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With the fantasy-rally in U.S. equity markets now a full, six months old, most of the mainstream analysts who saw the current economic meltdown in the U.S. coming are now issuing blunt warnings that the market-pumpers have flogged this “dead-cat bounce” for all its worth.

One of those voices is Marc Faber. Faber correctly predicted the U.S. economic and market meltdowns, and also became a “short-term bull” on U.S. stocks in March of this year. At the beginning of September, however, he predicted a “major move” down in the next “10 days to two weeks”.

While Faber was clearly premature with his call, he was not as premature as I was, in calling for the rally to end at the end of May (“U.S. Bond-Bubble Bursts, Bye-Bye Equities Rally”).

On September 30^th, Jim Rogers (who also saw the first U.S. crash coming) simply said, “I am not buying shares anywhere in the world as we speak.” Interestingly, though, two days later Rogers also said (in a CNBC interview) that if he “had a million dollars” to spend today that he would be buying commodities, specifically coffee, cotton and silver – calling the prices for these commodities “very depressed”.

Presumably, if Rogers were to buy any stocks at the the present time it would be companies who produce those commodities. While it is very difficult for most retail investors to buy into coffee and cotton producers, likely Rogers would not be averse to buying silver producers (i.e. miners).

Indeed, this seems to be exactly what Rogers was implying, since he advised “shopping around” for countries where these commodities were undervalued. Since the commodities, themselves, are global – and sell for the same price everywhere, only the valuations of the commodity producers will vary from market to market.

Of course, investors shouldn't need warnings from prominent (and credible) voices to “see the writing on the wall”. As I have pointed out on several occasions (most recently in “Insider selling STILL accelerating”), U.S. “insider selling” has been accelerating throughout this entire rally. So while I did not expect this fantasy-rally to continue for nearly this long, neither did most of Corporate America – who have the added advantage of knowing exactly how healthy (or unhealthy) their companies really are.

Naturally, the U.S. propaganda-machine won't let facts and reason interfere with its own incessant market-pumping. The latest fluff comes from Reuters. On Saturday, it speculated that “improved revenues” could continue to fuel the equities rally, and that revenues “kicked into gear” in the 3^rd quarter.

How does Reuters quantify this bullish prognosis? It's predicting that instead of the 14% year-over-year declines which represented the S&P average for the 2^nd quarter, that the year-over-year decline for the 3^rd quarter will be 'only' 11%. What these sleazy propagandists somehow 'forgot' to include in their analysis is that the 3^rd quarter of 2008 was much worse for U.S. corporations than the 2^nd quarter.

Thus, the “improved revenues” which Reuters is predicting when the U.S. 3^rd quarter “reporting season” begins next week will actually be no real improvement at all from 2^nd quarter revenues (if we assume the forecasts are accurate). Similarly, Reuters was also expecting “improved earnings” - predicting that instead of the average plunge in revenues of 27.3% percent which occurred in Q2, that the year-over-year collapse in earnings in Q3 will be 'only' 24.8%.

Naturally, Reuters dug up a market shill to reinforce this prognosis. “As of right now, the growth rates [emphasis mine] are improving for earnings and revenue,” said John Butters, director of U.S. earnings for Thompson Reuters.

As I just pointed out, both earnings and revenues are still plummeting down in all year-over-year comparisons. The reason why the market focuses on year-over-year numbers more than quarter-over-quarter numbers is because seasonal changes in markets make quarter-over-quarter comparisons irrelevant for many sectors of the economy. Thus, when this shameless shill talks about “growth” in earnings and revenues, he is referring to numbers which are still plunging downward at one of the fastest rates in history. This has been symbolic of this entire propaganda-fueled rally.

In the upside-down world of the propagandists, “black” is “white” and “bad” is “good”. Reality has no relevance, only the perceived reality is important.

With the real numbers (beyond the control of the propagandists) showing that the U.S. economy is once again accelerating downward (see “Business, Consumer Loan-Delinquencies Still Soaring”), and with “insiders” now having taken most of their own money off the table, the market-pumpers appear poised to end their propaganda campaign, allow U.S. markets to crash – and thus provide a new buying opportunity for insiders.

Put another way, if U.S. corporate earnings and revenues continue “growing” in the manner described by Reuters, almost all these companies will be bankrupt in a few years.

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