Saturday, January 31, 2009



Friday, January 30, 2009


Gerald Celente of the Trends Research Institute talks about the Crash of 2008 and is calling for THE GREATER DEPRESSION AND THE COLLAPSE OF 2009

Will Europe Collapse??

I have turned my focus from the potential weak dollar to the ever weakening Euro. While our economy is not in great shape I am focusing on how much weaker the Euro Zone can get. I watch the Yen hammer the Euro last night and will be examining the impact that a much weaker Euro Zone will have on our economy and how I can make trades based on that theory.

Natural gas firmed yesterday and I am hopeful that we will see some strength in commodities as I don't think we can see our averages move up until we see commodities show some signs of life. I think gold to $1000 is now a given and it could easily do it in the month of February. It is ever so strange to see the dollar strengthen and gold get stronger at the same time. If that is not a reason to be more cautious in this trading environment, you will perhaps never find a reason.

I laughed my butt off last night as Larry Kudlow basically said we are in for a rally if the government won't mess it up. That is like giving a weather forecast that says clear to partly cloudy with a chance of rain. Covers most of the bases. Why would we rally here is what I have been asking myself. Other than a short covering rally, I don't see any positive news. When in America have traders been so dependent on news out of the government? I don't think we will see the dollar collapse anytime soon. That will have a good short term impact on inflation---but don't worry, I haven't changed my long term outlook that we are headed for much higher inflation.

Wednesday, January 28, 2009


It is amazing how quickly the Mainstream Media coins terms. I have heard good bank/bad bank until I am about to puke. Right now the idea of getting the bad assets off of the banks balance sheets should be dealing a blow to the deflationistas. If the banks recapitalize by truly offloading toxic assets to the government, it will get them lending again. Sound like a great solution? If you like inflation and another step toward government insolvency. If we do this in one quick "swoop" of bad asset purchases--you will see inflation run in a hurry as the money multiplier will increase rapidly.

For those of you that listened to our interview with Jonathan Hoenig, I think he has the right idea by letting price action of individual stocks dictate moves in this market. The macro picture is far too tainted with governmental announcement risk to even suggest a buy and hold strategy. I favor buying stocks that are showing favorable price action and using good money management techniques (which in this market for me has meant not holding any position overnight.) I think we will see gold hit $1000 per oz soon even though it may fall over the next day or two. It is almost a foregone conclusion in the minds of many traders that gold has to test $1000 per oz.

The house passed the pork bill tonight (commonly referred to as the stimulus package). I am amazed at the number of brokers in the MM that are coming on TV and saying---just don't sell now!!! It will come back, it always does. Will it? I don't think in the fashion that they suggest. I believe that the game has forever changed and I just hope the new regulations will not adversely affect the small investor. I believe that now is a good time for a trade in USO and I will look to trade it over the next couple of days. I have been shorting RNT with some success. I don't like their business model and have traded in and out of that one several times over the last few days. I am looking to do the same type trade with EMS. I can't see the fundamentals for this one right now and I think it has set itself up for a decent short in the next few days. Again, I am moving in and out of these type trades and have not closed the regular session with any of these positions open.


Tuesday, January 27, 2009

Interview---Jonathan Hoenig of Capitalistpig LLC

Jonathan is very honest about the challenges that we face in 2009. This is a great interview and Jon doesn't try to sugar coat anything. Hear his perspectives!!!!

Monday, January 26, 2009

Sunday, January 25, 2009



Saturday, January 24, 2009

Friday, January 23, 2009

Great Interview with Scott Bleier

This is a great interview with Scott Bleier of CreateCapital Advisors. Is the way we invest finished??? Scott was one of the first to call the crash of 08--hear what he has to say about 2009. Please visit his site at

Thursday, January 22, 2009


I made reference to potential problems with the smaller banks in an earlier post and if you have been watching earnings this morning you are seeing them miss estimates. If we don't see the economy improve in the next few months--this will be the next shoe to drop. There is still time but the clock is ticking on these smaller banks.

On a positive note we saw Apple beat estimates and it is up about 9% in the premarket. IBM did the same and I still like IBM going forward---even though I got negative email about my mention of them about a week ago. What will happen with GE? Will they cut their dividend or will they risk having their credit rating reduced? Neither will be positive for the stock. If we don't get a follow through on yessterday's rally, I think we could test 7000 in the next few weeks. The more likely scenario is a rally up to the top of this trading range as we vascillate in that range.

We will have more later and a great interview posted late tonight. Our interview with Scott Bleier will be posted tonight and our interview with Walter John Williams was postponed until Friday night and will be posted either late Friday or early Saturday.

Wednesday, January 21, 2009

Banking Collapse

Bottom fishing will be extemely tough in the face of a total banking collapse. You can't call this a crisis--it is a collapse of the system that we have known and enjoyed. Many are arguing that there are smaller regional banks that will emerge stronger as their balance sheets do not resemble those of the Citigroup, Bank of America and others. In the southern region of the country that is most definitely the case---BUT HOW LONG CAN THAT LAST WITH PLUMMETING OIL AND NATURAL GAS PRICES. Many of these banks have made loans based on these industries and if they don't get relief from falling oil and nat gas prices----ANOTHER SHOE WILL DROP.

Has anyone heard ole Larry Kudlow calling for KING DOLLAR lately? I personally don't listen to Kudlow much anymore and wonder if he still believes the we need the stronger dollar---because I believe that we must see the dollar begin to fall or we are going to see worse than expected earnings from the multinationals. I know expectations are very very low, but what will happen if we see a bunch of earnings misses? We could easily see the DOW drop below 7000. This market has factored in terrible news--but if we get below expectations there will be selling like never before. Right now we have no confidence in the banking system, no confidence in earnings, and no trust in Wall Street thanks to Madoff and others. THAT MY FRIENDS IS A BEARISH RECIPE---EVEN FROM THESE LEVELS!!!!

Tuesday, January 20, 2009

John Bradshaw Layfield Interview

See our interview with John Bradshaw Layfield below. The interview was done on Friday January 16, 2009. John has a great perspective on the markets and does not paint a great picture for the next 12 months. Please check out John's product and website at

Financial MELTDOWN???

Don't expect the financials to lead us out of this bear market. Most of them will be lucky to survive. Royal Banck of Scotland has dropped 60% recently and many of the foreign banks are down 10% or better in the overseas trade. This means I will have a longer wait to see my commodities trade develop. I expect that this new downward leg for the foreign financials will ignite more talk of deflation and will continue to support the dollar. Gold and the futures are down right now (about midnight central time). Many traders are looking for a rally---I admit I was looking for a bounce last week, but this news takes out that possibility. We could be headed down another 20% in the next four months for the major averages.

If the dollar stays strong--and now it most likely will, the domestic economic numbers are going to come in worse than expected. Will we see an economic honeymoon phase as we change Presidential Administrations tomorrow? Not likely with all of this focus on the banking crisis. Many have said that these issues started with housing and they will only end with a recovery in housing. I would submit that we now have a major crisis of confidence. Not only have many investors lost wealth through legitimate trading----many others have just been screwed out of their money by the likes of Bernie Madoff. It looks like it will take quite some time to restore confidence in our financial system. Making matters worse, we don't know how long our major banks will be able to survive without another infusion from the government.

So how do we trade the new developments? I am not buying the steel stocks in the next few weeks like I had planned. I will look for opportunities, but I will not rush the trades and I see no reason to even think about entering these trades at this point. Are there good shorts within the financial sector? I will look for them but you can be assured that these trades will be crowded. Right now I will look for an opportunity to get short some commercial real estate holders. Yes this trade is already crowded, but if the banking system woes continue---it will pass to the real estate holders for sure.

Is this a buying opportunity for gold? I would be very careful about entering here as you would have to have a long term time table to play in this space at this juncture. Gold has several pressures as the dollar continues to remain strong. We will be riding the "We are better than the rest" attitude for the next few years.

I see where Jim Rogers apparently declared the UK finished. This appears to be a radical comment---but it might now be that far off base. You can expect the Euro Zone to be lowering rates soon.

Will have more tomorrow as things unfold.


Sunday, January 18, 2009

Can You Still Trade Fundamentals???

I think Jim Rogers made a great point during the last interview when he talked about the fundamentals of commmodities. That said most of you know that I have been upside down in natural gas for quite some time. I do see the short-term "price declines". I use the term price declines as I refuse to term it deflation at this point. Tomorrow we start a new Presidential Administration and I will be curious to see how quickly President Obama gets this stimulus package to the table. I believe that it will happen quickly and I also think the markets will respond favorably.

Many will argue that the financials will lead us out of the bear market. I don't believe that it has to be that way this time. If it does we are in trouble because we have more pain to go with the banks. I personally think that the commodities stocks will lead during this cycle. The markets are so focused on the deflation possiblities right now that as we see any sign of recovery---the steel producers, the miners, and the energy stocks should bounce first. Deflation, because of multiplicity of reasons---most notably the lost decade in Japan, scares the heck out of the market. Jim Rogers argues that we are still seeing deleveraging and I personally thought that most of that process would have been done by now.

Since the end of summer 08 this market has proven more difficult than normal to predict. I have been trying to find factors that I can couple together and try to make major profits when we see some normalization. I do believe that the dollar may stay stronger than most people think UNTIL we begin to see some signs of recovery. A major shocker may be that just as many think we are out of the woods when we see the economy start to return---we will see the dollar get HAMMERED. Why do I link economic recovery and the fall of the dollar. Because there may be some merit to the fact that the dollar has been propped up because our economy has been "better than the rest" during this downturn. If the dollar is going to lose its place as the worlds reserve currency, we will have to see some strength in other parts of the world before people have the confidence to give up their dollars for another currency. Gold--widely accepted as a currency in its own right has the deflation scare hanging over its head right now. How many talking heads in the mainstream media have you heard say "The Gold Bugs have had all of their dreams come true this year and gold is still below $1000 an ounce"? I have heard plenty of them and this puts pressure on smaller investors to stay away.

I believe that Jim Rogers call for the dollar short to be a good trade later is accurate for the reasons I just described. That said I am already short the dollar and I intend to hold that position.

I am looking to stay long natural gas, short the dollar, long the best of breed steel producers (namely X), long the best of breed miners (namely FCX, and take what technology gives(I like CSCO at these levels). Those are the fundamentals that I believe we can play sucessfully over the next 6-18 months. I also like IBM here.


Thursday, January 15, 2009

Jim Rogers Interview on Stock Shotz January 15,2009

I am so pleased to have legendary investor Mr. Jim Rogers back on our show. Jim talks about anamolies in the markets today and the long term outlook for inflation. I asked him about future growth in China and whether or not the Chinese will continue to finance our debt. He argues that we are still seeing deleveraging and does not term the current situation as DEFLATION.

Wednesday, January 14, 2009


I was expecting us to gap higher this morning as about this time last night the futures looked good. And then we get reports from the Euro Zone. The recession/depression collapse looks to be worldwide. Natural Gas has been absolutely decimated. The dollar is strong and many of the taking heads on television are suggesting selling gold short. There are times when an increase in commodities prices means a decline for the stock market as the expectation of declining margins dominates the though processes of most traders. In times like today--commodities and the markets fall together as both focus on the global economy and falling demand for goods and services worldwide. I did not expect it to last as long as it has---but now it seems that we are stuck right here for quite some time.

The dollar has been strong as other countries have been as weak or weaker. I personally believe that the government is buying dollars in an effort to fight inflation. We are continuing to throw good money after bad. I own shares in Bank of America in my IRA. That company now needs more cash as it tries to absorb Merril Lynch---but in all reality I should lose my entire investment. The concept of too big to fail is going to be applied for our country if we don't quit issuing IOU's like they are going out of style. We should let BofA fail. They should go into a structured bankruptcy and individual depositors should be made whole and individual investors should lose it all. That is the only way we will get the economy going again. If we keep propping them up and then attach forced lending practices upon them---it will be like getting knocked out in a prize fight and then going into an immediate rematch without studying the opponent. If you do that---you are destined to get yourself another ass whipping and it will most likely be worst than the first one.

I am watching one of our fine Senators say that we must restore credit BECAUSE OUR ENTIRE SYSTEM RUNS ON CREDIT. AND MANY OF YOU HAVE ARGUED THAT THE CONSUMER HAS LEARNED ITS LESSON. Are you ready for credit crisis round 2? I have said that you must be nimble in this market---if we don't stabilize early tomorrow---I will sell everything that I own and wait for clarity. This could be the beginning of a major major decline in the equity markets. We saw no sign of the "bounce" that I thought we would see today.

We need to see oil stabilize then we could see the equities rebound--but if the commodities downward spiral continues---we will see major pain in the equities. Be nimble or be out. I think the dollar is still key here. The strong dollar has put downward pressure on oil and if that reverses---we could see a reversal in oil. THERE IS SO MUCH UNCERTAINTY RIGHT NOW. I was halfway tempted to make a short-term bullish call tonight just because all of the "experts" agree that now is the time to be bearish. That is generally a bullish sign---but right now why would you add stocks?

John Williams will be back on the show to argue his case for hyperinflation. I am anxious to hear John's timetable as most of the inflation advocates had already assumed that the dollar would be declining. I am curious as to what is propping up the dollar---and this better than the rest argument has about run its course. I think it has to be government intervention. We are talking about passing out the rest of the TARP money and then adding a TRILLION dollar stimulus on top of that. Trillion---and how is the dollar still holding UP? Just because we are better than everyone else---No way.

Tuesday, January 13, 2009


I bought SSO today in anticipation of a bounce. It appears that dismal expectations have been factored into earnings season and we are seeing more media coverage of the thaw in the credit markets. Many argue that this crisis began with housing and it will end with housing---I am arguing that the positive news in the credit markets will cause a significant bounce.

We have heard different opinions on the growth (or lack of) in China. I am going on record as believing that China is going to continue to deliver growth and continue to consume more and more commodities. I have been bullish on natural gas and am officially admitting that I was wrong. It blew threw my stop of $21.75 today and I must admit I am still shocked (and at the time of this writing it is down further in overseas trade) Oil is up overseas and I think rising oil might be a catalyst that causes the market bounce. The dollar has been very (almost unrealistically) strong lately. I am still holding UDN in anticipation of the fall. Given the strength of the dollar today---you can see that oil is strong.

We confirmed our interview with John Williams of Shadow Stats for next Wednesday and will be taking viewer questions. Go to and fill out the contact form to submit your question. John has suggested that we could have a hyperinflationary depression. He makes a compelling case for hyperinflation and I am anxious to speak with him as he has been sounding the alarm for quite a while now and I will ask him more specifics about his timetable as we have been in a disinflation or deflation period over the last few months. I will also ask him if the Fed has the tools to fight DEFLATION if we see price declines persist.

Congress has 15 days to release the second phase of the TARP money. Does anyone really believe that they won't release it? Give me a break. It will be released. We are going to have corporate welfare coming out of our ears and it will cause inflation in the long term. I still believe that the government has been buying dollars in an effort to strengthen the dollar. Ask yourself the question "What make investors the most afraid?" Answer DEFLATION. People are confident that we know how to fight inflation, but aren't really sure how to fight deflation. Japan did not successfully fight deflation. So the more fear in the equity markets---the more money that flows into treasuries (which translates into lower borrowing costs for the government). So for the government right now fear is good. Buying dollars drives down the cost of commodities and raises fear of deflation.

I believe that we are in an area now where commodities and the equity markets will trade in tandem. If one goes up so will the other. I have been watching the futures and as oil fell from its highs of the overseas session--the futures weakened. I hope and expect that we will see both strengthen tomorrow. I AM NOT BULLISH----I JUST THINK WE ARE GOING TO HAVE A SIGNIFICANT BOUNCE.

We have many great interviews upcoming and appreciate all of our viewers.

Monday, January 12, 2009

In The Grip of DEFLATION

We have been debating the inflation/deflation debate on our shows and blog over the past several months. Over the short run it clearly seems that the D's have it. I am not sure which D---Disinflation or Deflation---but inflation is at bay at the moment. But why? I am not normally the one to talk about the "conspiracy theory" but it seems to me that the strength of the dollar is virtually impossible to explain. Could the Treasury be buying dollars? They certainly could and I think they might be. I have no other explanation as to why we did not see the dollar decline today. I know the arguments--that other countries are diluting their currencies as fast as we are. But are they really? Are they really printing the number of dollars as a percentage of GDP that we are? I do not think so. Why did gold fall today---on a day when our financial stocks were the center of negative attention? Could the Treasury be selling gold and buying dollars---unless today turns out to be an anomaly and we see normalcy tomorrow--I would submit that they could very well be and when their actions end the dollar will fall and gold will rise.

So where are the markets headed and how do I plan to profit? That is a good question since I have mastered the art of losing in the past few months. I think that we have much more pain to go in the banking sector. All you hear from the mainstream media is that the credit markets are beginning to thaw---but will it be too late? I think we are going to see 2 classes of companies in the coming year---those that have the pristine balance sheets (and they will get very favorable interest rates) and those that are not so pristine (these companies will find a much higher cost of capital and may very well have a difficult time expanding or even surviving. We will be looking for companies on both ends of the extremes. I have mentioned FLR over and over again and I think today's downward price action gave investors a decent buying opportunity. FLR has tremendous cash flow and will has such diversity in the terms of the countries that they serve---they will continue to post profits to their bottom line and will benefit as we start to see the economies (domestic and international) begin to grow again.

On the other hand, I believe that Aarons Rents RNT. They have done very well as of late--beating estimates and raising forecasts---but I think this trade is overdone. It sounds good, but a rent company as the economy begins to weaken. But customers on the "lower end" that can't afford a washer and dryer, etc. might not do well as we see more and more layoffs. A former boss liked to remind his salesforce that sales aren't sales until they are converted to cash. If banks have been hammered for extending credit---how will the rental business fare much better over the long haul---especially when the long haul may very well include the worst economic slowdown in modern history.

Now don't take this paragraph is unpatriotic--but the dollar needs to fall. To get our workforce back to work--we need the boost that a reasonably weaker dollar would provide. We are not going to get that benefit if we see the dollar continue to strengthen. Many would argue that we must have a strong dollar---I would agree especially as oil prices climb. But oil prices are declining and now would be a great time for the dollar to give up about 15%.

I think we saw a bottom in natural gas today. I will consider adding to my UNG tomorrow with a stop at 21.75. I believe that we will see companies such as EOG begin to bounce as I can't see oil below $33 any more than I can see natural gas going much lower.

For those of you that haven't heard Larry Summers made comments to the effect that since the current recession is of a global nature we will work with foreign counterparts to fix the situation and craft the proper regulatory environment. WAIT A MINUTE DID HE SAY INTERNATIONAL REGULATION???? CAN YOU SAY NEW WORLD ORDER? Please tell me that he wasn't serious because if this comes to fruition we are all going to be in real trouble.

Gold and Platinum look like they may be poised to fall more---but are eventually going to offer a decent buying opportunity for investors. I still hold UDN as I think the dollar will weaken soon.

Good Luck!!!!

EARNINGS (If there are any) SEASON

We have been talking to guests with very diverse opinions as to where we are headed in 2009. Right now I think we are going to see dismal earnings and given the fact that oil is getting hammered again this morning--the averages are headed down. This quarter may well create a great buying opportunity for gold. Gold is pulling back this morning and it could fall as we hear what could well prove to be the worst earnings season of my lifetime.

While oil and metals are poised to decline heavily this morning---corn, wheat and soybeans look like they will jump. I think the decline in agricultural commodities is very close to the bottom.

Some of the classic "safety" stocks such as consumer staples will be setting up for good short plays in my opinion. I will be doing research and will provide the names that I like as shorts in the near future. Today it looks like those in the deflation camp will enjoy the day. Can the strong dollar last? We will be exploring this issue in detail later today.

Sunday, January 11, 2009

Interview---Matt McCall of Penn Financial Group

Matt is more bullish on the markets than any of our recent guests. He also believes that ENERGY will be a great sector in 2009. Listen to the entire interview below. Please visit Matt's site

Thursday, January 8, 2009

Jobs Jobs Jobs

Well we have been waiting all week for tomorrows jobs report. The question is how much bad news we are really prepared to absorb without a major selloff. Today's late afternoon trading was surprising as we rallied in the last few minutes. Tomorrow we will interview Matt McCall of Penn Financial. Matt has made bullish comments in the recent weeks and I am looking forward to finding our more about his stance. Today's trade in Natural Gas really didn't make my recent inflation thesis look very good. I have not changed my mind and I will be looking to add to my UNG if it drops below $22.75.

For those that are arguing we will not see inflation for a very long time---did you hear about the proposed stimulus? The one that may be close to a Trillion Dollars. Yes TRILLION. Mish Shedlock argues that the dollar is going to stay strong because other countries are printing money just as fast as the United States. I have tremendous respect for Mish, but I respectfully disagree that the dollar can hold its value. First and foremeost I can't see any country that is as dependent on debt as are we. China stimulus will come from surplus dollars and ours will be financed. I differ from traditional theories as I don't believe that deficits are bad for the economy. I see the stimulus being effective in starting the economy and INFLATION.

Credit is beginning to flow---slowly. Housing still needs to see improvement and I think it will take a while for us to reach the bottom. Investor Confidence is another very important unknown today. We are seeing many people that have lost confidence as they saw their 401K's wilt away---and then we add Madoff to the mix and we have seen risk tolerance substantially decrease in the past few months. I am tired of hearing about the money on the sidelines---much of it may stay on the sidelines for quite a while. I am not a bull right now---even though I thought the late afternoon action was encouraging. I still favor commodities as I think we will see more investors choose those investments as the economy begins to turn. The individual investor has never been able to invest in commodities as easily as they can now. I strongly believe that we will see more dollars flow into commodities than ever before. I would argue that there will be a higher "speculative premium" in commodities this time around. As we see signs of inflation this premium will get higher and fear will get worse. If you don't believe me---bookmark this post and come back in 18 months.

I would not be so convinced about inflation if we were in a true free market system. The government believes that they must inject money to get the economy going. I believe that we are at a place where if they do not---we would see very dire circumstances. We are paying for the Greenspan policies of avoiding recession at all costs. When do we take our medicine? We must become more efficient??? we can't do it by propping up every industry that runs to Washington. We could debate this one all day long but the truth is that we are not going to take our medicine and we are HEADED FOR INFLATION. I am holding UDN.

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Wednesday, January 7, 2009

Community Reinvestment Act II? PLEASE NO.

We are seeing some normalization in the credit markets. The interest rates on corporate bonds are beginning to decline slowly. LIBOR is staying down and the rate panic that was hitting the small businesses is beginning to subside. Now I do understand that the price of money and the availability of money are very separate issues---perhaps more so today than at any other point in my life time. But there may be new trouble on the horizon. We heard compelling arguments from Mish Shedlock about the difficult plight of the regional banks--as he expects several hundred to fail in the next year.

While I try to stay away from politics, the greatest threat that I see is potential "strings" attached to the government TARP money. I want accountability as much as anyone with the TARP funds, but in no way should we force the banks to loan money that they would not otherwise loan. We got into this current credit crisis partly because the Community Reinvestment Act forced banks to loan to individuals that were very high risk. Even though we had to invest untold taxpayer dollars into these banks--we cannot afford to force them to loan money to those who are unable to pay. We would be much better off having the government send those individuals a check (in no way am I advocating that idea). I have no problem with the government making a profit--a very substantial one--off of their investment in the banks. If we force the banks to put a new asset on the books that is really not an asset--we are just recreating the same crisis over again at a later date. Private enterprise has to fix the banking system for confidence to be restored. If we see strings attached to these TARP funds, I will begin selling stocks as fast as I can login and enter sell orders.

I was pleased to see natural gas hold up as well as it did after today's sharp oil decline. Are we really shocked that we are getting terrible numbers everytime we have any kind of economic report? Not much in the way of employment numbers are shocking to me. We are not going to see any improvement in the labor markets for several months. I still believe that natural gas is a good investment---I am still holding UNG. I added also added EOG and more FLR to my portfolio.

We are continuing our quest to interview the best and brightest in the business. Over the next couple of weeks we will talk to investors with a wide variety of opinions on where the market is headed over the next few months to couple of years. We are very pleased that we will have Matt McCall on our show on Friday. Matt is more bullish than most and offers a great perspective on the markets.

We are committed to learning from each and every episode that we produce and will incorporate viewer questions into every episode. If you have a question for any of our guests-- go to our website and fill out the contact form. Put your question in the comment section.

Our viewer base is growing and we appreciate all of our visitors. The more viewers we get the more quality interviews we will be able to produce.


Mish Shedlock Part 3

This is the final part of our interview with Mish Shedlock from January 4, 2009.

Tuesday, January 6, 2009


Did the collapse in credit matter more than all of the money that the Fed printed? Mish argues that it did. Were many of the pundits wrong about the rise in M3 because there was really a FLIGHT TO CASH going on? This is part 2 of 3 of our interview with Mike "Mish" Shedlock. Mish has agreed to another interview in a month--so if you have a question that you would like to ask Mish go to and fill out the contact form and type in your question. Part three of the interview will be posted tomorrow.



Monday, January 5, 2009


Kevin Kerr of Kerr Trade International gives his perspectives on inflation, deflation, oil and other commodities prices in the coming months. Kevin thinks we are headed for infation and then deflation. Part 2 of the Mish Shedlock Interview will be posted tomorrow.

Please visit Kevin's site at

For all of our interviews please visit our website at we have some videos on the home page and then another page with our archives.

Sunday, January 4, 2009

Mike "Mish" Shedlock Talks DEFLATION

Many of you know that we have been exploring the INFLATION VS DEFLATION ARGUMENT. Mish believes we will have deflation for a period of time. He disagrees with our other guests such as Peter Schiff who sees the rapid decline of the dollar and John Williams who says we are headed for HYPERINFLATION. This is part one of our interview that was conducted Sunday, January 4,2009. Check back soon for part 2.

Please Vist Mish's sites at


The Diminishing Bang of the Buck

Many such as Peter Schiff have been warning the Federal Reserve simply does not have the tools to fix our economy. As a matter of fact in his last appearance on Stock Shotz, Schiff said that the American Consumer Was done and that the Federal Reserve was essentially "out of bullets". Is the Fed out of bullets? Well if they aren't, the bullets are certainly going to be more expensive in the coming months. Take a look at the chart below which was found on the St. Louis Fed's website. It shows the drastic decline in the M1 Money Multiplier. It has had a dramatic decline and the worst part of the chart is that the MULTIPLIER HAS DROPPED BELOW 1. I will admit that this points to short term deflation. Simple common sense logic tells me that as the Fed tries to stimulate the economy, they are going to only get 95.4 cents worth of "bang" for every dollar invested. As private investors, I expect most of us demand a better return on our money. So am I changing my inflation bias? Certainly not over the long term----but I could be willing to accept that it may take longer for my thesis to develop. I believe that this "multiplier below 1 phenomenon" will ultimately MAKE INFLATION WORSE. The longer the multiplier stays below 1 and "the further below 1 it falls" the more the money supply will have to be increased to get GDP growing again. Could the drop in the multiplier be caused by credit contraction? Absolutely? If the economy gets going again will credit expand? Again the answer is ABSOLUTELY. Then the multiplier will rocket upward. So the question is will the government be willing to pour enough money into the system to expand the money supply enough to reverse the course of the multiplier and GDP. I believe they will and then the question becomes can they raise rates fast enough to control the inflation that will follow. That I do not expect they will do. So while my long term inflation thesis is stronger than ever---I am now tempering my time frame for the price declines to end and inflation to begin.

In looking at the equity markets I must ask the question "Did the money mangers anticipate this phenomenon and sell in anticipation?" or are we yet to see the effects of this multiplier downturn in the equity markets. Will the stock market be a leading indicator (we know we normally see improvements in the equity markets before we see improvement in the economy) or IS THIS TIME DIFFERENT?

In looking at the forecasts for inflation---it has been quite some time since there has been this much disagreement between the "experts". I equate that into continued (perhaps even massively increased) volatility in the markets.

We are continuing our quest to speak with many of the best minds in the business and will be bringing you many interviews in the near future. I believe that the most successful in the markets in 2009 will BE NIMBLE AND BE QUICK AND BE WILLING TO LOOK AT THE FACTS AND CHANGE COURSE. I am not afraid to admit when I am wrong---and I will show what facts are changing my mind. The above chart gives me heartburn.


Saturday, January 3, 2009

Upcoming Interview

Stock Shotz is pleased to announce that John Bradshaw Layfield CEO of Layfield Energy will be on an upcoming episode in January. Please check out John's site at

In addition to being a very respected investor John is an entrepreneur that has a great read on the current state of economy.

Send your questions for JBL to

Friday, January 2, 2009


After hearing the political rhetoric of the Presidential election, one would think that protectionism is of only our doing. It is not. According to an article in Investors Business Daily, Argentina, Brazil, and Indonesia are considering import taxes/restrictions. Not to mention Russia and all of their saber rattling. China keeping their currency undervalued does not help as it makes a political target in slowing times. Yes we have heard some protectionist rhetoric (the steelmakers have asked that recipients of government bailout money be forced to buy American) but the real danger may rest with many other countries as they consider tariffs on our goods. This could magnify problems as the dollar falls. If we get into a situation where the dollar falls (and we believe that we will) we will need the boost from exports. If the dollar falls and we don't get that boost, we could be in real trouble. We would most likely respond with new tariffs of our own--can you say hyperinflationary depression?

Lets hope that our trading partners realize the value of free trade and allow us to sell our goods abroad as the dollar falls. If they don't we could find ourselves in a very bad predicament.

We saw nice action in natural gas today. Oil was up as well and I will say that I was very surprised--even shocked that the dollar held up as well as it did in the face of increasing oil prices. Many pundits are taking a strong position that many of our counterparts have further rate cuts to go and that should bode very well for the dollar. I can't totally disagree--but again that is only a short-term situation. Over the long haul the dollar is headed down. I bought UDN a couple of days ago and plan to hold it for a while.

Was the action in today's market a signal of what is to come? I don't think so. I think the light volume speaks for itself and many traders were still on their extended holiday. I am anxious to see what happens on Monday. I do think the move up in oil and natural gas was for real. With tensions escalating in the Middle East, I can't see oil going down much further. The situation with Isreal and Hamas is getting worse by the day. The energy complex had a stellar day today. KOL did well as did many of the individual producers of coal. The consumer is going to take advantage of falling gasoline prices and I don't buy that many are going to save more. I think they will take their savings at the pump and spend it elsewhere---just like the money is burning a hole in their pocket. Call me skeptical, but I am definitely not convinced that the consumer has learned their lesson. People tend to make the same mistakes over and over again.

FCX had an excellent day today. I think more people are turning to gold as a store of value and FCX will benefit from that trend. Last night we had several interesting comments in opposition to our inflation position. Many are arguing that we are only seeing reflation and the banks have used the TARP funds to rebuild their balance sheets and they are still not loaning money. I will stipulate to the fact that they have used the money to rebuild their balance sheets, but as things improve in the job market---they WILL BEGIN TO LOAN MONEY. THEY MUST HAVE LOANS TO HAVE FUTURE EARNINGS GROWTH. The credit spread argument is a valid one. Many companies are going to have a very difficult time refinancing. I am looking for companies that have the worst balance sheets and am preparing to short them as access to capital may prove difficult for many of these companies. I think this could contribute to more price declines over the course of the coming year. I still believe that there are more factors that point to inflation in the next 12-18 months. I have also heard many arguments on the destruction of credit and it is a valid argument. Many are even arguing that we should subtract the reduction of available credit from M3. It is hard to argue that point in the short run---but as we see normalization we will see the effects evaporate. We will explore these ideas in more detail later this weekend.

I believe that we are in a quagmire here. No doubt we are seeing pricing pressures--and many are terming it deflation. But there is also no doubt that we are setting the stage for inflation---you cannot deny the eventual effects of the printing presses. The great unknown is TIME. How long will prices fall and when will the economy start to grow again. I think we will start to see real inflation pressures within the next 12-18 months. is forecasting that real problems will begin as early as 2010. We will have their founder John Williams on in a couple of weeks and will really try to drill down and get his perspectives on the timing.

Let me comment on the ridiculous gas tax proposals that we have been hearing about lately. This is a terrible idea with worse timing. Gasoline is not something that should be hit with a "sin" tax similar to the taxes on alcohol and cigarettes. A reduction in alcohol and cigarette consumption does not slow the country down. Higher gasoline prices impact people trying to get to work and will take money away from retailers and fast food restaurants as people will have less discretionary income. I would love to see us begin to build the infrastructure to allow us to convert our vehicles to natural gas, but until that infrastructure is ready---we should not punish the American Consumer and further hamper our already crippled economy. We have bailed out those who behaved irresponsibly so we should be able to front the money to change our energy consumption habits without punishing the consumer. I live close to the Haynesville and Barnette Shale Natural Gas finds and it would be an economic boom to the people in this part of OUR COUNTRY if we could convert to natural gas and pay AMERICAN LANDOWNERS as opposed to exporting our dollars to the Middle East. But lets do it without hurting the consumer in the interim. As much "pork" as we have seen in the past, surely we can afford to fix this problem without taxing the consumer.

Thursday, January 1, 2009

Kevin Kerr Interview Monday January 5th

We are pleased to announce that we will be interviewing Kevin Kerr on Monday January 5th. We will be incorporating viewer questions into the show--so if you have a question for Kevin please email it to


Will this be another down year? Will we rally as credit improves? Will Americans increasing their savings rate substantially? I wish I could answer all of those questions. I think this will be a year where being quick will be much better than being patient. I believe that the unemployment numbers (bad, but not as bad as expected) point to a more inflationary scenario than to a deflationary one. Why? Because the current theory for deflation is basically hinged on employment--or lack thereof. Why is it hinged on unemployment? Because better employment will have higher bearing on the velocity of money than most have forecast. We know that the money supply has increased (I disagree that it has decreased due to wealth destruction) and if the velocity of money increases---we will be headed to a much improved economy--perhaps even an inflationary one.

I wrote earlier in the week a little about p/e and how difficult is was to truly assess the p/e of a company as it has been difficult to ascertain what the earnings of companies will be in this environment. Dare I say it, but this year could well hinge on the effectiveness of the upcoming stimulus plan(s). I have been on the side of free markets and letting them work and have not changed my position. I believe that the best thing for the market would be to go through a protracted recession and as Jim Rogers would say "Start over from a sound base. Since we know that we are not going to let the market work with no bailouts/handouts etc we will not discuss that scenario any further. We know we ARE going to get some form of stimulus and for this year the question will be whether or not it is effective in returning people to their jobs. Many would argue that this crisis began with housing and will not end until housing stabilizes. While I would not argue that point--I believe that employment is a huge component of whether we see housing begin to stabilize. If employment stabilizes our consumer will very soon try to return to the model of its former self.

Many people are saying that we have all learned our lesson and are going to start saving like we just avoided bankruptcy. This is simply not the case. Many of the individuals that were the highest in credit card debt will get relief through the stimulus--either in the form of a rebate check or reduced principle etc. They will still be out purchasing things every chance they get. Yes some of us will save---but the ones with the propensity to save were not the ones that started this credit crisis in the first place. I have drawn criticism for making this point but it will ring true. Yes there were some people that were just unfortunate and lost their jobs. But most of this crisis was caused by those that just took all of the credit they could possibly get---and my friends they will do it again if given the chance.

My point is that if unemployment starts to decline and the economy begins to "perk up" then we are going to see the banks resume lending (perhaps have some assets that need to be written up on their balance sheets). And at that point we will be in jeopardy of the velocity of money rapidly growing.

Now if the government bailouts do not kick start the economy we could head into a deflationary cycle. No doubt that if we throw a huge stimulus at this economy and it does not work---we will throw more. That is an absolute guarantee. I am either clear as mud or I sound like I am trying to hedge my bets. I am not trying to hedge---my point is that at some point we are going to have enough stimulus to get things going again. And when it does, we will see inflation.

Let me ask this question. Were many hedge funds allocating money to the commodities markets back in the summer when oil prices were high? You bet they were. Will they do it again? You bet. I believe that we will see more institutions than ever before allocate dollars to commodities as we begin this leg of the economic cycle.

I like SWS here. I like this company and in all fairness they have made a huge run lately--I bought them in this area and held them through the recent declines. My target on this one is $24.50.

ICOC had a nice run yesterday and sadly enough is still way below my entry point. I still like the company and think that they will benefit from the weaker dollar. It may take some time, but I think this one will double. It is not for the faint of heart though. Should Europe stay in a recession for a long time---it could hurt the stock.

I had liked Seagate STX and in all honesty was dumb enough to ride this stock all the way down from 25. This was my absolute failure at money management for the year. I really liked the company and thought I could fight the market and was SO WRONG. I talk often about tuition to the game of trading and I paid my tuition to learn a money management lesson that I vow never to repeat. This one I think I can master in the future because it hurt bad and I felt SO STUPID and asleep at the wheel when the stock landed at 4.

Personally I am taking 2 approaches for this year. One approach is to invest my inflation thesis. I have taken small percentages already in some select positions and will increase those positions as I see my thesis begin to unfold in my direction.
I am allocating 25% of my available funds to this part of my trading.

The second approach will be to take advantage of volatility and trade. I will be looking at taking advantage of some of the "double direction" ETFs. I have refined my plan with respect to short term trading (as I lost money last year) and until the markets stabilize will define "short-term trades" as a much shorter time horizon than I did last year. I had taken the mentality during the volatility that I would have my stops be "close" in other words if my stop was $25 I would not sell if it hit $24 during the day---I would wait and sell the next day if it closed below $25. It started out as a decent idea, but rapidly cost me much more than I was willing to lose on trades.

I could not end the year without thanking all of our visitors (whether you agree with our views or not--we know we were wrong at points last year and have sense enough to know that we will make mistakes in the coming year). We just hope to learn from our mistakes and get better each time.

I also wanted to take time to list each of the individuals that appeared on our show last year. We were so fortunate last year as we interviewed Jim Rogers, Peter Schiff, Charles Payne, Walter "John" Williams, Jill Schlesinger, Pat Dorsey, Ryan Krueger, Dr. Danielle Babb, Price Headley, Kevin Kerr, Jerry Bowyer, Dianne Swonk, Donald Luskin, Tracey Byrnes, Kendra Todd, Dr. Thomas Barnett, Dr. Reed Holden, Timothy Sykes, Hitha Prabhakar, Dr. Jim Mirabella, Dr. Alex Lazo, Carley Garner, Michael Panzner, Jerry Taylor, Dr. Christian Weller, MeMe Roth, David Duval, Anya Kamenetz, Toni Hansen, Wes Ball, Margaret Heffernen, Dr. Richard Murphy, Laura Ries, and Denise Shull. I wanted to list each by name as they were all gracious to take time out of their busy schedules to speak with us.

I made many new friends during this process and hope to do the same again in 2009. It was truly an honor for this "country boy" to have the opportunity to speak with and try to learn from these individuals. To every one I offer my humble and sincere THANK YOU for taking time to visit with us.