Lagging Tax Refunds Are Not News

Zero Hedge has posted a dumb piece on how tax refunds are running behind last year’s pace.

As a matter of fact, refunds have “plunged” because the IRS had to re-write a bunch of code to handle the changes that Congress and the President squabbled over until the last minute.

Here is what IRS Commissioner Doug Shulman said on February 15th:

“We worked hard to update our systems and get the changes in place as quickly as possible. We appreciate the patience of those impacted by the delay. We urge taxpayers to use e-file with direct deposit, and they can get their refunds within days.”

Note to Zero Hedge: the Sheriff of Withholding Town is still walking the beat.

Stocks Yawn at Middle East

The market didn’t react to events in the Middle East until things turned ugly in Egypt on January 28th. The day before, the S&P 500 had closed at 1299.54. Today, the SPX closed at 1307.40, eight points higher. Weird, right? (click chart to enlarge):

The market bounced right back after the Egypt Plunge (black arrows on chart), and rallied up so far that the Libya Plunge hasn’t caused any serious technical damage as of yet. In fact, the SPX bounced smartly off of the pre-Egypt level (blue line) when it dropped within a penny of it today (purple arrows).

Maybe it isn’t done speaking on the subject, but so far the market is saying that it doesn’t care much about Tunisia, Egypt, Yemen, Bahrain, Libya, etc. It cared way more about less-insignificant Greece last year. Things are relatively quit in Saudi Arabia, though I’m sure the market would care a lot more if that changed.

Fractal Stock Grapher – Beta 2 Release

Fractal Stock Grapher is my desktop app that plots the Fractal Dimension Index on stock charts for those of you using platforms that don’t have the FDI indicator. You can download it on the Fractal Stock Grapher home page.

This version will fetch the data from Yahoo Finance for you. Just punch in a symbol and click the Graph button. Much easier.

If you have the first version installed, you can just download the installer and run it.

Note: now is a very good time to look at the FDI on the weekly charts of the SPX, NDX, DJIA, and Russel 2000.

George’s 9-36-15 Strategy

I did some back-testing with George’s 9-36-15 strategy using SPY and SH, and it is definitely a technique you want use. Believe it or not, bears could have shorted this historic rally by trading SH (the inverse S&P 500 ETF) and lived to tell about it.

Since the rally began in September, if you had gone long SH on every 9-36-15 cross-up, and gotten out before the bell, you would have only lost 2%. That’s pretty miraculous, and way better than having your face completely ripped off. Of course, trading SPY would have made profits instead, showing that it’s always a good idea to trade in the direction of the primary trend no matter how good your techniques are.

I used a longer 1,000 day period for the results that you can see on the 9-36-15 Cross page.

The rules that I used were suitable for a computerized strategy. For example, after a cross, it just goes long. In reality, you could probably get better entry points by waiting for a dip on the 1-minute chart, or using additional signals from the stochastic, MACD, etc.

Is Oil the Next Natural Gas?

With such a cold winter, you might think that oil supplies would be dipping, but that is not the case. As a matter of fact, supplies at Cushing, Oklahoma, the official delivery point for NYMEX futures contracts, recently hit an all-time high.

How is that possible? Two things: the Canadians are ramping up their tar-sands production (see the chart here), and “fracking” is starting to do for oil what it did for natural gas. Here is a quote from this Fox News story:

“In the Bakken formation, production is rising so fast there is no space in pipelines to bring the oil to market. Instead, it is being transported to refineries by rail and truck. Drilling companies have had to erect camps to house workers.”

Can you imagine that? Production is on such a rampage that it is overwhelming our infrastructure. We need to build more pipelines to handle it all.

At first, the experts didn’t think that fracking would work on the larger, stickier oil molecule. But they were wrong. Here’s Aubrey McClendon, CEO of Chesapeake Energy:

“We’ve completely transformed the natural gas industry, and I wouldn’t be surprised if we transform the oil business in the next few years too.”

A Credit Suisse analyst thinks that the USA might be able to cut imports by 60 percent in the next nine years.

Is that why President Obama thinks that he has the luxury of encouraging revolution in the Middle East?

And why is gasoline still so expensive?

Oil is the only commodity that comes in scores of different grades, and refineries are finicky about what they will allow into their enormously complex systems. Will we need to build more refineries capable of handling the Canadian sludge as opposed to our traditional “light, sweet” crude? I won’t pretend to be able to predict the price of gasoline. We might have to go through several years of an extensive infrastructure overhaul, but it should lower prices eventually, no?

With all the talk of Ben Bernanke inflating commodities, it’s good to consider the supply effects on prices also. And oil futures (symbol: CL) are down a couple of bucks so far this year, having yawned at the turmoil (ha, ha) in the Middle East. If oil goes into a UNG-like downtrend after things calm down, that could be an un-expected boost to corporate profit margins.

Is Free Trade a National Security Threat?

We are about to find out – officially.

China’s embargo of rare-earth minerals last year looks to have been a major wake-up call for the USA. After all, it just won’t do to have our high-tech weaponry depend upon the kindness of strangers – Chinese strangers.

Or our low-tech weaponry. It seems that we are down to one plant in Pennsylvania that can make military-grade steel – and it is owned by a foreign company (ArcelorMittal). That was a bottleneck during the 2007 “surge” in Iraq.

The Director for National Intelligence has begun work on a “National Intelligence Estimate” to determine whether or not exporting our manufacturing base is bad for national defense. And that’s a big deal. Richard McCormack broke the story here.

This could eventually lead to trade barriers aimed at keeping out state-subsidized products from China, such as steel. So, domestic industrial companies could be expected to benefit, but high-tech companies too. McCormack recently published a story about Chinese networking companies, and wrote: “…many global telecom high rollers argue, in effect, that resistance is futile.”

Amazon is Respected, but not in Texas

In 2010, Amazon rocketed up the ranks of most-respected companies to the #2 position – in the opinion of money managers.

But the State of Texas has a quibble – a quarter-of-billion dollar quibble. They think that Amazon should have been collecting sales tax in Texas, and have sent Amazon a $269 million bill.

Amazon’s response? They are bugging out of the state.

In other news, Texas, which has a large budget deficit, has already closed four community colleges. And Borders is going belly-up.

In our Apocalyptic future, Gypsy booksellers like Amazon will travel from state-to-state, staying one step ahead of the revenuers, while searching for customers who are able to read.

Steven Segal – Trainer of Champions

Last week, Anderson Silva knocked out Vitor Belfort with a front-kick:

Turns out, the kick was a super-secret technique known only to actor, Steven Segal who taught it to Silva. Or so says Segal. Thirty-five years ago, my karate instructor called it a “snap kick” but what did he know, right? In any case, if there were an Academy Award for “Being Full of Yourself” Segal would win it in a landslide for this performance:

Piers Morgan is a Nincompoop

CNN’s Piers Morgan interviewed Donald Trump last night. Trump wants to renegotiate our trade relationship with China, and Morgan challenged him. What is Morgan’s brilliant, and better idea? That we should roll up our sleeves and just try harder. Can you imagine?

Many cities in the Midwest have lost half of their population in a single generation. Hunter Morrison of Youngstown State University says that depopulation on that scale has not been seen since the Black Plague struck Europe 650 years ago.

Trump understands the urgency of the situation. Morgan does not. Morgan is a bubble-headed buffoon, and a preposterously pompous nincompoop.

Morgan also asserted that China is not a military threat. But China supports North Korea, which is helping Iran with their nuclear program. While that is an indirect threat, China has also developed a ballistic missile designed to target aircraft carriers. Whose carriers? Well the Chinese haven’t said who they are targeting, so why don’t we take a look around their neighborhood?

Does Japan have any carriers? Nope. What about Vietnam? No. Maybe the Philippines, Indonesia, South Korea, or Malaysia? None. What about China’s number-one target, Taiwan? Not hardly. In fact, the worlds smallest aircraft carrier belongs to Thailand, and it is mothballed. Even the Russians are down to one carrier, and the Admiral Kuznetsov spends its time on the other side of the globe in the Atlantic, Mediterranean Sea, North Sea, Black Sea, etc.

But it just so happens that the USA operates a fleet of 11 aircraft carriers. And not only do we have more carriers than the rest of the world combined, but ours are bigger, and I’m sure, way better.

The only aircraft carriers that China ever sees fly the American flag, and they have designed a weapon specifically to sink them. No other country has ever developed a ballistic missile targeted at carriers. The Russians considered it, but decided not to launch the project. But China is all gung-ho about their new weapon and are developing it as fast as possible.

That is a direct military threat.

And Piers Morgan is a damn fool.

Note: Here is the article about the rapid depopulation of the Midwest.

Tony Robbins Ain’t No Nostradamus

As a matter of fact, he is the anti-Nostradamus. Remember that emphatic “economic warning” he gave last August? He got it perfectly wrong (click chart to enlarge):

Wow, right?

Here are the videos:

If I were Robbins, I would have been too embarrassed to come home and would have stayed in Fiji.

Note: See the end of the second video where Robbins sez he has to dash off to Fiji.

Main Street’s Mortgage Fraud

It’s fashionable to criticize Wall Street over the financial crisis, but let’s not forget Main Street. For every fraudulent mortgage peddled by an i-banker, there was a Main Streeter signing the loan papers.

This case from Oregon is interesting because it involves UFC fighter, Chael Sonnen, who is also a licensed realtor. Sonnen is the only fighter who has even come close to dethroning UFC middleweight champion Anderson Silva.

Maybe there were some banksters involved in the case, but it looks like all the people indicted were Main Streeters. My theory is that the Great Offshoring has made all Americans more prone to crime as we struggle to survive in our new jobless, post-Apocalyptic landscape.

Sonnen will be sentenced in March and faces up to 20 years. However, since he cooperated with the investigation, he may not do any time.

The Egyptian Army is a Paper Tiger

Yes, the Egyptian Army is equipped with a vast array of American weaponry, but Israel has no need to worry. The USA only allows Egypt a few day’s supply of ammo and spare parts, according to Eric Margolis.

Of course, being on the wrong end of an onslaught of such an army for “only a few days” wouldn’t be a picnic. But I’m guessing that an Egyptian attack on Israel is not very likely no matter how crazy the next regime may be.

Could the Egyptians build their own ammo and spare parts? I doubt they would be able to keep their American jets flying for very long without extensive outside help, but they do build the American M1A1 battle tank themselves under license. I couldn’t find much information on this, but according to this page, only 40% of the M1A1 parts are made at the Egyptian plant, with the rest being imported from the USA.

Another factor in Israel’s favor is that the Arabs are counting on the Israelis to help them fight off the Persians. If Iraq becomes an Iranian satellite after the USA is gone, then all of a sudden both Saudi Arabia and Kuwait will be effectively sharing a land border with Iran. Look at the maps: Saudi Arabia, Kuwait.

Will Iraq fall to Iran? Some observers think so. Muqtada al-Sadr, who was hiding out in Iran, recently returned to Iraq. Only three years ago, Iraqi troops were cracking down on Al-Sadr’s Mahdi Army in Basra.

Would The Colonel Fry Israel?

Of course he would; don’t be ridiculous. While The Colonel is a Southern gentleman, he is a gentleman of the slaving variety. And recently his Chinese sweatshop workers have been getting uppity, demanding higher wages in order to buy food, of all things. Can you imagine? The Colonel would gladly run them over with tanks, but that doesn’t play well any more with consumers here in the Age of Facebook.

So, The Colonel has instructed his buyers to cancel their orders with Chinese factories while he secures a new pool of slaves. Vietnam looks promising, and maybe the Philippines, but if you are going to take the trouble to relocate your massive sweatshop empire why not move it closer to your end markets?

The Colonel ships a lot of product half way around the world from Asia to Europe, so why not set up shop somewhere in the region? Now, let’s think, where’s an ideal location for “investment”? Where can one find a very large number of people on the verge of starvation who could be put to work making sneakers for 14¢ an hour?

Egypt comes to mind, does it not? Look at the map, it’s a stone’s throw from the lucrative European market. Think of the savings in shipping costs alone.

Do the multinationals have designs on the Arab world? I don’t know, but the The Colonel’s appearance in so many main-stream media pictures from Cairo is a little alarming. Perhaps CNN is just supporting Obama’s plan for Egypt with propaganda designed to appeal to Americans. They cover-up the anti-Israel placards, and make sure that The Colonel is seen often enough for the subliminal message to stick in the brains of viewers: “See, those Egyptians are just like us! They just want to eat at KFC without being clubbed by Mubarak’s henchman.”

Of course, The Colonel’s visage does indeed appear all over the world. Yum! Brands is a very successful company – just look at their stock chart. So, it’s not surprising to see The Colonel, and I don’t consider Yum! Brands to be the least bit sinister itself.

However, the multinationals don’t have a battle flag of their own yet. So, there could, in fact, be a deliberate message being sent to us via The Colonel.

In my previous post, I gave some potential political and military reasons why Obama might want to punish Israel. But if the multinationals want to “develop” the Arab world, Israel will have even bigger problems. Nobody can stand up to the multinationals – not even the USA. If Israel had to be sacrificed to win over the Arabs, the multinationals would swat Israel like a fly trying to land on The Colonel’s biscuits.

In a worst-case scenario, Israel would suffer many years of political isolation. After all, it took a couple of decades for the multinationals to build up the economies of Mexico, China, and India.

Note: Here is a New York Times article about how the multinationals are canceling orders with Chinese factories.

Did the USA Foment the Egyptian Revolt?

DEBKAfile thinks that the USA is behind the Egyptian revolt. See their article here. What motive could the USA possibly have to overthrow a staunch ally? Well, a couple of things come to mind…

You probably remember Vice President Biden’s visit to Israel in March 2010. It sticks in the memory because many people considered it a huge insult to Biden when the Israelis announced construction plans for a new settlement in East Jerusalem. I have no idea if the Israelis did that on purpose, but if Obama felt slighted, you could expect him to eventually deliver some sort of payback. And the collapse of the status quo in Egypt is not likely to improve Israel’s security.

The other thing that comes to mind is American commanders saying that Israel was making the War in Afghanistan more difficult. The theory is that if Israel treats the Palestinians badly, more terrorists are motivated to attack US troops. I have no idea if that is actually true or not, but both Generals McChrystal and Petraeus publicly criticized Israel on the point.

So, there is a certain logic to the Obama Administration fomenting rebellion in Egypt. It delivers payback to the Israelis, makes Obama a hero to the Arabs, which helps the president wrap up the Iraq and Afghanistan wars in time for the 2012 election.

If DEBKAfile is right, then we might be witnessing an historic sea-change in US-Israeli relations. This might also explain why Obama did not accommodate the Israeli/Saudi desire for an attack on Iran’s nuclear facilities.

What Planet is John Bolton Living on?

Today on Fox News, I saw John Bolton say that the pro-Mubarak supporters in Cairo were wholesome, upstanding citizens just trying to restore order.

Can you imagine? I have a question for Bolton: if you are really just doing your civic duty and trying to get everybody to play nice, do you run up on Anderson Cooper of CNN and punch him in the face?

No, you do not. You wouldn’t worry about the media filming your good deeds. Yet Bolton’s “good Samaritans” were clearly hunting journalists.

Not only that, but CNN reported that Mubarak’s rent-a-goon squads are veterans of his rigged elections, and are paid to bust heads. They get $40 and a Viagra pill, which allows them to do more raping.

Another question for Bolton: are you a fan of the Iranian Basij too?

Chinese Locusts Swarm Over Egypt

Larry Kudlow has been ranting on about how Ben Bernanke has caused the riots via food inflation in countries like Tunisia and Egypt. But did Bernanke set Russia on fire last year? Did he sink Australia to the bottom of the ocean? Did he cause droughts in the USA and China? Did he torture dissidents in Egypt?

I don’t think so.

Kudlow is frantically trying to blame Bernanke for food prices in an effort to deflect attention away from crop failures. That’s the last thing that Kudlow wants to talk about because it leads to questions about global warming.

And Ben Bernanke has larger fish to fry. It is the People’s Bank of China that has flooded the world with money, and Bernanke’s QE2 is designed to counter the Chinese onslaught. The President and Congress have failed to act against China on trade, so it is up to Bernanke to do the dirty work with the weapons at his disposal.

And so he is. The elephants are dancing, and the Egyptian mice are getting crushed worse than they otherwise would be. And of course, the Chinese are delivering a one-two-punch to the more unfortunate nations of the world. Not only do they print absurd amounts of money and create inflation, but they are also gobbling up the world’s food – literally.

Apologists for the Chinese mercantilists declare that we must continue to allow them to steal our jobs because they have so many peasants coming from the countryside into the cities who need jobs. But is it really a good idea to encourage that urbanization process in the first place? Is it really a good idea to pave over farmland in order to build giant ghost cities?

Speaking of which, you would think that with so much fresh water from the world’s longest river, the Egyptians would be able to grow enough food to feed themselves. But they can’t, and have paved over a lot farmland along the Nile. So maybe a good project for the new Egypt, instead of invading Israel, would be to dismantle Cairo, and move out to the desert to make room for more crops.

And perhaps letting Detroit go back to wilderness isn’t so much the tragedy that we think it is.