Archive - Nov 2010 - Blog entry

We are officially in an inflation trade melt-up.

Everything that is an inflation hedge has exploded since late August. Gold is up 15%. Silver is up 48% (courtesy of the manipulators finally getting taken to court). Agricultural commodities are up 25%. Oil is up 20%.

Against this backdrop, stocks’ 17% rally becomes slightly less insane. That’s right, stocks are up 17% since late August. What happened in late August? The Fed announced QE lite and promised QE 2 was coming. Almost to the day of this announcement, the US Dollar rolled over and dropped some 8% (it’s down nearly 15% since June).

The Maestro speaks at Jekyll Island ...

As policymakers display to their world their lack of clothes each and every day ($600,000,000,000 to prop up asset bubbles?), and Austrian remedies to the situation become more and more politically unpalatable as time passes and economic distortions become increasingly large, I illuminate 5 ways that politicians could realistically avert a complete collapse of the economy.

Pillagin', weighin' anchor' an' pukin' — that be how the FRB sails me hearties...the Gold be yer only savin' grace...

Let’s face it… if an alien came down from outer space and compared the US to other countries, it’d think we were just another 3rd world country that somehow managed to get bigger than the others. We’ve got the same levels of corruption, fraud, and lies, combined with the same looting, indebtedness, and crumbling infrastructure.

In plain terms, this is the beginning of the end. When an entire country’s economy is based on imaginary math, accounting gimmicks, and ideas that don’t even make sense on paper (let alone in reality) you know that economy will collapse.

A review of employment data shows some good signs, but not enough to overcome the negative headwinds.

Despite the recent price surge in crude oil this week--thanks mostly to a Fed's QE2-induced weak dollar, the fact is that crude inventory levels are actually sitting at the highest in 2010. This, plus other market factors coud pressuure crude prices to trade back down around the $75 to $85 range.

Once again we find some strange activity occurring in these markets from a trading perspective, and it is time that the increased staff and resources of the beefed-up CTFC enforcement division look into crude oil and silver markets, in particular.

It comes down to unreality--And it's fine with me 'cause I've let it slide--Don't care if it's a buyer's town or the sell side--I don't have any sound reasons--I've left them all behind--I'm in a Quantitative Easing state of mind...

QEII is truly lifting all boats, even the leaky ones, like the US stock market. The debasement of the dollar this policy assures will keep money pouring into virtually every tradable asset in the world, including stocks, bonds, currencies, commodities, precious metals, and yes, even real estate. The Fed knows it is creating a monster with the enormous amounts of money it is now creating, and that someday, it will have to drive a giant steak through its heart in the form of huge and cathartic interest rate rises.

What's going on in the Gulf now?

Here is the fifth and final part of Simoleonsense's interview with author Alice Schroeder of "The Snowball: Warren Buffett and the Business of Life" fame.

DON'T READ THIS ... Nobel prize winner Joe Stiglitz said that the wars in Iraq and Afghanistan basically have bankrupted our country and crowded out spending on domestic stuff, but anything having to do with those wars is ... er ... irrelevant to ... ummm ... deficits and economics and business and spending and unemployment and ... uh ... DON'T READ THIS!

Hells yeah. The jobs report was released today and the economy added a headline 151k new jobs which means we will be back to a Keynesian healthy unemployment rate sometime around the year 2172, just in time for the third Tralfamadorian invasion of Earth, OJ to find the real killers, and Rocky XVII to be released.

Main Street is not stupid enough to believe that engineered rallies as a result of QE2 stimulus are making them wealthier and so they should go out and buy another Coach bag. This is really crazy stuff that I can't say enough negative about...