Hangovers

Credit buying is much like being drunk. The buzz happens immediately and gives you a lift... The hangover comes the day after. - Dr. Joyce Brothers.

The above is a famous quote by a famous radio host and psychologist.

If you have ever been really hungover-- I mean drunk out of your mind, trashed without pants on and singing Journey's Don't Stop Believing at 3am in an elevator full of Mexican immigrants who have nicknamed you the 'loco gringo,' hungover.    If you have been that hungover you have probably learned one thing:  You NEVER want to be that hungover again!!!

Here is the U.S., we have failed to learn that lesson.  The hangover from the great recession has now been wiped away from our memories and we are again pounding the hard stuff with reckless disregard for the outcome, which will be harsh.  Guessing the exact Monday that the hangover hits is impossible, however I think it will be in June.  

Ain't No Dollar Bounce Back Girl!  

Greenbacks look to be pausing from their recent punishing decent.  We are hovering right above the 2008 lows.  While this may be a pause before one final collapse, the most important thing to notice is the intensity and speed of the bounce back from the 2008 lows.  I anticipate the hangover will create a very similar effect this time around.  

Strong Bond the Long Bond

There was more rubbish today about China selling treasuries and the debt ceiling signaling the death of bonds, but long bonds have been strengthening in the last two weeks and look to have bottomed.  TLT looks to have bottomed near 90 and has strong support at this level as well.  While the fun-employment numbers later this week may be a set-back for TLT, bonds are firming at these levels.  With QEII ending I would not be surprised for TLT to make another accent to triple digits. 

Silver Lining?

Silver is getting crushed over the last two days-- is this a true Sell in May scenario or a head-fake on the way to $60? 

Insiders Tell the Truth.

Please take the time to visit http://www.j3sg.com/.  They offer FREE information on insider trading.  Today's volume on insider selling to insider buying will BLOW YOUR MIND.  There are massive amounts of money being pulled off the table daily while hardly any inside money is being reinvested into the market.  I don't need to be a wizard to know what this means. 

The buzz from QEII will wane soon, but there is probably one or two more jolts of tequila left in this drunk market before everyone passes out from exhaustion. 

Drink Up! 

Wizard of Oz

In the movie the Wizard of Oz, the travelers go through a precarious round of awkward tasks and scenarios in order to meet the Wizard.  It is shown at the end that the Wizard is just a man behind a machine.   

He was just a figure head. 

Today, the Master Wizard of Monetary Policy, Sir Ben Wizzie himself, spoke to Dorthy and Toto, the Tin Man and the Cowardly Lion.  He did what all Wizards do before they are exposed as frauds-- kept everyone believing in magic.

Bernanke said NOTHING in his meeting today.  He has said NOTHING in the last 10 meetings.

By saying nothing Bernanke may have made some new enemies opposed to friends. 

Wizard Fed-Speak nothing today

“Extended period is conditioned on resource slack, on subdued inflation and on stable inflation expectations,” Bernanke said. “Once those conditions are violated or we move away from those conditions, that’s the time we need to begin to tighten.”

BEN WIZZIE'S NEW ENEMIES???

As for enemies, Ben wizzie now has on his list:

• Every U.S. Consumer that has been told the economy is recovering
• Anyone in the world that has to eat
• Anyone in the world that has to use fuel
• Every central banker in the world that has to try and wrestle the exploding costs of infaltion

This was a green light to continue to cream the dollar, and in essence over-inflate commodity rich companies currencies. 

Fun:  USA 2011:  $5 gas, homes dropping 10% this year, flat job growth and $19 apple-sauce.  RECOVERY!!!   

This was also a big F-U to Austrailia, Canada and other currencies that have exploded with commodity prices.  Who is going to buy your 'stuff' when the US crap is cheaper?  China?  Ha ha. 

The only thing that was definite was that Ben Wizzie said that QE was done in June.

Expect the last MANIA portion of the equity bubble to take off here shortly, but be ready.  No Stimulus shimulus in June = stronger dollar = Equity markets and commodity prices watch out below. 

Bonds should continue to strengthen as well.  When bonds strengthen while equity markets explode higher, don't believe the panelist on Cavuto that tells you 'Stronger Bonds mean we are recovering faster."  It means, there is shit being shot out of a bazooka and it is heading towards the fan at the speed of light.

Ben Wizzie will play his last Ace as QEIII before 2011 is over.  Will it work again?  Maybe he should just send everyone 'live' stimulus checks like Bushie Duex, or pay off our mortgages.

Maybe, just maybe, Ben Wizzie is playing us all into his trap.  He inflates to crash the economy and they unloads TRILLIONS of QE crap to the masses at a premium.

...Maybe he is just a man behind a machine and has no clue what he is doing... 

Probably the second scenario...

Regardless, I'll wait until Christmas 2012 to buy gold-dipped UGGs for everyone-- should be cheap, just like Australian Real Estate at that time...

June Bugs

The US Equity rally monkey has been busy this week! 

The idea of a debt downgrade has only strengthened the rally by further crushing the dollar.  Fundamentals are still Charlie Sheen on mushrooms skewed, but this rally is now a combination of marshmallow fluff from the Master Wizard's QEII and the 'unforseen' downgrade from S&P.  The S&P downgrade is just fuel to the fire... The problem now is that it will be much tougher to put this QE fire out. 

On another downgrade note, S&P downgraded FNMA/FHLMC bonds from stable to negative today as well-- just another little slap on the wrist, and again, about 3 years late. Captain Obvious strikes again.  Downgrading FNMA and FREDDIE MAC is the equivalent to picking Micheal Jordan as your 2-on-2 partner when you can pick from anyone in history.  Everyone knows it is coming.  We are moving ever closer to the next major leg down in the US real estate market...  

COMPLACENCY REACHED

Watching the VIX, we are now at absolute complacency in the markets.  This is indeed a sleeping dragon.  The idea that we are in a never ending, no risk associated rising market should be scary to everyone, though that doesn't mean you need to go and sell sell sell. 

Not yet.

It should be noted that the VIX is trading at levels before the big kahuna crash that lead to the great recession. 

It appears to be sunshine and cookies for all. 

DOLLAR KEEPS FALLING.  CAN'T SEE THE BOTTOM

Ugly should be the word to replace today's dollar.  Next time you go to the store try to pay in Uglies. 

How Much is that shirt?

--30 Uglies.

Will you take 22 Uglies and a book of matches signed by Tom Jones I found in my wife's suitcase.

-- 25 Uglies and keep the matches.

There is no bottom in sight for the dollar's collapse.  It appears to be in a free fall at this point.  The only way it rebounds is with some Wizard Juice-- that is right...  FED-speak magic.  The master wizard speaks to the masses in the 1st press conference on April 27th.  Expect nothing but the usual this time around. 

The waning confidence in the US Dollar continues to push the price of oil up.  Gasoline is nearing $4.00.  It is not different this time.  $4.00 gas will indeed cripple to consumer.

PARTY ENDS IN JUNE

We are at a major crossroads right now for the master of monetary policy.  Price increases will crush the consumer, but the weak dollar and rock-bottom low rates are needed to keep the economy skipping along like a school girl with raspberry jam on her face.

The one thing about a party is that it can't last forever.  There are too many forces against the FEDS to roll into a QEIII without a hiatus.  

When the fun ends it will end not only the rally, but also the dollar's crash, the VIX bottom and the free money for all.  It will not be pretty and it will happen fast.  

I say that the party ends in June.  I know this is vague, but I just can't see the market continuing without support from the FEDS.  The marshmallow fluff from Nov 2010 to now can't be duplicated or supported without the easing.  Long bonds are already strengthening in anticipation of a safe haven, as those that don't want to stay on the roller-coaster any longer are getting off before they run out of track.  

This has indeed been a great party and I would say Mr. Bernanke is a hell-a-va host.  I highly doubt we will have to wait very long for his next shin-dig.  I hear it will be a masquerade ball-- trying to hide the QE that tricky devil.  

Just look how great the S&P looks today!!!

Enjoy it now... It doesn't get much better than this. 

Killing The Dollar Soflty with QE

Kudos to Congress-- If I acted that way at my job I would have been fired. 

Make sure you read between the lines over the next few weeks to notice the consumer trends that are changing fast in the economy.  I have been saying since January that rising costs will cripple this fragile recovery, but at this point I do not believe the Feds have an exit plan-- and I am not only talking about QEII.   

Consumers are spending less and less each month as they are forced to pay more for beer, smokes, gas and diapers.  The biggest problem-- The dollar getting punished like a sex offender in a Peruvian prison.

Consumers are 70% of the economy.

2010 was a great year to be a consumer.  Things were cheap.  That was before the Master Wizard Ben Wizzie decided to pimp the S&P and begin his assault on the dollar..  Killing the Dollar Softly with QE

"Strumming My Pain With His Fingers..."

ENERGY:

200 GALLONS OF GAS A MONTH

Before QEII:  $580 @ $2.90/ GALLON

Today:  $744 @ $3.72/ GALLON

Increase to consumer:  23% increase in 5 months

MORTGAGE RATES

30 year fixed payment on a $250,000 loan

Before QEII:  $1208 @ 4.1%

Today:  $1326 @ 4.9%

Increase to Consumer:  9% increase in 5 months

IS 2011 a 'BACK TO THE FUTURE' EPISODE TO 2008?

Will 2008 and 2011 be looked at in the same light-- rising costs, falling dollar and eventually a recession to follow?

Dollar Crashes through trend line... Wizards winning the battle?

The Green Back has crashed through an important trend line that has held since 2008.  Wizards seem to be winning the battle of killing the dollar softly with QE.  Unless a 9.0 quake hits So Cal in the next 45 days the green back looks to fall further and fast as other countries scramble to tighten monetary policy.

"Killing Me Softly With His Song" 

Is this really ...Duh... WINNING...?

All the Bad Things that happen from the weak dollar... 

The combination of the Fed’s recent round of credit creation and the very public, political wrangling over the budget and debt ceiling will continue to impact the value of the dollar. Here’s how it will impact you:

† Higher interest rates. The world will demand higher interest rates on U.S. debt to offset the risk of dollar devaluation. That means higher interest rates ahead could impact the cost of mortgages, the financing for businesses and the value of bonds in your portfolio (when interest rates rise, bond prices fall). Of course, it could also mean better returns for savers.

† Higher energy prices.You’ve already seen the impact at the gas pump, but that was from supply fears during the Libyan crisis. The next round of higher oil prices will come as a result of the falling dollar. And rising oil prices will impact not only your commute to work but the airline fares you pay. As well, it will impact the price of stuff you buy, since every product has a transportation cost component.

† A slowing economy. All of those added costs will be a drag on the economic recovery. People who have to pay more to drive to work won’t be able to shop for other goods and services. That leads to bleak prospects for job creation.

Of course these are not all bad things (minus the last point of course) if there is any ACTUAL economic growth.  Consumers in 2011 are in a far worse position that in 2007/2008.  Unemployment is much higher, savings have been destroyed over the past few years and home values are crashing at unchecked speeds.  There is no money to support the economy as disposable income becomes used up for $4+ gas and $7 tomatoes.  To top it off, Baby Boomers start to retire this year-- this social shift, along with the lack of job growth and wage growth will make this round of 'inflation' 100X worse than the 2008 round. 

In Back to the Future, Micheal J Fox was able to fix (or create) problems by going back in time. 

There is no time machine for the Feds... there is no way to undo the easing at this point without terrible consequences...

This all ends with either uncontrollable inflation that leads to a recession or interest rate hikes to avoid inflation that leads to a... recession?  That's right.  Both roads lead to the same outcome-- even if you take the Delorian. 

Killing the Dollar Softly...  With QE...