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Saturday, 26 September 2009

Most ominous indicators:Insider selling still accelerating

While legions of U.S. market-pumpers insist that all that lies ahead for U.S. markets is an “economic recovery,” and a continuation of this absurd rally, they deliberately ignore one of the most ominous indicators of the future direction of markets: insider selling.

For the entire duration of this hype-fueled rally, insider selling has been steadily increasing. As we enter what has historically been the two worst months for U.S. markets, a CNN article had this to say:

Corporate officers and directors have been selling shares at a pace last seen just before the onset of the subprime malaise two years ago.

Let me repeat this. U.S. insiders are dumping stock with the same intensity last seen just before the worst market crash since the Great Depression. For those who can recall that period, this was when “Helicopter” Ben Bernanke had finally stopped insisting the U.S. had a “Goldilocks economy” where markets would never turn lower. He had just begun to push his new propaganda slogan: the “soft landing.” This was where the U.S. housing sector would experience a mild correction – which was supposed to have zero spill-over in the broader economy.

The same (reappointed) Ben Bernanke is now insisting that a U.S. “economic recovery” has already begun. That, in itself, should be seen as conclusive evidence that the U.S. economy is about to start its next leg lower.

As I have pointed out in several previous commentaries, with just 20% of the U.S. population holding 85% of all wealth, and a mere 1% holding more than 55% of all stocks (and the majority of this wealth being managed by Wall Street), the same Wall Street banksters who just finished scamming the world for trillions (and then scamming U.S. taxpayers for trillions more) literally control U.S. markets. And as they buy, buy, buy for their clients, they are sell, sell, selling themselves.

Unless someone believes that insiders are selling their shares solely to give retail investors a chance to buy cheap stocks, there is only one possible interpretation of this data: for nearly six months, U.S. insiders have been saying (with their wallets) that U.S. markets are heading lower.

The same “experts” who were all “surprised” by the first crash in U.S. markets are the ones who are claiming that the U.S. has already started a recovery. As I pointed out in “The Myth of the Job-less Recovery,” there cannot and has never been a genuine “economic recovery” which is not accompanied with positive job growth.

I followed that up with a commentary pointing out the sickening collapse in the amount of credit available to consumers – from the same Wall Street banksters who told Americans that if they could just give them $10 trillion in hand-outs, loans, and guarantees, that they would lend, lend, lend. In fact, a recent report from BNN stated that a survey of U.S. banks found that none of them planned on loosening credit.

With Americans losing their jobs, losing their homes, those who have jobs seeing their wages shrink, and cut-off from further credit, as one of my readers quipped, we're supposed to believe that the U.S. consumer economy is about to start a “job less and consumer less recovery.”

If we needed any further cues about what comes next for the U.S. economy (and U.S. markets) we need look no further than “Cash-for-clunkers.” This quick fix accomplished two things. It provided a very short-term jolt of “stimulus” for the U.S. economy.

However, by forcing Americans with limited available credit to take on significant amounts of debt, it literally “borrowed” a large amount of future consumption from the U.S. economy. It would be hard to invent more perfect circumstances for a final “blow-off” rally, followed by the inevitable, painful correction.

As you continue to listen to all the market-pumpers attempting to assure you that all is well, remember that all these market-pumpers were saying the same thing before the last crash. Remember that insider-selling is also mirroring what happened just before the last crash. What do people think these insiders are going to do once they have finished selling? Are they going to buy back in at higher prices? I think not.

Remember that there are 20 million empty homes in the U.S., ten million Americans with “underwater” mortgages, record rates of foreclosures (which are certain to increase going forward), and millions of already-foreclosed homes being deliberately held off the market – and hidden from the myopic vision of the market-pumpers.

Remember that there are still 2.5 million lay-offs occurring every month, roughly double what occurs when the economy is actually growing, and that even the phony, government monthly labor reports acknowledge the “worst job losses since the Great Depression.”

Remember that U.S. consumers (the “backbone” of the U.S. economy) have record levels of debt, falling wages, no access to credit, and (for the first time in decades) are actually trying to begin saving money.

If you can remember all that, you should be O.K. - as long as you don't forget to sell your U.S. equities before it’s too late!

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