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Gold's Got "The Feeling"

Written By Brian Hicks

Posted September 7, 2011

Jeffrey Immelt has thrown in the towel… just plain given up on America, the world, and his massive conglomerate — a company so large and intertwined in the global economy as to be, for all practical purposes, a market index ETF of sorts.

His statement didn’t read like a concession, but then again, I imagine the CEO of General Electric (NYSE: GE) got a whole bunch of professional message massagers working day and night to ensure his speeches always have a happy ending.

But if you hold his latest interview up to the light, you can clearly see that Immelt is basically giving in to this crappy market.

Yesterday, Immelt pledged he would beat the S&P 500 over the next two years, or at least he “feels like (he) can deliver for investors.”

Just Not Feeling It

Let’s place that bold claim into some kind of context.

Since the start of 2011, the Dow has lost some 4.61% of its value.

This is pretty damned funny considering the big bullish buying idea the cheerleaders were pushing just a few days ago was “Dow up in 2011.” (Okay, maybe I’m the only one sick enough to think that’s funny.)

But Jeff Immelt isn’t “feeling” it enough to promise to beat even that sort of paltry performance.

He’s eyeballing the broader S&P 500 — down some 8.13% as I sit to write — as his benchmark for success.

Problem is he’s still got a long way to go to reach even that sad goal, as GE is down some 18% in 2011. Immelt credits this horrid showing to such “black-swan events” as GE’s first dividend cut since 1938 and the loss of its AAA credit rating.

Now how often does stuff like that happen, eh? May as well buy shares now, as things surely can’t get any worse!

But the News is So Good!

One might imagine Immelt would attempt to actually sell us on GE shares with some kind of bold claim regarding concrete gains.

After all, didn’t we just hear last week from the Institute for Supply Management that both the overall economy and manufacturing in particular were still growing in August (albeit at a remarkably modest pace)?

And just this week, that same venerable source’s (ISM’s been around since 1915, you know) non-manufacturing index comes in over analysts’ expectations?

We are being told by that same crew of cheerleaders that these reports are cause for celebration — and by “celebration” they most certainly mean we should buy shares of companies like GE.

BlackRock CEO Lawrence D. Fink tells us, “In my personal opinion, at $16, (GE)’s an incredible opportunity, especially if you believe now is a good time to invest.”

Of course, there’s the very slight chance that Mr. Fink is merely “talking his book,” as Blackrock is the third largest holder of GE shares…

Lowered Expectations

Apparently, Mr. Immelt isn’t the only one setting a low bar. While Jeff promises GE ought to do no worse than the economy as a whole — if not hopefully a tad better — Fink says outright: “If you think global GDP is going to collapse, GE, along with most companies, will not fare well in that.”

Okay, I just can’t stand this sophisticated tongue-in-cheek crap anymore!

I will tell you point-blank that the global economy is already slipping into the second leg of the Great Recession, Second Depression, or whatever you personally choose to call this whole mess.

A Global Shift

Yeah, that’s right: I said GLOBAL.

This is no mere market hiccough or localized economic disturbance…

As I sit to write to you today, some very serious-minded folks are bantering over the idea that the whole European Union will have to be dismantled if any of its stronger economies are to survive.

This event isn’t slated to happen for years to come. But the meme — the IDEA — is scaring the lemmings out of Europe and into U.S. Treasuries (by way of the U.S. dollar), a rotation that has pushed the Dow back down under its 2011 open.

The world is changing. You will either change with it or be crushed by it.


The dollar hasn’t been the only beneficiary of this shift. Gold futures have hit another all-time high at $1,545.

If you heeded my ongoing advice to trade in calls, you have raked in triple-digit calls repeatedly over the past few months.

Heck, if all you did was listen up when I BEGGED you to buy at-the-money Gold SPDR (NYSE: GLD) calls back in mid-August, you’d be up more than 70% just a few weeks later!

I will tell you yet again that these gold-based tools are an absolutely essential weapon in your “New Depression” arsenal.

No “Values” Anymore

As for GE, frankly, my Viral Investing readers have been thoroughly enjoying shorting same with October put option contracts to the tune of some 176%.

These contracts are due to roll off my listing shortly, as I never recommend holding front month options. (It’s a time decay thing.)

But a more recent VI put play against is also moving along nicely today…

Blue chip stalwart International Business Machine (NYSE: IBM) — the “one stock to own” for the past 50 years — just showed up at the top of UBS’ “most shorted” list, and our puts are up some 15% today.

It’s a new world, people. “Value” doesn’t get it anymore.

It’s all about fickle stuff like mood, meme, and motion now.

Adam Lass Signature

Adam Lass
Editor, Wealth Daily