06/18/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST

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https://archives.warpradio.com/btr/InvestorsEdge/061818.mp3

JUST LETTING YOU KNOW

Eventually Something Has to Give

The markets have had a hopeful change of complexion, which started on Friday. You may not know it from the final numbers because if you turn on the tube, one of those network people will tell you that the Dow was doing 25 points.

Well, there’s more than meets the eye than that number. Today, was a very split tape. But for me, the most important thing that happened today off of Friday is that regardless of the Dow being down 25, growth stocks had a very good day. The Transports had a gargantuan day for a Dow that was down 25.

This means that money is going from one area to the next. Where it stops, we don’t know. How much we get of a rally here – it could stop tomorrow. We don’t know. What we do know is the condition that we’re in and on a daily basis, we’ll look to see if any changes show up. Or if more improvement shows up.

And that’s all we can do.

There were Greek elections over the weekend. The people that want to stay in the Eurozone with the Euro won the election, in that they won most of the votes. But in Greece, other parties running do have a certain amount of say. When the news came out, I figured that the Dow would be up 150 points today, if not more. And futures were up 90. But when I walked in the office today, futures were down. Nasdaq futures were down. The Dow and S&P were down. And it was worse during the day. But the story of the day was the strong Nasdaq and Nasdaq-100.

With Greece, I go by what I read and I go by history. The problem with Greece is simple. There is not enough money in Greece to pay off the promises. There are not enough workers to pay off the promises to the retirees. Thus, you wind up with a massive budget deficits and the situation that they’re in.

The other problem in Greece is that their collection of taxes is kind of like a guy knocking at your door asking if he can have some money.

They’ve been taking loans from the European Union. They been trying to issue more bonds, which ain’t gonna happen. And the problem is that they continue to think that putting off the problems today by creating more loans, is going to help the situation. The problem is structural. If you do not change the structure of a faulty building, the building will come down.

I believe there’s one in Las Vegas’ CityCenter that has to be knocked down due to construction defects.

In France, the people of France voted in a socialist. France has the same problems as others but not as bad.  The new president came in and lowered the retirement age for workers. Thus, it’s going to cost another $17 billion a year. Socialists don’t care about the bottom line. They only care about taxpayer dollars to feed their programs that never work…ever.

The outcome of all of is that, in my opinion, something going to give. You can add in Spain, with its 24% unemployment and a total crash of the housing market.

Eventually, something has to give. I think it’ll eventually start with Greece. And there’s going to have to be structure changes.

So that was the Greece Story. So supposedly it was good. Parts of the market shrugged it off. The Euro was down nicely today.

The next couple of years are going to be interesting ladies and gentleman. Just remember, if you do not change a flawed and faulty system, eventually it gives way. At what point, I don’t know. And I don’t know what effect it will have.

We’ll be watching the markets for what we do not know and that is the action that is going on today to give us a leg up going forward.

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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.