Friday, February 27, 2009



When I refer to turning point, I am talking about the inflation/deflation part of the cycle NOT THE MARKETS. I think we are seeing the end of the downward spiral in prices. Now we will see volatility, but I think commodities are ready to take the turn. I believe the oil prices will see both increased demand--and will also see the reality of the reduced supply as a result of the previous production cuts. I believe that we will have a bigger "fear" premium in oil over the next 18 months than we see in gold. And I think there will be a substantial fear premium in gold.

Bernanke has painted himself into a corner at this point. He has to continue with his thesis that we will see recovery by the end of this year. This most certainly means that he will have to announce a change in posture on inflation. I agree that during the last six months we have learned beyond a shadow of a doubt that both economists and traders are more scared of deflation than inflation---BUT THAT DOESN'T MEAN THAT THEY WILL NOT REACT TO INFLATION. The reaction will bring money into oil and other commodities at paces just as fast as we saw the exit when we started the downward spiral.

This morning the futures are down and Citi is getting HAMMERED. What group of idiots would be surprised about Citi? Nationalization is the only hope for this stock and that will be awful for the entire system---so THERE IS NO GOOD SCENARIO FOR CITI.

I was wrong about a rally--we tried it, but it failed. I guess even the technical traders can't muster any balls to buy at this point. I was hoping for a rally as an opportunity to add to shorts.

As inflation takes hold, we will see the decline of the dollar and the spiral begins.

We are focusing on our trading today, but will add to our inflation thesis with several posts this weekend. IF YOU DISAGREE MAKE COMMENTS BELOW. WE WILL RESPOND AND WANT TO CONSIDER ALL SIDES OF THIS EQUATION!!!! LETS MAKE THIS SITE A GREAT EXCHANGE OF IDEAS BY USING THE COMMENT SECTION.

Thursday, February 26, 2009


Consider this. If Chairman Bernanke is right and we will begin to recover by the end of this year, that has to mean that he believes that the deflation part of the cycle is DONE. To me the big question has always been will the Fed act quickly enough to quell inflation once the economy gets going again.

I believe that we are going to see a rally soon for several reasons. First, there is this pervasive belief on the street that we must see the financials lead us out. Any sign of strength in the financials will bring optimism. We have analyst like Dick Bove on The Kudlow Report last night really talking up the financials. He made a compelling case (I don't buy it one bit but it sounded good) that Bank of America was a good buy. In full disclosure, I must shamefully admit that I have BAC in my 401K. I am holding it as an option type vehicle, but don't have any confidence in its recovery. As the mainstream media puts out hype such as Bove's, we will see many individuals rush in as they are afraid to miss a great buying opportunity. This is where psychology will get small investors. They are afraid of missing something and will rush in and could get hammered. They will rush right back out if we make the next leg down. Finally, as we head into the weekend, I believe that the shorts will take profits and reduce risk as there is headline risk over the weekend.

I think this rally will hurt gold prices and present a good buying opportunity for those that have missed the trade to this point.


Wednesday, February 25, 2009

Futures Almost Flat

I have no confidence in yesterday's rally. Chairman Bernanke did a great job of talking up the markets yesterday, but talk is not a catalyst that will last. I am searching for a real catalyst that will send this market higher. Bernanke's call of economic recovery by the end of this year is more aggressive than my gold call. Let me ask those deflationists this question. "If Bernanke is right and we do recover that fast what happens to your deflation scenario? THERE IS NO WAY WE CAN RECOVER THAT FAST WITHOUT INFLATION---MASSIVE INFLATION.

I got hammered in SRS yesterday and will keep a watchful eye on it today. I think we ultimately head lower, but would not be surprised if this rally continued again today. Remember we have been going down for a while. A DEAD CAT WILL BOUNCE.

I will keep my blog short today and issue this challenge. If you believe in a catalyst that will move this market higher---please detail it in the comment section and lets have some healthy debate. We know that learning from others thoughts is the best way for traders to be successful.

Congresspeople are already talking about the need for more spending and people are give me grief over my gold call.

Tuesday, February 24, 2009


THE MARKET SEEMS TO HATE THE IDEA OF SOCIALISM. We tried to have a dead cat bounce yesterday and not only did it fail, it turned into a huge down day. One of the dangers that I see is that people got used to seeing 200+ swings, but not at these levels. If you look at yesterday--it would have been the equivalent of a 500 point drop when the DOW was at its peak. We have no clarity, and if we ever get any (sadly again looking to the government for our trading plan) we might see a bounce.

Right now there is no catalyst to send us higher. It has been tough to blog without sounding like a broken record---get out and wait. I sold most everything I owned yesterday when the market was down about 40pts on the DOW. I made some really nice trades in SRS and SDS. Obviously right now it is just too easy to trade those 2,but that to will change.

I think gold will run back through 1000 with relative ease. I have been criticized for my gold views, but it has had a great run based on its value relative to other currencies that are printing money. It will continue its run for another reason (inflation). It will certainly be volatile in the short run, but I still see it moving much higher.

I believe that commercial real estate is the next shoe to drop. We are seeing layoffs every day and those will take some time to have their full impact on the RETAILERS. We will see retail bankruptcies which will lead to vacant buildings by the droves.

I am trying to break things down to the simplest possible terms. STAYING OUT AND WAITING.

Monday, February 23, 2009

Rally Coming?

I think we could get a move higher--even though the futures are off of their best levels of the night. I can't see any catalyst that will actually move us out of the bear market. We continue to look toward the government for our answers and that cannot be the answer for a free market system. Citi is moving closer to nationalization and we can't see the financial sector move higher until we have a plan that will allow the banks to heal without government dependence.

I have no problem saying that I was wrong and I was---I exited my UDN (short dollar) trade last week. Over the short run, we will be seeing deflation and when inflation finally takes hold it will be bad, but for now we are seeing the dollar hold up well against everything but gold. Deflation will not be good for stocks and I will use this rally (if it materializes) to get short. I like SRS (short real estate).

I like (and bought)FCX. More later.

Sunday, February 22, 2009


Thursday, February 19, 2009


Hear our interview with Mr. James Turk of Please visit his site at



Wednesday, February 18, 2009


I can't find any leadership in this market, nor do I see any catalyst to move this market higher (other than just a "tired of heading down meaningless bounce" so I don't have much to write about. I have attached a portion of our latest youtube show--which was cut short due to the youtube time restraints and another show that pertains to the shrinking dollar. I will have a longer post tonight.

Monday, February 16, 2009

Japan Contracts Fastest in 35 Years

Will we ever quit reading headlines talking of record rates of contraction? Yes, but not any time soon. Many have sent emails asking if I am backing off of my weak dollar call. The answer is no, but as Jim Rogers said in our interview last month now may not be time to short the dollar. While I am personally short the dollar through the UDN, it may be some time before that investment finally pays off. For those baffled at the dollar's strength after the passage of the stimulus package---Remember that the European Banks are in seemingly worse shape than our banks and the slowdown in our economy has caused the slowdown worldwide. Many have asked "If we lead the downturn, will we lead the rebound" I think the answer to that question will be where the rubber meets the road and separates the winners from the losers. I think China recovers first and I think we are seeing signs of their recovery already. The "leg" that has not yet started the recovery is a big one---the part of their economy that is dependent on exports to the U.S. I do not see us having to lead the globe out of this recession. I see other areas recovering first and that is the basis of my worries about hyperinflation and stagflation.

I try to break things down in an effort to simplify. The world population grew by approximately 80 million people in 2008. 80 million more individuals that need to eat and will be consumers of some kind. Yes, consumption has contracted worldwide, but all countries have added to their monetary bases. I believe that we are destined to see rapid inflation. You can call the process that we are going through now whatever you like (deflation, disinflation, reflation, etc.) but in the end the question is how long the current process will last---because the next phase will be INFLATION. Opec is making drastic cuts to their production levels and I don't think the first announcements of production cuts have ever had an impact on prices because by the time they decide to cut---the deceleration of demad always outpaces their initial cuts. They will eventually cut enough to make a difference and increasing prices will have an impact on the dollar. And then the inflation cycle will be kicked off---and there will be no stopping it. The strong dollar crushed commodities price and who knows how long the dollar will be able to stay strong. Given the awful numbers out of the Euro Zone and Japan, it could be quite some time before we hear news from our neighbors that would prove their currencies a more viable reserve than the dollar. There is no way to tell when it will turn, but I believe that it most certainly will and that is why I am sticking with my dollar negative investments.

One of the best pieces of advice I have heard in a long time came from Jonathan Hoening when he told me that he lets the price action of stocks tell him what stocks to buy. I have found a couple of risky stocks---but I think there price action looks interesting. First is Teradata TDC. I like the fact that they don't have much debt and I like where they are from a technical stand point. Please read my disclaimer. I am not an investment adviser and this is not investment advice. VNUS medical also looks interesting from a technical perspective.

I had expected the markets to bounce tomorrow, but given the overseas averages----I don't know what happens tomorrow. I will most likely have an update in the morning when I get a feel for the futures tomorrow morning.

James Turk of GOLD MONEY will be our guest on THURSDAY!


Saturday, February 14, 2009

Incentives for INEFFICIENCY

The stimulus plan was supposed to kick start the economy and make more of our companies better investments. The only investment that I see this stimulus plan helping is gold. I had comments on my you tube video (where I referred to it as the stimulus/bailout/handout) saying that it (the stimulus package in the form that passed Congress yesterday) was an investment. IN WHAT? The infrastructure impact will be minimal and there is enough pork in the thing that the government should open a restaurant. It make me sick. We are destroying Capitalism. I have said it before and I will say it again. I have Bank of America in my 401k and if they don't operate well enough to stay solvent, I should lose my entire investment. I should not look to the government to bail me out. I took risk looking for reward AND FAILED. That is how capitalism is supposed to work. Next time I invest I will work a little harder to reduce the risk.

I am hearing now that a foreclosure moratorium is in effect until the government can unveil their mortgage rescue plan. REDEFINED: THE GOVERNMENT IS GOING TO BAIL OUT THOSE WHO LIVED ABOVE THEIR MEANS WITH TAX DOLLARS FROM THOSE WHO BOUGHT HOUSES THEY COULD AFFORD. We are destroying the very system that made our country great. How can we make the sacrifices necessary to return our economy to a sound base (by letting bankruptcies happen) when every out of touch politician wants to solidify his/her next election with some sort of rescue plan. Anybody hear politician Schumer make the statement that AMERICAN DON'T CARE when referring to all of the pork in this bill? That comment is dollar negative. The powers that be see no problem borrowing from our children and our grandchildren--and now probably a couple more generation to stay in their offices. For those of you in the deflation camp, if that doesn't tell you that we are going to spend, spend, spend until we light the inflation fire, you will never wake up. WE CAN'T PAY THIS MONEY BACK WITHOUT INFLATING OUR WAY OUT OF THE PROBLEM.

I have had guests on the show that have said we are going to have to monetize the debt and increase the Fed's balance sheet soon. I agree that it will be very soon. If monetization of the debt turns out to be deflationary I will have to do an episode called I WAS WRONG AND I APOLOGIZE. It won't happen. If for no other reason than we can't raise taxes without crushing the economy.

Part of the problem with our system is that we incentivize inefficiency. Lets take the so called mother of the octuplets. She willingly had those kids because she "loved kids" BullShit! She wanted more checks and a book deal. Did it take her very long to get her "donate to me" website up and running. She didn't have one by accident, she already had too many and was artificially inseminated to have all of them. THE TAXPAYERS WILL PAY FOR HER IGNORANCE. Don't send me emails about this paragraph---this is not a political viewpoint, it is simply an economic one. Ignorant decisions in business are inefficient and drag down a business. We can and should take care of those who CAN'T take care of themselves. The problem is we have used the words CAN'T AND WON'T synonymously for far too long.

Gerald Celente said in our interview with him that to recover from this economic crisis we must have a productive capacity. We must find alternative energy that will produce jobs in our country. A conversion to natural gas would get the consumer going in many areas as we would be paying American Consumers for automobile fuel rather than exporting our wealth to the Middle East. I own less stocks today than I have in years because the system is broken and I don't see any sign of recover on the horizon. I lost my butt last year thinking that I was being a great "value" investor until I figured out that stocks were getting cheaper and cheaper for a reason.

I am a commodity bull. China will turn around first and will need the commodities. Oil prices will reach $85 per barrel by the summer in my opinion. Natural Gas will move from its current level well below $5mcf to around $8mcf and gold will touch $1250.



Friday, February 13, 2009


We had a nice bounce at the end of the trading day yesterday just to get back to flat. The futures this morning are looking flat and I have heard several pundits claiming that we bounced off of the bottom and are headed up from here. We might do just that, but we are ultimately headed lower. This economic stimulus plan is going to make the system more inefficient and going back to what Gerald Celente said---We have no new productive capacity.

I think gold will pull back over the short term, but is destined to hit $1250 by this summer. Some panic will push the TBT down and could be a buying opportunity. People have asked why I am bearish on the treasuries if I am bearish on the equities. Their thought process is obviously if I believe in Dow 6000 and S&P 600 then there will be a flight to quality which should be bullish for treasuries. I think the so called flight to quality will be short-lived and what we are ultimately looking at could well be a FLIGHT FROM TREASURIES as our credit weakens. This stimulus plan solves NOTHING. It makes the problem worse. This so-called stimulus is filled with spending programs that will be continued. So instead of a one time expense designed to stimulate the economy, we have a bill that is destined to lead to more and more government debt. If you beleive that we are headed for deflation over the next 2+ years, please leave a comment below as I would respectfully like to hear your thoughts. I beleive in the exchange of ideas and know there are a lot of deflationers out there, but I can't see it.

I still believe that we are headed for a retail mess that will lead to many bankruptcies in the retail sector and ultimately problems (massive ones) in the commerical real estate sector. I went to a restaurant for lunch on Wednesday and this time last year would have waited at least 15 minutes for a table at noon. THEY HAD SECTIONS THAT WE CLOSED. EMPTY TABLE AFTER EMPTY TABLE. A meal that would have taken well over an hour last hear was had in about 30 minutes. That is happening all over the country and will show up in earnings reports for the first quarter. We are headed down and this pork bill that will pass today HELPS NOTHING. It took us 80 years to put a TRILLION dollars on the feds balance sheet and we are going to do it with one bill. We are going to borrow as a country 6 times more than we have ever borrowed in any one year.

Stay tuned as we will have some great shows and more details on the economy this weekend.

Wednesday, February 11, 2009



Range Bound Or Bound to Fall?

We will post the other parts of the Mish interview tonight. Our electricity was out for an extended period of time last night and we were unable to finish producing the videos.

Many of the talking heads are saying that yesterday was overdone to the downside. The futures at this point are pointing to essentially a flat open. I had a great run in my SRS and took it off of the table. I still like it over the long term, but if you get that kind of percentage jump in a short period in this market--you must take profits.

I have one question for the "deflation" camp. How in the world can you think deflation will last very long? I saw an interesting statistic yesterday. Someone said that it took the Fed 80 years to grow its balance sheet to a trillion dollars. All of the plans yesterday will grow it by two trillion. Inflation will take hold because the wasteful spending bill is not going to get the economy rolling again.

Whether you believe Peter Schiff, Mish Shedlock, John Williams, or Jim Rogers---they all have one thing in common. THIS ECONOMY HAS MASSIVE PROBLEMS AND IS IN FOR A PROTRACTED DOWNTURN. Understand what that statement really says. It says regardless of whether you biggest fear is inflation or deflation---they agree that we are in for more pain. I own less stocks today that I have in quite some time.

I think the best advice I have heard on the show lately came from Jonathan Hoenig when he said the best way to play this market is to let the price action tell you what to buy. AND BE NIMBLE. BUY AND HOLD IS DEAD.

I think this market is headed down. I think that we will break 800 on the S&P and will head to the 750 area soon. But believe it or not, I am not shorting the market right now. I want to see what kind of support we get around the 800 level and will let the market tell me when to get short.

I apologize for the delay in the Mish interview. We will get them out tonight!!!!

Tuesday, February 10, 2009


Here we go again. The markets are at a standstill looking to the government to see what plans are coming our way. If we rally, don't count on it lasting---no result of government action in the last 6 months has caused a lasting rally. Part One of our interview with Mish Shedlock is below. The interview was recorded Sunday February 8,2009 and we hope to have parts 2 and 3 published tonight.

Monday, February 9, 2009

The Next Shoe

I interviewed Mish Shedlock last night (will have the interview posted here tonight) and asked him if he agreed with Gerald Celente's assessment that commercial real estate was the next shoe to drop. Needless to say, Mish believes that commercial real estate is in trouble. He also believes that the pain in commercial real estate will quickly extend to the regional banks.

I have been asking the question "will the strong dollar hurt stocks" Mish favors a very strong dollar and makes a very compelling case for it. I am still maintaining that Friday's rally was nothing more than a bear market rally. One has to look at the reason for the rally. I couldn't find a good one on Friday other than it was a short covering rally preceding the government spending bill. Again, when we look to the government as a reason to be bullish---we are in trouble. Many in the mainstream media are FISHING for a reason to be bullish. They talk about and spin any piece of news that could possibly be construed as good news.

I will be looking for an opportunity to buy SRS (short commercial real estate). Now I have lost a good bit of money on this one lately as it is very volatile. I intend to use better position sizing to be able to hang in with this one until my thesis proves correct.

I will have a longer post after the interview with Mish is posted and we will continue exploring the inflation/deflation debate.

Thursday, February 5, 2009


I think we are going to see a rally unless the employment numbers tomorrow are extremely bad. I have heard more chatter about a rally from the so-called "experts" for the past few days and I must admit that today's action looked like a short-term rally would be imminent. I still believe that we are in a long term downtrend and will plan my trades accordingly.

If I said I was anything less than shocked at the action of the Dollar, I would be lying. I said this morning that I thought the dollar would hold up for a while---but it ran today much more than I expected. I contend that this is terrible for many companies and could complicate any signs of recovery. I heard a commentator on a MM show say "The government is going to come through and when they do we are going to rally IN A BIG WAY" Now how many times over the past few months have we had a rally based on some government action only to lose it in a hurry? Have we already adopted such a socialist mindset that we really believe that we have to look to the government for "fixes"? Please, this is the worst thing possible. This so-called stimulus is a joke that is just going to devalue our currency. Regardless of whether you favor John Williams opinion that we are headed to hyperinflation or Mish Shedlock at the other end of the spectrum with deflation---you must admit that reliance on the government is THE WRONG MINDSET. That mindset will continue to produce suckers rallies and I will prepare to short them. I am licking my chops at the thought of a huge rally tomorrow. If we get one, I will be looking to add to my RNT short and also look to short SPY and possibly AMZN. I will let the rally cool a little and might not place the trades until the first part of next week depending on the strength. Many contend that there is a lot of money on the sidelines that is just waiting to pour into the market. I hope so.

So would I purchase any stocks in a rally. Yes, I am looking at Visa (V), Chicago Mercantile (CME), MMP, and GHL as potential plays. I will have a traders mentality with these stocks and will try to not hold anything overnight. I will take what the market gives and if I don't get the proper setup, I certainly will not force a trade in any of these names.

Has anyone noticed that action in the double short dollar UDN? It has been very strange. As the dollar makes strong moves upward, one would think that the UDN would get hammered. This thing has held in remarkably well. Tell you that people are willing to be patient with their short dollar play? That is exactly how I am interpreting this action. It also tells me that many of the dollar shorts are very strong in their beliefs in that trade. I don't think we are going to see the dollar fall anytime soon, but as long as this position is not moving too far against me, I am quite content to sit still and wait on my thesis to prove correct.

I think the employment numbers will be terrible tomorrow and it will be very interesting to see how the market digests those numbers. I still believe that gold is headed to $1000 in the near term and the numbers tomorrow could put it close. So how do I think the market will react? I honestly don't know. I think we see a rally if the numbers are anywhere close to expectations, but this market makes me more humble by the day.

Every time I hear some talking head on TV say "We are beginning to see the credit markets thaw" I think of what will happen when credit actually flows again and the money multiplier begins to rise. I can't see how one can argue only reflation with the trillion dollar government handout on the horizon. Unless of course we see more line items like the millions for free digital TV converter boxes. The people receiving them may well never need them as when inflation takes hold they may not be able to afford the electricity to plug their television in. Of course that could lead to more stimulus---and MORE INFLATION. We will have a couple of great shows coming soon!!

Dollar Strength

Surprised by the recent dollar strength? Many have been, but Jim Rogers told us several weeks ago that there would be a time to short the dollar but he didn't think we were there yet. The dollar will stay relatively strong because the Euro will collapse first. I am and have been short the dollar through the UDN. I am considering closing that position because I think the Euro will collapse and that will keep the dollar index higher for a period of time.

As for stocks today--we are in a very pivitol area. The major averages seem destined to break through the November lows. Wal Mart saw positive same store sales and is higher in the premarket. Cisco beat the street last night and was down in the after hours as there comments about the upcoming quarter were apparently dismal. I think we could see DOW 7000 in the next month. Dollar strength will hurt our international companies and that will provide a new panic in the numbers as I do not believe that has been the center of much focus. When you turn on the mainstream media and the conversations are dominated by the Bernie Madoff scandal and the new limit on executive compensation for firms receiving TARP funds---you know that things are getting much worse and much effort is being made to aviod the real issues.

I raised cash yesterday. For the deflationistas-- have you seen the price of a galloon of milk reduced lately? How about the average tab at your favorite restaurant? The drop in gas prices has been a bonus at the pump, but price declines have not worked their way through the system nearly like the price increases did last summer when oil prices were jumping. We are headed for an inflationary depression. I won't argue hyperinflation at this point.

We are hearing protectionist rhetoric on top of this so called stimulus package. Protectionism will cause price increases and will kill our exports. MORE PAIN.


Wednesday, February 4, 2009


All of the sudden the theme with some in the MM seems to be that we have factored in all possible bad news and we are destined to go higher. I maintain that if we do it will only be a suckers rally. Many were pointing to the drop in the treasuries with the thought that all of that money will move into equities. With Disney reporting such terrible numbers last night--I can't see how anyone could feel that we are to the end of this bear market.

I think that gold may decline over the short term under the same mentality that money will be flowing out of the safe havens and back into equities. I think that will be a great buying opportunity. I believe that gold will hit $1250 this year. If you look at the UDN which is the ETF that tracks the inverse relationship to the dollar---it was up sharply on heavy trade yesterday. Could that be a leading indicator that we are getting ready to see real weakness in the dollar? The mainstream media paraded out a number of experts last night that said the dollar will stay strong. I think we could see some weakness in the dollar shortly. Now I think the Euro is done---they are in much worse shape than are we and it looks destined to drop, particularly against the yen.

I will watch RNT if we get a rally with the idea to short more. I am also watching EMS as a potential short. I think the next few days are a time to exhibit extreme caution as we get a bear market rally. I believe that we are still in a downtrend and will not fight the trend by buying in this rally.

Crude looks to be putting in a bottom and I will look to get long soon.

Monday, February 2, 2009


As promised here is the full video (with no interruptions) of our interview with Gerald Celente

Sunday, February 1, 2009