Four Inconvenient Truths.

Like it or not this market is reacting daily to facts that continue to be true despite all the news reports in the media.  Here are four truths that are being misreported. 

1. JP Morgan is currently being hit hard with press reports that say they lost $2 billion dollars in bad trades. That is correct, but frankly the amount when finally known will be much more than the current reported amount.  The thinking was that the Dodd Frank financial regulation bill was going to make these issues go away and now we know they did not. The reason is fairly simple, until the Glass Stegall law is reinstated these events will continue to occur. Banks will either trade like hedge funds in the US or as Goldman Sachs has done take their trade desks overseas.  Note that the JP Morgan trade was done in London.  Reinstating Glass Stegall would force banks to separate their businesses and make sure they are trading with their own money and not depositors.  The reason this did not happen is simple Obama needs bankers money for re-election. Take a look at the big banks on Wall Street and every single one is run by a Democrat and every one is sending checks to Democrats from traders with those banks.  Despite all the BS being talked by Obama and all the financial regulations being passed or proposed they will not do anything to end the campaign cash gravy train. The press is either willingly ignoring this fact to help Obama or maybe reporters today are not smart enough to even know the deal. 

2. Adding to the truth in number one is that Romney and Obama both depend on these bankers for election cash.  Yes, Obama gets much more banker campaign cash but, Romney if elected, will likely do nothing to stop the money flow as well. In fact you can expect him to leverage his power to get more cash himself if elected.  Obama will not change his stripes, maybe voters can help this issue by forcing Romney to state he would place Glass Stegall in the legislative hopper. 

3. Greece and France are in trouble, deep trouble.  Despite Angela Merkel's change of mind to allow printing by the ECB, sooner or later this spending is going to bring down some country's budget.  My first pick is Greece, which everyone knows is gone from the European Union, just everyone to refusing to even say it. Press reports again refuse to admit it since they do not want to see the socialism in Europe end.  The day will come that investors will refuse to lend money, even printed money, and then the dominoes will fall. The simple fact is that this will occur so fast there is no way to avoid it other than steer clear of anything that even smells of European investment.  One will wake up one morning, likely a Monday, and it will be over.  The White House is hoping that that day is sometime after the first Tuesday in November 2012.  Silly investors and traders will continue to play this game until they lose big. 

4. If you do not take the above facts into consideration when you invest or trade you are either a fool or sucker.