Well, here we are my fellow Slope-a-Dopes, up in the ozone where the air is thin, and God's creatures are sparse. So yes, as you all should know by now having been subjected to my incessant posting of the ominous evil number SPX 1329, we have indeed reached the summit. Only one way to go from here, and it's not up. Most serious traders on SOH will undoubtedly dismiss my call as simply the asinine ramblings of another top calling fool. Maybe so, nevertheless I take this opportunity to make my case point by point. One last word of caution, never mistake a buffoon with an idiot savant, you may well end up with tooth picks in just the wrong place………….Let's get to it:
1. This past week's surprisingly strong earnings from WFC, IBM, CAT, AAPL, NFLX…etc, should have given the market every reason to run wild like the bulls of Pamplona. Yet, curiously we finish the week slightly down on the Dow, and with the S&P flat. It seems the overheated ragging bull was easily tamed by the market matadors & trading picadores. The NASDAQ did mangage a 25 point gain, but considering the blow out earnings on the apple of its eye, there really was not much to bite into at all. With the 2nd tier of earnings on deck, as we make our way down the bottom half of the line up, have we not already seen the best batters come to the plate?
2. The Bernanke certainly gave it his best shot to goose the market.
He repeatedly stuffed the distressed re-gorging bird with all the hot air he could muster, in a desperate attempt to produce another tasty helping of delectable fois gras for his favorite sophisticated ducky dinner guests.
Yet, much to his dismay, this week's market surely disappointed the top flight crowd, as it merely served up an unappetizing turd of chicken liver pate.
3. Speaking of gastronomical delights, we have a ginormous gyro loaded with souvlaki on the menu. Will the tzatzaki CDS splatter fest end up all over our face?
The New York Times food section reports; that numerous very upset, and most dissatisfied Davos dinner guests, dinning on tasteless Swiss fare, were engaged in the following heated conversations: “The euro zone is a slow-motion train wreck,” Mr. Roubini said with much fanfare. “I’ve never been as scared as now about the world,” said Donald Tsang, chief executive of Hong Kong. He said the effect on the world financial system is unpredictable. “We do not know how deep this hole would be when the whole thing implodes on us." Mr. Osborne expressed amazement that such a tiny country continued to pose a threat to global stability. “The danger is that the tail wags the dog throughout this crisis,” he said. And today, From the Examiner, le plat de resistance: "Greece plans an orderly exit out of the Eurozone according to two sources close to Mr. Papademos, Greek Prime Minister, who spoke on condition of anonymity earlier today. The sources confirmed that plans are ready to return to a legacy currency given the current circumstances and that such exit would be dealt with, quote “in as orderly a fashion as possible” unquote.
4. Adding boorishness to the spoiled soiree, apparently the sour krouts have not accepted any Greek dinner reservations, and have denied tables to 150,000 Hellenic guests. This according to the Financial Times Epicurean pages: "The German government wants Greece to cede sovereignty over tax and spending decisions to a Eurozone “budget commissioner” to secure a second €130bn bail-out, according to a copy of the proposal obtained by the Financial Times. Even before Germany circulated its proposal, the EU and International Monetary Fund had presented a 10-page list of “prior actions” Athens must implement before the new bail-out is agreed. According to a copy of the document, also obtained by the FT, Greece must cut an additional 150,000 government jobs within three years." Although It seems the PSI represented buy the IIF, may be close to a deal on hair cuts, and an acceptable structure for exchangeable bonds, it still remains to be seen whether the EU dominated by Germany, will let Greece assume its sovereignty in handling its own budgetary allocations, and tax collection procedures necessary to make good on the new bond issuance. Opa! No Baklava for you!
5. Your insatiably hungry Idiot Savant, along with the following market technicians have called last week as the top: Walter Murphy (EW), Kevin Depew (TD), Tom Demark (TD),
Andrew Nyquist (EW and TD and others) and Eric Swarts (Market Anthropology). Carl Futia is calling for a 50 point drop from here. Of course only SOH's BDI nailed the exact top at 1329! Which as you can see by clicking on the chart to the left, he had called back on 12/02/11. Unlike the Maginot Line of old, the solid BDI-1329 fortifications will hold. I mean seriously, does any one really think the World Wide Debt War is over, and that we will now simply march to new all time highs? And, please spare me that nominal new heights crap, you can't print your way to prosperity. Inflation has always decelerated growth, and it's simple as that. $120 oil, $15 chickens, and $8 poptarts, ain't gonna cut it!
6. Speaking of Notorious BDI, you are all probably sick and tired of him pointing out that the Baltic Dry Index has sunk to 726. It now sits
only a few points above the ALL TIME lows of 666, an evil under water world number reached back in 12/04/08. Keep in mind that the BDI was well over the 2,000 mark only a few months back. This chart has not yet been updated for January, and yes, the steep slope down has only accelerated in the past few weeks. Please don't give me that retarded argument about many new ships being commissioned, they certainly could not have all been launched in the past 45 days! Is it not more likely that the global economy has stalled, and will now roll over due to the deepening recession descending upon Europe? The unemployment in the old continent is staggering, and the BRICs, that dependable engine of growth, is clearly losing steam as it chugs up an ever increasing incline.
7. The EURO coin, that magnificent bastard hero, is valiantly attempting to show us its hard earned shiny metallic brass stripes once again. Heads you lose, tails you lose more, 1.3500 never again! The ECB is printing like mad, rate cuts abound, and the Iberian peninsula will plunge into the sea. Until the Drachma, Lira & Peseta are issued again, the EURO will simply fall off the face of the earth. Our USD will keep pumping its chest, as apparently for now, our bloated bad ass US bonds are bigger and better than those pitiful, shaky, and pathetic european cousin's obligations…
p.s. Should we shoot the moon on the BB liquidity greased lightening express, I will board my mega yacht "The Joker 3.0", and head straight for French New Caledonia, where I will start my new life, away from all this madness. Its been fun, and I wish you guys all the best. Stay real……