You think this makes sense do you? US markets are ramping to levels not seen since the last, great bull market. The debt of countries like Italy (where ex-president and child rapist Berlusconi is threatening to splinter the votes to ungovernable ends) and Spain (where a quarter of the youth are disaffected, unable to start their lives and about one tenth of the land mass is preparing for secession) are trading for yields that are really, reasonable. Oil is spiking towards the $100 mark – meanwhile Europe remains marred in recession and Germany just joined them. Oil stockpiles are increasing.

Precious metals are collapsing in price and the Fed is printing $80 billion a month.

In short, my dear reader, you are out of your minds.

But that is all right. You see, I foresaw your absurdity – your complete mental breakdown – months ago. I prepared for this. I realized, “this makes no sense”, and because it made no sense, I knew you would act this way. How else would the crazy behave in a crazy world?

So I did the opposite of what makes sense. And I did it first, before you.

Now, let’s chat about the euro. The $EURUSD is completely deranged. If it were a person, it would be a homeless man who found a tattered tuxedo, and is presently running around, hiding in steam vents in the middle of the street in Detroit. But, by some divine joke, this homeless man has been mistaken for a titan of industry, and is currently invited to all the high social class dinners.

“Aaaaahahghgh”, he gurgles in reply to requests for his opinion on gun control.

“EEEEAAAA”, he says when asked for advice on pre-tax 401K versus Roth.

And then he proceeds to eat his napkin with an olive fork.

Now let’s chat about oil. Oil is going way lower. The US economic numbers and forecasts are, again, way off, again. This is really not very funny anymore. How ten thousand economists can blow this year after year, never bothering to even pretend to learn from their mistakes the year prior…they should all be fired and stripped of their degrees. Pathetic…

Plus, Europe remains in a spiral. Germany, the heart of the EU, has finally entered recession this year. Question: knowing German culture, do you think that will make them more or less willing to work with their fellow member states?

Wait, don’t answer that. I’ll answer it for you. “It will make them less likely to work with their peers.”

Very good me, have a reward.

Why thank you.

German’s are going to increasingly view the rest of Europe as a useless bundle. If German wellbeing takes a hit, they’re culturally predisposed to blaming Italy or Spain or France for dragging them down with their wild schemes and self-centered demands. If Germany was reluctant to sit by and watch Draghi open the ECB doors to distressed banks before, wait until their worst prejudices are confirmed. Free money was supposed to help Europe, remember? Germany goes into recession and they’ll make sure the Bundesbank does everything within its power to hamper the rest of the EU at every turn.

Now let’s chat about housing. Housing prices are going higher, but that’s not going to help you sell that third, four bedroom house you’ve been desperately clinging to, praying for a buyer. Your retirement plans are shot, pal. Prices are going higher, but sales volumes are staying depressed. The housing recovery, like most luxuries, is reserved for the rich.

Now let’s chat about bonds. Safe haven bonds have got one major push left in them. I don’t expect the US 10 year to clear 2%. Meanwhile, bonds of Italy, Spain, Greece, etc are WAY too high. They are going to be taken out back to the woodshed before summer.

After that, I’m going to reinvestigate building a short position in American treasuries. We’re one major push in commodity prices from the Fed being strung up without any options for recourse. Because they’ve decided to load up on assets yielding 2%, they really don’t have much in the way of choices for controlling the money supply, unless they want to jack up the discount rate and watch the banks crash screaming back into bankruptcy. The economy is going to become increasingly wild, like a Stallion that got away from the Spanish.

For the moment, bet on the Fed and bet on higher prices. But always remember, in the back of your mind, that trouble cannot be vanished with the wave of a wand. Problems will always materialize in some way, and if not addressed, the consequences of those deviations can build to tremendous proportions.

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We’re really off to the races now. There is absolutely nothing that will bring down this market.

You have to understand the driving power behind this rally. It isn’t hope or nonsense, or in some way, even free money (although the Fed’s $80 billion a month sure doesn’t hurt).

No this rally is actually also being data driven.

It only takes about 4 seconds reading the talking heads on blogs and Twitter to realize that these numbskulls actually think the pickup in activity this Christmas is “gaining steam”. How this is possible is very difficult to fathom, but I think it can be well surmised by saying that these guys just aren’t playing with as much RAM as the rest of us.

Having trouble accessing those memories all the way from last year, guys?

The uptick in data is spurred primarily by the holidays, and is standard noise/seasonal fluctuation. Throw in some promising pricing in housing and a nice recovery in the US auto market in the Midwest, and these guys are now betting big that this upswing will be “the big one.”

It’s unlikely. While there are some pretty decent improvements materializing, the main weight around the global economy’s neck has not been removed – or even addressed, for that matter. We seem to be ignoring the debt and the looming, crushing money flows under the current rules and contracts, which are still very much the largest threat.

Europe is still an enormous problem. Asia is still and enormous problem. Emerging markets are still an enormous problem. And America is about to be an enormous problem.

These aren’t just going to go away. They need to be fixed. The Central Banks seems to be the only ones trying to address them; although their prescription is as much of an ailment…

By Spring, the current rounds of hope making the airwaves will go the way of Green Shoots, Decoupling, Housing Recoveries 1 & 2, and EFSF/ESM Europe Is Fixed.

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I hope you all had a Merry Christmas, or at least enjoyed the free break for those who do not celebrate.

The unprecedented actions of the Federal Reserve have changed my mind. My fears of the demise of the world economy need to be adjusted for these new facts on the ground. This is not childish interest rate games they are playing. The rules are being changed, and anyone caught looking at their old playbook risks being swept aside.

The initial reaction of the Fed to the Great Recession was interest rate adjustments around the time of Lehman. These had no real impact on the crisis.

The second reaction was to directly purchase the distressed assets. This act led to the bottom of 2009, in my opinion. It was this direct devaluation of the currency that led to the rapid price reflation.

Then, QE2 was announced. However, the purchases were sterilized with sales of offsetting treasuries. In this regard, QE2 was vastly different from QE1.

Which brings us to QE3 and the hastily announced (and almost ignored, it feels like) QE4. These two actions are monumental in scale. And they look almost exactly like QE1. We are about to have immense, unsterilized purchases of treasuries and, likely, other assets by the Fed.

Ben does not seem to be playing around here. I understand the dangers of the US budget all too well. I also remain convinced Europe will continue to sink all economies into a global recession.

But I am floored by the numbers being tossed around. And now Japan is jumping onboard also?

My belief for the next year is this; currency destruction is the name of the game, and it’s being kicked into high gear. It’s still football, but not like your grandparents used to play. The players are professionals, on steroids, and they’re going to start setting new records.

The damage of the economic realities that are being fought will shift where they materialize. Deflation threats and exploding bond markets will be replaced with money primer that will eventually run away from the officials who are unleashing it, leading to inflation. The bond markets will not be allowed to sell off; but nor can they be used to control the outstanding money supply anymore either.

It was always a cruel, false choice between these two outcomes, but knowing which one would ultimately happen was a matter of what choices those sitting at the head of the table decided to make.

There’s only one way to position yourself – full long, but NO MARGIN.

Precious metals are a must here. However, I view industrial commodities like oil to be a trap. My expectation is that economies will continue to contract even while the numbers involved grow. Real unemployment remains elevated, GDP and tax receipts increase, and people become furious at the $100 tomato.

Commodities like oil or copper will be subject to immense volatility, as they have been. Since I envision economic activity to continue slowing, demand for oil will weaken and stockpiles will grow substantially. This will create an environment of “reflation” where these commodities rise in price trying to pace the precious metals, only to hit the “flush out” moments where they crater 30% inside of a few weeks. Then repeat the process.

Taxes are about to rise on everyone. Consumption will likely slow.

I’m inclined to believe that the US consumer will fair better than expected. I’m also of the mind that, with recent price decreases, such as gasoline, the country can absorb a good swath of a broad price rally before it starts to stall out again.

Stay away from companies with soft balance sheets. Large cash positions are a must. It’s time to start picking out the long term survivors; the guys with 20% of their books in cash, waiting for a chance to seize market share.

Then sit back and hope business productivity is enough to offset the currency destruction and slowdown.

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I spent today curdled in a pool of sweat, as God struck me down for outstripping Abel in every possible way.

My throat had been bothering me a little on the return flight. Today, it struck in full force, like an assassin. I hurdled in the corner of my office shivering for warmth, beneath my desk.

But, lo, as I peaked out from under my harbor, I caught a sight most wonderful. All of my positions are up an enormous amount, with the sole exception being silver. I ended the day up 1%.

After hours, silver is running back up – 5000 oz bars are going for over $34 again. An ounce is going for $33.

I will say this once more. The age of Cameco lagging is coming to an end. As it blossoms, so too will my wealth. All time highs are just around the corner, friends.

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I upped purchases in my core positions of AEC, CLP, BAS and CCJ, bringing my cash levels down to 30%.

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Just a quick recap from a few months ago, here are some comments I made concerning one PSN.TO.

And here’s why I wasn’t going to touch Poseidon Concepts with any of my money:

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