Still Digging & why we are final phase of this S&P manipulation

Going through my morning Google Flip I found this article by Thomas Friedman: Still digging

I particular loves this quote:  More than ever, America today reminds me of a working couple where the husband has just lost his job, they have two kids in junior high school, a mortgage and they're maxed out on their credit cards. On top of it all, they recently agreed to take in their troubled cousin, Kabul, who just can't get his act together and keeps bouncing from relative to relative. Meanwhile, their Indian nanny, who traded room and board for baby-sitting, just got accepted to M.I.T. on a full scholarship and will be leaving them in a few months. What to do?'

Do read the whole thing.....

Otherwise this is key day as 10 year rates again makes new high in this cycle and meanwhile our semi-leading index from Citibank (measuring expected vs actual economic data) is coming down as hard as it did in Q1-2010 - It's at year low in our model so far, but market has little time for facts as the Kool-Aid stock market makes it final test into 1240/1250 on.... strong unemployment numbers from Australia (Indeed, indeed I don't get it either!).

Tomorrow is the day for the Chinese rate hike - market is hoping for more RRR hikes rather than actual discount rate higher. I have no opinion except this bull run is running into headwind from here:

1. Higher US yield - not only in 10 year govies, but mainly in 30yr and 10yr mortgage rates...
2. Chinese CPI / RRR hike incoming Friday or over the week-end
3. Tax deal still looks likely to go through - raising market growth forecast (although as per usual the actual effect will be much smaller - rule of thumb divide by 5 the growth hikes from Investment Banks)
4. Technical level extended beyond 1250.00
5. Manipulation of higher stock market values through POMO and long only market players running into XMAS/ Year-end
6. Banks needs to bring "order" in their risk and prop.trading volumes will go down - the very mean which is used in manipulation of market..

But wait for the confirmation - which I see if 1195/1200 is broken - meanwhile let the market run amok and enjoy the final phase -

I see Q1 S&P down to 1000.00 as austerity, California bankrupt, EU process stalling, and ever higher interest stops the market. Bottom line: The Fed and the banks needs a high stock market valuation into year-end as it is the ONLY 'success' of their failed QE1 and QE2, but come January 1st everyone will be dumping RISK left-right-and-centre.

Good luck