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Thursday, August 25, 2011

Watch What You Wish For. Jobs Well Done.

A big shout out to Steve Jobs--

Best of luck buddy.  You are a pimp and you created many gadgets that make the world a better place.  I hope you can live out your life happily with your family and friends... and many rooms filled with money.

It's the day before Fed day.  We all know that Ben Wizzie is getting ready-- probably doing voice lessons with his stimulus speech coach, eating government cheese and joking about leaving a 9% tip on the $80 bison steak he just devoured.  That or he is shivering in his own sweat and freaking out.  Really though, I doubt that-- I would however put money on Wizzie being a cheap ass tipper.

QE3 to save the day?  Better watch what you wish for.

There is a ton of chatter about QE3, how it will be presented and in what way it will spark the markets.  There will be a QE3, but not tomorrow, at least not in the same fashion as QE1 or QE2.  The QE3 announcement will come in 2011, however later in the year when the wheels really start to fall of the bus.  It will be put in place to try and save Christmas... which it will do, at the cost of an intense recession in 2012 and 2013.

In reality, QE3 is a bad idea, as was QE2.  Were they necessary?  That is hard to say.  You get many answers from well dressed 26-year-old analysts on CNBC on this topic-- some which say yes because it pimped the S&P and others that say yes because it afforded them the Armani suit. 

Others, the more seasoned analysts, (still wearing Armani mind you) say.. maybe?  I suppose the verdict is still out on QE2, but from my vantage point as 'the consumer' I think it sucked.  Everything costs a ton more and there are still no jobs or housing market.  The only real difference I saw from QE2 was that grapes went from being $0.99/lb to about $2.99/ lb.  Luckily I drink my grapes! 

If Ben Wizzie does announce a curve-ball QE3 tomorrow that mimics the QE2 mistake, you can expect the markets to rally, 26-year-old analysts to 'holla' about how great the S&P is doing, and dollar based commodities will shoot higher-- most noticeably oil.  It may be great for a month, but the rally will fizzle-- there just isn't the money in the pockets of the consumer to support higher prices right now.

This is why I think Wizzie waits until right before Christmas.  He knows the rally won't hold and it will kill the consumer shortly after the announcement.  Why waste your last bullet now when you know you can use it in late November and get a quick jolt before the holiday and save Christmas before the house of cards comes tumbling down.
The markets look to be in rally mode regardless of this happening.  Insider buying has been ridiculous, so expect the S&P to pimp higher despite what Wizzie says.  They will probably give ole' Wizzie the credit regardless.  As always, be smart in these bear market rallies-- all that glitters is not gold (painful few days there as well!).  We are going to take a dive soon, but this is not 2008... this is 2011.  The fall will not be a rapid plunge like 2008.   

Think about taking a rubber kick-ball and throwing it off a tall mountain.  On the way down it will bounce up, sometimes very high, but it will always lose to gravity and continue the fall.  We are about to see how high that first bounce up will be... 

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