The Week in Review:

I think it goes without saying that the stock market will remain extremely volatile until the end of October.

Why?

The Federal Reserve normally lowers interest rates just before or after an economic crisis. Rate cuts don't happen in good economic environments.

On September 18th, it will be interesting to see if the fed cuts rates as a token gesture, or will it be the beginning of several more moves to come. If more interest rate cuts are in the cards, then stock market may react negatively since it may signal that more bad news is on the horizon. If the economy is in much worse shape than previously thought, then the stock market will react harshly in the weeks and months ahead.

Here are some possible reactions we can expect if the fed does in fact lower interest rates at its next meeting.

1) Inflation will be reignited.
2) Gold prices will rise.
3) The U.S. Dollar will decline further.
4) Oil prices will rise.

A Lot of Confusion

Today, there seems to be more confusion associated with investing than ever before. In short, many investors get so much information that they really don't know what to believe.

The one constant that seems to be reliable is people. All you have to do is watch what people do, and say. Since the buying habits of the public drives corporate sales and profits, all we have to do is watch what is happening to the public.

Here are a few observations;

1) Stocks sold off on Friday after the government reported payrolls in August fell for the first time in four years. Non-farm payrolls were expected to rise 100,000 in August. Instead, the Labor Department reported a drop of 4,000. The data increased expectations the Federal Reserve will cut interest rates this month.

Consumer companies Best Buy and Circuit City both hit 52-week lows. Harley Davidson dropped 4.69 to 49.40 after cutting its earnings forecast.

2) Representative Walter Jones (R-N.C.) said, "Since NAFTA was approved, the United States has lost 3.1 million manufacturing jobs.

3) Former Assistant Secretary of the Treasury in the Reagan Administration, Paul Craig Roberts wrote; “According to the Bureau of Labor Statistics, one-quarter of all new US jobs created between June 2006 and June 2007 were for waitresses and bartenders. Almost all of the net new US jobs in the 21st century have been in domestic services."

4) The United States is being over run by Mexican's while President Bush, Canadian Prime Minister Stephen Harper and President Felipe Calderon of Mexico to put the finishing touches on the “Security and Prosperity Partnership” (SPP) agreement, which essentially merges the United States, Canada and Mexico into one entity.

If you have been wondering why President Bush has not pardoned the two border patrol agents who shot a Mexican drug dealer in the butt, maybe the above activities have something to do with it.

Agents Ignacio Ramos and Jose Compean were also beat up in prison.- Read Article

5) The Bureau of Labor Statistics data has revealed that the real wages and salaries of US civilian workers are below those of 5 years ago. US corporations are hiring foreign workers brought in on work visas in order to reduce labor costs.

6) US corporations are forcing their employees to train the lower paid foreigners to take American jobs. Here is a shocking article from the San Francisco Chronicle.

7) The politicians running for US President (the ones who have the best chance of being elected) are backing globalism, and the threat to our system of a representative Democracy by allowing the “New World Order” to unfold before our very eyes.

The issues surrounding NAFTA, open borders, outsourcing jobs, have evolved to promote the merger of the United States, Canada and Mexico into one entity.

This globalism movement has been the work of one very powerful man who politicians refuse to say no to- David Rockefeller.

As you do your own research on the markets, I encourage you to pay attention to what is happening to our citizens. After all, if they don't have higher paying jobs, how can corporate profits continue to grow?

Do you see what I mean when I say there is a lot of confusion? There is much more to investing than what an analyst, corporate executive, or financial commentator tells you.

The Markets

1) On Friday, the DJIA lost -249 to close at 13113. The real strength in the markets continues to be in Technology, Energy, Commodities, and selective Industrials.

Former Federal Reserve Chairman Alan Greenspan said that he sees parallels between the present situation and the stock market crash of 1987.

I ask again; What Happened to: "Goldilocks, Soft Landing, and the Resilient Consumer???

A re-test of the August lows looks to be in the cards.

2) Commodities rose this week as the CRB Index closed at 414.44, up from 413.49 last week and 408.65 two weeks ago.

3) Gold closed at $709.70, up from $675.80 last week and $671.40 two weeks ago.

4) NYMEX crude oil rose to $76.70 up from $74.04/bbl last week.

In our opinion the chances of a recession in 2008 are favorable.

We raised our allocation to the stock market by another 5% when the Dow dropped below the 13,000- 12,800 mark and the SPX to below 1400.

At Dow 12,000 we will raise our allocation to the stock market by another 5%.

Our asset allocation is as follows;

70% Equities: (Normally 95%) Aggressive
60% Equities: (Normally 80%) Moderately Aggressive
50% Equities: (Normally 60%) Moderate
30% Equities: (Normally 40%) Moderately Conservative
15% Equities: (Normally 20%) Conservative