FIRE IN THE HOLE

All this talk about inverted yield curves and Recession is rather rediculous, as we all know the FED can avert any bad situation, and it's diferent this time.

I ask you, why are 10 yr yields falling? Oil is falling. Gold is falling. home prices are falling. Is this the inevitable pull of DEFLATION>? Or are we in the Goldilocks scenario?

Housing was a greater % of GDP back in the 60's and 70's, but currently with Hedonic pricing of computers, I feel this distorts this data, Hedonic pricing of computers had much less of an effect on GDP 30 years ago then it does now in the computer age.

I wonder if in the 60's and 70's they used their homes as ATM machines as thy do now? my friends it's all about BUILDING equity not sucking it dry. Home owners, especially new ones will be upside down on their mortgages if home prices fall even slightly because of the overleveraged positions they hold as result of new fangled loans like interest only.

The US $$ rose unexpectly this week, helping to put pressure on precious metals. I think partly due to Japan's Central Bank (BOJ) deciding to leave rates unchanged a rediculous .25% !! How strong is that economy they couldn't withstand .50% ??

Chinese goods are putting pricing pressure on all sorts of American goods. Chinese goods so far have eaten the commodity price surges, whereas US manufacturers are passing it along to Consumers. chinese goods are SO CHEAP they even put downward pressure on USED GOODS markets.

There isn't a shortage of a damn thing with seemingly limitless capacity in China to produce, where do you see too many dollars chasing too few goods?

The US is more competitive in manufacturing in what items? We are a consumptive society that produces very little outside of military machinery.

We are exceedingly at the mercy of Foreign lenders, not a good situation.

How is life at home? Bush wants to usurp our Constitution, AKA Vendetta. He knows what's best and he has helped to instill fear of TERRORISM so Americans will do anything, give up anything to be "safe", when his BOLD RECKLESS actions are helping to create the very thing we wish to avoid.

Has there been a lessening in blodshed anywhere? What has been accomplished by setting IRAQ for sectarian violence/Civil War? Was there a FLOOD of terrorists coming into Iraq before we invaded? The American public has been lied to and sold out and they do nothing? SEND A MESSAGE in NOVEMBER! Vote THEM OUT!

SO, this September is going to be different? No stock weakness? I DOUBT IT! SUmmer rally has begun to peter out and most of the rise coming from a pullback in SUPPLY (selling pressure) NOT from DEMAND (buying pressure).

I think the HIGHS are IN, and a DEFENSIVE posture is called for.

How important is housing to our economy? It adds to demand for employment at LOWES Home Depot, furniture stores, paint, remodling and new construction jobs, demand for nails, rubber, steel concrete etc.....demand for all commodities OIL etc, Demand for Banking services, real estate brokers, title searchers, lawyers, road construction, fabric , designers and archetects and so on and so on.

Have we not taken this housing bubble as far we can? These jobs we added are now in SERIOUS trouble.

I am asking the question, where are these jobs going to be absorbed? What other part of our economy will be growing to offer support?

WHY is oil now falling, broken through all akinds of supports? I say sure some speculation is pulling back but so is demand, supply is currently sufficient for demand.

And what elese will fall? RECORD oil company profits, which have been VERY supportive of record S and P profit growth. SO have financials, both charts of Banking and Energy have turned bearish. Housing has long time turned bearish even though it has seen a little dead cat bounce leately.

Home owners are stuck with rising property taxes. And new home owners with HUGE mortgages on elevated home prices they had to pay......debt is at HISTORIC levels as a % of just about anything.

I think we begin to see a little pushing away from the credit buffet. Merchants will begin to see this and cut prices to attract sales, even as they get squeezed at the wholesale level with nice price increases.

I don't see a soft landing, I think the 3 bears ate Goldilocks.....

Duratek