Alright, so the instant I switched over from “merely rapaciously expectant” to “full blown, mind numbingly jubilant”, the market turned on a dime and started punching participants in the face. That should have been clear before I did it. It always happens like that.

So on behalf of everyone whose kids can’t attend college now, I’d like to say, “I’m sorry.”

In times like this, it can always be difficult to answer that most important of questions. No not, “am I properly managing risk.” I’m talking about the even more important inquiry…”Whose fault is this?”

Now, there are several ways you could play this. Personally, I’ve decided to blame it on people using trailing stops. Dicks…littering their homes with half eaten burgers strewn around in McDonald’s bags all over the floor…all while smoking and ashing right on top of them…just begging to burn their house down…

There, you see how I did that? Make sure you ramble a little and trial off at intervals, to really get the “I’m-slightly-unhinged-talking-almost-to-myself” effect.

At any rate, the markets are getting lit up, and all is despair. If you’ve been living the Pisani lifestyle, I’m afraid you’ll be made to eat your hat by a short seller, who will watch you doing it while flinging small handfuls of sand in your eyes. It hurts, I understand. You have my sympathy.

Thankfully, I had the foresight to sell into the strength as opposed to throwing weight on the downdraft and cutting myself down by 5%+ all in one go.

My anticipation, for the moment, is that we will finish this selloff quickly and then surge higher.

I made a (now obviously) misguided purchase of AGQ a few days ago, but other than that I’ve been very good about holding that cash and keeping my hands off it. EUO, my hedge, is running, as this selloff seems to be driven as much by dollar strength as anything else.

The REITs are holding up decently well; AEC and CLP having nothing but cash and sterling operations.

BAS is not so fortunate.

If you owned BAS and didn’t know this quarter was going to be hard: please dispatch yourself in a grueling fashion. That was the most obvious loss in the history of loss-taking. Still BAS is way up from last year and I will consider adding on dips.

CCJ got hit yesterday as well, and RGR seems to be collapsing predominantly on profit taking. Both are buys; both will see much higher prices.

Finally, silver. Silver is the butt of jokes being told on Twitter; that place where everybody sees everything coming and makes 500% annually. Well, the jokes going to be on all of you. Silver is going to explode higher when you least expect it. I remember the circus at $15 /ounce. How it was going single digits. Then it lit you up.

I remember when it went from $50 to $25, and the same people were guffawing how it was going back to $15. Then it lit you up again.

Now it’s off to below $30 (meanwhile the Fed is dropping money like it’s worthless), and the same folks are howling that it’s all done for.

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At almost 1.36, purchasers of EURUSD have completely lost grip with reality. Between US monetary policy and Japanese central bank response, carry trades have been caught in a torrential storm. If you were on the wrong side of those moves, your screams were lost to the cheers of equity bulls. However, the move is overextended, largely built on your back.

The problem is that there really is no economy, globally, that can afford to be the leaning post for the rest of the world. The assumption of global macro economics was always that the likelihood of all economies being in the same desperate condition at the same time was negligible. Unfortunately, as the economies became co-dependent, the assumptions of i.i.d. that made those statistical declarations possible withered away.

None of the economists noticed.

So now, here we are, and monetary policy can only be used to grab a quick upper hand. Ultimately, the brunt of utilizing the printing press ends right back on your country’s inhabitants. There’s no “superiorly positioned” exporter that can afford to give up a few points of growth.

So, as you watch the EURUSD climb, remember that each step of the move is unhinging the stability of the largest social wellfare state on the planet. With Germany, the keystone of Europe, flirting with recession, and Spanish and Italian debt barely under control (largely thanks to a renewed Japanese/US carry trade), the wellbeing of EU states is imperative.

But as I said, all countries have become interdependent. The same monetary response that has lowered Spanish/Italian bonds is also making EU exports uncompetitive. Any previously witnessed ECB policy response to this problem simultaneously makes debt yields increase. The only way to avoid the complimentary variance here is for the ECB to purchase EU debt directly.

Throughout the entire debate, this activity has been staunchly opposed by Germany, Finland and Austria. Will those countries cave? Or will they finally succumb to their ethnic roots, and become completely disaffected with EU authority?

Regardless, the euro disaster has not finished rolling yet.

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I opened a position in EUO for $18.25. This is a starter position, which I will add to every few weeks/months.

Remember, every time thus far that European authorities have put claim on “the end of the crisis being just in sight”, it has come back to haunt them.

They are playing a confidence game. The realities of the situation are different. Just below the surface, trouble is brewing.

Remember that.

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Sticking with the larger theme over the past two weeks, my portfolio is melting higher into the close. AEC, CLP, CCJ, BAS, and RGR are all rushing up, either for profits or, in the case of Ruger, to close the day flat. Which, given Ruger’s last month, is really not a problem at all.

Physical silver has largely recovered from the Fed scare. The euro has also rebounded after Junker tried to talk it down.

My expectation is for higher prices. We are running, and only confirmation that the recovery is not happening will stop us. If you are betting against the indices, or are out of the market, I have bad news for you – that is months away.

You are stuck exactly where I was last year; having the right answers, but getting whipped anyway. It will come through for you in the end. But unlike 2011 and early 2012, this time I will be mocking you, sipping straight whiskey, and the pain will only end after I’ve locked in profits and position myself against the market.

So I am afraid you will be on the receiving end of jokes until at least March…

Expect treasuries to sell off as short sellers start trying to edge into that trade. The rising yield will only add to confirmation bias, bouying the stock markets higher. Both trades will fail in the Spring with bad prints going into summer.

The treasury bears will be killed at least this one last time. The markets will sell off again. I personally will be interested in building a short euro and short oil position sometime in the next two months.

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I have not banged on this pot in a while, yet its presence should have been taken as a foregone conclusion.

Still, for a moment, I’ll hang it on a shelf.

Earlier this year, I didn’t believe we’d go over the fiscal cliff, mostly because I thought “that would be stupid”.

And stupid it will be.

At the end of the day, I blame the Freshmen Tea Party Republicans for this, because they willingly surrendered a voting majority, tied their hands behind their backs, and jumped into the water – Javert style. What the hell is this, the finale of Les Miserables (that looks incredible, by the way)?

Now the ramifications of this will be dollar weakness. Also, we’re already getting calls for more Fed easing? I think that’s premature, just like the calls for QE3 were initially way premature.

But no matter what, I’m seeing a few months of intense dollar pressure, which will likely translate into EURUSD support near this 1.3 mark.

But make no mistake – over the next several years, the EURUSD will enter sudden periods of cascading, which together will lead the dollar and euro to parity. The resumption of this inevitability will probably recommence this spring.

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Good evening. You find me tonight enjoying a small dinner of mostaccioli with a side of bread for taking up a delicious red sauce prepared with a mild citrus flavor and a nice red wine pairing.

I spent the day in retreat, as the market was closed and I had very little to preoccupy myself with.

I did want to address the November 1 effect of all “speculative” naked credit default swap positions being banned in Europe. How, precisely, one can ban all speculative positions in a counterparty relationship is beyond me. Logic dictates that there always has to be at least one “speculative” position set to make money without a covered stake (we all know the European banks don’t have the money to cover their liabilities because that’s not how fractional reserve banking works).

I suppose I understand that what the EU really means is “no buying CDS coverage unless you’re one of our ‘preferred citizen’ lenders”. That’s fine.

It won’t work.

The EU is only delaying the inevitable. Besides, the CDS market had largely collapsed before now anyway; not from the potential restriction, but from fear that any bond bet could be destroyed in seconds by ECB intervention or EU government bail outs. Or from a Greece like event where the core government ends up strong arming the CDS committee from declaring a technical default while still subjecting unwilling bondholders to a haircut.

For the moment, distressed debt of EU nations is subdued. That’s a large part of the reason I am long.

In a few months though, I could see myself getting very bearish on Europe and global growth again.

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