Riddle Me This

At what point does the bond market say enough is enough and impose some discipline on the Fed?

Yesterday was strange insofar as yields shot higher, the dollar shot higher and gold was still strong. Any one day could be noise but we'd better keep an eye on this.

TGIF

Must admit that I see more potential longs than I have in some time. Banks appear as if they are trying to put in a short term bottom. Have a hard time believing that's gonna happen but...I'll trade the tape I'm given.

Coming into this week I intended to position myself market neutral (as opposed to net short up to my eyeballs) but I have yet to add any substantial longs. Maybe today is the day.

I remain conservatively positioned with the intent of escaping this week with some profits intact. Yesterday sucked but hopefully today will be better -thereby increasing my weekend revelry. After all that's what it's all about.

What A Joke We've Become

I just have to get this off my chest real quick.

Do you know why we are not trading at 10K on the DOW? FRAUD. Period.

Losses are intentionally being hidden from the marketplace. Every effort to clean up this mess has been an exercise in further obfuscation.

Where are the regulators? Where are the indictments?

This is all downright fucking disgusting. No effort whatsoever has been made to punish the wrongdoers.

My thesis is and has been that America, the greatest civilization in the history of the world, has PEAKED. This my friends is the beginning of a long slow painful decline and as sad as I find it personally we should probably get used to this sort of thing.

We now have corporatism, not democracy. According to various theorists, corporatism was an attempt to create a modern version of feudalism by merging the "corporate" interests with those of the state.

Or maybe it's neofeudalism- the concept is one in which government policies are instituted with the effect (deliberate or otherwise) of systematically increasing the wealth gap between the rich and the poor while increasing the power of the rich and decreasing the power of the poor. That might be more appropriate. Regardless of what you want to call it we are a country almost completely divorced from the ideals that made us great.

There will be no greater testament to our broken government than that of a choice between McCain and Hillary- if it comes to that and I'm cynical enough to assume that will be the case. Finally, belatedly 60-70% of our nation is against the war in Iraq yet we could end up with TWO PRO-WAR candidates as our only choices. Further, it seems painfully obvious that both candidates represent the same established interests (not those of the people).

Just A Reminder

We're not going to go down in a straight line. No one said it would be easy.

Getting More Expensive To Keep That A/C Buzzing

I've been a proponent of a shift to nuclear power as it's cheaper and cleaner than traditional coal-fired plants. In a post-peak-oil world we need to focus on keeping the lights on as opposed to keeping the cars running.

Here though is a problem I hadn't yet considered. A problem that lays at the nexus of our impending energy and water problems.

By MITCH WEISS Associated Press Writer

LAKE NORMAN, N.C. — Nuclear reactors across the Southeast could be forced to throttle back or temporarily shut down later this year because drought is drying up the rivers and lakes that supply power plants with the awesome amounts of cooling water they need to operate.
Utility officials say such shutdowns probably wouldn't result in blackouts. But they could lead to shockingly higher electric bills for millions of Southerners, because the region's utilities may be forced to buy expensive replacement power from other energy companies.

Already, there has been one brief, drought-related shutdown, at a reactor in Alabama over the summer.
"Water is the nuclear industry's Achilles' heel," said Jim Warren, executive director of N.C. Waste Awareness and Reduction Network, an environmental group critical of nuclear power. "You need a lot of water to operate nuclear plants." He added: "This is becoming a crisis."

ClickHere for full article.

This Guy is a Moron

Jim Cramer- you never cease to amaze. We are not even in recession yet (according to the faulty numbers we all follow) and he is saying on CNBS to buy "early cycle stocks" like banks, homebuilders and retailers. You gotta be fucking kidding me. Much like early 2000 when he told his sheep to buy high tech he's guiding you to the worst place to buy. Banks? Homebuilders? That's where the problem began (and still remains). Retail? That is the first place our problems are going to spread. This guy just pulls out his dusty playbook and reads it verbatim. "Let's see here....nuclear holocost...buy the banks!"

He is also calling for another inter-meeting Fed cut! Come on. How can anyone take this guy seriously? He is a fucking joke. Right here, right now I would take the other side of his trade. The worst part is that his lunacy is going to hurt many of the people that listen to him. He's made so many obviously bad calls that it's mind-numbing.

Market Doomed

Yesterday someone asked me if I knew what stocks to buy in light of all the recent selling. Any time over the last few years this would have been a smart question to ask as buying dips HAS BEEN a good strategy. No longer. We are now in a bear market but it's going to take time to change psychology.

Not only are we in a bear market but it's now in the very early innings. We have a long, long way to go. For me that means containing my excitement in the short term and remaining conservative. I feel so strongly that we are going much lower (and have been waiting for this moment for a long time) that it is hard not to bet the farm.

It's important to keep in perspective that I'm trying to earn a living, not win the lottery. I've been winning consistently by hitting singles and doubles. There is no need to swing for the fences. There will be plenty of opportunities down the road. My best trades are yet to come.

This week I'm printing money with the market getting killed. The only negative is that a lot of money has been left on the table due to lack of aggressiveness. I've scaled back after the beating I took last week. The worst part is that as the market overshot to the upside at the end of last week I was forced to cover several positions that would have made me a rich man this week. I literally bet the farm a couple days too early. Stupid regardless.

The mistakes of last week are behind me. I still have to pay for my market education from time to time (but I learned a lot). Overall I'd say the market makes perfect sense to me about 80% of the time. I know what is going to happen before it does but it's not always so easy to capitalize.

I Own You

Not as in "I'm long you" but rather as in "You're my bitch."

Focused

Given the opportunity in the near term I will short more GM and go long more SKF. Banks appear likely to lead us lower again.

Let the Record Show

About the only smart thing I did last week was to cover my YHOO short. Thank goodness- I might have jumped out the window.

More Dead Bodies

http://www.bloomberg.com/apps/news?pid=20601109&sid=anvgqhQbacc4&refer=home

Back to Earth

It would have been almost impossible for me to be any more wrong last week. Looking for more downside I got ran over by Bernanke and the bulls. That bearded hack cut 125 bps in like eight days. The S&P was up almost 5% which is huge in the span of a week. Needless to say I did some serious damage to my accounts.

Turning points are always obvious in retrospect. This one I actually expected but failed to respect. The idea that after the waterfall sell-off we've had the market would bounce for only a few days is just as silly as the idea that after several years of a bull run the bear is over in a couple months.

This personal correction was necessary to check my growing arrogance. When you spend the greater part of seven months being right you start to get a bit too cocky. Consider me sufficently humbled. Going forward the object is start winning again. For now that means a market neutral approach.

Short-term we could trade higher and I do see stocks to be long. However, over the intermediate-term the path of least resistance is likely to be down. This bear market is not even close to over in my opinion but I have learned my lesson about getting too dogmatic. Nonetheless here is what I expect.

The government will continue to attempt to bail everyone out and encourage more consumption. The Fed will continue to attempt to inflate it's way out of our problems. Bulls will continue to reflexively buy the dips. Executives and regulators will continue to collude to hide the dead bodies. Regulation is completely non-existant.

The housing-ATM is broken. Most people will not be able to refinance. Credit will continue to tighten as sane lending practices slowly return. The economy will continue to deteriorate. Eventually more dead bodies will float to the surface.

Something like that- although I'm over-simplifying and leaving a lot out. Big picture I intend to profit one of two ways (hopefully both). Either the Fed succeeds in re-inflating and I win with precious metals (or commodities generally) or the Fed fails and I win by shorting everything that moves (and probably still win with gold).

The new year is still young. It's likely to get even more interesting. Fasten your seatbelts.