The Return of the Dead Dollar

Shout out to the neocons who spit on dollars. Apparently, the dollar is going down the sewer drain, again. If so, I do not view this as an opportunity to go long commodities, just gold. In my opinion, gold can sprint higher on dollar death, while oil and corn will suck wind, thanks to demand destruction.

More on this later.

Why do you little bitches put cream or sugar in your coffee? What the fuck is wrong with you? Aside from being bitched out, weakened from taking in all the modern day media, when it comes to coffee make a stand, for the love of animal instincts, and drink it black, no milk, no sugar.

Much to my chagrin, standing in line at my local Starbucks, I felt like punching out of the Adam’s apple of the guy in front of me, who ordered a “Grande Latte Machiato” or some shit, with a certain homo’s out tone to his voice. My order, as always, “a large cup of black coffee.” Should that fucker put sugar in my cup, I’d jump over the counter and beat him senseless with a coffee pot.

Just saying.

As for the markets:

I am not making or losing money in this tape, which is annoying. However, if I was not hedged to the upside, I would have gotten my fucking brains splattered all over Wall Street, long FXP, EEV and FAZ. Sometime soon, I am telling you now, the market will turn upside down on its head and “clown dive” to new lows.

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This is truly fascinating. As evidenced by the leadership in foreign markets, investors/stupid hedge fund managers are pricing in a resurgence of the U.S. consumer and the global infrastructure boom, via bidding up basic resources and domestic retail equities.

It’s a bold call, considering we are in the early stages of the down cycle. Even when U.S. markets are down, Asian equities are higher, due to the assumption that a U.S. consumer driven recovery is on the way.

There is no other way to dice it.

In case you were wondering, the following stocks are major beneficiaries of the return of global growth:

XOM, CVX, APA, OXY, CEO, MOS, POT, CLF, RIO, BHP, SLB, BHI, NOV, ASTE, LNN, BUCY, CAT, TEX, EME, SGR, PCR, FLR, FWLT, INT, ACM, INSU, GVA and finally DRYS, GNK, TBSI and EXM.

Now, I am not giving you a portfolio recommendation for late 2006, mind you. Whether the market is right or wrong, the above stocks are where its at.

As you can see, this is a very powerful move. There is a concerted effort to bid these names up, for whatever reason, and it can last for quite awhile. Based upon past numbers, all of the basic resource names are dirt cheap. However, unfortunately, forward looking numbers do not leave much to be desired.

Bottom line: I will take profits on longs, when I can, and use cash to make long side trades. And, as much as I want to short everything in sight, I will respect the current market forces and refrain from making any big downside bets.

Use patience to kill the momentum.

UPDATE: I bought 10,000 CBL @ $5.76.

May the games begin!

UPDATE: I sold out of my KBR, north of $15.10. my plan is to take profits on longs, while leaving shorts in place. This strategy will lead to 100% short, by the beginning of the new year.

After such a successful year of raising capital, the CEO’s of our banks deserve some TARP money, deposited into their checking accounts. Granted, most of them are already worth 100’s of millions, they still need more.

I’m so glad, we as a nation, understand the emotional duress these “Titans of Industry” have undergone this year. For the love of cheese and grapes, the credit crisis was NOT their fault, but some egregious poor folk who reneged on their fucking home loans.

All of a sudden, everyone is picking on poor old John Thain, for taking a meager $10 million dollar bonus. As the great Dennis Kneale just said on CNBC, “MER makes like $10 mill every 20 minutes.”

Why not give Mr. Thain 2-3 hours worth of MER revenue? After all, getting that BAC for MER deal signed and delivered must have taken at least 2-3 hours of his time, no?

In the spirit of Christmas, let’s forgive the banks for destroying American capitalism and let’s give them a fucking bonus, for the love of Christ, taken directly out of the TARP funds.

Quit being so stingy.

Amidst the whistling winter winds, quislings will be shot dead for stealing bread from the local bakery. Local schools will be converted into prisons and church’s into homeless shelters.

High above, rogue military bombers will drop napalm ordnance on upscale shopping malls and low end street fairs.

Local banks will be used as recruiting stations to lure unsuspecting teenagers into American kamikaze missions. And, at the local grocery store, mustard gas will replace the old tangy condiment, much to the delight of middle aged military historians.

Back on Wall Street, the Dry Bulk Shipping sector will be on fire, due to elaborate strength in Asian economies. Oil and gas stocks will soar, due to the fact that people will be using armed vehicles and tanks as their primary source of transportation. Retail and tech stocks will soar, thanks to government stimulus packages that includes “buy one rpg, get a second one for free.”

Short sellers will have their balls baked, literally, by roaming squads of “truth seekers.” Western civilization, as we know it, will be a bit different, but business will continue, thanks to American innovation.

The problem with buying commodity stocks is that the fundamentals are going to be horrendous, going forward. They are the biggest beneficiaries of “bounce trading,” due to people being emotionally attached to them; but like dot coms in 2000, they are dead.

If the market is to begin a new bull market, it must do so with new leadership.

Construction firms are ripping again, much to my delight, long KBR. My watch list includes: PCR, SGR, FLR, FWLT, ABB and MDR.

Today’s tape is the exact reason why I am not willing to commit 100% to being a bear. Although I know stocks are expensive and will trade lower, that does not mean people are going to forget about Santa Claus and give up all hope. Instead, investors are taking the optimistic viewpoint, betting that the economy picks up within 6 months. After all, how can it get any worse?

Well, the answer to that question, and more, is easy. Wait until states and municipalities run out of money, and start to grovel for Federal dollars.

Hey, at least treasuries are down today, which means people are not tossing money into the Federal barn fire.

As crazy as it sounds, long ERX, TNA, FAZ, SRS and JPM is working today, which happens to be a portion of my holdings. Essentially, the banks are not participating in today’s melt up, which means we will trade lower sometime later today—unless of course commodity stocks can hold onto these big intraday gains.

As for FXP:

That etf is so criminal, the makers of it should be tossed into an alligator infested swamp.

Top picks: KBR, FAZ, SRS TNA

UPDATE: I sold out of my entire JPM position, above $34. And, I bought some more SRS, sub $84.

We are about to enter a pretty odd time of year for the indices, where junior traders and trade at home Dads run rampant, moving stocks on thin volume. I do not expect the market to make any bold statements, for the remainder of 2008.

There will be many false breakouts, accompanied by incessant rumors of insolvency. But, nothing will be resolved until early 2009.

In my estimation, the best way to protect assets and make some money in a thin December tape is via intra-day trades and/or long/short strategies. As bad as today looked, tomorrow can look glorious, with robust gains in banks, oil and tech. However, don’t expect much follow through.

We’re in a fucking meat grinder tape. This is the sort of market that will destroy year to date gains, inside a short week. My approach is simple: keep the short positions static and trade around them with longs. In other words, I will build up positions in SRS, SKF, FAZ, REW and maybe even a little FXP, down in the $30’s (why the fuck not?), while making advantageous trades in individual stocks/ etf’s, like KBR, JPM, TNA or FAS.

You get the point.

Like last year, I expect the “homo hammer of certain death” to reign down equities, as if Dennis Kneale’s face represented the market, or some shit, and some binged out, over-caffeinated maniac was just hammering it— until its ugly mug turned to dust.

NOTE: The PPT is pretty much neutral right now. Technically, the market is a sell. But, there are numerous sectors that are still in bull mode.

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