Wednesday, November 11, 2009


The dollar and the market seems to be the topic de jour. Karl Denninger over at the blog Market Ticker had a couple of excellent posts, which his regular readers know is commonplace at his blog. The first post yesterday's FedSpeak Translation - There is No Recovery and today's Strong Dollar Lies both deserve your attention.

Please focus on the charts in his post which are overlays of the U.S. dollar and the broad based S&P500 index. I agree with him in that this is no recovery at all it is simply a mirage. I also agree that the currency is a reflection of the country in question. I was counselled many years ago, by a very wise chap, that the thermometer of a country economically was its currency.

You can agree or disagree with KD but the one thing he will do is make you think, which is more than I can say for the mainstream financial media. His post did just that with me, it got me to thinking. In particular about something I have oft written, that if one were inclined to wearing tin foil, one might easily come to the conclusion that people in charge are sandbagging us. That they know what the remedies for our dilemma are yet are purposefully and with premeditated calculation doing the opposite, thereby sabotaging the economy. As in a game a chess where you make a move that elicits your opponents next move. For those that don't play chess go see Law Abiding Citizen to see what I mean)

That snakes like Geithner, Bernanke, Paulson, Summers, Blankfein, the Fed governors et al know what the correct remedies and solutions yet refuse to implement them. Could it be that someone or somebodies stand to gain enormous by this. Whats that phrase again?.... Oh yeah, follow the money!

In the aftermath of the tech bubble it was widely reported that approximately 22% of us held tech stocks. In the aftermath of the housing bubble it is reported 64% of us own our own homes. (I could stand to be corrected on this one so take it with a grain of salt). Where am I going with this? Okay, how many of us own dollars.

The story regarding the whistle blower from the IEA (Int'al Energy Agency) that oil production statistics are manipulated by the U.S. seems to be gaining traction. To which all I can say is really? Maybe kinda like the unemployment numbers. Of course not, they're sacrosanct. No politician would do that? Would they?

And yet again another block of the foundation of our financial system, trust, crumbles away. I have commented before that trust is the most crucial element is capital markets. People have to be able to believe that the information they are being provided is legitimate and untainted, Zales (ticker ZLC), Apollo (ticker APOL) anyone?

Sure, you're absolutely correct, they're just one off circumstances. Lets just ignore the FASB changing the accounting rules for banks on non performing loans and now changing the rules for commercial real estate, but I digress.

Let me step further and get a couple of things straight here....

The state of California is on the verge of bankruptcy,
The state of New York is on the verge of bankruptcy,
The City of Houston is on the verge of bankruptcy,
The City of Detroit is on the verge of bankruptcy,
Unemployment is 10.2% if you believe the government, and if you don't, well then its closer to 20%.
Commercial real estate is comatose
The largest pension funds in the country, like Calpers are an unfunded shambles.
The taxpayer, via King Henry and his merry band of thieves and thugs owns GM, AIG, Citi and bushel upon bushel of Fannie and Freddie paper backed by next to worthless mortgages.

And yet in the face of all this evidence I am supposed to buy stocks? Because they are going up. All yet in the face of this evidence the manager of that growth/value/small cap/large cap fund in your IRA or 401 k is buying stocks. Not because he wants to but because he has to or pink slip she a comin'. Again because they are going up. Isn't that what Chuck Prince did, dance just because the music was playing.

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Direxion Financial 3X Bear ticker FAZ @ $19.09
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

No comments: