I was beat down almost a percent today thanks to BAS and CCJ imploding. That is the trouble with those stocks; anyone wishing to own them should accept the huge down spikes implicitly.

However, today was without question a huge win for higher prices. The market smacked down every shot the shorts tried to take, then ran them back for layups.

Ignore the news flow for a minute…this market is now controlled solely by the Federal Reserve and free money. It has to go somewhere, because everyone with direct access to the trough knows it’s worthless. So it goes directly into equities and bonds.

For the moment, it isn’t going into commodities. I somewhat suspect foul play on the part of the Fed, and have no qualms about distributing conspiracy theories; Bernanke is twisting the arms of banks to prevent commodity prices from running higher. He can easily hold the discount window over their heads, and couple it with threats from the Treasury.

Ben watched the commodity market call his bluff for two years straight – I know because I was part of it, bidding up metals and oil first, then shorting the red lining. Both times the ramp in commodities (oil prices specifically) caused the economy to stall. What better way to make his policies stick than to blackball any bank that tries to play the commodity market with free money?

China is in the news today, which is stupid. The reports on the vacant malls and cities is at least four years old. If you just found out about this, you have nothing on the table. Sorry to be blunt – China is definitely in trouble, but when will the consequences finally catch up with them? Two years? Three?

I’m actually betting China holds it together much longer, like until their population uncontrollably contracts and retirees start forcing down the rolls on a working generation too small to handle it…a la these population control policies they so unwisely pursued.