Financial overseer

If Obama gets his way, the federal reserve will be the watch dog over "all' financial transactions.

For those new to this blog, I blasted Bush as well. So this is not a party thing. I have repeatedly said both parties are corrupt.

This Federal reserve is not even elected. It meets in secret, no press in their meetings, they are appointed...I can go on and on.

We are witnessing the end of the greatest economy ever in the history of mankind. Those seeking power grabs will not stop at just this.

So why the spouting on this blog?? Because it will effect your entire future.

I am beginning to agree with Rogers. Move to Asia (Singapore I think) While masking as communism, they are more capitalistic than we are.

From your retirement accounts to your jobs, we are falling off a cliff here. Better be well prepared. It is going to jolt the masses and you need to be ready. You need to get your house in order.

Inflation/Deflation

This will be a subject talked about. Since the next few months trading depends on getting this right, much will be discussed. As we look at the latest gov figures today, (what part you can believe) we see that inflation did not rise as much as expected. This is deflation winning.

But do not be surprised with another "bailout" "stimulus" from the gov. deflation is much worse in the eyes of the feds than inflation. Problem is the deleveraging is going to take more capital than the feds will be able to pump into it.

So...tangibles will be falling as a result of this latest round. At what point are the feds going to stop pursuing the printing? Who knows.

For now the breather in tangibles should be looked at as a chance to get in. Also the breather in falling bonds should be looked at as a chance to get short.

Time will tell when deflation is defeated. With the credit markets imploding all around, my guess is deflation for longer than most expect.

Housing starts Jump 17%

Yet the market as I write is going down. Why? Isnt this good news? NO! What started this mess? Housing meltdown. It is terrible but builders only know how to build. This will just put even more pressure on an already over supplied housing.

I guess if I was a builder, I cannot make money unless I build, but then those houses need to sell in a glutted market.

This is not the news you wnted to hear in spite of the media spin.

Shorting Bonds

In this weeks newsletter I mentioned that many analysts (ones I respect anyways) feel the trade for the next decade will be short bonds and long energy.

While I agree, I missed the best point on this trade back when TLT was at 123 or so. I am waiting for a nice run up to get along diagonal put spread going on this.

Leaps are not out of the question either. Although those trades take more capital and as such the returns can sometimes lag the shorter 6 months out trades. The nice thing about doing the leaps is you can basically sell way out of the money and only want to capture time decay and let the leap run in the money for a long while.

This should be a very long ride and with those rides, we will see many volatile swings that will make many give up the ship. All the factors are in place to make bonds a bad investment gong forward for a very long time (in my opinion). This Will also effect Cd's at banks and other fixed income investment so steer clear if you can. Annuities would fit into this as well. The locked in rates will lag the upward pressure on interest rates.

As a long term advocate of whole life, it might just be a term and invest the difference decade. Many insurance companies will struggle. Remember that those state funds are for only the guarantee on the policy when a comapny goes belly up. Most of those guarantees are in the 4-5% range.

If you have a universal life policy sold back in the 80's or 90's, you need to have a serious talk with someone and see where you stand.

I would be glad to assist.

Once again Deflation/Inflation

The war rages on. If the efforts by the Feds massive amount of cash sloshing around going to reinflate or not? Bond traders are specualting it will, commodity prices are acting like they agree.

What most are not considering is the fact that the very thing that caused the bubble to pop (Real Estate) is still imploding and spreading to the commercial sector.

For the agressive traders buying into the comodity run may just be a good trade. However watch for the run to fade in a few months. What most are banking on is the inflation forcing tangibles. While I agree this could happen, I also see the implosion of trillions of dollars in Real Estate that the banks still will not disclose. If the reality of this does come home to roost and production (see euro production article)drops, then there will be too much suply once again haging around and prices will once again drop.

To play this, get on board a few commodity ETF's for the summer and be careful. This could turn fast and furious.

Or you can trade super conservatively like I do and wait for the rally to halt and then sell diagonals on the way down. Either way will make for a wild summer.

Want a scare?

Go to bloomberg.com and search for Davidowitz. Listen to a few of his podcasts.

Not that he is not saying what we have been here for over 2 years, just that a mainstream analyst is saying it, must mean it is far worse and ca no longer be covered up.

Let me know what you think

Here is a sample enjoy

Time to hunker down and get serious isnt it?

Is the rally over?

Far from me being able to prognosticate markets timing, but have we run the course of the bear market rally?

It really has the appearance of a Japan style economy. Throw some money here, wait and see, Throw some there wait and see. Hide the bank problems, hide off balance sheet losses, etc.

What did Japan get for all of its tricks? 20 years of a spiral down. Mind you some of the rallies were impressive and sustained a year on many of these rally's. 40%-50%even 60% retracements only to falter and eventually continue lower.

The only question in my mind is are we exactly like Japan or similar. These rallies will be long and appear to have the bottom in sight. Reality tells me otherwise.

How to trade this stuff is taking the long term bear approach and selling shorter term against the long term. These rallies could be 6 months or more in the making.

You could wait until a decent rally in the 30% range then take positions to the short tide as well.

Secular bear markets make a very select few very wealthy. Because only the few recognize what it is. The "Professionals" i.e. financial planners, insurance, brokers etc. have a mind set and compensation set up to make money only as markets rally.

For the most part the many will buy on these dips only to see much lower prices later on. The very select wise traders will see the rally points as opportunities to get more short positions and ride out the temporary rally.

There is going to be much more pain to come. The best thing you can do for folks is to show them what is really happening and how to get on board.

p.s. I do take referral, but as most of you know it is only the very select few that want to come on board.

Dow component

If I am wrong, wasnt the Dow supposed to drop CITI and GM today and replace them with cisco and another one?

If so, the Dow sure went nowhere for having a switch like this.

I would imagine all of the funds that need to adjust their portfolios to reflect this change should have made more of a rally.

But then if I am wrong on the date....

Employment numbers

If anyone noticed, the adp jobs loss was revised (as usual) down. If anoyone wants to use data such as this for fundamental analysis, they need to look to an average of revisions. Are the revisions getting better or worse. the news hardly ever reports the revisions, if the revisions arre worse each and every month, then you have a trend.

The best way to use this information is the take 6 months average, that take out the wild swings so to speak. If yoou want to llok at these each and everytime, then make sure you look at the revisions as well. I think Friday fed numbers on employment are coming out. Look to the revisions and see if they are revised down or not. My guess is they will be.

the markets can act irrational longer than you can stay solvent.

GM the largest industrial bankruptcy ever and the 4th largest.

The market jumps at the open. Do the masses understand what this will trickle down too? Not only GM shriking, but auto suppliers as well not to mention dealers in every state.

But hey just as in the gaga years of the dot.com, these all dont matter for it is up up and away.