Friday, June 4, 2010

20 Minutes to Go - Short Covering or Giving Up the Ghost?

It will be interesting to see how this day ends... we've seen a lot of short covering on big selloff days lately as people fear intervention by this, that, or the other entity. The problem right now is these interventions have become mind numbing in repetition and losing their effectiveness. Sure they still burn shorts for a day or two, but it is taking more and more drugs to have the same effect.

If there is any rally here it will be nothing more than people like me getting out of short exposure ahead of the G20 meeting where the brightest minds will tell us how layering more debt onto a debt problem, solves things. Or at least bails out banks which apparently is the only thing that matters anymore.

If we can give up the ghost, I'll be happy to punt 90% of my two put positions into the close. To the upside I'll also sell the what I have on any move over S&P 1070. Either way I'll be back into cash in a big way in the next half hour and ready for Monday's casino opening.

Look the end game is plain to see... your fiat currency will be turned into toilet paper. As Bill Gross said today, the US dollar is just the last to go because it's the least ugly duckling .. or as those crazy PIMCO guys say "the least dirty shirt" (what the heck?)
  • The U.S. is the least dirty shirt,” Gross said during a radio interview today on Bloomberg “The world is full of dirty shirts in terms of excessive debt, and the United States is one of those countries, but it still remains the reserve currency and still remains the flight to quality haven.”
Everyone's purchasing power will be attacked since we have decades of debt buildup that no one has a realistic chance of paying off. In the U.S. we have states that are looking to solve budget woes by... adding more debt. Or federal handout. Then the private pensions will ask for bailout. Then the public pensions. Oh then we have the little matter of Medicare. Which is why the US dollar surging is almost humorous. All in good time.

Other than HAL9000 buying natural gas there is one thing working today. And it's not by accident. Smart money knows there is only 1 solution. Devalue what you've worked all these years for.

EDIT 3:57 PM - I sold 90% of both my SPY 107 puts and remaining 2/3rds of SPY 108 puts. No one even bothered to cover shorts - how sad. Off to hug some gold bars while waiting word from the G20 summit on the next great solution.

EDIT 3:59 PM - Great news from the Fed. In a year and a half the unemployment rate "perhaps" might be below 9%. Somewhere in the world Joe Biden proclaimed that this is "great" news!
  • “It is my view we will make progress on unemployment. Perhaps by the end of 2011, we will be below 9 percent.” - Dennis Lockhart

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