WAKE UP CALL. TIME RUNNING OUT

Were it not for stock buybacks SPX earnings would be negative, is reason also for 1% GDP. Energy stocks playing Atlas. PLUMETING cash out home equity doesnt support spending, and if spending outstrips wages and savings plunging savings rate to 1933 LOWS neg .5% the market even outdated following of 30 industrials will follow.

D

http://briefing.com/Investor/Public/MarketAnalysis/Calendars/EconomicCalendar.htm (new home sales at 10)

YET juicing are they the futures, doesnt mean HEAVY GREEN early trading. IMHO they already GOOSE the GDP....we know that and still an economy gone FLAT, and if the jiggyness here is for the END of FED tightening? SO SAD it is not to realize what is really going on

NOT THE SAME OLD PAPPA BEAR

"Spx earnings rose 11.5% last qtr" (impressive right?) "WHat is corp America DOING with ALL its cash? Investing in Asia and buying back their shares. (quotations from and paraphrased PRIVATEER)

But we like when shares are bought right? That increases demand for the stock right? It amounted to "US $160 B.....and without this? "US EPS would have FALLEN by 7.8%.....a DRASTIC FALL in earnings" *(we also have massive non-confirmations in various indexes)

WHen CASH is re-invested in the company to upgrade software (you see SEBL and many others languishing?) buy new hardware (Dell languishing) and invest in Capitol equipment (CAT OFFSHORE SALES) the US core health is deintegrating before our very eyes.

The COVER up which I believe GOLD is doing its best to "RAT OUT", is REAL INFLATION is soaring in everything except CHINESE IMPORTS.

How could not RECORD OIL and demand for paper and wood etc, and the transport of all these goods (RECORD HIGH TRANNY AVG) not be filtering down into US goods? We know the CPI and PPI go UNDER REPORTED. OIL remains near $70.

HOUSING IS SLOWING, make no bones about it, Houston we have a trend, this comes first before the FALLING of prices.

'FED reported that in 2004 $600 B was EXTRACTED from household equity" which accounted for 40% of the GDP GROWTH!" THIS is not there for the future, and we already know household DEBT has risen to 121% of disposable income, and that REAL WAGES have fallen, there is margin for error.

I believe we are set up for a NASTY ACCIDENT, see how foolishly they run back to market only days after 200 PT crash?

VIX and CPC remained LOW during this decline.

We know how the FED and BUSH have hoodwinked and used smoke screens to hide the reality of our situation, hey "it's all good".

60% of mortgages now "interest only"? HUGE amounts of SPECULATORS holding investment property in the MOST ILLIQUID market.

It ALL comes together this March again is my guess. We have IRAN and the EURO ONLY OIL BOURUS, we have FED hiding their dirty work with M3, we have new FED Chief at helm, we have Anniversary of 2000 top, we have OLD bull market cycle.

Early buying held up by those who maxxed out contributions mid last year and retirement contributions coming in up to end of March, and I DO believe there is much trouble ahead after that if it even waits.

Consumers in debt to eyeballs, 70% already in homes, WHAT be the driver for the economy? with cash hordes going to make earnings look good instead of investment.....what be the driver? Are recent upswing in yields telling us Foreign buyers of our debt are balking?

When the 20 week EMA crosses down the 50 WK and they both begin to decline, is when I go FULL bearish with leverage as the trend will be obvious to those of us who even bother to look for it.

Til then, I will continue to look for long opps when they appear, with itchy trigger finger. The margin for error (SNDK OFF $10 last night) is going going gone. (INTC at 52 wk low)

Duratek

Researching a HYdrogen Economy

http://www.hydrogen.co.uk/h2/hydrogen.htm PRO
http://www.fromthewilderness.com/free/ww3/081803_hydrogen_answers.html DEFINATELy CON !
http://www.energycooperation.org/hydrogeneconomy.htm
http://www.calpoly.edu/~sjoplin/hydrogen_economy.html
Since hydrogen is not an abundant fuel, it must be produced using energy from other sources, preferably renewable ones. Hydrogen is not a solution to a growing demand for energy but rather a better means of utilising it. Before the hydrogen economy becomes feasible, better methods for storing hydrogen must be developed.

BURN FIAT BURN

Runaway inflation? NO WAY ?

WE have tons of excess capacity and a need to keep consumers buying, will higher prices do that?

I buy Chinese desks and chairs and have had NO price increases or gas surcharges. BDI has been declining sharply

Are we getting to the preverbial "you can lead a horse to water, but Cant make him drink?" they can keep printing money but the velocity of such and demand is falling....consumer loans have declined near first time in how many years 2 months in row.

However as I Just post this I went here http://research.stlouisfed.org/publications/usfd/page3.pdf SOB!!!!!! what a HUGE LEAP from last week OMG!!! This is crisis proportions my friends

From Noland (prudentbear.com)

January 15 – Market News International: “China’s foreign exchange reserves rose 34% to $818.9 bln last year, as massive amounts of foreign direct investment, export earnings and ‘hot money’ chasing currency appreciation continued to pour into the country.

January 18 – Associated Press (Scott Sonner): “‘Right now, the rest of the world owns $3 trillion more of us than we own of them,’ (Warren) Buffett told business students and faculty Tuesday at the University of Nevada, Reno. “In my view, it will create political turmoil at some point. ... Pretty soon, I think there will be a big adjustment…’

Broad money supply (M3) declined $23.2 billion (week of Jan. 9) to $10.244 Trillion. Over the past 34 weeks, M3 has inflated $619 billion, or 9.8% annualized. (SO money supply is a TRICKY definition to understand as we compare M3 with VELOCITY (MZM) and ADJ base

Noland feels demand for Chinese product will grow as consumers pick up spending and Katrina spending.

WILL OUTCRY from GOV spending and waste LEAD to CUTBACKS in such which cancel out Katrina spending? Maybe so.

AS gold and OIL have risen so have stocks….ASSET inflation along with housing……..if housing declines maybe so will all kinds of related SPENDING depressing demand for all kinds of things.

ANY SHARP fall in gold I will take as a VERY bad sign and expect other commodities and assets to follow.

Fri was opex fri, so strange things happen, like 200 pt whiff. I thing major damage done, let's see how mkt acts next week

D

COWBOYS WEAR WHITE HATS

http://www.atimes.com/atimes/Global_Economy/FJ30Dj01.html

ABove written in OCT 2004. JAW dropping, not much bang for buck when you see chart of what we got GDP-wise for each $$ printed.

AMD saves day, expect potential upside THURS. even though AAPL much more important laid an egg AH GOOG will probably delight.

1275 SPX defended for now, will this launch new attack on 11K??

Could get pop from NIKK tonight, though they CLOSED markets early last night to STOP the selling.

After March things could get more dicey. My buddy P1 got a pop AH from DVAX!! Take a look. Chart was UGLY,$4 stock pops $2 plus, nice, not always about the charts huh?

Can't pedict when news will come or if good.

D

RUBBER CHICKEN MEETS THE ROAD??

http://www.schaeffersresearch.com/commentary/observations.aspx?ID=15008 SCHAEFFER ON CHARTS TALKING comp AND nikk

WArnings ignored earlier PD, DD ALCOA. NOW more YHOO and INTC misses and take GOOG down with it.Bullishness nary wavers.

I can see COMP at 2,500 and I can see it at 1,500.

Mad dash for yield, how safe are yields?

11K touted on every talking head show, whoopie, it's a round number that hasn't held since besting it, rather odd? But it's 11K man!! come on!!!pause that refreshes?

Consumers are cutting back. Prfoit projections are too high, IMHO

BDI shows a slowing CHinese economy. OIL surging on speculation? Does HIGH oil force FED to continue raising rates?

Bonds have outperformed stocks last 5 years.

A leak of air just now, stay tuned. 4 years bull OLD BULL, 4 years with no 10% correction....greedy or asleep Lemings beware.

Readers are you still out there, I am trying to keep this blog going....

D

BLACK HOLE

http://www.econindicators.com/em-cgi/charter.exe/var/vel-gdp-per-m3

Can't shake feeling we are working up to something. NO 10% correction in 4 years. DD, ALCOA, PD warning. Consumer spending slowing. BDI already blown apart showing diminishing demand for raw materials. And velocity barely budging in face of historic FED pumping.

Duratek

RANDOM THOUGHTS OF GLOOM/DOOM

BDI swooned, CHina slowing, demand for commodities slowing, prices receding to follow. Consumer spending collapsing. Ability to fund consumption from rising home values vanishing. Speculators stuck with inventory they cant sell. 70% already own.CNBC jackles sputter "we are becoming more competitive.....businesses will spend (tech) to increase productivity which is booming". cyclical bull 41 months old. deficits out of control, if Bernanke does as many think, the US $$ will be decimated, assets will plummet, int rates will sky rocket (why I wont touch high yields nor treasuries). RATES have been HELD low below inflation and mkt by manipulation. CHinese already stopped buying. Iran OIL/EURO will CURB demand for US $$$ IS THIS WHY M3 EXPLODING? CAN FED PRINT AT WILL??? setting up dollar tsunami. BDI shipping rates swooning is DIRECT result of lessening in demand.PERIOD.

RECORD bullish readings near 70% for 3 week mkt vane (EWT) 18 yr high.Home equity was 40% of 2004 GDP (Privateer)

$50 Trillion unfunded liabilities means NO NEW TAXES to pay for this, who then how?

DURATEK, DAY OF RECKONING APPROACHING

ALICE IN WONDERLAND

http://www.geocities.com/northstarzone/FED.html

AND SO 11k IS HERE WHOOPIE, could stay jiggy til MArch, ride the tiger, have finger on trigger.

D

MUST READ Doug Noland

http://www.prudentbear.com/archive_comm_article.asp?category=Credit+Bubble+Bulletin&content_idx=50242

(excerpts from above)

The now global U.S. Credit Bubble will be sustained only by enormous ongoing Credit and speculative excess. And it is also the case that Credit booms turn most fragile when they appear most powerful. Seemingly endless liquidity can vanish as quickly as a speculator’s nerve.

Energy insecurity and the determination to rectify it will certainly be a major global theme going forward. As such, I fully expect the fanciful notion of the “win-win” Bretton Wood’s II (stable dollar claims recycling) monetary regime will loose sway to the “zero-sum game” proposition of excess dollar claims as purchasing power to procure increasingly constrained crude oil and industrial metals supplies. The trend toward energy investment and precious metals holdings as a preferred store of value (to inflating quantities of specious financial claims) will only gain momentum. Indeed, the dilemma posed by the volatile interplay between accelerating energy and hard commodity shortages and the Global Liquidity Glut could easily unfold as A Critical Issue of 2006.

The energy boom will continue to support economic expansion, as will the booming export sector and hurricane rebuilding. All indications are for continued Service sector expansion.

I will be surprised if there is much of a consumer pull-back in the near-term. And if financial markets cooperate, the economic surprise for 2006 could very well be the re-emergence of the technology investment boom/Bubble. It is a fundamental tenet of Macro Credit Theory that if the Financial Sphere is determined to expand Credit and sustain abundant marketplace liquidity – create purchasing power – the Economic Sphere will gladly find ways to spend it. It’s guaranteed! Barring market tumult, I see a significant probability that economic growth initially surprises on the upside.

It is the nature of economic Bubbles to advance to a fateful state of exuberance; for market Bubbles to conclude with a destabilizing terminal “blow-off” phase. Distressingly, we are today faced with the reality that the norm would consummate the worst-case scenario for both the U.S. financial system and economy. As an analyst of Bubble Processes and Dynamics – as well as a student of financial history - I fear the worst-case is anything but a low-probability proposition. I never believed the tech Bubble was The Bubble. It is now clear that it was but a harbinger of things to come – a forewarning recklessly disregarded. More importantly, the technology Bubble served as a prerequisite for the policymaking, financial and economic backdrops capable of fomenting History’s Greatest Bubble.

I hope the “optimists” are right, but they won’t be. There are too many ways things can go wrong. The Bubble economy is unstable and will likely boom until it busts.

CONCLUSION:

Euphoria, greed, confidence, and marketplace liquidity are notoriously flaky and fleeting things. You certainly would never wager the world on them. I have warned repeatedly of the great dangers associated with leveraged speculation evolving into the key source of liquidity for the financial markets and economy. Well, this dynamic has enveloped the globe – the entire world! Our policymakers have done the unthinkable; they’ve kept betting over and over - double-or-nothings - until they bet – yes – the entire world. What a stunning, extraordinary and distressing development. It’s going to be a wild, exciting and, likely, historic 2006. To my loyal readers, I promise to do my best when following, analyzing and commenting on developments. As a Macro Credit and Bubble analyst, I am a kid in a candy store and more than willing to live with stomach aches and a mouthful of cavities.

Duratek's take:

We will FLY to new heights...until we don't......and instead of a little correction, when 2nd Phase of Bear comes back it will wreck havoc WORLD WIDE!! Those f'ers at the FED have gone TOO far this time. I think we are near a BLOW OFF stage....

I SMELL BLOOD IN THE WATER

We have a FED gone wild, we have bullishness gone wild (HUGE gap in RYdex bear and bull funds!!), we have margin debt gone wild, little cash to cover (4% Mutual funds cash levels).
**DEC CROSSCURRENTS.

If economy is on SOUND FOOTING, why is the FED pumping in $40 B a week?

Every time (with NO exception) oil/gas prices such as we have (been near $60 for a yr) led to Recession.

Inverted yield curve....led to recession, yet at same time Fed says "it's different this time" they plan to in March STOP reporting M3. Same time Iran opens Euro's for oil. Near weaker 6 months of market. near ANniversary of 2000 top. Every day adds to OLD 40 month cyclical bull.

Rally NOT being disputed with LOW VIX LOW TRIN LOW CPC/CPCE

Cramer getting face time, has legion of groupies.

ALL moves (like FED int rates) assumed telegraphed.

Margin debt near records set during 2000 bull run, is the action JUST hedgies running after same which is hot (GOOG SNDK GOLD) with little LEMMINGS piling on.....with "free" money the LONG side of trades is like a one-sided Titanic.As MUCH of trading is programmed (up to 70% !!!!) and on MARGIN!!!! imagine the move in REVERSE? forget any stops.

Consumer now has credit card doubled minimum payments, higher adj mortgages, weak wage increases, and an explosion coming in AMT taxes. Real world energy prices and real world inflation on things we must have also crimping cash flow. With slow or end to property value rise, much harder to pull cash out of home.

It seems to me, too many Hedge Funds, hardly regulated, buying on leverage, most on SAME SIDE of trade.....set up similar to 2000 top is in place NOW.

11K almost a sure thing to be broken, then what? A BLOW OFF TOP? rise to NEW HIGHS IN DOW? BUT my friends, when a market exhibits behaviour more like 2000 than 1982, what do you do?

The downside protection being given away, and most bears gone and shorts covered, and all eyes on Dow 11K, eyes have been removed from the dangers, the underlying falsity of the move, of the fundamentals.

An accident is waiting to happen, and I won't be on the roads when it happens. As Newman professes "all he lessons of the mania offere have been ignored"

Duratek (I have turned EXTREMELY bearish because most are not)

Random Thoughts

Bonds not reacting to weak jobs......yet
High yield funds rebounding from end of yr selling..today as well
End of rates rising now strongly telegraphed.....high yield funds given present?
Everyone already knew fed agenda, 2PM rally Tuesday transparent reaction to...what
70% program trading.....no reality in mkts
MARCH screams of no return deadline.
Weakest recovery still per wage and work week advance
40 month bull MUST be near last leg
RYDEX funds show GULF of bullishness per flow of funds
http://research.stlouisfed.org/publications/usfd/page3.pdf WOW, but peak from Sept still stands

Haven't Learned A Damn THing?

http://money.cnn.com/2005/12/16/markets/colvin_fortune_122605/index.htm