I wanna run, I want to hide
I want to tear down the walls that hold me inside
I want to reach out and touch the flame
Where the streets have no name
I want to feel sunlight on my face
I see the dust-cloud disappear without a trace
I want to take shelter from the poison rain
Where the streets have no name
Where the streets have no name
Where the streets have no name

-U2

"For the record U2 and the individual band members have a totally clean record with every jurisdiction to which they are required to pay tax and have never been and will never be involved in tax evasion"
-The Edge to the Baltimore Sun

When U2 saw its taxes leap to $1.1 million in 2006 after only having to pay $46,500 in 2005, the band did what any smart band would do ... moved its corporation to a cheaper tax domain. The move to Amsterdam must have saved the band hundreds of millions on the more than $1.0 billion it's raked in since then. It's always better to find a place where the accounts have no names to shelter hard earned bucks.

This is particularly true of famous leftists banking big time money. Hey, I'm a fan of the music and commonsense action to keep more of what they've earned.

Washington DC was a busy place yesterday with the IRS scandal moving to the Senate while Tim Cook was under the microscope for saving money on taxes but not breaking laws. Apparently, Apple uses a subsidiary in Ireland that doesn't have to pay taxes to that nation because it's managed from outside and doesn't have to pay taxes to America because it's not an American company. I'm sure this angers some people, more often than not people that pay no taxes and those in government see a chance to play the class warfare card and try to embarrass a symbol of American capitalism.

It was really as self-serving as it gets in a town where accountability has been thrown out the window and finger pointing is as close to honest debate as one could expect.

In the meantime the guys in charge of the IRS while it targeted Tea Party groups did their best Barney Fife impression as they continue to claim they know nothing, can't remember anything, but are sure singling out conservatives weren't "politically motivated." The bumbling by itself is disappointing, but using the IRS as a political weapon is deplorable. So, while one guy was defending his company (Apple) because it only paid $6.0 billion in taxes last year some guys down the street were trying to build a moat around the White House using the dirt from excavation to bury truth.

The fact of the matter, and it was only brushed a couple of times yesterday, is American policymakers have their work cut out trying to lure and keep businesses here while the world beckons. Two decades ago jobs began to shift because it was much cheaper to manufacture abroad. Now, the dilemma is the fact that the customer base is growing faster outside the United States. Coupled with an educated workforce, particularly in Asia, it makes a lot more business sense to manufacture closest to your customers with a smart and cheaper workforce.

Add to this mix the highest corporate taxes in the world and just how does America lure some of that $1.5 trillion offshore stash back home.

There have to be pro-growth policies coupled with lower taxes. Otherwise it's the just the armies of the government and giant businesses going around in circles. Yesterday, Tim Cook said he was cool with corporate taxes in the 20% range with expatriated taxes in the single digits. That would be a great start but for a government that doesn't get the idea that generating prosperity across the board that would see even greater tax receipts than confiscatory and punitive policies.

Conclusion

The tax code and IRS would be better used to enforce tax policies that aim to fund government, not create rivals to the private sector. Increasing the army of storm troopers will only embolden more of the despicable action that saw political opponents of President Obama targeted and punished. A terrible mistake is being made when even the most liberal of corporate chiefs fights against current tax policy.

(I do find it funny Cook took shots at companies that use offshore banks in the Caribbean while he found the most convoluted maze imaginable to not pay taxes on billions of dollars. Even with tax avoidance some people think they're nobler than others).

I don't hold out hope for sanity to invade the White House, especially economic sanity, but will we spend the next three years going from excuse to excuse? There are so many challenges for the nation we can't meet any of them without capital and fossil fuels and the same people mucking up works for both. It is time to tear down the walls that hold greatness in the ground and gobs of money outside the country. Let's put an end to the poison rain.

https://www.wstreet.com/user/register.asp?source=3

Pythagoras' cult prayed to the tetratktys, or first four digits.

* One - represented reason
* Two - represented argument
* Three - represented harmony
* Four - represented justice

Then there's the famous theorem that made Pythagoras a household name even to this day. He was so excited upon proving his theorem Pythagoras sacrificed a cow (I said they didn't eat meat but it didn't stop them from having fun). When we examine the stock market rally, we have to take into account the four digits from the Pythagoras belief system. The one that bothered me most yesterday was "reason." The big news (according to news types that have no clue about how to make money) was Yahoo buying Tumblr for $1.1 billion. A deal some would say there was no rhyme or reason for considering the price tag.

I can't call it yet, but it seems like a high price to pay, but I've watched names like CSCO and MSFT languish for years in part to holding on to too much cash. In that regard I think it was a smart deal. Then there is reason with respect to the broad market rally and its justification. I've gone along with the idea the rally is justified and still think there are scores of individual stocks still cheap enough to own - especially if you can catch a dip. Still, you are going to get arguments on this from smart people, angry people, people who have no clue and people that simply want to see America fail.

Part of the problem is that there is no harmony. It would be so much easier if the economy was generating 300,000 jobs a month, factories were being built, and the Fed didn't feel obligated to pump in $85.0 billion a month. Yet stocks zoom. Stocks are higher even as GDP growth barely stays above water. There is no harmony between the stock market and the US economy, but with Tim Cook heading to Capitol Hill today to discuss corporate taxes we are reminded that many of the biggest publicly traded names make more money outside this country than inside.

Poetic Justice

Surely as the divine powers take note of the dutiful,
surely as there is any justice anywhere and a mind
recognizing in itself what is right, may the gods
bring you your earned rewards.
-Virgil

Finally there's the issue of justice. I watched the market move mostly sideways for years after the 2001 market crash, ignoring amazing profits as investors had licked their wounds and moved on to the housing bubble. That same bubble took stocks down even more, aided by bumbling lawmakers that bailed out failed businesses in the name of a soft landing. Well, it was anything but soft and took another giant chunk of confidence from the investing public. Now those same investors are coming back to the market hoping not to get hammered again.

The haters would love to see investors troop back into stocks and get scorched again to teach them a lesson. There really are some out there content to have missed 9,000 Dow points because such profits are unethically based on Fed money printing. It's not good enough for them to miss out, but they resent the public not worshiping at their altar of fear. Yes, there are so many things wrong with America and we are on that well-worn path of Greece but we are still America - for now. I suspect reluctant investors just getting back in the mix will be tested soon.

I can say already many will fail based on some comments I heard yesterday about the fact a couple of our buy and hold ideas haven't moved up much - since last week.

Beyond the stock market, the nation is dealing with a series of scandals that will test our belief in Justice when it comes to the highest powers in the land.

For now, I think there is an element of justice to the rally for those of us that have dealt with the long trip of indifference and near death.

Conclusion

If Wall Street was only about the numbers on a day to day basis the market would be easy, but it's about emotions on a day to day basis, trust on a day to day basis, consensus on a day to day basis, and hype on a day to day basis. Yes, there is a lot of public information, but the public is severely uneducated about the market in general and even names in their portfolios. Numbers do matter in the end, and it's that plus the human element to make those numbers happen again and again that eventually determine the fate of stocks.

I think the market, when it's not reacting to exogenous forces and events, does rely on reason, argument, harmony and yes justice, too.

War on Capitalism

Today, Tim Cook has to explain taxes and expenditures to a bunch of Senators and give a reason why Apple loathes bringing overseas profits back to America. The richest company in the world actually has more -real- money than the United States government, yet they want to scold him on how to spend the riches that belong to Apple shareholders.

Today also sees a vote on whether Jamie Dimon should retain both the CEO and Chairman's titles at JP Morgan. Considering the company is considered the best run business on Wall Street, and some would say all of America, it's kind of crazy this spectacle is occurring in the first place.

https://www.wstreet.com/user/register.asp?source=3

Doubling wages means fewer workers, higher prices for customers, and less profit for shareholders. Essentially those are the goals of the puppet master behind the walkout.

These kinds of debates, which we'll see more of as there is a push from the left for a dramatic hike in the federal minimum wage, always miss the true human angle - the true human tragedy.

During our dustup I mentioned the city of Detroit as a glaring example of how the progressive agenda can destroy industry, family and even a grand city once called Paris of the West. Amazingly the idea of wages that exceed the boundaries of the free market is always promoted as fair, or caring, or smart. In the end it is none of those things. This ideology skews reality while mitigating the obligations of would-be workers. It encourages minimum effort to learn to sacrifice to be a greater asset to the employer and community.

To be frank, it's a lie that destroys futures.

Those McDonald's workers in Milwaukee were carrying nice signs obviously designed and made for them by others. Behind the scenes union officials have been pushing organized labor at the largest businesses in America from McDonald's to Wal-Mart. Part of that push means wage demands that are unrealistic for reasons already mentioned that would reward mediocrity. We are told, and evidence backs up the notion, the more education we attain the more money we'll earn. The narrative these days, however, is we must reward those that haven't made the effort, that somehow those with the least amount of education should be rewarded with large increases in wages.

For me it gets back to the most dreaded aspect of liberal thinking - making poverty just comfortable enough for those snared by it to not make the right kind of effort to escape.

The avalanche of programs from food stamps, tax credits and local programs has put recipients in a position of actually having to take a haircut to go to work and early possible raises in salary actually result in lower net income. That's the drawback for those that want to work and for those people that don't want to work - they really don't have to so millions have checked out. The pride, rigors and foundations built from going to work at any job aren't developed by these people otherwise portrayed as victims of capitalism rather than victims of policies designed to hijack capitalism.

When someone is overpaid for their skill set they rarely bring up those skills. To reward McDonald's workers with a 100% wage increase would remove the urge to find better employment and remove the need to sharpen skills that would have been needed to attain a better job. This is how it happens. In Detroit wages were too high, the entitlement culture from city officials to city residents ran amok to the point of implosion. Now the city must brace for true austerity if it is ever going to shed the shackles of deficits.

I've seen this on household and neighborhood levels in my lifetime. It's politically incorrect to demand more from disadvantaged people. Over the years we've watered down school tests, implemented employment quotas and had hundreds of jobs programs. What has never been done is going to people and saying: "You must bring it up!" Businesses deal with demands from powerful politicians and organized labor and rich special interest groups, yet we don't demand sacrifice or extra effort from those getting all the attention, money and sympathy.

Those workers at that Milwaukee McDonald's would be cursed if their wages doubled. They would become complacent and future expectations for what their limited job skills would demand would lead to heartache and frustration if they ever decided to leave Mickey D's in the first place. Those pulling the strings honestly don't care about people becoming lifelong welfare recipients or fast food employees as long as they can chip away at the capitalistic structure of America.

I worked at McDonald's between high school graduation and entering the Air Force. It was a nice place to work and had programs for those eager enough to give extra effort. In fact, I met a young Black manager from another store who was in a program that would eventually help him purchase his own franchise. The program demanded a lot from him including a grueling work schedule and continued education. Imagine that, a program with real demands and real rewards.

The cycle of poverty will never be broken with government programs, higher taxes for the rich and businesses, or artificially high wages. It can only be broken by individuals that demand more of themselves. It can only be broken by people that reject trinkets like free cell phones and the narrative their lot on life is determined by others that don't like them. The cycle of poverty can only be broken by people that reject the notion of victimization, embrace the idea life isn't fair but can be altered.

The chains of poverty can only be broken when people know they are being played by special interest groups and politicians and reject their Faustian deals.

The beautiful thing about America is the chains of poverty can be broken.

Scandal's Silver Lining

If there is a way to stall President Obama's anti-business campaign it's great news for the economy and stock market. Sure, higher taxes and oceans of new regulations are in place or on the way but the dream goal of making corporate profits part of the public domain get pushed back. Moreover, there is greater hope Obamacare could be derailed, although the administration will fight with and without Marquis De Queensbury rules to keep it on track.

In the meantime these scandals should embolden the GOP to put up more fight and make a charge in 2014.

Historically these scandals haven't had much impact on the economy, save for the bitter end of Nixon which coincided with the Oil Embargo.

Watergate

GDP: 1972 5.3% (up even more after scandal broke) 1973 5.8% and 1974 -0.6%
Jobs: 1972 1.8 million after scandal broke, 1973 2.76 million and 1974 584,000 into August

Iran-Contra

GDP: 1985 4.1%, 1986 2.2% in first quarter
Jobs: 1985 961,000 from August to end of year, 1986 1.89 million 1987 652,000 to March

Monica Lewinsky
https://www.wstreet.com/user/register.asp?source=3

GDP: 1998 4.4%
Jobs: 3.0 million

Throughout these scandals the market mostly went sideways until the final days of Nixon, while up dramatically during Monica Lewinsky scandal.

Well did the market come to a bump in the road or the end of the road yesterday? It wasn't a dramatic selloff, except it was a selloff, and it happened at the exact time the market had been rallying. There was a reason for the abrupt stumble into the closing bell. San Francisco Fed President John Williams mentioned the possibility of less bond buying as the economy improves. According to his own models, the economy is picking up the pace, and that means the $85.0 billion a month crutch can be tapered off and maybe ditched by year's end.

This would be big news from any Fed official, but Mr. Williams is a die-in-the-wool dove, and he's beginning to see the light. Well, not see the light per se just thinks the economy is on the cusp of walking like a natural man. I'm not convinced about the strength of the economy, things are gradually getting better, but the things that make the Fed print in the first place are abundant. Be that as it may, one day the Fed has to stop this wild experiment that challenges everything from common sense to laws of math. It would be great if they pulled the plug on the presses in an obviously strong economy.

It would have better if the Fed never printed at all, but it's a moot point.

What is interesting for the second time in as many days is we saw investors bolt for the exits fast. The first time was the initial reaction to earnings from Deere that saw its share collapse $10.00. There is a serious undercurrent of anxiety, a pullback would relieve a lot of that even if it means doves stop crying.

Message of Hard Asset Markets

Very rich people get ready for inflation different than you and I- they don't buy guns and bomb shelters.

While debate rages over how much impact Ben Bernanke has had in the stock market rally, there is no doubt Fed money printing is the main driver for an unprecedented rally in art. On Wednesday, Christie's established numerous records with an auction of contemporary art.

The total haul (with commission) was a staggering $495.0 million paced by an array of new milestones:

> Nine works $10M plus

> 23 works $5M plus

> 16 new artist records

(click to enlarge)

Gold Buyers

Much has been made of the dramatic decline in the price of gold, but there's another phenomenon happening. People around the world are scooping up physical gold. While it's true jewelry demand has additional drivers in places like India and China, but demand popped in the United States as well in the first quarter.

People, central banks and technology still seeking the shining metal and history hedge against inflation.

(click to enlarge)

Notes:

> First increase in jewelry for US since 2005

> Chinese jewelry demand of 185 metric tons a new record

> Middle East jewelry demand +15%

In addition to consumer demand for physical gold, Central Banks acquired 109 metric tons during the quarter marking it the seventh consecutive quarter above 100 metric tons. The big sellers were ETFs which saw net outflows of 177 metric tons. Technology sector demand surpassed 100 metric tons for the quarter as well.

It's obvious the anticipated great rotation into equities from bonds has already begun in the gold market. But the unreported story is that of physical demand, which has several narratives. Taken in conjunction with blazing prices in the art world, it's clear many individuals still see physical hard assets as the best way to hedge against an impending explosion in the rate of inflation. It hasn't happened yet, and it probably becomes the worst-case scenario long after most predictions.

For these purchasers, it doesn't matter when it happens. In fact if they were worried about timing, ETF demand for gold would be much higher as it's more liquid than gold bars. While he's the hot artist of the moment, you just don't wake up with the notion of dumping a Basquiat for $50.0 million that same day.

https://www.wstreet.com/user/register.asp?source=3

> IRS
> AP
> Benghazi
> Army Sex Misconduct

How these are handled will tell us even more about the administration and give insight into how dangerous the power grab of the past four years is.

Obama Administration vs. Tea Party & Individual Rights

This IRS scandal is so egregious it might even ripple through Main Street. How amazing is all the talk of suppression of the Black vote when in reality it was members of conservative organizations like the Tea Party that were being denied opportunities to grow stronger opposition to President Obama. This was real suppression, real intimidation, and real harassment. I don't think anyone had to answer how many bubbles are in a bar of soap but IRS demanded donor lists, copies of speeches, manuals and even list of books people in organizations read.

It's the oldest trick in the book, do to your enemy what you are accusing them of doing to you. It is real underhanded stuff. Yes, the administration really stuck it to organizations that dared to think for themselves and had to gall to ask for nothing from government. Talk about turning the government reliance agenda on its head-how could anyone turn down more food stamps, earned income tax credits, child tax credits, welfare, and more goodies. The Tea Party said "no thanks," and their message was catching on; see 2010 election results.

This is the height of hypocrisy, but the administration isn't very contrite despite the resignation of Steven Miller, acting head of the IRS.

Separate Sinister Entity

"Unfortunately, you're grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that's at the root of all our problems. Some of these same voices also do their best to gum up the works. They'll warn that tyranny always lurking just around the corner. You should reject these voices."
-President Obama

Thank God for voices of tyranny; the kind of voices that rejected a King; the kind of voices that rejected a Madman; the kind of voice that rejected a rule about where to sit on a bus; and the kind of voices that rejected laws of knowledge that could have never conceived personal computers, laptops, smart phones and medicines that doubled life expectancy in a century. The voices of tyranny came along at the exact moment the nation needed them. An agenda to completely remake America had begun; its consequences would have destroyed the greatest nation to every grace in the planet.

To tell kids attending a college graduation to reject the kind of voices that spurred previous generations to greatness is hubris, the kind of hubris that says the ends justify the means. In this case, the best way to shut out those voices was to derail specific organizations by any means necessary. For people that dared to think differently than Barack Obama, tyranny wasn't lurking around the corner, it was lurking in the very government sworn to protect individual liberties and freedoms.

Put up Your Dukes

"I haven't been treated with a lot of respect...this isn't a personal thing, but I am the Attorney General of the United States!"
-Eric Holder

During his hearing in front of congressional leaders, Attorney General Eric Holder ripped into Darrel Issa (R) Ca. After suggesting Mr. Holder was holding back details concerning the nomination process for Labor Department Secretary after Congress got a bunch of emails concerning Tom Perez that simply had to and from and no contents. When Issa made this point, Holder replied that the congressman from California was "unprofessional" and his conduct "shameful."

It was ugly to say the least.

It's Okay ... it's Your Money Anyway

It hurts doesn't it? Your hopes dashed, your dreams down the toilet. And your fate is sitting right besides you.
-Teddy KGB (John Malkovich) in Rounders

After the bell, news broke that Elon Musk would purchase $100.0 million of Tesla's stock sending the shares to the moon ... or I should say the moon of another planet since the stock was already in deep orbit. I immediately thought of a few scenes in the movie Rounders including the one where the protagonist, Teddy KGB just lost a lot of money to Matt Damon's character but goaded him into playing longer by reminding him in not the prettiest way of a prior crushing defeat.

Elon Musk is sticking it to the shorts.

At least 45% of Telsa [[TSLA]] shares are short. That means of all the shares issued to the public (float) 45% have been borrowed and are already sold. It's mostly the smartest guys in the room doing this and as I've written for weeks now, those guys aren't looking so smart these days.

(Tesla is featured in our December 2012 Newsletter, and our analytical team wanted to take profits, but I said let's wait until it gets to $100. but now we might have to set our sights higher.)

Rooting Interest

I root for the underdog almost always, and this week I've had a lot to cheer about. Elon Musk is rich and successful, but he's also the personification of the little guy making good. His success hasn't stopped Wall Street from beating hugely on his failure. The Tea Party rose like a Phoenix to influence the conversation and derail a locomotive. Just as titans of the street tried to level Musk, titans of government and their powerful tools were used to level the Tea Party.

This week the little guys are winning, and it feels great.

Today's Session

There was a time when Cisco Systems [[CSCO]] could carry the entire market, but that was a long time ago when John Chambers was Chief Excitement Officer. Today, however, it looks like earnings results from Cisco will help NASDAQ open higher while the broad market is dealing with initial jobless claims that were not good.

(click to enlarge)

Cisco is finally making major inroads into the hotter growth areas of technology, and the Street loves it. Revenue increase that reflect strong gains into cloud computing and other areas is what's moving the stock

> Data Center +77%
> Service Provider Video +30%
> Wireless +27%

Migration Series Jacob Lawrence

At this point it would seem some kind of bankruptcy is in the offing. But problems don't go away with such a decision. And while there will be debates over where money comes from and who pays for a bailout, the bigger tougher question is how this once great city truly recovers.

The story of Detroit must be followed closely because of its economic and moral implications. The economic part is not just what's happening at this very moment but policies and ideas that brought the former Paris of the West to the point of state takeover. The city is spending money it doesn't have and now must figure out how to live within its means even as it now must also find ways to pay its massive deficit.

$326.6 million unrestricted deficit
+$60.0 million added at end of fiscal year (June 30)
$386.0 million

In a town where citizens feel services are poor to non-existent, officials will actually have to do even less. This adds to the serious death spiral of pessimism and defiance. It's estimated that $247 million in property taxes and fees went uncollected in 2012 from more than 150,000 (47%) of owners, mostly out of defiance. There were at least 77 blocks were only a single homeowner paid their property taxes. They say "why" taxes go to pay for service that stopped a long time ago.

Then there's word city officials severely inflated property tax rates. In fact, one report says officials are leveling taxes at 10 times the selling price of properties by discarding 94% of sales made last year.
Talk about highway robbery. But this is what happens when lavish promises are made while a city, state, or country bites the hand that feeds it. Government "revenue" is mostly the function of taxes. When politicians promise money they have to know where that money is coming from. Unlike the cyclicality of the economy those promises are never adjusted lower- there is never a recession in government promises.

Almost all municipalities now facing difficulties are in trouble from promises made to government workers and are hiking taxes in order to pay them. Coupled with promises to those with lower incomes, it means higher taxes on successful people and businesses have to be levied. But higher taxes ultimately means lower return - it's the law of diminishing returns personified by less output, and flight of (talented) people and capital, while less talented people keep coming in.

In one hundred years Detroit went from a magical city playing an amazing role in industrialization of America but also assimilation of races (in the beginning painful), and beacon of hope. The Progressive movement played an early role there in trying to mitigate business and in the beginning unions and other pressure did lead to better wages for all - making the city a magnet. But, the pendulum swung too far resulting in wages that were too high, promises too rich and habitual spending that continues to be the unshakable addiction.

There might be state and federal money to help Detroit but in my mind there's only one real solution.

Time to Grab Bootstraps and Embrace Capitalism

Detroit is one of the homes of progressivism in America which helped to make wages better but at some point began to push businesses out of the city. High taxes and tough unions made competition so difficult industry in the city suffered. In the meantime, a certain lifestyle became the norm for both citizens and government officials. Money was spent, promises were made and the seeds of the current economic malaise were sown.

There was a flight of businesses and people, the former often to other states, the latter to the suburbs.

The city must find ways to bring back business, population, and education.

(click to enlarge)

Luring Them Back

Only people fleeing third world nations are going to be lured away from their homes to live in welfare states. Americans, even after four years of being told to limit dreams to the Middle Class status that amounts to living paycheck to paycheck, want more. Even as we are told our earnings and our children are part of the public domain we still seek better lives. For most that means better jobs and better opportunities for our children. This is only going to happen if the private sector thrives.

Government run or dominated economies have always failed and always will no matter how appealing it may seem on paper or in flowery speeches.

Government has to be crowded out by the private sector, easier said than done since it mostly happens the opposite way.

Currently eight of the top ten employers in Detroit are government, education and healthcare. Private businesses are only 10% of employers, and there is simply no way the city can ever get back on its feet with a model that relies on high taxes to create jobs as people flee the city. Those leaving are brilliant and innovative. Those staying behind are needy and have been coddled so much with so many programs their ability to stand erect without government aid has almost vanished.

The city would do better to lower taxes instead of raising them as (soon -to- be-former) Mayor Bing wanted.

Luring Business

Already Dan Gilbert, founder of Quicken Loans, has shown smart, deep-pocketed business people are willing to make investments in Detroit. His purchases in an effort to jump-start a mini Silicon Valley have included the old Federal Reserve Building, Chase Tower and First National Bank. In total his investments include:

> 9 buildings
> 3 parking structures
> 1 lot

Others are following his lead but even that must be pushed with encouragement. Otherwise a citywide recovery where there is an oasis or two wouldn't be much better. Of course importing businesses and smart people is only a part of the equation - there has to be homegrown talent, too.

Homegrown talent means better education and no more excuses. I spoke with a Detroit based professor who informed me that 47% of the population was functionally illiterate. A liberal, the professor gave me the stat as a reason for more government aid in the form of welfare spending. In my mind that would sink the people of Detroit farther down the abyss of despair. But it underscores the sense of urgency and points to how failed economic policy goes to the roots of society.

The good news is graduation rate is above 50%, having hit 65% last year but the dropout rate is still 20% and there is still a lot of hopelessness.

The cure to Detroit is a combination of things, almost all painful. People born into despair will bristle at the idea they must pay such a price for good times had by folks that have passed on or moved on. It's the only way to get this done. Tough austerity that can only work if articulated with a plan that citizens buy into. A plan that somehow gets people to pay their taxes because they understand a metamorphosis will take time and money and sacrifice.

The same people that have been told since birth things are owed to them rather than expected of them will have to be sold on putting skin in the game on the notion there is no other way to be great again.

They have to know they can be Paris of the West again but the foundation starts in a deep dark hole.

Today's Session

Equity futures have been under pressure most of the morning and it looks like we'll start the session lower. Of course that's been a green light for buyers that have put a twist on the notion of buying dips. It used to be buying the dip over a few days or weeks, even months. There will be that dip that keeps on dipping for a real pullback, yet I'm not sure what triggers such a move. Right now the US economy is gradually improving, albeit not at the pace it could or should, and expectations are still low enough to have modest growth and Fed money printing.

But there is angst beneath the veneer of the market, make no mistake. Case in point Deere [[DE]], which posted results this morning that blew away consensus and were the best in company history, yet the initial reaction from the stock market was an immediate $10.00 dive. It speaks to the fact everyone is looking for THE pullback - the real dip. Management offered cautious guidance based on the same stuff everyone's been worried or cautioned about for years.

Income was the highest ever from an increase in the global farm economy:

US & Canada +9%
OUS +9%

Agriculture was on fire, up 12% offsetting a continued slump in construction, -6%. Guidance was cautious but South America, powered by Brazil, is seen up as much as 20%. The most important line in guidance was:

Company will "capitalize on the world's increasing need for food, shelter and infrastructure in the years ahead."

This brings up a serious dilemma. Taking profits after huge moves to avoid the next pullback, even if you have great faith based on the work that same stocks will be much higher down the road. It's easier said than done to say we'll hold when the time between now and "down the road" could see a lot of gains evaporate or fade significantly. Deere is a stock I would hold, but if I were up 20% or more write calls against or even take off the table, but making sure to reenter after 30 days.

https://www.wstreet.com/user/register.asp?source=3