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Dear Toolbox Readers,

Looking at the market we are always faced with the decision of which way we think it is going now. Lets take a look at where we are and see if there are any clues as to what comes next.

If you were a member of the Research Lab you would already know that the best performing markets in the world are Brazil, Israel, Austria, Sweden and South Korea all up from 50-74% so far YTD.

The US market is up about 14% so far and the stocks in the US seem to be very overbought. Take a look at the table below and notice how almost all the stocks are trading above the major moving averages.

The S&P is now 17% above its 200-day MA, the highest since 1999. Now you have to ask yourself this... Is this a market top?

I'm not so sure. You can clearly see that the market has been on a tear and many people are calling for a pullback and under normal market conditions I would tend to agree.

A lingering question for me is... What is normal these days?

The Global economy is not in great shape, Swine Flu on the horizon and a near panic mode among the fear mongers warning of everything from financial meltdown to the second coming.

Here is a great example of why we have to keep an eye on "What Is Normal".

My good buddy Dan from Short Stocks sent me this and I have to say... SHOCKING!

Seriously, Back in the day... near the highs Citigroup was trading at about 56 dollars and a market cap over 100 billion...

Now Citigroup is trading at 4 dollars and change... market cap 100 billion.

This is just more insane manipulation.

Finally...

I was prepared to write this toolbox yesterday and I was going to discuss the record bank failures so far this year. Last year 25 banks failed, the year before that 3 banks failed...

Yesterday afternoon we had 77 failures (so far) but I know that they like to announce bank failures on Friday night after everyone goes home for the weekend... so I waited...

Alas, here it came. The press release announcing 3 more bank failures (down from 5 last week) and a cost to the FDIC of about 224 million dollars.

Of course, they already had buyers lined up for these failing banks and shuffled off the assets to the new owners so we can all be open for business again Monday.

Then it happened.

At 5:19 am Saturday morning another press release...

This time we announced the Guaranty Bank failed. The second largest bank failure of the year and this one is gonna cost the FDIC billions.

Worse yet... the buyer they lined up this time is a foreign bank.

The FDIC took all the assets of Guaranty Bank and sold it off to a foreign bank and agreed to share in the losses which are sure to be in the billions.

The transaction approved by the Federal Deposit Insurance Corp. marked the first time a foreign bank has bought a failed U.S. bank.

The bank failure, the 10th largest in U.S. history, is expected to cost the deposit insurance fund an estimated $3 billion.

Now, we are spending billions in tax payer dollars to support foreign banks. Have you had enough yet?

Maybe you've wondered why the FDIC always has a buyer lined up before they take a bank down...

That is an easy one. The FDIC has no money. Their reserves are a joke. The whole damn scheme is laughable.

They don't take banks over, because they have no money! As long as they can act like a bank broker... it wont come to light that they have no money.

They will come on TV and tell everyone "not to worry" no one has ever lost deposits in a "federally insured bank".

Ha, what a crock!

They act like they could take over a bank and "insure" the deposits... It is just another government ponzi scheme.

So here we are with 81 bank failures so far. More than 3 times the number we had last year and the most since the height of the S&L crisis in 1992.

But, I would not worry if I were you.

Ben Bernanke still thinks we could recover in the 3rd quarter.

Oh... did I mention that the president but together a ten year budget and told us to expect 7 trillion in new debt over the next ten years.

OOOPS!

They announce yesterday that their number needed adjusted. It seems now we are going to get 9 trillion in new debt over 10 years.

That is only 900 billion a year for ten years.

Does it bother any of you that these numbers are before the new health scheme, cap & trade and a whole bunch more new government programs?

It bothers me a bit that they missed the projection by almost 29% and we are trusting these clowns to manage anything.

How is that "change" working out for ya?

Lat me take a second here to look into my crystal ball...

INFLATION, INFLATION & more INFLATION!

There is simply no other way to pay off debt that big. Watch for it. It is coming.

You better find a way to multiply the money you have because you'll need it if you plan on living longer that the next few years.

If you have not done so already...

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Until Next Time...

Best Wishes and Good Investing,
Bill McKinley & Doug Newberry
The Investing Systems Network

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