Cleaning House

Well, I've decided to stop fighting the market. It seems that the Fed's quantitative easing has juiced it. I thought that maybe with the last of the potential bad news out of the way - the stress tests - the market might turn down. But that didn't happen, so it's time to get out of the way.

Lee Adler on Radio Free Wall Street was talking about data that showed that money from the Fed to the primary dealers correlated very well with stock market direction. So maybe the whole market is just controled by the dealers. That would explain why the Fed Treasury buying has freed up the dealers to bid up stocks. Basically, they're selling Treasuries and buying stocks.

DIG -21%
SKF -31%
EWY -46
EWY -73
COF -107
COF -57

And here is a great point about banks in America and Japan, and saving vs. borrowing. Perhaps with the recent lending numbers out of China, we have found where the new borrowers will come from. If this is the case, there will be lots of commodities to be bought. China will buy more and more, and the US will devalue the dollar to pay off their debt. Well, that's a long, long, term scenario. Who knows what it means for today's market.

Rosenberg says the banks are holding cash instead of bonds.

Well, I'd like to do a couple of things, namely buy Seadrill on the recovery in oil prices, and short Treasuries. I won't short Treasuries, because I was looking for a bounce today on the better than expected unemployment numbers.