Whoa!! Watch out Ben!:
Oooops! I hope everyone that planned on refinancing into a 4+% mortgage did so last week. Ahhhh...I had to chuckle watching this all play out today:
First we get an awful GDP# of -6.1% versus the consensus estimate of -4.7%. Futures then jumped after the traders dug into the report and saw that consumer spending had increased by over 2%.
Hmmm.....How can consumer spending be up after digging into the report?:
"Current-dollar personal income decreased $59.9 billion (2.0 percent) in the first quarter, compared with a decrease of $42.9 billion (1.4 percent) in the fourth.
Personal current taxes decreased $193.5 billion in the first quarter, in contrast to an increase of$19.7 billion in the fourth.
Disposable personal income increased $133.6 billion (5.1 percent) in the first quarter, in contrastto a decrease of $62.6 billion (2.3 percent) in the fourth. Real disposable personal income increased 6.2percent, compared with an increase of 2.7 percent."
A little question here: How does disposable income soar while at the same time personal incomes dropped versus the 4th quarter? Anyone smell something fishy? Yeah me too. I call bullshit on this report.
Could it be that disposable income increased as millions started to stop paying their mortgage? That's what some of the bears are thinking. You can put me in this camp as well.
Well, today certainly didn't disappoint when it came to the bond market. I warned yesterday that Ben better announce a treasury buying spree if he wants to continue to keep yields and mortgage rates low.
For a change Ben showed some discipline and just announced that the Fed will continue with their treasury purchases as needed. The bond traders then predictably shoved it right up Ben's ass by taking yields higher.
You better be ready to back up your words in the bond market. These are the best traders in the world and they will most certainly call your bluff if you fail to back up what you say. As you can see in the graph above, yields soared as traders ramped up the pressure on Ben and the Fed once they learned that no new treasury purchases were announced in the Fed's statement.
As I said yesterday, the Fed is increasingly running out of options. Bill Gross said today that he doesn't believe the world has the finances to buy the $2.1 trillion in treasuries that will be brought to market this year. IMO, we have a better chance of seeing god before we sell all of this crap sold to the rest of the world!
The only way I can see it happening is if the DOW crashes to 4000 or so. This would force trillions of spooked investor dollars into treasuries. Consider this to be a warning. This type of collapse can be easily orchestrated by the Fed: All they need to do is pull their liquidity and this market is toast.
Let me explain it another way: The financial system and most its players today are all a bunch of bailout addicts. The only drug dealer with the bailouts is the government. If the government pulls their bailouts from the addict, the economic system will be exposed for what it is: A BLOATED BANKRUPT INSOLVENT DISASTER.
Investing Will Never be the Same
I'll end with this point today. The stock market moving forward may never be the investment tool it has been in the past. Its been gamed, defrauded, and stripped naked and put in a closet.
I have often discussed a lot of trading ideas on here in the past. You will see less and less of this moving forward because I can no longer make sense of such a system that has become so corrupted and filled with fraud.
The desperation and panic that's filled the market in the past year has killed the Bulls(Sept-Nov.) and the Bears(March-today).
The only advice I can give at this point is to hoard cash and other assets of value. Going long this market is total suicide. There have been times that I have seen nice long plays out there.
However, I can't advise anyone to go long anything while the market is still filled with the criminals that almost and eventually will destroy our financial system. The bottom on this could fall out at any moment folks and going long at this point is extremely dangerous because there are no fundementals to support the market. Please keep your trades small on both the long and short side. Keep your hard earned 401k money in cash.
Could the market move up to 10,000 on this insanity? Yes, but I could just as easily see it plummeting to 4000 if reality is allowed to kick in.
The larger this move gets, the more fearful I become that average investors will all pile in here thinking everything is safe once again. Folks, this market is about as safe as walking into a Mexican hospital without a face mask thats filled with swine flu patients.
The only thing that's propping up this market at this point is hope, fraudulent spin, and the governments balance sheet.
Don't allow yourself to get sucked in by all the hype around this bounce.
Before you do anything around stocks: Turn off bubblevision, look around where you live, and ask yourself: Do things look any better?