What happens when even Zero-hedge turns bullish? Small macro comment:

Happy Sunday,

I find and found this Fridays action extremely telling for this zero-rate, turbo Bu..S..., euphoria environment we trade in. The interview by CNBC w. David Tepper (http://www.cnbc.com/id/39341388)  catapulted the market higher: "....whatever happens is good for the stock market" - an interesting comment - not with any foundation in reality, but it reflects the admiration we are all prone to: Who dares fade one of the most famous billionaire investors - who went all in long in 2009 and so far is up 30%-ish.

That is the point - the media loves winners - and love them even more if their message fits the "bill". CNBC is now Obama's best hope for reelection. This Friday they rolled out Jack Welch (what a joke he is - GE is the biggest financial pyramid scheme in the world!) and Warren - aka- I am merely a simple guy from Oklahoma - Buffet....... An all star line up for people believing in hope and empy rhetoric. Market was looking for Gospel and got it plenty-

Then this Sunday morning I find Zero Hedge giving up to - in a, as always, well argued piece: http://tinyurl.com/33429a2 . The ultimate reversal indicator?
:
Now you probably feel I'm jealous of their success - who would not be? - but that's not the point: The world is not this simple: The Warren Buffet buy-and-hold theory will NOT work, its not working really now, forever, its precondition is exactly the condition we have seen since 1987: Lower and lower inflation and central banks willing to go all in........we are at ZERO percent effectively - will we go to minus 5 pc for Warren to continue to make money?

Then there is the David Tepper story - refreshing as it was, it was merely his opinion - he was clearly high on his own his own success(nothing wrong with that!) - and for my own experience in the very little success I have had, the worst time to make bold predictions is in a time of peak success.

He could be proven right in the direction of the market, but if so.. it will not be due to his arguments like: QE will make everything go up... but rather the fact by some miracle, that Obama/Geithner/Bernanke get some help from the REAL economy (which look very unlikely as of now)

There are really two worlds:

The one Tepper/Welch/CNBC/Buffet lives in: Zero rates, massive lobbyism from Wall Street securing NOTHING CHANGE in Wall Street-land, and free ride with Ben Bernankes Fed Helicopter (with a crash free design)

Then there is the REAL WORLD: One where housing sales continues to disappoint: http://tinyurl.com/25s6y9e. Unemployment continues to rise and consumption continues to decline.

Maybe my economics studies where obsolete but one thing I took note of was: Ultimately you need to remember three things: Housing and consumption leads the business cycle and productivity gains are the only "true" creater of growth.

I do not see anything Tepper/Buffet/Welch/CNBC said changing the gravity or constitution of these  economic facts: Low growth, low employment, low sentiment, but do not let that stop you from buying into this dream and hope scenario, if Zero Hedge has given up so has many others.......


STRATEGY:

Core views:

US Dollar: Bottom around here. Reached 50% retracement of whole move Friday - looking for serious correction into year-end.US dollar index

Fixed Income: Some more upside in prices (lower yields) - test of August low in yields likely and then its time to take profit and going into cash.Fixed Income shown via IEF ETF

Equities: Still some room before we hit "top of range" - several of my cycle indicators looking for correction - and soon..... ------ SPX chart w. cyclical indicators

Commodities: Gold took out 1.300,00 but.... volatility coming of and momentum falling..... still see more upside as it makes sense.....but...freight still coming off (China closing for growth), and some signs market is getting ready for lower growth.....Commodity overview

Performance: Been tough September (reverse of Tepper :-)) but it takes more than a bullish fund manager and CNBC to change my view - after all: I do believe in facts more than fiction.

Nice sunday,

Tempatations....Temptations.....the beauty of FIAT money (Macro May 13th 2010)

It's very tempting to join the fans of FIAT-money creation and go long the stock markets, but fortunately I have a few rules which keeps me from doing it:

• The extremely simple moving average model (as shown yesterday) called our Beta-model, as it is designed to tell us when to be long (or short) on strong trends.
• Analysis of money-flow into big assets classes: Gold, Bonds and Stocks. Todays three charts looks at this and find that somewhat surprising big inflow into bonds- and gold, while the move higher in stocks since April has been without "real money" buying.
• The risk indicators: USDJPY & EURCHF (as shown in Tweets yesterday EURCHF chart
• General news picture and macro assesment as per our Weekly Investment Outlook.

This week has been interesting in the sense that despite everyone 'intellectually' agreeing this plan failed to do anything about structure- and competitiveness in Southern Europe, they love the fact they now got free state guaranteed money for longer - Yesterday was a turning point in the research I receive from major banks of the G-20 - EVERYONE and I mean everyone embracing the FIAT money creation and to no big surprise either. Their livelihood is now 100% dictated by the whimps of central bankers and politicians. Long live the easy money, long live the FIAT regimes - their only issue being:

• EURCHF at all-time low - even lower than in 2009 on the low point in S&P
• GOLD at all-time high.... and it is very important to remember Gold is the only currency you can't manipulate and hence the real money of the world is flowing that way. Gold,EURCHF (plus USDPY) are the true STATE-OF-THE-WORLD indicators - as shown in the chart attached S&P goes up without ANY real buying- it is back to the algo-trading manipulation of the FIAT-banks buying programs.

Botttom line:

This could go on for another 24 hours or 24 days, but the gravity of the above observations is not to be neglected at least in my experience.

After having been short up to Friday- square over week-end I am now more or less back to same Gamma-short position in Equity and Gold, the only thing missing is a true conviction FX deal, but JPY strength is tempting for old macro guy like me.

Winston