery.

Data? What data? Forget the real facts and figures, the statistics, the jobs, the unemployment rates and public sector jobs, it seems the only thing that matters now is technicals. “A positive read on the 200-day moving average supplies an underpinning and support for market sentiment that has proven to be important to this particular period (of the) market,” said John Stoltzfus, senior market strategist at Ticonderoga Securities in New York. Despite rapid intraday changes in direction, the market has managed to build a more positive tone since hitting a seven-month-low in early June. The S&P 500 .SPX decisively scaled its 200-day moving average this week, a key technical marker that could trigger more buying, according to Reuters.

So let’s get this straight. Because the conomy is hopelessly spiralling downwards into an empty abyss, the mass media and so called “professional” economists have begun to simply rely on technical analysis while ignoring the real underlying issue – The fact that in the long-run, eventually, the printing of money and borrowing to help the economy will lead to a high inflation that will override any technical analysis capabilities. This key principle is easily seen as Gold rallied to a record high near $1,260 an ounce on Friday as momentum triggered by buying of the metal as a haven from sovereign and financial risk pushed prices through technical resistance to near their previous peak.

Essentially what you have is the mass media helping take the public’s money by pursuing them to inch back into the financial and banking markets, while larger institutions and governments begin to stock pile on Gold at the same time. “We expect gold to continue to perform well given continued fiscal/debt challenges in Europe and the potential for this to spread to other regions,” Deutsche Bank said in a note. If this isn’t a sign that an economic meltdown similar to that of World War II is upon us, nothing is.

Key Points:

• Obama and others talking about the “recovery”, ‘this’ will be good for the “recovery”, ‘that’ is needed to keep the “recovery” going. Borrowing more won’t get you out of debt. Lowering interest rates won’t keep you out of debt. Losing jobs and creating private sector employment to keep rates up so more reports can be sugar-coated won’t get you out of debt.
• Let’s start with unemployment. 15,000,000 people are out of work, this means that this figure is nearly 10%. Last year it was 9.2% and the year before 5.7%. Is that a recovery?
• Last week the market rallied because it was reported that 450,000 new people filed for un employment when the market expected 453,000. Well, that number was revised up to 460,000 this week, while this weeks numbers were over 470,000 and the market continued to rise unexpectedly, approximately 30,000 higher.
• Lets look at Europe. The market and the Euro has recovered because of successful bond sales. So, we have countries on the verge of defaulting on their national debts, borrowing more money to pay the minimum on those debts, and that is good?
• Lets look at earnings. The big stock to watch last week was Fed Ex which gott a good pulse of buying based on shipping. Unfortunately, they missed earnings, big time. Best Buy, missed. Home Depot, looking pretty bad. Dell, guided lower.
• Then we have this oil issue in the Gulf. Neither the Government nor BP is being honest about what is happening here. There are scientists who say the relief well may not even work and the opening could enlarge, leaving plenty to wonder whether the Gulf will be ruined decades to come.
• GDP numbers have been steadily revised down.
• The market ignored the Japan PM stating that they are in danger of not being able to make debt payments, and may follow in Greece’s footsteps, not to mention their credit was also put on watch. Again, the market ignored it. Story courtesy of The New York Times.
• Housing is tanking with the expiration of the first time home buyer credit (mortgage applications are now down 40%). No wonder some democrats want to extend it, and surely extend unemployment benefits.

So, you can shove your charts, your ‘head and shoulders’ patterns and technical analysis back up those greedy black holes, because, quite frankly, the fundamentals, simply put, suck, not just in the U.S., but everywhere. The volume in this 2-week ‘sucker’ rally has been the lowest 2 weeks of the year. Therefore, in conclusion, no, the grass is not greener on the other side. Don’t be fooled into being one of the retail sheep who have been fancied into buying it, if you must invest, listen to your shepherds and stick to being a gold-digger.

Disclosure: Long FAZ

TheMarketFinancial is not paid, compensated or in any way incentivized to report news and developments about publicly traded companies, unless otherwise stated.

Initially starting in the film industry, during the past three years, Edoardo has studied the financial markets along with a few of his closest friends and began writing as an editor for one of the largest newspaper publications in his city. This offered him the opportunity to meet new co-workers and lifelong friends which ultimately led to him into moving onto helping form TheMarketFinancial.com. His portfolio style often follow the biotech field, with a mixture of long and short ideas, and has been quoted in a number of well known online financial publications. He prides in investigative research through the use of SEC filings, FDA calendars and mainstream media in order to bring about the most interesting stories to life.

Edoardo Lopezpineda

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