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Currently holding levels of PMD, and CCT; an economist who created theorems being bantered about for the Austerity v. Coase oppression investing, and new nest egg investing lifestyle rules. The theorems are measuring affects on markets and human unit plights over these next decades. I have been... More
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  • The Cliffs Surprise Market Messages - Houdini Illusion Still Alive! Updated Nov 21 2012 0 comments
    Nov 21, 2012 8:01 AM | about stocks: AGNC, AOD, CAT, F, SDRL, WYNN, ZNGA, AAPL, BAC

    World Markets Trying The Great Escape Are Taking Lessons From Harry Houdini - Part Two

    How true this prior article predicted the current events of today. Readers found we were witnesses of a market clearly setting up for runs to new market highs. The ECB through Mario Draghi continued finding the same policies workable as in acted by Ben Bernanke of the Federal Reserve. Actions set in motion had launched QE3 by the US and super supports in acted by Draghi of the ECB.

    Can the Dow make a run at 15,000 to 20,000 thousand before a more enduring correction occurs? We think YES, as based upon true Progressivism and TARP like atmosphere worldwide.

    New forms of radical politics are at play tackling inequality without hurting economic growth. Here is our suggestion for those holding elected offices, which steals ideas from both left and right to tackle inequality in three ways: Compete, Target, and Reform that does not harm growth.

    These thoughts are based upon the reelection of President Barack Obama 4 more years of holding the CEOs position for the United States of America following Tuesday's election results.

    THE OBAMA REELECTION SURPRISE

    (click to enlarge)

    The quick bipartisan for Obama crossing the isle to work with one another is the $60 - $120 trillion dollar question. He must, if he's going to save both his party and the republicans as well.

    To get a sense of scale, consider that the president's 2012 budget projected a $1.65 trillion deficit. That staggering number is obviously unnerving to ordinary American investors who try to live within their own family budget. Unfortunately, the way that official Washington calculates deficits dramatically understates the magnitude of the problem of the fiscal cliff. Many feel they are willing to jump out of the market and put their money into a mattress.

    The current approach in the presidents budget formula used by all presidents since Lyndon Johnson was devised too hide the cost of his Great Society programs and the Vietnam War.

    If the government used the same Generally Accepted Accounting Principles it requires companies to use, the annual deficit is actually about $5 trillion a year. That's three times higher than the official figure and means the government is consuming a much larger share of our national income than anybody wants to think about. Bottom line; it affects our ultimate GDP and corporation's ability to beat expectations and clearly registering the misses' log for this past 3rd Quarter reporting period. This opens the door to plan your buying points for reentry for market corrections post-election trading bringing significant gains on the near horizon.

    We found most of the differences between the official figures and the real deficit comes from acknowledging the unfunded liabilities for Social Security, Medicare, veterans' benefits, and other retirement programs.

    The gap between official government figures and reality is especially noticeable once you move beyond annual deficits and take a look at total debt. We have had congress raise the official debt ceiling. That's the total amount of money the government is formally allowed to borrow. We call this the Bernanke and Timothy F. Geithner "Extraordinary Measure Effect."

    The litmus test for our argument comes in the summer of 2011, following a high level of partisan bickering and theatrics that made everyone involved look bad, the debt ceiling was raised a couple of trillion dollars from $14 trillion to $16 trillion. While those are big numbers, the actual total debt of the US government is up to eight times higher-somewhere between $60 and $120 trillion. These figures reflect the future of keeping with all federal entitlement programs and infrastructural support of our national defense.

    The markets are setting to roar ahead! The Obama reelection surprise effect brings a bipartisan agreement. An agreement will occur between motivated actions for the president to pull off what former presidential candidate Mitt Romney proposed on the first day he would cross party lines to get a deal passed for getting America to avoid the immediate fiscal cliff concerns. Obama and his historical bipartisan shake with both houses of our legislative lawmakers is the immediate surprise the market is not pricing in a Santa Claus Rally ending 2012 and moving into 2013.

    Recently, John A. Boehner (bay-ner) the speaker of the House of Representatives. The morning after the election results this video sets the stage of avoiding the "Fiscal Cliff" concerns plaguing our markets moving forward.

    In remarks today on averting the president's "fiscal cliff," Speaker John Boehner cited the bipartisan Tax Reform Act of 1986 as a model for how Republicans and Democrats can work together to pave the way for long-term economic growth, help bring jobs home, and rein in our national debt:

    "There is an alternative to going over the fiscal cliff, in whole or in part. It involves making real changes to the financial structure of entitlement programs, and reforming our tax code to curb special-interest loopholes and deductions. By working together and creating a fairer, simpler, cleaner tax code, we can give our country a stronger, healthier economy. A stronger economy means more revenue, which is what the president seeks. … There's a model for tax reform that supports economic growth. It happened in 1986, with a Democratic House run by Tip O'Neill, and a Republican president named Ronald Reagan." -Speaker John Boehner, November 7, 2012

    Boehner says there were skeptics who doubted the benefits of tax reform in 1986. But "those skeptics were wrong."

    We see priority should be a Rooseveltian attack on monopolies and vested interests be they state-owned enterprises in China or big banks on Wall Street. Only a fraction of the European Union's economy is a genuine single market. Both the US and Europe need School reform and introducing through voucher choice for K-12 education for use of tax dollars to support both the private and public sector education systems are crucial.

    Getting rid of distortions, such as labour laws in Europe or the remnants of China's hukou system of household registration, would also make a huge difference.

    If you remember, "The illusion becomes reality when the masses no longer can tell the two apart." This is why many will be on the wrong side of the trade and miss another market run for even new highs within all the indices. These predictions come from target government spending on the poor and the young. In the emerging world too much cash goes to universal fuel subsidies that disproportionately favor the wealthy (in Asia) and unaffordable pensions that favor the relatively affluent (in Latin America). But the biggest target for reform is the welfare states of the rich world. Given their ageing societies, governments cannot hope to spend less on the elderly, but they can reduce the pace of increase-for instance, raising retirement ages more dramatically and means-testing the goodies on offer.

    The last reform Boehner has brought to the spotlight is reform of taxes: not to punish the rich but to raise money more efficiently and progressively. In poorer economies, where tax avoidance is rife, the focus should be on lower rates and better enforcement. In rich ones the gains should come from eliminating deductions that particularly benefit the wealthy (such as America's mortgage-interest deduction); narrowing the gap between tax rates on wages and capital income; and relying more on efficient taxes that are paid disproportionately by the rich, such as some property taxes. The passing of tax laws giving the middle class a reward to invest are critical for markets moving forward. Giving an investor within the middle class tax range to have zero (0) % Capital gains on long-term and short-term income.

    AFTER A MARKET BREAK, BUY WHAT RECOVERS IN PRICE

    There is nothing quite like a market break to show you where to find the strongest investments. This has been the case over the past four weeks.

    Good investments will recover quickly, and poor ones stay pinned to the mat. After a market decline, when deciding what to buy, look to the upside leaders. You will hesitate because you'd like to get the lower, bottom price of a few days earlier. But, in waiting, you'll miss the easiest profits that are possible at the bottom. Strong stocks are usually the first to rise and the last to fall. We are telling you to make this work to your advantage.

    Knowing what the voters gave a mandate for opens the doors for stock picking the names on our buy long positions list that should also be on yours. Look closely toward Caterpillar (CAT) giving exposure to world recoveries. Some investments traders' on CNBC thought Caterpillar was an "Ultimate Value Trap''. The foundations to emerging growth and mining for precious metals makes it a bellwether to keep in your clients portfolio. Keeping a near 5% dividend ensures overall stability to clients asset diversification moving forward.

    The other prominent emerging growth stock comes with Wynn Resorts LTD (WYNN) that has exposure emerging and within the local US. The wild card corporation is in the name of Zynga Inc. (ZNGA) having a Google type engine for e-commerce by being the top projected for linking on-line gambling that they already are first in line in the UK.

    If you are looking to acquire a long-term holding that has a true momentum; it comes with Ford Motor Company (F). Ford keeps doing it right with plenty of pipeline of new and innovative products. The other stock issue comes with the known fact that low interest rates will remain enforce by the programmed policies of Bernanke giving American Capital Agency Corporation (AGNC) that is the best in breed for portfolio diversity.

    The thought of what can CEFs bring to a Simple IRA or a retirement advisory account has been bantered about over the past several months. We think they still have a place within the IRA type of accounts. We like names that are reasonably priced, but offer yields worth your attention. Alpine Total Dynamic Dividend Fund (AOD) and other such types of MLPs should be on your radar. Alpine Funds can see a return back to the levels of $5.00 to $6.00 dollar a share NAV.

    OUR FINAL SUMMARY

    We see Caterpillar getting to an area around $95-$116 a share strike price. Look for Wynn Resorts LTD to see in the near-term Santa Claus Rally of $126.00-$134.00 share strike price. Don't think Ford is trapped in a trading range. Ford will find a return to their 52 week highs of $14.50-$17.75 share strike price.

    Why should I buy Zynga Inc.? The answer comes that it holds the best Risk to Reward metrics. We see to get back between $7.50-$10 dollars a share. They have many exposures and well positioned to be an M&A pickup.

    The REITs side of the market environment is based upon keeping a lower interest rate. These rates are projected to maintain for near-term 2013-2014. These low rates are the policies driven by both the ECB and the US; not to mention other emerging growth nations.

    American Capital Agency Corporation most recent 3rd Quarter conference call reflected a strong couple quarters moving into 2013. Getting the income from dividend is a good addition to one's portfolio. We see getting back over their most recent 52 week high and may see $48-$50 dollar a share because portfolios need performance.

    We have kept our eye on the oil plays. Seadrill LTD (SDRL) and others are in play. We see Seadrill to move back down into the low $30s, but give a great opening for reentry for the $.84 dividend and growth potential for this issue moving forward.

    Remember; always keep tight stops on all your investments. Watch closely, your bond income fund choices or individual purchase of bonds or Bunds for your income driving side in diversified portfolio management theory. We feel there are great ways to make money and the spreads of corporate bond issues for the 3-5 year ranges and moving into 15 years as the furthest out we recommend to any investor looking for secure in and out income.

    Knowing that God must be kept in your equation, we all need to keep the effort of this mindset for moving a society back within a social order that will work and upright many nations that adopt this critical concept in new oppression or austerity measures throughout our worlds nations.

    Keep looking for our next article series based upon the illusion the markets keep presenting. Best of luck in all your investment bringing higher returns based upon safe stock picks that make sense to own in the near-term and long-term.

    Please help my brother who is battling his cancer of Non Hodgkin Lymphoma. He received a Bone Marrow-Stem Cell transplant out of Loyola in Chicago August 2012. The costs have overwhelmed his family. We have setup a co-fundraiser with The National Marrow Donor Program (NMDP) Be The Match. You can help by going to "Help Perry Gornick". Thank you, and God bless.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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