Man of The Year Keeps His Job
The brow-beating of Bernanke is a sure sign that U.S. markets won’t be treated any better. As China pulls back, the sources for job growth narrow significantly.
January has been an interesting month for Fed Chairman Benjamin Bernanke. He was celebrated as Time Magazine’s Man of The Year. Also, Congress wanted to throw him out for doing a lousy job.
Somewhere between being the hero that saved the economy of the Western World and a low life who couldn’t organize free housing for everybody in America, Bernanke’s reputation was resolved: Congress brought him back for another four years.
I have already written about the wicked hit that U.S. equities took when Obama whacked the financial sector. Here’s some follow on to that:
Jim Cramer’s Mad Money – Jim Cramer is one of the more buoyant TV personalities in the financial world. One might say manic. He’s a magnet for controversy, because he’s perfectly willing to broadcast insights about trading activity, especially if accepted industry larceny might try to pick your pocket. His audience – the “Home Gamers,” he calls them – respect his detailed explanations of how fund managers operate, and they accept his daily insistence that they take his themes and go do actual homework. It’s a very loyal bunch that includes newbies, market makers, and CEOs from around the country. People know who this guy is.
To me, this makes the Mad Money broadcast of January 25, 2010 especially significant. A large audience of dead serious investors listened to Cramer’s advice to move even more money out of the United States, because our government cannot be trusted. His premise: We can be certain that this administration is seriously anti-business, but we can’t begin to guess what it might do in any twenty-four hour period.
In this program, Cramer officially expanded on his advice to move away from U.S. markets. He recommended increasing allocations for foreign corporations from 20% to 25% of total holdings. In addition to that, he also strongly recommended holding gold.
Cramer’s comments can move markets in after hours trading, even while he’s still talking. This broadside is sure to move a lot of money out of the U.S. over the coming weeks.
Discussing Earnings Season, Cramer said, “We got some serious good earnings from almost every quarter.” However, good earnings weren’t nearly enough to offset the announcements in Washington. We only lost 5%. It could easily have been twice that if Bernanke hadn’t been reinstated.
Concerning Bernanke, himself, Cramer said, “When a country’s politicians turn on the most respected Central Banker in the world (Time’s Man of The Year! – TD) you know our nation’s going to be a less safe place to invest than in just about any other modern democracy on the globe.”
Cramer recommended looking to Brazil, Chile, Canada, and Australia, saying, “They are all more sane and less likely to turn on the public officials who are actually trying to save small business and boost employment.”
Simply moving assets out of the United States is not a complete strategy. Look again at the countries Cramer suggested for your investments. He’s got a point. I got word today that the IMF just downgraded the United States, Europe, and Japan. And don’t forget that China – the world’s economic engine of recovery – is taking a break.
On January 27, Cramer demonstrated what has been happening to companies that were dependent on China for their strong earnings growth. Remember, that January 19 the Chinese command economy instructed banks to stop lending. In that country, a room full of guys can call a halt to economic growth, and economic growth stops right then and there. Chinese leaders recognized their economy was overheating, and they dealt with it.
Around the world, suppliers to China saw their stocks fade. Quarterly reports – some of them showing excellent earnings improvement – started including caveats about a slowing Chinese market.
Recruiter’s View – I have often said that a major safeguard against political chicanery is the speed at which massive funds can be moved around the world.
In our electronic age, assets can be protected at the speed of light. Bizarre behavior by politicians – anywhere in the world – are offset by monster trades, completed in the blink of an eye.
The reason I follow things like this, is because I’m looking for indicators. Buildings and people can’t move as quickly as electronic transfers. But if traders make enough transfers, you can bet the buildings and people will follow.
As Cramer pointed out, Obama is unintentionally stopping economic growth, and the Chinese are deliberately stopping economic growth.
Can we find new employment with foreign investors based in Brazil, Chile, Canada, and Australia?
I’m looking.