Now I see this clearly. My whole life is pointed in one direction. There never has been a choice for me.
-Travis Bickle
Taxi Driver

I’d like to make a couple things clear about my plans for this evening.

1) The rumors that are spreading that I am going to be in San Francisco this evening may or may not be true. If I am there, I’ll be talking the markets, of course. It could be likely that I would wear a Tinker Factory T shirt. If you do see me in that shirt, it is the exact shirt I wore in the 1996 reunion tour of my Glam Band, Volaterra.

If you’d like to interact, please make yourself known by wearing one of my familiar logos.

2) If I am in San Francisco, the first thing I’ll do is hitch a ride out to Alcatraz for a swim back. Sometimes I swim Alcatraz. Just because.

Peace

Jack LaLanne Swims from Alcatraz Island to Fisherman's Wharf, handcuffed, shackled and towing a 1,000-pound boat

1) US stocks ripped higher today. I can already hear televisions across the nation talking about how great this all is. They are probably saying things like “WOW, look at GE, it went up!….That must mean the economy is strong.”

Tune them out. Tune me in. Allow me to explain, the cycle and the spin.

First, allow me to define, what is known as “The Oldest Trick in the Book“.

The Oldest Trick in the Book is the infamous “Tapping on a person’s left shoulder when you’re standing on their right.” This trick was first chronicled in cuneiform by the Ancient Sumerians, who lived on the windswept steppes of Mesopotamia.

And today in the market, The oldest Trick continues as US stocks rallied immensely (that’s the tap on the left shoulder), while the dollar fell (that’s whats standing to your right). As stated back here in December, it is gold that will ultimately benefit from all this.

2) My collaborators at The Tinker Factory and I were cruising back from Geneva earlier today. While homeward bound on The Errol Flynn, we discussed how to position for the next move lower in the REITs. I am well positioned for now, though I am itching to add a few more puts. I’ll check in with the prices of various strikes tomorrow to see if I should add more.

3) I mentioned my jet, the Errol Flynn. You can spot Errol by looking at the tail. One of my images is usually on the tail. Sometimes, there is no image anywhere. In those instances, I may or may not be trying to pull off a covert mission.

Peace

In my time, which is now, I sometimes ponder

Of all the trades that I have done, Which one is the best?

Without a doubt, I know, that my best trade

Is my next trade

Peace

“I wanted you to see what real courage is, instead of getting the idea that courage is a man with a gun in his hand. It’s when you know you’re licked before you begin but you begin anyway and you see it through no matter what. You rarely win, but sometimes you do. Mrs. Dubose won, all ninety-eight pounds of her. According to her views, she died beholden to nothing and nobody.  She was the bravest person I ever knew.”

-Atticus Finch
To Kill a Mockingbird


On the wall in my home sits an original Vic

I bought it one day from him in the back of a church where they let him store his paintings

I envision his creativity in galleries and and all the notoriety and all that

But that’s not Vic

His gallery is just where it is

He’s an original

And my wall is better

because on it sits

An original Vic

Dedicated to Rodrigo.

Peace

Korce

So you thought the overnight fed funds rate was the only rate that the federal reserve has authority over?  Today, the fed announced what is the equivalent of printing dollars.  The Federal Reserve is going to buy US Treasurys.   They increase the amount of dollars in circulation, which dilutes the US dollar.  They then take the diluted dollar and buy US Treasurys.  The dollar sold off hard on this news.  Harder than it has since the year 2000.   US equities rallied.   I wrote recently that if the dollar did not find support, it would add fuel to the equity rally.  The drop in the dollar did just that, added fuel to the recent equity rally.

The Bond was up a massive four points.  There must have been blood all over the the bond pits today.  In my view, this move was scripted.  It shouldn’t have caught anyone off guard.  In fact, if you are reading these pages, you may be long Treasury calls.  The move in Treasurys is just getting started and the calls that I spoke of should expand in value to many many times their cost.  The price of the bond and it’s rate have an inverse relationship.  As the bond trades higher, rates go lower.  So the fed has used another tool in its arsenal to ease monetary policy EVEN MORE.

All of this easing will lead to a massive inflationary cycle, which is why Gold and Silver were so strong today.  The move in the metals could not have been scripted better as they sold off hard early in the day,  stopping many out, only to rise from the basement and zoom to the top floor and close near the highs.

My positions remain, bearish REITs, (RIMM) and Visa (V).  Bullish metals and Treasurys.

No matter how bullish the move becomes in US equities, I will remain bearish on the REITs.  They are special situations for a couple of reasons.  First, some of them are using fraudulent accounting.  Second, FFO is a fallacy.  I will write more on the REITs in a later post, but I am going to own puts in many of these names until they trade below $2.  Why?  Becuase they will trade below $2.  How do I know?  Becuase the math cannot lie.  The mathematics will be forced to face their implications.

Peace

The Ten Year

The Rate on the Ten Year

The US Dollar

Silver

S&P 500 has now pulled back to the Golden Ratio