Friday’s Trading – 10/1/2010

On CNBC Thursday, Carter Worth rescinded has breakout call that he made on Tuesday. He said that he expects the market to “rest”. Now, if you are a bear, this might make you uncomfortable because your position just got a little bit more crowded. However, at the end of a long move, you often see a shift in sentiment like this just before the market changes direction. This rally can’t correct until the bulls start pulling their bids and defect to the bear army, right? So, we may just be seeing the very beginning of a shift in sentiment from bullish to bearish.

Thursday was obviously a clear win for the bears. The bulls got a lot of good news in the morning, but the market sold-off on strong volume anyway. Things have gotten a bit chaotic and the bulls need to send in the troops to restore order before the hunters become the hunted. As I write, the futures have rallied a few points on another beat from yet another China PMI report, and we have a bunch more economic reports this morning. So, if the reports continue to come in strong, will the bulls be able to get the ball rolling again? Or will they turn lemonade back into lemons like they did Thursday morning?

Thursday’s Trading – 9/30/2010

Laggards Join the Rally
Carter Worth’s prediction that small-caps and transports would break out came true on Wednesday. However, it wasn’t a decisive victory. The IWM made a new closing high for the rally, but it came up short of taking out the intra-day high of 68.00 from June 21st. It missed by a nickel. The IYT did the same thing: it made a new closing high, but came up a penny short of the intra-day high of 82.26 set on September 21st.

Note to bulls: nice try.

Also, it seemed like money was rotating out of large caps and tech, and into small caps, transports, and energies. The SPX, NDX, and Dow were all down a bit on the day. Of course, this rotation makes sense since there is no new money coming into the market. Retail investors pulled out another $2.5 billion last week.

Laggard XLF dropped on the day, so there was no rotation into the hapless financials, and XLF is nowhere near breaking out of its five-month long trading range. But since the market demonstrated an appetite to rotate into the laggards, if we get another rotation day, the XLF might play “catch up” with a monster move. So, you might want to keep it on your screen, along with UYG and FAS if you are the gambling sort.

Weak Selling Volume Again
After the market dropped on Monday, I said: “Volume on Monday was light, so the selling was not serious.” And the market did indeed rally back a bit on Tuesday. And while SPY dropped 20¢ on Wednesday, it’s volume declined from Tuesday. So: bears beware.

Floppy Futes
Overnight, the SPX futures often like to test the previous day’s highs and lows. Tonight, they have chosen to test Wednesday’s lows. That might not be terribly bearish, but you can’t call it bullish either. (As of this writing, Wednesday’s low has held.)

Swim or Die

The bulls have been rather lazy this week with the SPX suffering a four-point loss so far, and it just might be swim-or-die time. On the chart below is the 60-minute SPX with the 20-period moving average in red, and the 50-period in blue. Notice how they are within striking distance of a cross-down (click chart to enlarge):

Now look at August 10th. That cross-down lead to a good deal of unpleasantness. And if you are a day-trader, you want to be aware that the cross occurred in the middle of the day, but the market then rallied smartly into the close. Then it gapped down the next morning. So, just because you spot a critical cross-down, it doesn’t mean that the market won’t fake you out, and even leave you leaning the wrong way before the big move. The market is very sinister that way, and will, in fact, fake you out 99% of the time – even when you are hunting the move and have the right idea.

Notice also that we almost had a cross-down on September 23rd, but the market then blasted higher. The moral of the story is that such cross-downs are often momentous, but tricky to play.

After being in the red all night, futures blasted into the green after both GDP and Unemployment Claims came in better than expected at 8:30am Thursday morning.

Red Clouds at Night, Bear’s Delight

The market closed on Tuesday afternoon with my cloud indicator showing a bearish red cloud. The one-minute chart below shows an octo-cloud with SPY, and two white arrows. Those arrows point to the bars where the top two cloud indicators (the most important) both turned red. SPY flopped over immediately both times (click chart to enlarge):

Since this is a very short-term indicator, it is possible that the market won’t drop any more than it did in the last five minutes of trading. The storm could be over already. However, when the market is very strong, it will stubbornly go sideways after a red cloud, and then go higher as soon as the cloud dissipates. But on Tuesday, it flopped over very quickly both times. If the news-flow is neutral-to-negative in the morning, then the market is vulnerable. If the market gaps-up, buying into it will likely result in unpleasantness.

When China’s PMI beat expectations at 10:30pm EST Tuesday night, the SPX futures rallied exactly 0.50 points. So, that’s a potential indication of buyer’s fatigue.

Apple dropped 1.33% on Tuesday. But even if it was only a “misunderstanding” due to a rumor, you can’t ignore the facts that AAPL did not fully recover after the rumor was dispelled on CNBC, and that the stock fell on the heaviest volume in over two months.

The IWM made a new closing high, but after the bell it fell back below the previous high of 67.43 from September 21st. The IYT did sort of the same thing: it made a new closing high, but couldn’t close above the intra-day highs of the 21st. They couldn’t fight through my red cloud, but Carter Worth thinks they will break out. Maybe he will be right, but with the way AAPL is acting, I would be nervous about making bullish calls here.

My other two laggards, the XLE and XLF didn’t even come close to breaking out. XLE had a decent day, but XLF still looks pretty forlorn. However, I will say that the XLF held up very well when Maria Bartiromo tried to crash the banks when she was interviewing Meredith Whitney during the last hour of trading on Tuesday. Bartiromo was trying to create some drama, but the XLF shook it off. Maybe it was only because the shorts were being squeezed into the close, but it was indeed bullish behavior, and I hereby authorize the XLF to go about with a feather in its cap today.

Note: Red sky at night, sailor’s delight is a weather expression.

Where Do I Send the Invoice, CNBC?

On Monday, September 20th, I pointed out that the XLF, IWM, and IYT were not validating the SPX’s breakout above 1130. Last night, I brought up the subject again. And today, Carter Worth, chief market technician of Oppenheimer Asset Management presented my observation on CNBC.

Here’s one of my quotes:

“A week ago, I pointed out that the XLF, IWM, and IYT were not validating the SPX’s breakout above 1130, and they still aren’t. “

Here’s what Carter Worth said in the video below:

“To figure out whether the market, as measured by the S&P is going to go higher, it’s good to look at some other indices and see where they are in relation to the June and August tops. Let’s look at the Russel and the Dow Jones Transportation Average.”

Note: As I’m sure you know, the IWM is the ETF that tracks the Russell 2000 index, and the IYT tracks the Dow Jones Transportation Average. So, Carter Worth and I were talking about the same thing.

Note to CNBC: That will be $100. Since I am obviously writing content for your station, it is against the law for you to not pay me. You can PayPal the cash to the address on my About page.

Note to Oppenheimer: That will be $1000. You got a lot of free publicity from CNBC after all.

Tuesday’s Trading – 9/28/2010

A week ago, I pointed out that the XLF, IWM, and IYT were not validating the SPX’s breakout above 1130, and they still aren’t. In addition to those three laggards is the XLE. If the global economy were on fire, surely the energy stocks would be breaking out, right?

Nevertheless, IWM, IYT, and XLE are all within one day’s march of victory. So, bears should bear (ha, ha) that in mind. Volume on Monday was light, so the selling was not serious.

Both the IWM and IYT are “crawling along” their resistance levels, and that is usually a bullish indication because it shows a relentless eroding of the barrier. The IWM also did not make a lower intra-day low in Monday’s whoosh down into the bell.

The XLE doesn’t look terribly perky, but it did rally on strong volume Friday, and consolidated on light volume Monday, so that’s a bullish posture.

The XLF is the train-wreck of the group. Its rally volume on Friday was ho-hum, and it would probably need two strong days to take out $15.09. Morgan Stanly’s hiring freeze isn’t helping matters.

Joe Sixpack Don’t Buy It

Mutual funds that invest in US stocks have suffered huge outflows since the beginning of 2008. But during that time, there have been ebbs and flows, and a few good weeks amongst the bleeding. April was one of the good times; people actually sent money into their mutual funds. And not surprisingly, the spring rally that topped-out in April was the best rally of the year.

But Joe Sixpack wanted nothing to do with the June and July rallies, and so far, the September rally. On the SPX chart below, I have drawn boxes around the four rallies this year (click to enlarge):

The next chart is weekly flows into and out of mutual funds this year. I have added color-coordinated arrows that match with the first chart:

The black arrow points to four straight weeks of inflows during April, which matches up with the black box on the first chart. The public actually got sucked into that rally. But now look at the blue, purple, and red arrows. The Wall Street hype machine failed to bring in any new money at all – not a dime in five months.

How long will people be afraid of another Flash Crash? I don’t know, but the market will not be able to get back to normal until that time.

What happens in the mean time? My theory is that the big pension funds become the swing vote, so to speak. Could it be that their portfolio rebalancing is what has produced this range-bound market? Are they, at this very moment, planning to take profits on their stocks and rotate the proceeds into bonds? After all, you’ve got to be in TLT no later than Thursday to collect the monthly dividend.

Note: You can buy TLT on Thursday and sell it on Friday, and still get the dividend. However, the ETF will drop on Friday morning by the same amount of the dividend, so there’s no free lunch – unless TLT rallies after going ex-dividend; then you can have your cake and eat it too.

Note: The Investment Company Institute, which is the official trade organization of the mutual-fund industry, reports fund flows with a one-week lag. So, for all we know, Joe Sixpack could have sent his life savings into Fidelity last week. However, if you look at the last bar on the chart, you will see that outflows actually increased during the second week of this rally. So, the public looked at it as on opportunity to get out.

The “A” Team

After the “Flash Crash” back in May, I conducted a poll to see who thought a bear market would ensue. The market did indeed fall from that point, but not the 20% needed for an official bear market. So, congratulations to the people who voted “no bear market”.

The “A” Team:

The “F” Team:
Bob D
Bob Smith

You people on The “F” Team will just have to try harder. 🙂 But seriously, it was a pretty close call. According to my calculations, the drop from the April peak of 1219.80 to the July low of 1010.91 was 17.13%. And if you went short after voting for a bear-market and stayed short the whole time, you had a winning trade up until this week.

How did the market survive? My theory is that the “Flash Crash” was a financial event rather than an economic event. So, while everybody was freaking out over events in Europe, the US economy continued its feeble expansion, second-quarter profits came in strong, and stocks didn’t look too bad.

Even as the market plunged after the poll, I never changed my vote because I used my superior withholding-tax indicator to fend off the ECRI hysteria of June.

Contrary Indicator Disclaimer: Let the record show that I think the market is more likely to plunge 10% than it is to rally 10% from this point in time on September 24, 2010. Of course, when you declare victory in something like this, it’s perfectly natural to do so at the top of a rally. And by doing so, I am attempting to jinx the market so that certain long-suffering bear friends of mine can weasel out of their positions.

The Great ECRI Fakeout of June 2010

Remember all of the commotion about ECRI’s “infallible” Weekly Leading Index (WLI) during the summer? And how it was forecasting impending doom? Here is how it looked at the end of June (click chart to enlarge):

Scary, right? But my subscribers at knew better. Look at the lower-right corner of my indicator:

It was moving upward sharply, indicating economic improvement.

Did I mortgage my house and go all-in short after reading articles like Zero Hedge’s “ECRI Plunges At 9.8% Rate, Double Dip Recession Virtually Assured“.

Not hardly. And it’s a good thing too because the S&P 500 made its bottom for the summer just as June was ending, and the ECRI hysteria was at its peak:

Of course, the stock market doesn’t always move in the same direction as the economy, so indicators like these are of limited use in trading. Nevertheless, my indicator painted a much more accurate picture of the business cycle.

There is a big difference between our indicators: ECRI’s Weekly Leading Index is a model calculated with a secret formula. My indicator is a straightforward presentation of the hardest of hard data: taxes withheld from the paychecks of American workers. The moral of the story is that when America’s payrolls are expanding, you don’t need to worry too much about the economy.

Mish Shedlock has a detailed criticism of ECRI here.

Friday’s Trading – 9/24/2010

On Wednesday night, I began my “XLF Goes Rogue” post by congratulating Steve Grasso, and then pointing out the XLF’s breakdown. Then, Thursday’s daytime episode of CNBC’s “Fast Money“, began by congratulating Grasso and went on to point out the problem with the XLF.

Do I hear an echo?

Grasso also said that his mutual-fund clients couldn’t get enough Apple stock. But maybe they did get enough, because two hours later (at 2:38pm) AAPL stepped into the elevator and pressed the “Hell” button. AAPL, and the rest of the market made what might have been the sharpest plunge of the month – and with strong volume too.

Melissa Lee opened the 5pm episode of “Fast Money” raving about how Apple continues to “defy gravity.” I reckon she didn’t look at the intra-day chart. They then discussed Apple for seven straight minutes without ever mentioning the afternoon plunge. There were some bearish opinions presented, but overall it came across as an infomercial for AAPL.

This all stinks of distribution. I wouldn’t buy Apple here with Larry Kudlow’s money.

New Channel in Town?

The futures are up a couple of points as I write this Thursday night, but they will need to do better to break out of their new downtrend channel (click chart to enlarge):

The blue lines on this 60-minute chart are drawn roughly around the September rally, which may be giving way to the new downtrend channel (red lines).

I enjoyed seeing Blockbuster file for Chapter 11 bankruptcy. Before the internet, I dreaded going there. They had the worst customer service I have ever seen.

Volcker Goes Nuts
In what appears to be yet another sign of the wheels coming off of the Obama administration, Paul Volcker,

“…scrapped a prepared speech he had planned to deliver at the Federal Reserve Bank of Chicago on Thursday, and instead delivered a blistering, off-the-cuff critique leveled at nearly every corner of the financial system.”

WSJ story here. Here is my favorite quote:

“I’ve heard so many stories about how important derivatives are but there doesn’t seem to be much doubt that the creation of derivatives has far exceeded any pressing need for hedging.”

I’m sure that he’s talking about the banks’ giant CDS casino there.

XLF Goes Rogue

Note: this was published at midnight, while the futures were still rallying. They didn’t roll over until 3am.

Congratulations to NYSE floor-trader Steve Grasso for defeating Doug Kass mano-a-mano last week. Kass was preaching doom, and Grasso was bullish when the SPX broke out to the upside.

However, Grasso said something on CNBC Wednesday that I’m not so sure about. He said that the market would likely be strong until the elections. But what about the financial sector? I mean, what’s the Tea Party’s policy toward banks? Answer: The “Santelli Treatment”: turn the bankers upside down, shake them until the TARP money falls out of their pockets, and then drop them on their heads. No more Bailout Nation, right?

Maybe that’s the right thing to do in the long run, but the Tea Party might be expected to cause a bit of a tumult while they are getting the poison out, don’t you think? If you want to make a fiscally-responsible omelette, you have to break a few eggs; maybe even do something drastic like shut down the banks’ CDS casino. Who knows?

On Monday night, I pointed out that the XLF, IWM, and IYT were not validating the SPX’s breakout, and they still aren’t. The IWM and IYT pierced their August peaks, but were unable to close above them. Bulls should be worried about that. And bears should be worried that IWM and IYT are still within easy striking distance of getting it done.

But financials were the worst sector on Wednesday with the XLF down 1.56%. In fact, when it comes to the XLF, you can forget about a breakout and start worrying about a breakdown. On the chart below, I have drawn a red box to show last week’s trading range. Notice how the XLF made a false breakout, and has now broken down out of the range (click chart to enlarge):

The SPX can’t get far without the financials, so bulls should keep their fingers off of the buy trigger until the XLF gets with the program – assuming the parabolic program has not been canceled already.


Below is a chart of the McClellan Oscillator in the upper panel, and the SPX in the lower panel. With red semi-circles, I have highlighted a head-and-shoulders reversal pattern that appeared at the top of the July rally (click chart to enlarge):

The black arrows point to a similar pattern that has developed with the September rally.

On Tuesday, NYSE breadth was negative all day, except for a brief period when the FOMC announced that it had ordered a new fleet of money-printing machines. But breadth rolled over and closed negative. We don’t have any solid evidence that this parabolic rally has stalled out yet. However, if NYSE breadth remains negative, then you should refrain from biting the heads off of plastic bears like Jim Cramer did on Tuesday just as the market was topping for the day (3:10 in this video).

Note: The FOMC’s “quantitative easing” announcement was obviously an election-season gift to the President. And so was the NBER’s announcement that the recession is “officially” over, which they released to coincide with Obama’s CNBC special. Shameless.

Note: Cramer has a point though: this rally began when the administration “played the capitalism card” and began talking about tax cuts.

Get a Clue Bernanke

You don’t decide where the jobs go. Corporate America does. Whirlpool says jobs will go to Mexico. IBM says jobs will go to India. Apple says jobs will go to China.

Do you think that your “quantitative easing” will change their policies? What planet are you living on?

Michigan: Museum of Capitalism

Like opera and ballet, capitalism in the USA will soon only exist by the grace of federal grants. It’s already happening in Michigan.

In the video below, you can see Michigan Governor, Jennifer Granholm gush over the fabulous new “green tech” industry springing up in Michigan. But then you will be deflated when you find out that all the electric-car-battery companies have set-up shop there because of the federal grant money that Ganholm has been able to score. Also, the former auto workers are being re-trained with federal money. And their children are being looked after with federal money. It’s like some freakish, socialist, “capitalist museum” of a state now.

Michigan has been able to “create” 89,000 new “green tech” jobs so far. But that pales in comparison to the one million factory jobs lost in the last decade. Of course, many of those jobs have gone to Mexico thanks to NAFTA. But a “disaster” would happen if we turned “protectionist” and revoked NAFTA, right? How is this not already a disaster? And how is Michigan’s new model better than what we had in the 1980s, before NAFTA?

I like Jennifer Granholm’s “can do” attitude. She seems to be working hard for her state, and I doubt there is much more that she can do given the circumstances here in our glorious free-trade utopia. But this whole thing will end in tears. The taxpayer dollars that she uses to “create” jobs have to come from somewhere, and Michigan isn’t the only state being hollowed-out by free trade. Taxpayers in other states are almost as broke as those of Michigan.

And even if those new factories can make marketable products, it is only a matter of time before they are wiped out by imports from Mexico and China. What’s to stop China from owning the electric-car-battery industry like they already own the solar-panel industry? We invented solar panels, but that hasn’t stopped the Chinese from taking over the industry.

Did Henry Ford need federal grants to start his company in Dearborn in 1903? Not hardly. Michigan is quite a bit different today, is it not? But then again, so is the USA. In 1903, the USA had a 46.5% tariff, and today we have wide-open borders and are busily exporting factories as fast as we can.

Tuesday’s Trading – 9/21/2010

On CNBC Monday, Bob Pisani was raving about volume. However, SPY’s volume doesn’t look terribly impressive to me. It improved a bit over last week’s showings, but a little more enthusiasm would have been appropriate for such a momentous breakout, no? The XLF’s volume actually declined and was lower than any day last week. Volume is only one variable, but this performance is not sufficient to rule out a false breakout.

A few other flies in the ointment:

1) The XLF did not break above its August peak.
2) The Russell 2000 made a higher close, but did not take out its July 27th intra-day high.
3) The IYT did not break above its August peak.

If the FOMC doesn’t do anything to frighten the market, and XLF, IWM, and IYT still can’t break out, then this parabolic move might be out of steam.

Fractal Dimension Index End-of-Range Signal

On September 4th, I posted an SPX chart showing the Fractal Dimension Index giving an “end of trend” signal. And the uptrend did indeed come to a screeching halt the next day, which so far, has been the only substantial pullback during the month of September.

And now the market has gone flat, and the Fractal Dimension Index is giving an “end of range” signal (click chart to enlarge):

The blue arrow at the bottom points to an extreme reading. No doubt, light summer volume and options-expiration on Friday are responsible for the unusually tight range. So, the market is very likely to break out of its range soon; certainly no later than Tuesday’s FOMC meeting.

The FDI “end of range” signal only tells us that the market has been freakishly flat and that such a condition cannot continue much longer. It doesn’t tell us which way prices will break out, or if the breakout will stick. The red arrow on the chart points to the last EOR signal when the market had coiled up at 1100. The market broke higher there, but notice that it had made a pretty nice bullish ascending-triangle pattern before doing so. The current pattern isn’t so well-defined, and the market just kind of flopped around last week.

However, on a larger scale, the market has formed what might be an inverted head-and-shoulders reversal pattern. This is what Kay was referring to on Friday:

A bullish resolution of this pattern would have the power to test the April peak. Also, it doesn’t have to break out right now. The market could pull back, make another higher low, and then blast higher.

We’ve seen investor sentiment get very frothy in the AAII survey last week. However, on Friday, all of CNBC’s “Fast Money” traders were bearish. So maybe that sets us up for a false breakout. If prices move higher initially, all the traders leaning short will barf up and go long. At that point, both investors and traders will be leaning in the same direction and the market will be vulnerable to a whoosh down.

41 Million on Food Stamps

The private economy has created a modest number of new jobs every month this year. However, it has not been enough to compensate for population growth. As a matter of fact, the number of people receiving food stamps is still soaring. Here is a weekly chart (click to enlarge):


The permanent home for this on this page, where I also have a chart going back 35 years. That annual chart shows exactly how appalling this 41 million number is.

As a nation, we have decided that wide-open free-trade is the most fabulous economic strategy ever invented. And since we are so committed to exporting jobs on a mass scale, we must now ask: is it time to shut down our population growth?

Isn’t it time that we take down the Statue of Liberty, expel all non-citizens, and adopt a Chinese-style one-child policy? Shouldn’t we be reducing head-count, just like Corporate America has done during this recession?

Larry Kudlow, Chinese Patriot

Larry Kudlow’s vigorous and passionate defense of China’s new trade-war on Japan on CNBC last week is a shining example to all aspiring shills.

Note to Japan: I regret to inform you that you are on your own. As China drives up the value of your currency in order to take market share from your exporters, the USA will not help you. Larry Kudlow is “in the loop” of the powers that control American trade policy, and his opinions are an accurate reflection of how you can expect to be treated.

The Small Cap Lag

If you want to be skeptical of this rally, you can hang your hat upon the small caps. Look at the red line on this 15-minute chart since August 31st (click to enlarge):

Notice that the Russell 2000 ($RUT.X) is almost a full percentage point behind the S&P 500 ($INX), which is the black line. That indicates a lack of animal spirits since gamblers love the small caps.

I have also included the Dow ($INDU) and the NASDAQ-100 ($NDX.X) even though both indexes are worthless. The Dow is an archaic “price weighted” index designed before slide-rules were invented. In fact, only one stock (CAT) accounts for all of the Dow’s gains this year. Story here. And the NDX is calculated by a secret algorithm for which you have to pay $10,000 just to get a peek. It might be just as bad as the Dow with Apple accounting for most of the gains. Story here.

But I digest.

Now let’s look at the beginning of the July rally for a comparison:

In that failed rally, the small-caps also lagged badly. But they turned on the afterburners on July 13th and caught up to match the 6.38% gains of the other indexes. The market then stalled and rolled over (not shown on chart).

Morals of the story:
1) Lagging small-caps are a bad sign.
2) The small-caps are capable of making a superhuman catch-up move in a single day.
3) That catch-up move might be the signal that a swing-high is in the making.

Now, if you want to make a comparison today, make sure to use the indexes. SPY is scheduled to go ex-dividend (along with many other ETFs) and should be 60 cents lower than it otherwise would be this morning. It looks like IWM will go ex-div next week, so it shouldn’t get jolted this morning.

So, what’s your poison?
TNA at the open and TZA at the close?

Erin Burnett is So Cute!

She think that iPads are made in USA. How adorable!

Note to Burnett: Apple products are made in China.

Burnett, who obviously is a Democrat, was gushing over President Obama’s miracle plan to save the economy by “doubling” exports. At 45 seconds into the clip below, she asks the guest:

“Could you give a few tangible exports, of the things, whether it be iPads, or whatever it is, that we’re going to be exporting so much more of?”

I might also add that we have been hearing about all these fabulous export jobs that will be created, any minute now, buy wide-open free-trade for many years, and somehow they just never seem to show up. Or at least not in anywhere near the quantities required to make up for the manufacturing and other jobs lost to countries like China, Mexico, and India.

Ben Ferguson is a Jackass

Conservative radio talk-show host Ben Ferguson was on CNBC today for a discussion of trade policy. I have never heard of this guy before, but I can’t believe what a jackass he is. He actually thinks that we should lower wages to match Chinese wages:

“…if the president wants American jobs to come back, he should stop listening to unions who are saying ‘go after China’ and say: ‘hey, we gotta have better markets here, and we gotta have a better competitive rate we can pay’ and not be married to unions that are killing jobs in this country.”

The idiocy begins at the 1:30 mark of this video:

Can you imagine that? He doesn’t even realize that what he is advocating is ILLEGAL.

Note to Ferguson: we still have minimum-wage laws in this country.

And what if he got his way, and every American worker had their pay cut to Chinese levels of $3,900 per year? Answer: nobody would be able to pay their mortgage, their car loan, or their credit cards. Everybody would go bankrupt and every bank would be wiped out.

I wonder if Ferguson also advocates that American factories should be operated like Chinese factories: like minimum-security prisons where workers are subjected to totalitarian rules such as only being allowed to use the restroom once per 12-hour shift. I can just hear him now: “Liberal American work rules are inflating labor costs! The President should pass a law that all factory restrooms should be locked except during lunch hour!”