Peter Dag & Friends: November 2011

11/30/11

Print, print, print

Six central banks led by the Federal Reserve lowered the cost of emergency dollar funding for financial companies in a global effort to ease Europe’s sovereign-debt crisis.

The new interest rate is the dollar overnight index swap rate plus 50 basis points, a half percentage-point cut, and the program was extended by six months to Feb. 1, 2013, the Fed said today in a statement in Washington. The Fed coordinated the move with the European Central Bank as well as the Bank of Canada, Bank of England, Bank of Japan, and Swiss National Bank. (SNBN) (Source: Bloomberg)

The global central banks seem to have decided to solve the problems we are facing with more liquidity.

But the problems of Europe are structural - and I am thinking about Italy, Greece, and Spain in particular. These countries cannot compete in the world markets. They cannot survive by just borrowing money.

The problems remain - solidly in place. Because the power structure of those countries will do anything to maintain the control of those economies. The little guy is going to pay the price. As usual.

Is reflation the solution of the global credit issues?

More details in my The Peter Dag Portfolio , in Dag's Exclusive market Alert, and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

11/28/11

A picture is worth ....

The markets soared today.

But make no mistake about it. The crisis is alive and well. Just click on the chart to enlarge it.

More details in my The Peter Dag Portfolio , in Dag's Exclusive market Alert, and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/26/11

Thought of the day

Politicians take advantage of every situation to gain power and wealth (after they become lobbyists). They are human - this is what humans do. Any time. Any place.

Then problems arise because they think the next guys will solve the issue they created. But the next guys try to kick the can and pass the ball to the next set of politicians. And so on, and so on.

Eventually the time comes to pay the piper. Some ideas are beginning to float of what the problems might be. The seniors protest. New ideas. The unions protest. New ideas. The police and the firemen intimidate us with loss of security. Then defense. No way! The lengthening of the age to receive Social Security. Are you kidding? -- Political suicide.

The best line of action -- fake it. Kick the can down the road. More super committees.

This is what the Europeans have done. The lesson? Politicians are bound, forced to wait for the crisis to erupt. Only then will the people understand and accept the solutions. That we like them or not.

The Europeans waited until the crisis unfolded. Now they are forced to solve the problem. The PIIGS could not keep borrowing at German interest rates. Interest rates are soaring. Their economies are in disrepair. The people will accept any solution, even if they do not understand what is being done to them.

The USA is next. It is not that we do not know the solutions. The problem is that the people do not accept them. They will accept them only when we are facing the ugly crisis.

We cannot keep borrowing at zero percent interest rates forever. The PIIGS cold not keep borrowing at German interest rates forever. The script is the European script. And it will provide exciting investment opportunities.

More details in my The Peter Dag Portfolio , in Dag's Exclusive market Alert, and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/25/11

Obsevations

A client called me to discuss recent market events. He mentioned some statistics showing the steady decline in the population of the western world from Russia to Western Europe, and possibly of the US.

Is the western world disappearing? Should we worry? What are the implications?

The most direct concern is that we are aging and we need someone to support us. As things stand now, it is not going to come from our direct siblings. We need fresh new blood.

This is where immigration plays an important role. Governments have promised, and we demanded, protection when we retire and become old. These are great ideas. But someone has to work and pay taxes to support these programs.

As an immigrant, I created wealth. I paid taxes, which have been redistributed to the rest of the community to support needed social programs. I employ several poeple in by business. Because of demographic trends, other immigrants will do the same for me, otherwise social programs will have to be cut.

But there is another angle to immigration. The world is in turmoil because the income differential among nations is widening. It is not a coincidence, as I discussed after 9/11, that acts of terrorism happen between rich and poor countries. See our website www.peterdag.com under Understanding the Markets.

Immigration allows wealth re-distribution. Money earned by immigrants in wealthy countries is quite often sent to relatives left behind.

What I am trying to say is that the “market” is solving several problems. The decline of population growth puts at risk social programs. The new blood coming to the countries with loss of population allows these programs to survive. Immigration also allows a “friendly” way to redistribute the wealth of the west.

It is not a perfect world. The issue of income differential is a serious one and is not resolved by insulating the rich countries from the poor ones or through acts of terrorism.

(This Observations appeared in the 11/11/02 issue of The Peter Dag Portfolio)

More details in my The Peter Dag Portfolio , in Dag's Exclusive market Alert, and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/24/11

European trends

German Chancellor Angela Merkel again ruled out joint euro-area borrowing and an expanded role for the European Central Bank in fighting the debt crisis.

Euro bonds are “not needed and not appropriate,” Merkel said today at a press conference with Italian Prime Minister Mario Monti and French President Nicolas Sarkozy in Strasbourg, France. She said euro bonds would “level the difference” in euro-region interest rates. “It would be a completely wrong signal to ignore those diverging interest rates because they’re an indicator of where work still needs to be done.” (Source: Bloomberg)

The bottom line is that banks will have to recapitalize and pay the price for lending to governments that could not repay their loans.

Countries will have to restructure (something I think very difficult) to become more efficient and be able to compete with Germany.

In other words, Germany wants to solve the European debt problem with less debt and improved productivity.

We, in the USA, want to solve our debt problem with more debt.

More details in my The Peter Dag Portfolio , in Dag's Exclusive market Alert, and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Technical patterns

1120-1125 remains an important support range. The market could very well regroup close to it.

Let's hope so. For the time being, however, risk seems to be rising. I will be more specific in the my next "Market Update" of 11/27/ on www.peterdag.com for my subscribers. Friday could bring more surprises.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/22/11

Late night thought

The market futures are down sharply. Asia is down. Risk indicators are rising.

Are we close to panic? The odds are the bottom is not too far. We tend to panic when the market is close to a bottom.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

How can we do it if ....

"If Congress fails to act over the next year, the Department of Defense will face devastating, automatic, across-the-board cuts that will tear a seam in the nation's defense," Panetta said in a statement. (Souces: Bloomberg)

Of course. No one wants cuts. How can we control the growth of the deficits if everybody complaints - defense, Medicare, Social Security, housing, subsidies to everybody, ....?

We want to do it by cutting someone else's programs. Not ours. Incredible!!! We all need to make sacrifices.

Like the Italians, the Greeks, .... we were given too much. Now they have to take some away and we protest. The pendulum is swinging.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/21/11

Latest news

The US$ Libor rate is soaring. Is it bad news? Read The Peter Dag Portfolio. Our subscribers know exactly the meaning and implications of this trend.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Market trends

An ugly opening this morning.....commodities down...stock futures sharply lower....gold down...European market sharply lower ... My subscribers know why.
The only place to hide: US Treasury bonds.
1125 is an important support levels.

More details in my The Peter Dag Portfolio , in Dag's Exclusive market Alert, and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/20/11

Wrong question

Must Democracy Be Sacrificed to Save Europe? -- Business Week asks.

It is the opposite. What is happening in Europe it is happening to save democracy with the markets taking over.

Keep in mind that the Europeans were never asked to vote for the EU and that all the bureaucrats in Brussels built a gigantic administration to manage Europe and they were never elected.

The Euro was supposed to unify Europe and instead it is destroying it. This is the result of their incompetency (including Nobel Prize winners). The is the verdict of the markets.

More on this in the 3 videos below this post.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/19/11

About the EU destruction of democracy

11/18/11

For the exclusive use of my subscribers

You should have received an email explaining the meaning and investment implications of the above graph.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

The only feasible solution

Spanish and Italian bonds rose after the European Central Bank was said to buy the nations’ securities, its fifth consecutive day of sovereign-debt purchases. (Source: Bloomberg)

This is the only realistic solution to the European problems. Print money and buy bonds.

The process will eventually - with some lag - be followed by inflation. Inflation will then lower the value of the debt and keep the populace at bay.

Can you see a possible long-term investment strategy?

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/17/11

And now listen to this!

My subscribers are familiar to some of these ideas. I have been writing about the many failures of Europe for years in The Peter Dag Portfolio.

Bureaucracies are the same in every country. They hide behind inaction and regulations.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

About government industrial policies

In the two years preceding its collapse, Solyndra and its biggest investor aggressively asserted themselves in dealings with the Obama administration, pushing Energy Secretary Steven Chu to visit the company’s headquarters to help it raise private money and later suggesting it would file for bankruptcy if the Energy Department rejected its proposed rescue plan.

Executives associated with the California solar panel company also privately described Energy Department officials as more concerned with appearances than with sound business decisions. (Source: The Washington Post)

Should the government decide which industries and which technologies are in our future?

Politicians have no experience in business decisions and are more likely to fail than succeed. Bureaucracy increases to keep track of the favored companies. Corruption is bound to increase making the decision process very inefficient.

Agencies are then created with regulators to keep track of what happens. Politicians are bribed to force the success of the enterprise. For example Newt Gingrich made between $1.6 million and $1.8 million in consulting fees from two contracts with mortgage company Freddie Mac.

What is happening in Europe is the direct outcome of excessive control of government carefully orchestrated by the industries it has supported and created.

The function of government should be to set the rules of the game and be the umpire. But governemnts should not play the game.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Technical patterns

1275 remains a formidable resistance level. An increase in volume is needed to go over it.

My guess is that we will see a strong rally going into 2012. Let's hope so.

This is a frustrating environment to make money. But there are some great stocks that seem impervious of what is happening.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Forget about changing the European system

"What you see in Italy is hardly ever what you get. This is a country where the pieces never stop moving but where everything remains the same. Remember what the old Prince of Salina says in the classic Italian novel The Leopard: “If we want things to stay as they are, they will have to change.” And if you thought Greece was hard to hold to account, get ready for the main event."

"The system, or myriad systems that govern Italian life at every level, are in fact highly organised and impervious to change. They are almost impossible for outsiders to comprehend. The Milan market was right to be sceptical."

"It goes without saying that these sophisticated and interdependent webs of power and influence are not confined to the world of politics. Corporate Italy also abounds with these structures of tribal capitalism."

These are some of the excerpts from a great article on the FT by Paul Betts (November 11, 20011 page 15) on Italy and why Italy will not change. It gives anecdotal evidence and explains in details some of the “webs” and interconnections dominating Italians power structure.

Italy will not change. As Greece will not change. As Spain will not change. If they want to save whatever appearance of “union” there is in Europe, they will have to cover the continent with money and smoke it with inflation.

One more thought. The Euro is strong because it reflects the commercial strength of the D-Mark, of Germany. Nothing to do with the financial crisis.....yet.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/15/11

FYI

I've updated this chart to include data recently made available for 2009. The big-picture takeaway hasn't changed: the rich pay a hugely disproportionate share of federal income taxes.

The top 1% of income earners paid almost 40% of all federal income taxes; the top 5% paid almost 60%; and the top 10% paid about 70%.

The bottom 50% of income earners paid only 2.3% of all federal income taxes, and some 59 million tax filers either paid no income tax or received money on net from the IRS.

This puts us perilously close to a "tyranny of the majority" in which there are more people receiving net benefits from the government than there are paying into the system.(Source: Calafia Beach Pundit).

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Questions

Why is the US Libor rate rising? Why did it jump today?

There is something cooking in the financial markets. Is it because the global economies are strengthening? Weakening?

It cannot be good news.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

My view

I think Mr. Bloomberg handled the NY OWS issue in a businesslike fashion.

He gave room to freedom of speech. But then when things seemed to get out of hand he acted. Firmly.

He is a businessman and as such he is also a leader. This is the kind of people we need to lead our country out of the mess we are in.

It is just my view.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Try and try again

Mario Monti, Italy’s premier-in- waiting, faced political resistance on forming a Cabinet as his market honeymoon turned sour, with Italian yields surging amid concern he’ll struggle to tame Europe’s sovereign-debt crisis. (Source: Bloomberg).

They do not care. Too many vested interests. They have sun, blue sky, calm seas, great beaches, wondeful food .... why worry.

And the ship keeps sinking. Like GM. Same fate.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Early morning trends

The markets are down across the board. Commodities, stocks, gold.

Yields in the crucial European countries are rising again. Either they start printing money aggressively or the EU has to break up in two Euros. They seem to be sleeping at the wheel.

Global recession is becoming a reality.

The only asset class rising is US governemnt bonds.

I am becoming more and more convinced that only a strong bout of inflation will solve all the financial issues.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Wow!

Workers' paradise?

This is what Karl Marx promised the Russian crowds. And you know how it ended.

I came to this country in the 1960s because I did not want to be ruled by the Italians 99%.

These people do not know the meaning of being ruled by the 99%. Do they really know the implications of what they are saying?

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/14/11

TECHNICAL PATTERNS

Everything is down. Almost. Correlation is high.

Commodities are down - they keep declining. A sign the economy is not strong.

1275 for the S&P 500 is formidable resistance. Even gold and GDX seem to have found a resistance level.

It is frustrating. We are watching closely a few stocks which have a nice momentum (high alpha). I will discuss them in my next issue of The Peter Dag Portfolio.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/13/11

Observations

The gentleman across the conference table was surprised when I told him I collect and analyze all the data shown in The Peter Dag Portfolio.

The process of publishing this service starts on Saturday morning. I copy the data and enter them in a database. I need to handle the data to get a better feeling of what is happening. On Sunday I review hundreds of charts. My mental setting is as open as possible -- tabula rasa, as the Latins used to say. At the end of this phase some patterns become important, and I take notes about their implications.

From Monday to Thursday I write and re-rewrite the content. My wife edits every version of The Peter Dag Portfolio. She is Swiss and she has a much better control of the structure of the English language than I do.

On Friday morning the 4-page version of this advisory goes to the printer. By Saturday or Sunday the Internet version (about 20 pages) is finalized and posted on the website www.peterdag.com.

I have been following this process faithfully for almost 30 years. I must confess I am still committed to making this service a bit better and more comprehensive each time I write it. In the process I am having a lot of fun!

(This Observations appeared in the 10/28/2002 issue of The Peter Dag Portfolio).

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/12/11

You need to read this article to really understand the European problems.

This is a great article on Italy. It shows with unique knowledge of the Italian problems why it is difficult to think "Europe" for the European businesses.

A really great analysis. It applies to most other European problems. Take your time and digest it. Just click on this link: Smirks about Italy miss deeper truth. Or, see FT of 11/11/11 page 15.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/11/11

I know, it is crazy ...

....but 11/10 was full moon and the market was strong. And today the furures are also strong at 7:30 am.

They say that -- and this is a fact -- that the full moon has max pull when it is full, thus attracting water towards it (reason for the tides). And humans are mostly water.

They say that the change in water distribution is the human body creates a psychological effect. I know, it does not make much sense. But someone has to explain this strange happening. Just for fun.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/10/11

Europe will unravel.

With the European sovereign debt crisis escalating dramatically, after Italian bond yields hit record highs on Wednesday and France’s bond spread over German bunds continues to widen, the possibility that the EU will fail to find a solution and will be forced to break up is now very real.

Nouriel Roubini, the famed NYU economist dubbed Dr. Doom for his ultra-bearish predictions, argues that without the ECB engaging in QE (drop rates down to zero and massively purchase bonds) and a strong stimulus program from Germany, the European Union will not survive. (Source: Forbes)

I think Europe will go back to the way it was before the Euro.

Or, there could be two Euros - Euro 1 comprising the high productivity countries of the north. And Euro 2 - comprising the southern countries. This is the best it can happen. Both areas will have their currency and their interest rates.

The financial issues facing the region are the result of putting together countries with extremely different productivity differentials. These differentials have caused the financial problems Europe is facing. And these problems are not going away because the issues of productivity are too endemic to solve in just a few years.

Europe was a bad idea. The Euro will fail, as I have been saying for years.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

As a European it is painful to see that I was right. Hopefully we learn the lesson.

Failure to restore order may leave Italy joining Greece, Portugal and Ireland in seeking outside help. The first port of call would likely be the 440-billion euro European Financial Stability Facility. A country can now tap a precautionary promise of support of up to 10 percent of its gross domestic product -- about 160 billion euros in Italy’s case.

European stocks declined after European Central Bank Governing Council member Klaas Knot said the bank can’t do “much more” to stem the debt crisis. U.S. index futures rose and Asian shares fell. (Source: Bloomberg)

The Euro was a wrong idea -- designed and implemented by few bureaucrats without the consent of the Europeans. They created a monster. Some famous economist even got the Nobel Prize for concocting the currency.

The Euro is destroying a great continent full of history and resources. They made it a bureaucratic nightmare. A financial quagmire.

This is what happens when we let bureaucrats take charge of how to run our lives and refuse to take personal responsibility. It is one more example of the damage bureaucrats can do when they decide to tell us how to live. What is best for us. How do they know?

Shame! Shame! Shame!

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/8/11

Food for thought

In any event, the euro will collapse

Even if good will were there among the political classes, the pan-European junket could never have worked, because something key is missing: Europe has no common public. The EU proves that democracy can never succeed without a common discourse. The supranational European Parliament, which in any case has hardly anything to say, is appointed in national elections. But the nightly news, the political leaders, the cultures of debate and the traditions remain purely national. Because of this, left and right majorities regularly vote against all incumbent parties when it comes to greater Europe. Here the majority of the polyglot and internationally networked elite simply holds no sway.

Europe must therefore be cut back to what Europeans still understand, to some extent, and can then weigh up at the ballot box. This Europe will not be the lobbying and compromise factory of Brussels, where eighty percent of our laws are cobbled together today. It will be rather, purely and solely, a Europe of democratic nations.

Europe will only be served well when the rumbling and jolting stop on the over-engineered machinery of the EU. All decision-making must go back to being democratic – and that at national, regional and local levels. The encroachments must end. In any event, the euro will collapse.

There is only one road ahead for Europe: back to the nation. Back to democracy.

(Source: Excerpts from the Frankfurter Allgemeine Zeitung)

Late night thoughts

I like to end the day by going through my charts and my indicators and try to understand what they are telling me.

What impressed me tonight is the very close relation between CRB and S&P 500 – nothing new. However, in the last few weeks the market was very strong while the CRB is still in a decisive downtrend.

What does it mean? Which one of the two is right? Interesting questions. Well, I am going back to the perusal of my indicators and try to find the answer to these questions.

More details in my The Peter Dag Portfolio and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Near-term technical patterns

Commodities rise and stocks rise.
Yields rise and stocks rise.

The point. Watch commodities and yields to assess the strength of the market. The assumption, of course, is that these patterns repeat.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Off-the-cuff

Did you notice how in the last several months governments that do not get the job done are changed and their leaders removed? In dictatorship and democratic countries. One by one.

And we support the change because we ask - require(?) - a forceful leader who has the capability of introducing a new political system or solve a critical financial issue.

And we agree. I am just wondering if the markets or OWS will force us to do the same thing. And how.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/7/11

Full moon indicator

Nov. 10.

The market is getting ready for the full moon by going up. I know it is crazy. But let's see what happens in the next 2 days.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

About the real reason why the Euro cannot work

According to the [IFO]study, prices of goods produced in Greece went up by an average of 67 percent between 1995 and 2008, a record increase for the euro zone. The average price of domestically produced goods went up by 56 percent in Spain, 47 percent in Portugal and 41 percent in Italy. By contrast, prices went up in Germany by only 9 percent in the same period. (Source: Der Spiegel)

I have always said that the Euro could not work. Currencies reflect the inflation (or productivity) differential between two countries.

The Euro could work only if inflation differentials between all European countries was the same. Which has not been. Which is not. Which will never be.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/6/11

The end of EU?

Greece has backed away from holding a referendum on the euro bailout package. This week's tumult, however, shows that Europe is still far away from solving the euro crisis. German editorialists on Friday warn that the worst-case scenario may arrive sooner rather than later. (Source: Der Spiegel).

Should we get ready? What to do? Planning for the black swan.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Crises and power groups

The problem with the world is that governments are the creatures of massive power groups such as the banking system, unions of all types and colors, and - especially in Europe - also of guilds (although they are beginning to sprout also in the USA according to the WSJ).

When Lagarde - the new chief of the IMF - told the banking system they needed to recapitalize at the tune of 300 billion Euros, she was derided. How do you dare telling us what to do! they seemed to say.

Crises find the ultimate solution is the collapse of the status quo - the strategy of choice of the major power groups.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/5/11

....AND THE PENDULUM SWINGS.....

[JURIST] The Cuban government on Thursday announced the passage of a bill that will modify its housing law to allow permanent residents of the country to buy and sell their homes [AIN report, in Spanish] at will. The new law, which will take effect on November 10, will still limit home ownership to one house in the city and one seasonal house in the country, but will allow Cubans the freedom to buy, sell and trade these homes at their discretion. All transactions will take place through Cuban bank accounts [AP report] so they can be regulated, and parties will be required to obtain a seal of notary for every transaction. There will also be bank commission collected for each sale and a tax of 8 percent of the value of the property.

....BIG GOVERNMENT.....SMALL GOVERNMENT....BIG GOVERNMENT AGAIN....

And humans try all sort of experiments....Then they reach the extremes of the experiment.... Excesses and distortions become evident because moderation is not part of the experiment...and then we go back to the beginning......

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

About the lagging indicators

Inflation is considered a lagging indicator. Like all lagging indicators it is an important measure to understand where the market and the economy are going. This video will tell you more about them.
Just click here.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/4/11

Observations

When prospective clients ask me for advice about how to improve the performance of their portfolios, this is what I tell them.

• The portfolio is too diversified. Holding more than 100 different stocks and several mutual funds is not diversification. It is the same as owning “the market”. Why not then buy SPY (the EFT for the S&P 500) and forget about stock selection.

• The portfolio should focus on a specific strategy. This strategy depends on the outlook for business activity and the position of the business cycle at any particular point in time. The sectors in the portfolio should not be more than 3 or 4. Diversification may be required within any given sector.

• Stock brokers (or investment consultants) are not, let me repeat – are not, portfolio managers. They are not responsible for the performance of your portfolio. Their job is to give you advice on what to buy and, possibly, what to sell. The difference is that they make money every time you make a transaction. A portfolio manager makes money based on the performance of your portfolio.

• Measuring the performance of a portfolio is the most crucial step in money management. Performance evaluation helps you to isolate the poorly performing assets. They have to be dealt with to improve the performance of the portfolio. Act. Do not sit on your hands.

• It is difficult and time consuming for the average investor to isolate the poorly performing positions in a portfolio with too many issues.

• Flexibility in the investment strategy is a crucial trait of successful money management. Most investors are still holding technology stocks. They do not have the discipline and flexibility of recognizing investment themes.

(This Observations appeared in the 9/30/02 of The Peter Dag Portfolio)

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/3/11

Another bad day?

The futures are sharply down at 3:45 am. A reminder to our G20 leaders that the markets do not like what they see.

1225 for the S&P 500 is an important support level. And the odds, as of now, are that it will be violated on the downside. The next support is 1125 - 8% lower.

This is really a crazy market.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Early morning thoughts

(Reuters) - Protesters shut down operations at Oakland's port and blocked traffic on Wednesday in demonstrations against economic inequality and police brutality that turned tense as the night wore on.

I told a friend of mine some time ago that this is exactly the kind of things we should be worried about.

The rising unrest across the country - and the world - is a clear statement that our leaders have failed us.

Somehow the policies that have been followed have been tragically wrong -- and the outcome is high unemployment. And when there are many people out of a job the social fabric breaks down.

Maybe, I say maybe, everybody should stop campaigning and show they are aware of what really is going on. And give a sense to the people they are doing something about it.

They seem to like meetings - like the G20 meeting in Cannes today - but nothing keeps coming out of them.

The markets are winning, unveiling the incompetence of the bureaucrats in making timely decisions. And no one seems to be at the helm.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

11/1/11

Thought of the day

Governments have grown too big to be supported by their economy. This problem can't be fixed by bailouts or haircuts or bank recapitalizations; it requires fundamental changes in the role and size of government in modern economies, because there is a tipping point beyond which a government that has grown too much begins to suffocate its economy. (Source: Calafia Beach Pundit, WSJ)

I always maintained that we are not facing the death of capitalism. We are facing the death of socialism. I am glad to read that a thinker like Edward P. Lazear hints at the same idea on the WSJ.

Governments have become too big. They promised too much. Now it is the time to pay the piper. And there is no money. This situation has nothing to do with capitalism. This process has happened in the USSR and Cuba. It is time to let the markets operate they way they should.

More details in my The Peter Dag Portfolio and my free educational videos on www.peterdag.com.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.