Humble Opinion vs Manipulation ~ John Norquay

April 10, 2012

The briefing was updated Sunday and can be found in The Briefing Room.

Humble opinion vs. Manipulation

In the news we have read about the continual improvement in the jobs situation. We have discussed the importance of jobs data during election years. If it is deteriorating, the incumbant never gets elected. Thats it. Simple and straight forward. Everything in 2012 that comes out of the current administration will be jobs based and it may look better than it actually is. The good news for us is that every now and again reality seeps in and everyone (the market) has to pay attention.

Bernanke mentioned in a speech that if the people believe we are in a recession, even though we currently aren't, we will soon be, simply due to the change in spending habits. How do you fight this if you are the chairman of the Fed? Tell the people everything is ok, then print more money for them to spend. Unfortunately the new money never seems to get down to us at the bottom of the food chain until AFTER gas is over $4 per gallon and food prices have sky rocketed.

Europe has copied this approach and is paying dearly for it as we speak. Greece has already had over 90 ammendments to the austerity measures introduced. The alcoholic simply wants another drink. Spain, even though the European Fed quadrupled their money supply is being charged increasingly more to borrow money by the bond markets. Their inability to pay back their loans will be a continuing topic for 2012. The French stock index (CAC 40) is down over 20% from its high over the last year. The German Dax is down over 12%. Could the U.S. be next?

Earnings season starts with Alcoa at the close of the market today. According to an article in the Wall Street Journal today, Companies within the S&P 500 are expected to have the worst earnings since the financial crisis. Does this corroborate the picture of improving jobs data? I didn't think so either.

Look what else is going on around the world right now. North Korea is breaking all kinds of treaties by launching a long range rocket that others feel will eventually carry nuclear war heads. Iran is certainly not willing to back down on their nuclear ambitions and have basically told Israel and the U.S. to "bring it on". Syria doesn't care about the U.N. deadlines and is inviting world involvement.

The market today (Tuesday) seems to be feeling the pain of an ailing world and questioning the rhetoric of it's leaders. It is down nearly 4% since we exited our last positions and so far today hasn't shown signs of stopping. This will create excellent wholesale opportunities for our portfolios as this pullback unfolds.

Please visit the briefing room and get a detailed analysis of our plans and thoughts for the current market conditions.

Have a great day!!

John Norquay
CEO PivotPoint Advisors

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