Fast One

After being down 200 pts the Dow has rallied back to flat (now green). The bulls are attempting to again snatch victory from the jaws of defeat. "The Skeptic" still does not believe in fairy tales.

Of Fairy Tales and Weak Arguments

Global growth. Global growth. Global growth. If the moron pundits on CNBC say it enough maybe the bleeding will stop. Click your heels and hope Goldilocks can be revived. What a joke.

Look Out Below

Look here folks. You had better take precautions. Not even money market funds are safe according to today's WSJ. You see these slick wall street types on TV talking about the risk being spread out all over so no one is going to blow-up. Right. It just means this toxic waste is everywhere. It's in Germany where they are already bailing out a small bank and Paris where BNP Paribas dropped the bomb this morning that got us off on the wrong foot. I woke-up at 8ish and the futures were down more than I could ever remember seeing in a decade. Apparently the ECB had stepped in an attempt to stop the bleeding. According to the Financial Times:

"The European Central Bank might have called it “fine-tuning” but its decision to inject nearly €95bn into the eurozone banking system, the largest such intervention since the September 11 2001 attacks, is anything but. Does the ECB know something the rest of the world does not? After all, the Federal Reserve on Tuesday gave no inkling that a systemic threat might arise from the stream of banks and funds confessing to subprime-related problems."

So that toxic waste is in Europe and around the world. There's just so much of it. But don't forget here at home it's held by hedge funds, banks, insurance companies, builders, money market funds, pension funds and endowments. We are at the edge of the cliff. We are staring at the oncoming headlights. If we go over or stand flat-footed every single American will be affected. Period.

So you had better brace yourself as every asset class is being liquidated. We are still very close to the top and the hedgies are already blowing themselves up left and right. It's indicative of how much leverage has been employed.

Won't be long before cash (the dollar) isn't safe either despite the bounce today. If "The Skeptic" were to sell anything in the long-term account the proceeds would go into the GLD. Everything was sold today but gold has the best chance to protect you (after the ongoing liquidation). If you were smart you'd buy some farmland with water rights, bury some oil drums in the front yard and put some gold in a safe which you protect with a firearm. Good luck.

Disclosure: Long GLD

UPDATE: Countrywide just dropped the bomb. Look out.

Here's a Must Read

Great article. Absolute must read. Here's a latest from http://contraryinvestor.com/mo.htm

"The conceptual message seems pretty darn clear. When the rate of change in household debt growth decelerates meaningfully, the US has experienced recession. You don’t need us to tell you that this makes all the sense in the world. We’re a consumption based domestic economy that has been heavily debt financed. When the rate of change in debt slows, so does the economy. Simple enough? And what we see in the current period is a very sharp slowdown in household debt growth as of now. In our minds, this demands monitoring as we move forward."

Insert Expletive Here

This from the Daily Telegraph:

"The Chinese government has begun a concerted campaign of economic threats
against the United States, hinting that it may liquidate its vast holding of US
treasuries if Washington imposes trade sanctions to force a yuan
revaluation."

Wow. Read that one again.

Now:

"Two officials at leading Communist Party bodies have given interviews in
recent days warning - for the first time - that Beijing may use its $1.33
trillion (£658bn) of foreign reserves as a political weapon to counter pressure
from the US Congress. Shifts in Chinese policy are often announced through key
think tanks and academies.
Described as China's "nuclear option" in the state
media, such action could trigger a dollar crash at a time when the US currency
is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering
the US housing market and perhaps tipping the economy into recession. It is
estimated that China holds over $900bn in a mix of US bonds."

Great Analogy

Check out this video. This fella makes some very important points. 200 basis points? WatchVideo

Break from Doom and Gloom

There has been a lot of doom and gloom from me lately. Despite my genetic predispositions I try to maintain some balance. You need to make money both long and short. Bull or bear. In that spirit I would suggest biotech. It's working. It should be as it's a sector that won't be directly affected by the slowing economy. Or so the theory goes. Think AMLN, not AMGN.

Also, select basic material and resource plays look intriguing. Utilities bounced hard today and seem to have more upside. Check your favorite names in those sectors.

Monday Bearkill

The stock market emasculated the bears today. Dow up 286 points. Cancelling out entirely Friday's massive drop. A few thoughts:

1. For a day when the Dow was up 2.18% and the S&P 500 was up 2.42% the breadth was weak. NYSE had 1793 issues advance and 1570 decline. Not impressive. More telling perhaps was the Nasdaq which saw declines outpace advances 1617-1453.
2. There are some delicious short candidates out there. But who the hell is going to stick their neck out before the Fed meeting. No one. Therefore, only buyers today.
3. I'll be the first to admit that I've been waiting for a long time for this market to crack. I remember the other pullbacks and how every single one has been met with more strength and eventually higher prices. Obviously, betting against the bulls has a low probability of success. However, I look at hundreds of charts everyday and can tell you that damage has been done this time. I've not seen so many ugly looking charts since before the bull began.
4. The dollar index briefly dropped below 80 this morning before bouncing. Stay tuned.
5. "The Skeptic" welcomes a market rally as an opportunity to get more aggressively short. Unless proven wrong entirely in which case it'll be time to get reluctantly long...again.

Well. That's all for now. I understand that calling a top in the market or calling for a bear market is a fool's errand. You are the butt of every joke. Everyone is against you. Fine with me. Just like when I sold my home in the summer of 2005. I was ridiculed by everyone. No one is laughing now. The bulls had better enjoy this last dance because it won't be long before I'm sticking my foot up their asses. Good luck out there. It's going to get interesting.

Jim Rogers on CNBC

Here is the link to Jim Rogers' appearance on CNBC this morning. http://www.cnbc.com/id/15840232?video=456571213&play=1

Later in the day CNBC's Joe Kernen went on a rant about his theory that Jim hasn't made any money since his days with Soros and that he is a joke. Kernen speculated that Jim probably has had all his money in T-bills since the 1980s and that he has been a global bull but probably only buys one share of stock in each country just to say he owns it. He then added that Rogers has always been negative on US stocks. Kernen generally doesn't irritate me too much but this was over the top. For one thing Rogers called the secular bull market in commodities, before anyone else, when it was still in it's infancy. He also told you to get long China. Sure he has been negative on US stocks but it seems he'll be proven right eventually. You have to understand, Rogers is not a market timer or trader but a big picture thinker. Has Kernen even read Jimmy's books? I bet not.

Seriously, Kernen you just need to pipe down. You are a TV host! Not an investor, not a money manager, not a trader....and apparently not even a very bright light. Stick to the teleprompter Kernen, you dumb shit.