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2014 a wild ride ahead

Coincidence or parallel only time will tell
Coincidence or parallel only time will tellcourtesy of Tom McClellan of the McClellan Market Report; he in turn gives credit to Tom DeMark, CEO of DeMark Analytics

Between the CBO (Congressional Budget Office) report issued last week and other signs, 2014 will prove to be an interesting year. We are into the sixth year of the Obama presidency, seven years since the recession and five years into “recovery”. Though we have been bombarded with reports about how things are looking up we see few, if any signs of recovery. What we do see is over 4,000 retail locations closing throughout the country in 2013. Unemployment numbers retreating at the same time Washington wants to extend unemployment. We see 49.2% of the population receiving government assistance and those are from 2011 before the Obamacare subsidies are taken into account.

The CBO report documented the effect of Obama and the Democrat’s economic policies. (CBO report) The administration and the news media were quick to rush to defend the gloomy outlook. In a move reminiscent of the LA Times funemployment story all these American workers laid off or cut to part time would now be liberated from the drudgery of gainful employment. (NYT editorial) One could assume Obama’s mouthpieces found it tiresome lying about any recovery and decided to make lemonade out of a piss poor outcome. The administration also gently persuaded the CBO to put some lipstick on this pig with some FAQ’s. In a nut shell CBO agreed with their estimate that 2.5 million would lose their jobs as a direct result of Obamacare but qualified it by claiming “workers would choose to supply less labor”.

Another sign of things to come is retirements from the House and Senate. Fifteen Democrats and eighteen Republicans have chosen for one reason or another not to run for reelection. The number isn’t far out of line from other years but the ages are younger when most chose to leave public office. The other noteworthy point is the Democrats retiring are the fiscally conservative ones or the blue dog Democrats, Matheson of Utah even voted against Obamacare. The Republicans are of the RINO kind (Republican in Name Only) the press likes to call “centralists”. These changes could mean an even more house divided in 2015 and beyond. Who the winners and losers end up to be depends on the voters.

One very ominous sign besides the corrections in the stock market is who is selling what. Warren Buffett sold off 21% of his holdings in companies dedicated to American consumer products. He dumped his entire stake in Intel. John Paulson sold off 14 million shares of JPMorgan and ditched all his holdings in Family Dollar, and Sara Lee. George Soros after dumping his gold holdings ( Gold -21.73 from last year) last April now sold nearly all his stock in JPMorgan, Citigroup and Goldman Sachs. (Selloff) These are not just market watchers who make predictions, these are movers and shakers moving and shaking their own money. What do they know we don’t?

There currently is a chart by McClellan Market Report that was produced last summer on a lark that tracks today’s market with 1929’s. It was published in November and market watchers were very skeptical. Today they are more cautious than skeptical (2014-1929) the up and down trends of today’s market seem to follow the market prior to the 1929 crash.

No matter what transpires 2014 will prove to be an interesting year. With the makeup of both the House and Senate up for grabs and Hillary gearing up for her turn at the White house expect a political battle royal. All these signs point to a wild ride for 2014. It would be less troubling if our current administration cared more for the country than his supporters and donors.