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Guest Post: I've Got a Funny Feeling About the Stock Market

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

Guest Post: I've Got a Funny Feeling About the Stock Market

The dollar has reached a point of double-bind for the Fed: push it down further or allow it to rise, it won't matter: either way, stocks will fall off a cliff.

I've got a funny feeling that all the ramp-and-camp, extend-and-pretend POMO games propping up stocks are about to stop working.
That would of course trigger a long, deep slide in equities, because as we all know, it's the Federal Reserve's games which have goosed the market to its current lofty heights. The market's confidence in the Bernanke Put--that is, the belief that the Fed will never let stocks decline-- remains supremely undimmed.

A lot of very good technical analysts see sentiment reaching lows which usually mark market bottoms. I am not so sure about this interpretation, for the investors intelligence readings are still complacently bullish.

Other very good technical analysts haven't yet seen a break in the long-term uptrend, so they too have reservations about any real decline.

Various Wall Street analysts are predicting a "mild correction" of 7% to 10%, after which it's off to the races once again--a pause that refreshes the permanent Bull.

I've got a funny feeling that it's lose-lose time for the Fed's games.
here's the basic game plan: inject tens of billions of free money into the "risk trade," i.e. equities and commodities, ramp the futures markets when volume and liquidity are low, and crush the U.S. dollar.

It's practically a perfect inverse correlation: when the dollar tanks, stocks move higher, and when stocks hit bottom then the dollar peaks. Think see-saw: when one tops out, the other hits bottom, and vice versa.


Interestingly, there is a rough correlation with the 40-week (9 month) cycle that many chartists watch. If that holds in the chart of the dollar, then the dollar should rise to a near-term peak in about 8 to 12 weeks. That further suggests stocks will crater.


Notice that the dollar has been driven down to an important inflection point. If the Fed forces it below the 75 level, then that opens the way to 72 and a careening collapse below the line-in-the-sand at 71.

There's an inherent limit to the "drive the dollar down to boost equities" game: inflation, which is already on track to hit 8.3% in 2011 (via Zero hedge).

For there's another see-saw dynamic: the lower you push the dollar, the more all the imports the U.S. depends on cost, generating a loss of purchasing power that is often called inflation.

Here is a simple real-world definition: you pay more for the same (or smaller) goods and (degrading) services than you did in the recent past, though your wages have been stagnant for decades.

Though the Ministry of Propaganda is running full-tilt pumping out statistics that "prove" inflation is near-zero, the recent "you can't eat iPads" heckling of a Fed official reflect the growing disbelief in these official pronouncements.

So here's the lose-lose double-bind: if the Fed continues destroying the dollar, then they will feed the rising-input-costs monster which devours corporate profits like a 10-year old devours Oreos. In a climate where consumers' incomes haven't risen for decades in real terms, passing on higher prices is a non-starter.

So profits will take a hit, and since the market has priced in ever-higher profits, the market will plummet when profits "unexpectedly" decline.

But if the Fed insists on pushing the dollar below 75 in the hopes of pumping up equities, they risk triggering a meltdown of the dollar globally and forcefeeding the rising-input-costs monster until a positive feedback loop kicks in and inflation sinks its teeth into the economy. As noted above, that will destroy corporate profits and thus the stock market's lofty valuations.

I also have a funny feeling about this chart. The NASDAQ, heavily dependent on a few superstars like AAPL and riddled with gaps all the way up from its lows in August, could be topping out not for a few weeks but for years.


The always excellent and provocative Imperial Economics blog of B.C. has published some eye-opening charts which overlay the current bullish utopia with those from previous eras. The sobering conclusion is that if history echoes, then the market is about to roll over in a massive decline that will last a year or two.

As I noted in Sorry, Fed and People's Bank of China: You Can't Have It Both Ways (March 15, 2011), you can't pump up money supply and credit to goose "risk trades" in stocks and commodities without inflating asset bubbles and triggering runaway input-costs, i.e. inflation that destroys profit margins and impoverishes stagnant-wage households.

But if the Fed takes its hands off the game controller and allows the dollar to rise, then equities crash anyway.

In other words, the dollar is at a point where either path leads to stocks crashing. Go ahead and destroy the dollar, and the rising-input-costs monster will gut stocks and impoverish households. Back off and let the dollar rise, and the risk trades (equities and commodities) will plummet.

Take your pick: the result is the same.

Disclosure: I opened a long position in UUP, the U.S. dollar ETF yesterday, and added to my QID short against the NASDAQ 100.

 

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Wed, 03/23/2011 - 20:41 | 1092959 jdrose1985
jdrose1985's picture

You can forget about your personal credit in the near future.

It'll be worthless.

Wed, 03/23/2011 - 20:47 | 1092971 jdrose1985
jdrose1985's picture

Junked me without a rebuttal.

Pity the fool who lives on credit, we're headed to a cash economy as the "long emergency" takes more form.

Wed, 03/23/2011 - 21:21 | 1093098 the mad hatter
the mad hatter's picture

technical analysis? who needs technical analysis?

BTFD while the printing presses are running full speed. the day that bernanke raises interest rates and/or stops POMO will be the day that i sell.

Wed, 03/23/2011 - 21:37 | 1093134 Doña K
Doña K's picture

It may either be too late, or you may think that it is just a dip and buy more. They are smarter than us. Why? they have the info and we don't timing is everything. Look out.

Thu, 03/24/2011 - 00:11 | 1093704 Everyman
Everyman's picture

Here is some information about the "Liquidity Hoarding" from the Fed.

 

http://www.newyorkfed.org/research/staff_reports/sr488.pdf

 

Seems that Fed is Suprised that the banksters are keeping the money.

What the hell were they thinking???

Thu, 03/24/2011 - 00:14 | 1093715 huntergvl
huntergvl's picture

NOT smarter than us....just criminals. They telegraph their moves though. For instance, if the market jumps on April 1st, we're still good. First of the month has been green for awhile, although we had a miss either this month or last. That might be a new trend beginning.

Every time a FEDHED, gives a speech somewhere, they are putting out clues to what they will say (what they will do is obvious QE3 is a lock, but they don't have to necessarily call it QE3. They have generated such a large balance sheet, that they can effectively roll over the maturing treasuries without increasing their balance sheet, for some time). But, they will have to telegraph their intentions in advance of the April FOMC announcements, or risk some dynamism in the markets which upsets them (unless it's straight up).

I'm sure everyone saw the G7 bailout and Japan printing money like an addict going through johns and crank. Japan's deficit far exceeds the U.S., but still 'THEY PRINT,' will the full consent and backing of all the G7.

Currently, there is absolutely NO downside to running up massive deficits by printing money and increasing the debt ceiling to infinity. The consequences are issues for tomorrow and especially for another legislature and another administration. They might let the market correct down 10-15% to get all the retail investor's attention just so they can easily justify QE3 and this time go for the gusto.....$600 Billion (really $900 billion minimum) is chump change. If I was a scummy Central Bankster, I'd let the market dip hard and fast and then come to the rescue with a $3 Trillion QE.

So, I am risk on, risk off, risk on, risk off, like the Karate Kid, and more skittish than a virgin on prom night, but I am still trading and after all this time (since '07), I remember that which matters most.....

"We are STILL HERE" LOLOL

We should call the 2011-2020 decade, the Matrix Decade. Reality is on Hiatus for sure.

Thu, 03/24/2011 - 00:16 | 1093723 huntergvl
huntergvl's picture

Today:

Long SLW AXU BRD USO AEM

Thu, 03/24/2011 - 03:34 | 1094145 Djirk
Djirk's picture

yummmm oreos

Thu, 03/24/2011 - 07:20 | 1094339 Ben Trinanke
Ben Trinanke's picture

since i am new in here  i might ask a question that seems pretty dump for you, but what do you actually mean by BTFD???

thanks

Thu, 03/24/2011 - 07:46 | 1094392 Waterfallsparkles
Waterfallsparkles's picture

I think it means Buy The Frigging Dip.

Thu, 03/24/2011 - 08:44 | 1094567 New_Meat
New_Meat's picture

http://www.zerohedge.com/article/buy-dip

and we need to infect the newbie with other memes ;-)  He's required to view all of the silver bearz, starting here:

http://www.zerohedge.com/article/goldman-sack-blows-whistle-jp-morgue-si...

- Ned

Thu, 03/24/2011 - 10:49 | 1095125 Ben Trinanke
Ben Trinanke's picture

got it. thanks a lot...

Wed, 03/23/2011 - 20:54 | 1092993 goldenbuddha454
goldenbuddha454's picture

Credit is limitless in Ben Bernochio's world.  Just print more money and all is well.  When he gets in front of Ron Paul and says that QE is designed to temporarily buy and hold assets adding them to the Fed's balance sheet I wanna throw up in my mouth!  Bernochio's nose grows atleast a quarter inch a day.  In essence, the Fed, an American entity, is buying what debt noone else will and adding it to the balance sheet as a so-called asset, huh?  An asset, U.S. debt?  I guess I can call my credit card company and tell them I'm not going to pay this months statement because its really an asset which if they're interested I will sell it back to them to be paid back ten years from now at 2.1% interest.

Wed, 03/23/2011 - 21:02 | 1093022 jdrose1985
jdrose1985's picture

You don't even need to call them.

Your signature is the asset. Your energy has been robbed from and reissued to you your entire consumeristic life purely for the profit of the Chapter 11 bankrupted united states (since 1933) and its evil IMF overlords. Yikes!

Speaker-Rep. James Traficant, Jr. (Ohio) addressing the House in 1993:

 "Mr. Speaker, we are here now in chapter 11. Members of Congress are
official trustees presiding over the greatest reorganization of any Bankrupt
entity in world history; the U.S. Government.

 

Thu, 03/24/2011 - 01:31 | 1093960 SoCalBusted
SoCalBusted's picture

I miss Jim, "Beam me up Scotty".  He got out of prison a few years ago.  He seemed a bit crazy 20-30 years ago.  Not so much now.

Thu, 03/24/2011 - 01:38 | 1093973 Moon Pie
Moon Pie's picture

I used to watch Traficant on CSPAN.  Wish I had a DVR then.  Dude was off the hook and in some ways, very prescient.  He whacked the IRS beehive and got done over that.  I will always believe that.  The Feds could hogtie just about any congressman/woman if they wanted to.  They went after "Beam me up.." Jimmy cause they could and cause he laid into the system every time he could.  He is no saint, but none of them are.

Thu, 03/24/2011 - 08:20 | 1094488 Watauga
Watauga's picture

Anyone seen SHUTTER ISLAND?  DiCaprio's character is lost in either his mind or hell on Earth.  Never can tell.  The key to making him think he has lost his mind, or to making him appear to have lost his mind if he ever escapes the island and talks, is to ensure he has no credibility because of what appears to be his insanity.  Perhaps, however, he is completely sane?  That is what they did to Traficant.  Made him look like he was borderline insane.  Then, it was easy to whisk him off to jail on trumped up charges.  Sure, he helped the process along, but they enabled his failures to ensure no one cared about him being removed from office.  It was masterful.  Or, he really was off his rocker and had no business being in Congress, EVEN IF HE WAS RIGHT most of the time about what was going on in government!

Wed, 03/23/2011 - 23:19 | 1093499 chumbawamba
chumbawamba's picture

Why don't you throw up on the television set, or perhaps an effigy of Berjackass instead?  I imagine that would be less unpleasant than throwing up in your own mouth.  Maybe you canmake a life-sized effigy of Berjackhole and then throw up in its mouth.  That would be rather satisfying, I imagine.

I am Chumbawamba.

Wed, 03/23/2011 - 21:03 | 1093023 duncecap rack
duncecap rack's picture

/

Wed, 03/23/2011 - 21:44 | 1093157 eddiebe
eddiebe's picture

Personal credit? What does that mean? That we wont be able to borrow anymore? Maybe so, but why do you think not?

 Personally I think now is the time to borrow as much as possible with a fixed interest rate long term. With a huge wave of inflation coming, the payments made in a few years will amount to pennies on the dollar.

Thu, 03/24/2011 - 07:18 | 1094331 SunSword
SunSword's picture

Soon...very soon...not quite yet. But soon it will be time to dump any cars you have and buy brand new top of the line autos on credit. Timing will be 80% of this maneuver.

Thu, 03/24/2011 - 01:53 | 1094012 IQ 145
IQ 145's picture

 agree with the premise of the article; the top is in from Feb.22; we are now in a bear market.

Wed, 03/23/2011 - 20:47 | 1092978 Arch Duke Ferdinand
Arch Duke Ferdinand's picture

A strong dollar allows commodity prices to drop.

Watch the selling of Gold, Silver and Oil for Food.

 7 reasons food shortages will become a global crisis...

http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/03/7-reasons-food-shortages-will-become.html

OT Wrong Side Up....OT Comedy...2 min vid...

http://goodthoughtsgoodwordsgooddeeds.blogspot.com/2011/03/wrong-side-upfilm-short.html

Wed, 03/23/2011 - 21:03 | 1093015 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

Right on Duke.

Do you know that farmers can order seed that specifies how much sunlight the grow cycle has.

Example; "I want maximum yield in 90 day of sunshine", or "I want maximum yield in 95 day of sunshine".

Fucking-A. How to engineer a global food crisis? Kill off the Heirloom, let the rise of GMO take over the world. Walmart Seeds bitchez.

Wed, 03/23/2011 - 21:43 | 1093155 rocker
rocker's picture

Wow, which do I respond to. People will sell their gold, silver, and oil for food.  Huh, you mean the people who had no investments and are selling family heirlooms. Wow. Or do you mean the CB's who are going to short everything and take all that money the Bernanke put in the markets just as the individual investor wets his feet?

And on the seed thing. Nothing surprises me anymore. Nothing. Monsanto has figured out how to sell seeds that will not produce fertile seeds so you have to buy them again next year.  And to top it off.  Our local Walmart is selling what they call "Seeding Potatoes".  I have never seen any of these at a Walmart ever. Are they O.K. to eat as is?  Just what the hell is the difference between a seeding potato and the regular ones you buy.  I always cut a few up every spring and stuck them in the ground.  

As I've said before. Sometimes I need the lady to pinch me to make sure all this shit is real. Either way. If Gold, Silver, and PM's do dip with the market. I do think the market is in for a correction. On PMs, Buy the Fukn' Dip.  Don't sell yet. This is far from over.  QE3 is only a rumor, then we have 4 and 5.  

Wed, 03/23/2011 - 23:21 | 1093512 Sam Clemons
Sam Clemons's picture

On PMs, just put up a chart that backs your thesis.  They may be tired in the medium-term, but aren't close to over.

http://thelastcanary.blogspot.com/

Thu, 03/24/2011 - 08:23 | 1094502 Watauga
Watauga's picture

Gold to $1225--buy.

Silver to $23--buy.

Long term bull in PMs.  Gold to $5000+ and silver to $100+.

As for food crisis, MENA, Japan meltdown, U.S. entering third war (or expanding the world war), risks to oil, nuclear, and coal going forward. . .  and we have a charlatan and pretender in charge.  What a country.

Time to re-read, by the way, THE CAMP OF THE SAINTS. 

Thu, 03/24/2011 - 01:30 | 1093955 Yen Cross
Yen Cross's picture

I hate getting Smacked Judy. I'm rebuilding this country. P.S. who was it Eisenhower sent in  to rebuild Japan> JUDY!!!????????????

Wed, 03/23/2011 - 20:48 | 1092980 gold mans sack
Thu, 03/24/2011 - 01:14 | 1093911 dogbreath
dogbreath's picture

nice, which reminded me of this

 

http://www.youtube.com/watch?v=c9cWkUhZ8n4&feature=related

 

so much bullshit on this planet right now

Wed, 03/23/2011 - 20:48 | 1092981 10kby2k
10kby2k's picture

When something is win-win beyond all rational comprehension...it violently turns to lose-lose.

Wed, 03/23/2011 - 21:41 | 1093154 Oh regional Indian
Oh regional Indian's picture

Wise words 10k, very well said.

ORI

Thu, 03/24/2011 - 01:49 | 1093996 TruthInSunshine
TruthInSunshine's picture

Time for the cheap deep OTM puts, IMO, and yes, I'm calling out Bernanke for being incompetent and less than the magician (much more like the charlatan) some claim he is, as I did in 2007, where I made enough money to expand my horizons.

And yes, I'm also doing what I'm saying.

Bernanke's fucked, he was going to be fucked anyways *after fucking America and the world*, but Japan was the swan that shat on him, and accelerated his demise.

Look for NerObama to throw Bernanke out to the wolves soon, in a vicious display as to how ugly politics can really get. And the excuse NerObama will use is -

 

-- Bernanke stated he would not support bailing out states, counties and cities.

Every once in a while, I get a good thesis going, and sometimes, they even pan out.

 

p.s. - You technical/pattern guys and chartists - give me an overlay of 2007/2008 before the crash happened and the last 2 or 3 months. Thanks.

Wed, 03/23/2011 - 23:18 | 1093491 spekulatn
spekulatn's picture

When something is win-win beyond all rational comprehension...it violently turns to lose-lose.

 

Good point 10kby2k. Music to the ears of a certain semi-retired speculator hell bent on change. 

http://www.mrc.org/bmi/commentary/2011/Unreported_Soros_Event_Aims_to_Re...

 

h/t   www.drudgereport.com

Wed, 03/23/2011 - 20:52 | 1092986 Kryten451
Kryten451's picture

error

Wed, 03/23/2011 - 20:50 | 1092988 Lets_Eat_Ben
Lets_Eat_Ben's picture

Long the dollar?!?!? The hell you say. It sounds just crazy enough to work, but I'd feel much better shorting the markets. Good thread

Wed, 03/23/2011 - 20:51 | 1092989 Fred Hayek
Fred Hayek's picture

Interesting stuff, as always, Mr. Smith.  Thank you.

Wed, 03/23/2011 - 20:54 | 1092994 10kby2k
10kby2k's picture

The bold trade: Sell your commodities to trend followers and go short equites and then buy your commodities back at a deep discount.

Wed, 03/23/2011 - 21:18 | 1093091 Oh regional Indian
Oh regional Indian's picture

Dangerous waters those. Timing is everything and something tells me we cannot see the clock.

ORI

Wed, 03/23/2011 - 21:24 | 1093106 oygevalt
oygevalt's picture

So now you're not hawking your website, but are speaking in Yoda-isms?  Thanks for mixing it up.

Wed, 03/23/2011 - 21:52 | 1093179 KickIce
KickIce's picture

Dumb shit you are.

Wed, 03/23/2011 - 22:12 | 1093221 Dr. Porkchop
Dr. Porkchop's picture

The eye that looks ahead to the safe course is closed forever.

 

Paul Muad'Dib

Thu, 03/24/2011 - 02:39 | 1094090 thegr8whorebabylon
thegr8whorebabylon's picture

Pass the spice please, Porkchop.

Thu, 03/24/2011 - 00:36 | 1093783 10kby2k
10kby2k's picture

Very dangerous. That is what i would do with other peoples money.....more cautious and measured with my own.

Wed, 03/23/2011 - 21:39 | 1093145 Jason T
Jason T's picture

I did it last week.. bought SH at about 42.20, UUP 22.10 and sold a good chunk of SLV and CEF.  Too much going on for the risk trade and that $52 trillion in US$ Debt makes that dollar one hell of a shorted currency.  No flight to safety, flight to pay off debt and deleverage.

Wed, 03/23/2011 - 21:46 | 1093164 thebark
thebark's picture

bold I dare say....and probably true...but when I ask? does silver go to $200 first? if the dollar collapses BEFORE the market....then gold and silver will go parabolic...

Wed, 03/23/2011 - 23:16 | 1093487 tiger7905
tiger7905's picture

And here is something that will only help silver increase. India to increase silver bullion for investment purposes 25% in 2011.

http://goldandsilverlinings.com/?p=329

Thu, 03/24/2011 - 08:26 | 1094513 Watauga
Watauga's picture

Not so bold, as it is a sure thing--on a long enough timeline.

Wed, 03/23/2011 - 20:53 | 1092996 donde1
donde1's picture

.

Wed, 03/23/2011 - 20:53 | 1092998 donde1
donde1's picture

So do I sell all of my silver to buy back in after it drops??? 

rookie

Wed, 03/23/2011 - 21:13 | 1093066 JohnG
JohnG's picture

No!

But DO BTFD's.

Wed, 03/23/2011 - 22:21 | 1093248 Dr. Porkchop
Dr. Porkchop's picture

You hold the store of your wealth until this current system collapses and something else comes along that won't rob you blind while you sleep through inflation. If it doesn't come in your lifetime, then the next generation must be educated to carry on.

Wed, 03/23/2011 - 20:54 | 1092999 Misean
Misean's picture

Beware the crunchy beefy burrito!

Wed, 03/23/2011 - 20:55 | 1093005 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

I've got a funny feeling that your story is about to fail.

How's that Mr Bear?

Wed, 03/23/2011 - 20:56 | 1093007 TruthInSunshine
TruthInSunshine's picture

As Charles Biderman of TrimTabs has alluded to, and he tracks equity market inflows and outflows as a research client service, there is a mystery as to who/what is doing the buying, with few exceptions. I'm not speaking of the buying and holding by 'gotta be mostly invested' mutual and pension funds, but the incremental buying that would be needed to see markets rise to the levels they have.

But think about it. Bernankincide can point to equity markets, off their 2009 lows, as his single point of proof, in the face of withering criticism, to even mount the case that the has done 'something.' As he reminds us constantly, the equity markets are the economy, in his new warped (if one is to believe him) rendition of reality.

And it only took Bernankincide 12 trillion (some, though, claim it's more like 22 trillion) in direct spending and backstopping of debt to produce a 3 trillion down gain in equity market value gains (from the lows).

In the meantime, the adverse effects from this centrally planned and massively interventionists, market distorting, asset class distorting, bubble producing - commodities , bonds and equities in a massive bubble - has been inflation and a stealth, massive tax on American & Global Consumers & Producers, in the form of higher prices on everything produced and consumed, and putting 'free markets' into a coma.

So, The Bernankincide has kicked the can, extended and pretended, and it's all vaporware anyways, and expensive vaporware at that.

When the markets crash, The Bernank will have no excuses left. Not even the lame ass one he singularly relies on in interviews on 60 Minutes with a very ill-prepared and clueless 'reporter' such as Scott Pelley.

Ben Bernanke, a failure of an economist, thinker and man. Ben Bernanke is destined for historical mockery.

Wed, 03/23/2011 - 21:02 | 1093026 Misean
Misean's picture

I'm glad I got in early on the mocking thing. I'll sell when the bubble hits.

Wed, 03/23/2011 - 21:06 | 1093039 10kby2k
10kby2k's picture

Famous last words. Anyone that thinks they can ride it to the top is a fool or a gambler.

Wed, 03/23/2011 - 21:08 | 1093058 Misean
Misean's picture

Mocking Bernutty is a pleasure in and of itself. I'll enjoy the ride.

Wed, 03/23/2011 - 21:26 | 1093107 10kby2k
10kby2k's picture

I can't sleep when i know the ponzi is getting long in the tooth.

Wed, 03/23/2011 - 21:12 | 1093061 TruthInSunshine
TruthInSunshine's picture

Bernankincide's Tenure:

Jobs - Terrible and detiorating

Housing - Depression status

Credit - Tight and palpable signs it may tighten further

Wages - flat at best, and declining in many sectors

Inflation - Hot and fast, with more expected

Consumer confidence - 35 year lows

Business confidence - tenuous at best

Banking sector health - zombified, life support, or dead

Equity markets - up significantly off their '09 lows, on the back of massive Federal Reserve intervention, with little retail participation, and insane valuations that will take the elevator down.

Health of States, Counties & Cities - Abysmal

Helth of what remains of small business, free markets, private side econom - Tragic

Bernankincide's final grade:   F-

Stalin & Mao would be proud of him

Wed, 03/23/2011 - 21:17 | 1093083 Misean
Misean's picture

Assuming helicopters have sufficient lifting capacity - Fail!

Wed, 03/23/2011 - 21:30 | 1093120 Caviar Emptor
Caviar Emptor's picture

Biflation: the real economy is tanking, the paper is rising

Thu, 03/24/2011 - 00:28 | 1093762 TruthInSunshine
TruthInSunshine's picture

Yep.

Bernankicidal Biflation, and then either massive inflation or massive deflation (both are viable depending on yet to be seen developments), which will take us to the same place: Shit sandwich town.

Thu, 03/24/2011 - 08:28 | 1094516 Watauga
Watauga's picture

Thank Heaven for Obama.  He'll save us for sure.  HOPE AND CHANGE.  YES, WE CAN!

Wed, 03/23/2011 - 21:07 | 1093044 Dapper Dan
Dapper Dan's picture

When it all comes crashing down I don't expect to see Ben living near me in a van down by the river.  He will do OK,  I'm sure.

Wed, 03/23/2011 - 21:07 | 1093048 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

As a surfer you don't ask where the wave came from young grasshopper, you just ride the wave.

QE3 or a cloaked derivative of; is the wave.

Wed, 03/23/2011 - 22:42 | 1093323 obelisks
obelisks's picture

your comments reminds me so much of this :-

ROGULSKI:Why are you here ?

Woman: To get some money

ROGULSKI: What kind of Money ?

Woman: Obama money

ROGULSKI: Where’s it comin; from ?

Woman: Obama

ROGULSKI: And where did Obama get it from ?

WOMAN: I don’t know, his stash. I don’t know. I don’t know where he got it from, but he’s givin’ it to us. And we love him. That’s why we voted for him. O-ba-ma. O-ba-ma. (…)

ROGULSKI: Where did they get it from?

WOMAN: Obama getting the funds from… Ummm, I have no idea, to tell you the truth. He’s the president.

Thu, 03/24/2011 - 01:27 | 1093951 Diogenes
Diogenes's picture

Obama gone pay my mo'gage! Obama gone fill my tank with gas!

Wed, 03/23/2011 - 21:17 | 1093081 DavidC
DavidC's picture

Along, one hopes, with Alan 'prove me wrong' Greenspan.

DavidC

Thu, 03/24/2011 - 11:35 | 1095391 Clycntct
Clycntct's picture

We can see by the 1 junk that little ben was reading you.

 I think I saw a teardrop after it.

Wed, 03/23/2011 - 21:00 | 1093016 trendybull459
trendybull459's picture

its not all way that corellation,there few more corellations,when stock up and dollar -real bull and when stock down and dollar down-staflation,but your general feeling i have since 2007,still do not see when end of all this comes,looks americans buy till they die

Wed, 03/23/2011 - 21:01 | 1093028 Count Laszlo
Count Laszlo's picture

Prices come down when people can't afford it anymore... POP.

Wed, 03/23/2011 - 21:09 | 1093057 Raymond K Hassel
Raymond K Hassel's picture

hit my bid

Wed, 03/23/2011 - 21:31 | 1093118 Imminent Crucible
Imminent Crucible's picture

"Prices come down when people can't afford it anymore"

Didn't work that way in von Havenstein's Weimar Republic.  By 1923, Germans were literally starving while food prices, and all prices, continued to skyrocket. As long as the presses keep running, prices keep rising.

See "When Money Dies" by Adam Fergusson.  Prices didn't stabilize until the mark was abandoned and replaced with the Rentenmark.

Wed, 03/23/2011 - 21:42 | 1093150 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

I hope I can RentaDollar.

Wed, 03/23/2011 - 21:47 | 1093162 Caviar Emptor
Caviar Emptor's picture

Prices come down when people can't afford it anymore

Sorry, that's the beauty of this beast: prices can rise in the absence of demand. Not just because of 'speculators' (that's what the dummies want you to believe). There are just simply way too many dollars out there from 4 decades of reckless printing. Never forget that this beast is global: trade and commodities are priced in dollars. So if you put an ocean of dollars into foreign hands to fund deficits they'll some day come rushing back to market to buy up everything available for their own growth. Emerging economies are switching from savings to consumption. And as the dollar's day of reckoning seems to get closer and closer, the desire to spend those dollars rather than save them will grow exponentially. Don't forget that many natural resources have now reached or exceeded peak production. That's the beauty of this perfect storm: prices will rise to meet the dollars available to be spent. So even with a US consumer on the ropes with two black eyes coughing up blood you can still get rising prices. Lotsa Luck!

Wed, 03/23/2011 - 22:07 | 1093192 hamurobby
hamurobby's picture

YES

well not in a true free market with a stable currency, but who has seen that?

cost push.

hyper velocity of currency.

The dolear will crash when China Russia India and Iran get it together and tell Ben (and us) where to put them.

Wed, 03/23/2011 - 22:06 | 1093208 eddiebe
eddiebe's picture

Well put caviar! Equities can certainly be looked at as a dollar and T bond hedge. The case can easily be made that equities are the more real and valuable of the three.

Wed, 03/23/2011 - 21:52 | 1093185 KickIce
KickIce's picture

Not if there's shortages and hoarding.

Wed, 03/23/2011 - 21:02 | 1093030 duncecap rack
duncecap rack's picture

I don't know much about reading charts but I am trying to learn. The big fat juicy double top here looks kind of like an inverted head and shoulders too. That reading would be bullish i think. Charts really are only useful in a free market though. In this market it is only will they or will they not print.

Wed, 03/23/2011 - 21:06 | 1093038 Republican Lackey
Republican Lackey's picture

Of course this is what is going to happen. Everyone and his brother is long commodities.

Wed, 03/23/2011 - 21:07 | 1093052 Raymond K Hassel
Raymond K Hassel's picture

not really. 

Wed, 03/23/2011 - 21:06 | 1093050 Raymond K Hassel
Raymond K Hassel's picture

>>If the Fed forces it below the 75 level

Normalcy Bias. 

Wed, 03/23/2011 - 21:10 | 1093060 rsnoble
rsnoble's picture

Fuck the stock market.  I got cash in the bank and refused to play along with this bs game because I knew it was horseshit all along.  Yeah I coulda made $ but i don't wanna be holding the bag. I heard today that everything went up together......dollar, commodities, and their precious fucking stocks.

I guess we're about to find out if all the conspiracy talk about the
Amero is true by which course they take.  I for one have bought a hell of a lot of ammo lately.

Wed, 03/23/2011 - 21:12 | 1093068 Raymond K Hassel
Raymond K Hassel's picture

>>I got cash in the bank and refused to play along with this bs game because I knew it was horseshit all along.

cash in the bank is a neutral bet...or maybe not.

Wed, 03/23/2011 - 22:00 | 1093197 eddiebe
eddiebe's picture

Consider: Holding cash in the bank is holding an asset also. Just like stocks or bonds or Gold. Ask yourself: Is that money in the bank more valuable than some of the most productive companies in the world? What are those paper strips sitting in the vault at the bank? What will they buy a year from now?

Wed, 03/23/2011 - 22:04 | 1093204 rsnoble
rsnoble's picture

Unfortunately many of those paper strips could be gold bars but some jackass banker talked me out of gold saying $500oz was entirely to high.  Since then i've learned to do my own homework and screw everyone else.

Wed, 03/23/2011 - 22:08 | 1093214 eddiebe
eddiebe's picture

Good plan rs.

Wed, 03/23/2011 - 21:11 | 1093065 MisterKurtosis
MisterKurtosis's picture

Run for the hills, bitchez!

Wed, 03/23/2011 - 22:03 | 1093075 Heavy
Heavy's picture

This one strikes me as a big maybe.  Sure it could pay off 10% maybe even 20% in the short term, but with the forces working to limit market moves it shouldn't be more than that.  But if you get stuck waiting it out and it doesn't happen your losses could be a lot greater than 10-20%, and that just numismatic influences could crush such an investment probably means it should be avoided as a widely applied strategy.  With forces of inflation, such as money printing and japan selling treasuries to try buy back the fallout and fraud generally in banking/government, what they are I already see the market crashing slowly and steadily. Numerically it is still 12,000 in funny money, the value of it is less, because the USD is worth less.  The number remains the same.  You can short equities priced in dollars, have the market go down, end up with more USD and still come up short in value because of inflation in the currency in which your dealing.  Additionally, even though U.S. equities should be loosing value, shorting in this inflationary environment may just screw you when you didn't really deserve it.  We've already seen sub 75 (~72) USD index.  The poverty will hit households before it hits equities.  With inflation and value loss working against each other to keep the USD price of equities stable I would avoid investing in equities.  It'll either go up or down next, nobody fucking knows, gamble if you want.  My advice?  Buy metals and commodities, hold a healthy portion in physicals, avoid gambling against inflation wherever possible.  Don't fight physics, ride the wave.

 

I actually had this discussion yesterday with my buddy who does retail investing services.  He'd shorted equities, bought some metals ETFs, has USD cash.  He got mad and willfully ignorant the moment I suggested his equities short was riskier than he was thinking (never mind the whole possition's penchant for a black swan swoop).  We got side tracked into a discussion about Japan.

 

Japan has been destroyed.  Rebuilding will cost money.  Japan has been pushing to keep their currency strong.  They have ~200 bil in damages (for the sake of argument).  They have less than 50 bil in gold.  They have +800 bil in treasuries.  Which would you sell, which would you keep.  My retail buddy wasn't sure which they would sell to help pay for the damages while not crashing their currency.  Let me tell you, they won't be selling the gold, all time high or not.

 

This was the one examle I got in before he ran for the door.  Other inflationary forces on the USD didn't get aired.  Like the idea that a new power block in the middle east will hamper the USD, as directly/indirectly being backing the USD by oil will become more difficult.  Petro-dollar exchange bitches.

 

Never mind stuff like this either (http://sadhillnews.com/2011/03/20/another-gulf-oil-spill-near-deepwater-...).

 

Plenty of distractions around today to allow for liquidity injections and other printings of funny money.

 

And another link: http://www.marketoracle.co.uk/Article27127.html (and apparently zerohedge has already got this one)

 

At least try to have the short pay off in gold valued at the initiation of the bet (try to get someone to take that deal).

 

We may have lost control of the train (almost certain), either way, don't stand in front of it.

Wed, 03/23/2011 - 22:13 | 1093228 eddiebe
eddiebe's picture

' Japan has been pushing to keep their currency strong.'

So sorry, but wrong: Japan has been pushing to keep their currency weak.

Thu, 03/24/2011 - 03:47 | 1094150 Heavy
Heavy's picture

In this brave new world you can print to have a weak currency.  Japan needs(ed) a strong currency (velocity, trade, demographics).  Look at USD/Yen has the yen been strengthening against the USD?  For how long?  By intention?  Words and deeds...

 

Also: yen index http://stockcharts.com/freecharts/gallery.html?$XJY

Wed, 03/23/2011 - 21:16 | 1093079 MiningJunkie
MiningJunkie's picture

Totally disagree - by selling stocks you are going long cash, be it Euros or Federal Reserve Notes. Why would you place your wealth in fiat which is being purposely debased by leaders of the U.S. And the ECB? This big rally off the 2009 lows is all reflation-driven and until policy shifts, the Zimbabwe-styled trashing will fuel even garbage stocks higher.

Wed, 03/23/2011 - 22:14 | 1093234 eddiebe
eddiebe's picture

That's the way I see it!

Wed, 03/23/2011 - 21:17 | 1093082 Buck Johnson
Buck Johnson's picture

Good analysis, and this is what happens when you try to control all of nature.  You can't control everything and when you do you miss something, which they did.  Also what was just described is essentially Stagflation, which is hard to control.  Where the cure for one is the poison for the other condition and vice/versa.  The secret to not going into stagflation is to not start it in the first place.  The insidiousness of the trap is the proverbial gambler saying just one more roll or the drug user saying I can handle my drugs etc. etc..  You walk into this condition of stagflation and as usual with all, you crawl out of it.

Wed, 03/23/2011 - 21:19 | 1093093 Thurifer
Thurifer's picture

Face it, there is not a single one of us who isn't slackjawed with amazement that Ben has been able to keep this many plates in the air for so long. Yes, one day, it will all come crashing down, but I'll believe it when I see it, not before. Until then I will gaze in flabbergasted wonder at one man's ability to defy reality.

Wed, 03/23/2011 - 21:23 | 1093101 Snidley Whipsnae
Snidley Whipsnae's picture

Make that one man, a large staff, and lots of funny money printing...

Anyone trying to do tech analysis now is pizzing into the wind...

Wed, 03/23/2011 - 22:14 | 1093235 Calmyourself
Calmyourself's picture

Face it indeed but, it is not just him or his staff.  Its your neighbor, the banker down the street, the cop on the corner.  All of them and more are totally and completely in vested in the farce.  No, it will not end soon, as the psychological conditions are not close to being right.  90% of the population are actively or impassively supporting the grand lie and it will not go down easily.

Thu, 03/24/2011 - 11:44 | 1095427 dogbreath
dogbreath's picture

I agree.  I thought gold and silver would have been higher sooner amongst other things.  Like you I am amazed at their ability to manipulate.  

Wed, 03/23/2011 - 21:26 | 1093113 SwingForce
SwingForce's picture

Judy, who are all these other assholes I have never heard of?? The commenters all change their names, and take new identities, like Witness Protection augh!

Who are these assholes???

 

Wed, 03/23/2011 - 21:30 | 1093116 SwingForce
SwingForce's picture

PS you are an asshole, hence your "funny feeling".

ASSHOLE! Take Adsense for all its worh.

Wed, 03/23/2011 - 21:45 | 1093125 Atomizer
Atomizer's picture

On one of my previous thread posting, will continue here.

Leaving off with taxation & globalization plans, one might see thru the forest if eyes are clearly focused on the game.

Back in 2003 document #ISSN 1485-6641 spoke about the very issues we see today.

More. Long url so click this link 

Next, we have Crackpot-in-Chief who sent out several messages to the international communities days ago.

Obama To Brazil: ‘We Want To Be One Of Your Best Customers’  

Obama Says ‘There Is Going To Be A Tug-Of-War Within The United States Between Those Who See Globalization As A Threat And Those Who Accept’ It

Here at ZH, I try to help you see thru the geopolitical side of corruption & fraud.

The secret formula: Politicians follow a scripted political agenda/charter, Wall Street noise/investor baiting, and when all else fails..rob the taxpayer's to complete agenda under a new crisis.

Learn the well greased cycle. Wash, rinse and repeat.

Wed, 03/23/2011 - 21:32 | 1093126 phyregold
phyregold's picture

ZHer's correct me if i'm wrong.

 

But there isn't an few trillion owed in back/lost taxes?

 

Maybe i'm nuts, but wouldn't tax holiday (like the some States did), correct nearly all of this, or at least half?  I did read somewhere they there is an estimated 1 trillion in back taxes lost each year.

 

Couldn't the Bernake have a brain storm and say oooh tax holiday, and all of a sudden they can get 10 trillion out of thin air without printing it?

 

(10 trillion comes from estimated 1 year/1trillion lost, and the SOL of the Fed of 10 years).

 

I could be wrong i guess.

Wed, 03/23/2011 - 22:10 | 1093218 SWCroaker
SWCroaker's picture

Um, you're wrong.  1) Total taxes collected was averaging about $2T prior to the 2008 collision with the big financial iceberg; they've been down since then.  If you think $1T is not being collected annually, that's a 50% collection shortfall.  Don't think so.  2) Even if there is a sizable shortfall, how many of the deadbeats have it socked away in a checking account, vs are flat broke?  You can't squeeze water from a rock, and you can't collect back taxes from broke unemployed citizens.

Tax holidays without spending reform (drastic cuts in Government staffing and spending, including entitlements) just kicks the can down the road, and forces further borrowing/printing to met current debt obligations.  You do understand that is what got us into this mess?

Keep reading.

Wed, 03/23/2011 - 21:37 | 1093135 rosiescenario
rosiescenario's picture

There is one major assumption the author makes and that is earnings drive stock prices and since margin compression happens during inflation, a weaker $$$ will drive down stock prices.

 

Unfortunately that assumption is based upon Newtonian economics, not our new era paradigm bending ones....the ones we have seen in full tilt boogie ever since Ben came back from JH.

 

If the Fed. (and it is highly probable) continues its green shower on WS, then stocks are going higher, margin compression or not.Ditto all the PM's and best of all, those companies that mine them and hold massive reserves of them in the form of yet to be processed ore. Many of the latter are selling at a nice discount to their true value when one considers what they are sitting upon.

Wed, 03/23/2011 - 21:44 | 1093163 JohnG
JohnG's picture

Tickers for those ore reserves, please.

Wed, 03/23/2011 - 21:40 | 1093136 JohnG
JohnG's picture

"In other words, the dollar is at a point where either path leads to stocks crashing. Go ahead and destroy the dollar, and the rising-input-costs monster will gut stocks and impoverish households. Back off and let the dollar rise, and the risk trades (equities and commodities) will plummet.

Take your pick: the result is the same.

Disclosure: I opened a long position in UUP, the U.S. dollar ETF yesterday, and added to my QID short against the NASDAQ 100. "

 

Hmmmm,

This does not make sense to me.  Looks like at best a break even trade assuming the circumstances outlined.

Going long the dollar, right now, in the face of more QE (QE2-lite, QE stleath, ouright QE3) seems a bit foolish, imho.  Shorting is definitely a fool's errand with more printing coming, and it will, it is Bernanke's only trick.  Selectively shorting, fine, but very selectively.

Setting aside the fact that I m a metals bug, instead of a break even trade, why not just buy metals?

Seems like the "two minds" are fighting...a bipolar trade?

Keep a tight stop on that dollar long trade.
Select ratingCancel ratingPoorOkayGoodGreatAwesome

Wed, 03/23/2011 - 21:40 | 1093149 JohnG
JohnG's picture

Rating selections from my copy/paste.  Can't edit out....?

Wed, 03/23/2011 - 21:45 | 1093160 tradewithdave
tradewithdave's picture

Charles, I know there's a "volatility" index that you can buy, but how about a "confidence" index.  If your assessment is correct, then "confidence" is the only thing remaining to trade.  If that's true, then the opposite is true also, that the dollar could rise along with the market.  Then again, I had that same "two pieces of bad pizza Jerry Maguire feeling" back on February 18th that you're having today  http://tradewithdave.com/?p=5372 .  My call has been increasingly uncomfortable in light of the three stooges of QE, so putting in a hedge that calls for a dollar and market simultaneous rise would seem to be called for since your lose-lose see-saw would appear broken at the fulcrum, but Marty Zweig keeps whispering in my ear... "don't fight the Fed, don't fight the tape."  Can't the phantom wealth effect spawn yet subsequent curves, one upon another simply raising the height of the eventual cliff?  Who's really watching anything except the bottom line balance of their mutual fund?     

You know how those Three Stooges were.  The first two were always the same, but about the time we got used to Shemp, he passed away and was replaced by Curly.  You got to watch out for that third version of QE because you know what they say... third time's the charm.  I'm not ready to change my call and it's been a good one, but I can't say that I'm as comfortable as I was a month ago.   

Dave Harrison

www.tradewithdave.com  

Thu, 03/24/2011 - 00:07 | 1093688 UninterestedObserver
UninterestedObserver's picture

Oh shit soon Goldman will sell derivatives based on our confidence or lack thereof and we won't even own that anymore

Wed, 03/23/2011 - 21:46 | 1093166 TruthInSunshine
TruthInSunshine's picture

1929 - Massive stock market crash.

1930 through 1932 - One of the biggest bull markets in history, whereby people that got burned in '29 made most of their losses back, and new entrants into the stock ponzi game were estatic.

1933 - Massive stock market crash and beginning of Great Depression. Those who lost in '29 and lost again didn't return to stock markets for nearly two decades, and many never returned. The flush-cash that noobs made vaporized.

 

History sometimes repeats, and at the very least, as Samuel Langhorne Clemens said, it always at least strongly rhymes.

Wed, 03/23/2011 - 22:19 | 1093241 samsara
samsara's picture

And from 1930 on we could look forward to 70+ years of more energy each year,  Cheaper relatively each year. 

Cheap, Storeable, HIGH energy density fueled the World for the next 70 years.

An energy source that could be used to power industry to build huge complex machines.  Like D10 catapillars and Huge airplanes and on and on.

An energy source so mallable that it would fuel cars and make fertilizer and pesticides and medicine.

Look around you,  Everything you see that is not metal, Glass or Wood is made from this energy source.

Look around,  EVERYthing nearly in our modern world is made from it. 

 

Unfortunately, The NEXT 70 years will not be so kind.

Each year from this point forward we can look forward to less and less of this energy supply from this time onwards.

Peak Oil Bitches

It is the End of MORE.

Thu, 03/24/2011 - 00:06 | 1093687 RockyRacoon
RockyRacoon's picture

Remove the need for the current fuels for transportation and you have the slack to retain oil for the purposes you outlined.   Drag out some of those suppressed alternatives which are being held in "reserve" and the deed will be done.   Hide and watch.

Thu, 03/24/2011 - 06:56 | 1094294 Urban Redneck
Urban Redneck's picture

My grandfather was born in 1914.  He would point out that you left out the predecessor to the interest-only mortgages that the banks pedaled to the uncreditworthy masses through the roaring ‘20s.  His parents did not have a mortgage then, he doesn’t now, but he still trades stocks, options, and commodities daily, and his having a blast.

 

I’m torn between 'Those who cannot remember the past are condemned to repeat it.' and ‘It's déjà vu all over again.’

 

Look at intraday 4% moves in USDJPY March 2011, and August 2007- instant replay, 4 years later.  I wonder what the puppeteers in the central banks have learned in the last four years, hopefully more than their counterparts did between 1929 and 1933, or at least enough to come up with an alternative exit strategy.

Wed, 03/23/2011 - 22:12 | 1093211 Auricle of Omaha
Auricle of Omaha's picture

I think we're forgetting about the US's greatest export - Inflation.

Bernank will continue pumping money and the rest of the world will have to follow in order to keep their exports low. The Great Bernank will continue printing until there are riots in the street - and then maybe a bit more.

Anyway, the Government won't stop spending or the Fed stop printing just because there's import inflation - they have ways of manipulating the numbers so we won't believe it's true.

We haven't even gotton to the point where Congress, in all its wisdom, steps in with price controls. Not to mention funding more and more food stamps and passing out greater and greater "tax rebates" to help the starving masses.

Congress and the Fed will do whatever it can, spend and print, in order to keep punting the problem into the future - you can be sure of that. Fiat will the the cure all end all until we are using it for toilet paper.

Of course it will all come crashing down... But not before the market zooms up in euphoria and the dollar goes crashing down in despair. Is suspect PM's will do well since what the hell else is anybody going to have?

Wed, 03/23/2011 - 22:22 | 1093249 goldenbuddha454
goldenbuddha454's picture

The endgame will be the U.S. will have to default on all debts owed in treasuries and a new currency will have to be created just like the weimar republic.  Then China will tell us what the value of that new currency will take to pay them back.  Ireland bond yields have risen to 10%, Portugal and Spain are close behind.  It will be interesting to see at what point Merkel will pull out and say "back to the mark it is".  Piigs are on their own

Wed, 03/23/2011 - 22:22 | 1093255 eddiebe
eddiebe's picture

Sounds about right!

Thu, 03/24/2011 - 00:09 | 1093693 RockyRacoon
RockyRacoon's picture

Ron Paul is about the only one in a position to actually do anything who is actually talking about the reality of the situation in which we find ourselves.   The rest of the clowns in Washington are subscribing the the IBGYBG philosophy so rampant in Wall Street.

Wed, 03/23/2011 - 22:13 | 1093222 The Axe
The Axe's picture

Bullshit....no difference then Jim Cramer...its a gamer market.  computers control the value..not human emotion.....greed and fear always controlled the markets..now only HTF and algo matter...the earth could explode..but if the servers in nj WERE SAVED THE MARKETS COULD GO UP...MAYBE 100 POINTS PLEASE....

Wed, 03/23/2011 - 22:15 | 1093232 Caviar Emptor
Caviar Emptor's picture

Don't be silly. There is no market. 

The rising stock market is a matter of policy, not supply and demand. 

No mystery. It rises from money poured in ($ 7 Billion daily from QE) and the removal of risk (the Bernanke put) which removes any compelling reason to sell. And it's a global policy: Japan just bailed its market to the tune of trillions of Yen. And they'll keep it up even if their economy is in the tank. Eurozone just approved an expanded bailout fund. Now with Portugal on the table and more countries to come the printing presses will be back on turbo. 

Wed, 03/23/2011 - 22:24 | 1093252 Auricle of Omaha
Auricle of Omaha's picture

For sure... Where has printing more money failed in the last 40 years? Open up any macro textbook - these guys think they are economic gods that can fix anything with just a little montetary manipulation.

B.O. just promised 2 billion FRN's to Brazil to support the south american oil industry. Let the printing roll on!

As long as there's an open hand, we'll print FRN's to fill it.

Wed, 03/23/2011 - 22:18 | 1093242 Village Idiot
Village Idiot's picture

someone give me a pump up on the USD.  i worked too hard to see it go to waste.

Wed, 03/23/2011 - 22:21 | 1093245 AmCockerSpaniel
AmCockerSpaniel's picture

AaaaaaaaaaaaaaaaaH;  The old... damned if you do, and damned if you don't.

Wed, 03/23/2011 - 22:26 | 1093262 6 String
6 String's picture

I agree with the article. keep printing, margins ultmately fall to the floor from their historical highs=stocks tank.

Stop QE, the market unravels=stocks tank.

It's why short the market/long gold is a safe bet. If somehow stocks keep ramping because of digital confetti-gold still outperforms. If they stop, which they really can't, but if they do stocks tank, more than Gold.

That's the safe, lazy way to go.

Thu, 03/24/2011 - 00:10 | 1093705 RockyRacoon
RockyRacoon's picture

Well, looking at the gold/silver charts, it appears that some other folks feel the same way.  I'd say you're safe with your position.

Wed, 03/23/2011 - 22:28 | 1093277 Glasgow Gary
Glasgow Gary's picture

Ah yes, yet another in a series of dollar strength calls. This time from the man who said, "the powers that be don't want inflation, and so they will choose deflation." Just like Mish. Just like Prechter. You see? These people aren't analysts so much as they are rigid suspicionists.

Good luck with this dollar strength call. I've been hearing it all decade.

GG

Wed, 03/23/2011 - 22:41 | 1093331 Caviar Emptor
Caviar Emptor's picture

They will never choose deflation. Supply-side economics favors the elite. Deflation would mean massive defaults on debts (loans, bonds and derivatives) owed to them by everyone else. They'll do everything they can to avoid that. That's why money printing goes on and on. But their mistake is not taking into account the potentially catastrophic side effects

Thu, 03/24/2011 - 09:20 | 1094734 sdmjake
sdmjake's picture

They will never choose deflation: +1

 

Wed, 03/23/2011 - 22:35 | 1093306 gwar5
gwar5's picture

Ponzi Scheme. 

All the baby boomers and money managers who put their money back in the market are going to get the rest of their 401Ks and IRAs wiped out. That will put additional pressure on the growing Soc. Sec. and pension problems.

At that point, the government will try to confiscate what is left of everybody's private pensions, ala Argentina, for "safekeeping" and use them to buy US Treasuries as part of a forced "guaranteed retirement account" program. Another Ponzi scheme.

 

Thu, 03/24/2011 - 06:07 | 1094247 tradewithdave
tradewithdave's picture

I agree that inflation is the obvious pathway out of here, but a "this time is different" reset switch does seem to be the most likely alternative.  The thing about traps is that they all have one thing in common.  The element of surprise.  The very fact that pensions are at risk gives the government the reason that it needs to step in an "take over." 

As much as I would actually like to believe that they'll continue to roll out the barrel of inflation and as true as it is that it does benefit the creditors, I can't convince myself that in light of a new global currency and the unknown timeline for its implementation (in the midst of the next bigger crisis), that indeed both pensions and treasuries are not a trap.  Some sort of hybrid-public-private-social-guarantee implemented simultaneously with Mervyn King's divorced two-part currency system http://tradewithdave.com/?p=5687 would seem to be the order of the day. 

The social bargain will be a new transactional currency with no fractional reserve and therefore no systemic risk alongside a new partially gold-backed wealth currency which if when you leave it in the "forced retirement account" you receive a huge premium for the conversion.  What could be better?  There's only one problem.  I don't think the Chinese are going to go far a shared currency that says "In God We Trust" at the top.   

Dave Harrison

www.tradewithdave.com

Wed, 03/23/2011 - 22:41 | 1093326 Rockfish
Rockfish's picture

I pick

Back off and let the dollar rise, and the risk trades (equities and commodities) will plummet.

Fuck equities let my dollar buy more.

 

Wed, 03/23/2011 - 22:42 | 1093334 monopoly
monopoly's picture

Gonna get interesting. Tear up those credit cards as soon as 0 balance. Get rid of "to big to fail banks", find a solvent local bank and keep your physical silver and gold for down the road In your safe. Will be a bit bumpy moving forward.

 

 

Thu, 03/24/2011 - 00:09 | 1093701 UninterestedObserver
UninterestedObserver's picture

? Wouldn't it be better to buy PM's and not pay the credit cards - credit won't be needed for quite a while anyway

Wed, 03/23/2011 - 22:49 | 1093365 goldenbuddha454
goldenbuddha454's picture

Letter from Ron Paul sounds good, but like all politicians its all posturing for a run at the presidency again.  He sits up there questioning Bernochio and knows what the truth is but can't dismantle the FED without getting legislation through so its all a mute point.  Rand Paul I would vote for, but not Ron Paul.  Here's the letter:http://www.freerepublic.com/focus/f-news/2693697/posts

Thu, 03/24/2011 - 00:55 | 1093846 TwoShortPlanks
TwoShortPlanks's picture

Contract credit: Jack-up interest rates, or, cut-off QE programs...it's the same damn thing; the elimination of cheap, loose credit and speculation; it's Triage time.

There will not be a QE3, it is time to purge, there is NO other choice.

"It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."

This next move will effectively kill-off that failed experiment called the 'Welfare State'. It is high time people stood on their own two feet, deregulate everything I say, and let the smart people, who bother to research and educate themselves - instead of watching reality shows until they're catatonic - make wealth safely and in abundance, without the burden of the stupid, lazy and apathetic.

Time to un-hitch the full-retard Caboose of human effluent.

Bring-on the end of QE and don't bother to taper! *Hint-Hint*

Thu, 03/24/2011 - 01:09 | 1093901 Cocktosen
Cocktosen's picture

I've got a funny feeling too....but not until QE2 ends...

Thu, 03/24/2011 - 01:32 | 1093963 Yen Cross
Yen Cross's picture

American Economist. Frederick Hayek! Answers Bitches and secured loans?

Thu, 03/24/2011 - 02:46 | 1094098 ivars
ivars's picture

Stock prices are really jumping around the average decline line since February 18th little bit more than I expected , but , As the article states, there is only one way the trend in DJIA can go, and in and accelerated mode. Stokc markets are doomed in 2011 regardless of USD value.Here is February 6th graph I made for DJIA 2011-2012.

http://www.saposjoint.net/Forum/download/file.php?id=2608

Thu, 03/24/2011 - 05:02 | 1094198 samlowrey
samlowrey's picture

Humbug!  The economy and the market are just getting started.  Jim Cramer said so!

Thu, 03/24/2011 - 06:37 | 1094276 Highrev
Highrev's picture

I've got a funny feeling that he's right (maybe early though).

Disclosure: I opened a long position in UUP, the U.S. dollar ETF yesterday, and added to my QID short against the NASDAQ 100.

Disclosure: closed EUR/USD longs and added shorts yesterday (maybe early though), delta neutral on equities looking for one last pop higher to position short into.

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