Today’s second order rumor is of a “broad agreement” between Angela Merkel and Nicholas Sarkozy. Kindly ignore that they have had a broad agreement with one another since day one, and the fact that Angela Merkel does not speak on behalf of all (or maybe even most) Germans.

Then buy stocks and oil.

I’m going to call it right now. This is no different than back in July when everyone was so convinced that the debt ceiling was the end-all be-all. If we failed to raise that ceiling then by golly, we were going on a one way trip to hell. But if we raised it, then by the sweat from Odin’s brow, there would be no stopping us.

We would be unstoppable. Do you hear me? Un-stop-able…

We shit the bed immediately following the announcement that the ceiling had been raised.

Europeans bailing themselves out is a non-issue in U.S. markets. If they fail to do so, then they dry up something fierce and we take a hit as our largest combined group of trading partners slows to a crawl. But if they do bail themselves out, it’s not necessarily different from where we’re sitting.

The Europeans are not going to be able to save Italy, Portugal, Spain, and Greece (or any combination of the three…or two…hell, maybe not even one) without devaluing the euro. There’s not enough savings to pull it off.

So America watches as Europe goes into a recession, or the euro takes a massive hit and we become grotesquely uncompetitive.

Listen you, Japan keeping a weak currency in the ‘70’s was enough to almost single handedly destroy the U.S. automotive industry. The Chinese and similar foreign countries near totally destroyed American textile and electronics production. What do you think an entire continent weakening their currency will do to us?

There’s only one way to avoid the accompanying slowdown should the Europeans choose to bail versus bankruptcy; we can print to keep the race to the bottom going. In that case, the Europeans wouldn’t be able to gain free productivity for their treachery. When all countries are devaluing their currencies together, then the effect is more like a sort of global debt forgiveness…unless of course you’re the last guy getting paid, at which point it’s more like “getting fucked over.”

This “universal, non-compulsory haircut” is the only thing that will make me consider covering my hedges. In fact, I would do a 180 and run up silver stocks so fast, you’d think I were a hypocrite. But looking at the state of affairs at the Fed, I also don’t expect it to happen.

For the moment, the Federal Reserve significantly altering the value of the currency is off the table. There is too much resistance to the move internally to be feasible, and too many people anticipating such a move externally to be effective.

Devaluing the currency doesn’t help when the markets immediately translate that act into price inflation.

Thus, for the moment I’m looking for a continuing rally in the dollar, and weakening of commodities.

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Look, as much as I would love for the major news outlets to hammer crude into oblivion, I can’t let this slip past. The Associated Press is harolding the new dawn of Libyan oil to the market place and how it could help suppress prices another $10-25 a barrel.

Awesome, I welcome the news.

But if that news hasn’t been priced in over the months since the rebels took control of Tripoli, then I will be absolutely shocked. If you didn’t know that oil was going to resume export from the country, then you either didn’t know where or what Libya was, or were dead. If it’s the former case, then you’re excused for your ignorance.

Why do you think we had that much firepower raining down on Qaddafi’s loyalist forces? Because we care about the Libyan people?

Was it a coincidence that the strategic oil port of Brega was one of the very first locations to fall? Why not have gone straight to Tripoli?

Because we didn’t care if the freedom fighters ultimately salvaged the country or not. If they wanted our help in taking down the whole thing, then they needed to show strategic usefulness first. That meant clearing the path to restoring the flow of oil and helping to guarantee we didn’t see a repeat “Kuwait Move.”

So it was; the oil port fell, the rebels secured some of the fields, and we knew that if we protected them we’d at least get some benefit from it. Obama presses with drone attacks and other aid for the rebel forces. But if they had failed, we would still have secured what we wanted. Libya would have probably been split into two countries, with the central region left landlocked and without anything to trade with.

So excuse me if I think now maybe isn’t the time to be selling oil because of “Libya.” But hey, you’ve all been behaving so crazy lately, maybe this is the cow that burns down Chicago. And if you want any better reasons to sell oil, I’m sure I can provide you with a whole host of them.

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Sorry for the silence, but this will be my only piece today. If you really want to have some material to read, I suggest you go back to yesterday, and the day before that, and re-read what I wrote then. The entire premise of the bounce we experienced today is gibberish.

That move in oil was so large and so fast; I swear on my honor I almost liquidated my accounts to begin the peaceful life of a gardener.

I am not impractical. If this move continues and shows no signs of slowing, I will cut down my hedges and raise cash. But I’m not going to do anything of the sort while the market is being shaken like this on nothing but hearsay.

My time has been spent solely to my labor, for the past week or so. Oh how I missed working, this time last year. However, it does have the tradeoff of being especially busy during the Fall. It’s just the nature of the consultation business.

I’ve been putting in 10-12 hour days, easily, and work on other endeavors at night. So my time on the site has been limited to about one post a day.

But I see the light at the end of the tunnel. It won’t be long now before I have significantly more free time on my hands.

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Believe me when I tell you I hate coming out here parroting the same shit, day in and day out. I don’t enjoy calling bulls rude names and shouting about how you’re “all wrong.” It isn’t my character.

I long for the days when I can return to my more normal intonations; that which you may recall from my earlier writings in the Peanut Gallery. Then, I rarely shouted but rather conducted my business in a manner of the most self-controlled gentlemen…save for when I was lighting NOV on fire or reveling in the victory of the latest long.

But as much as I would enjoy chilling back down and restraining myself from openly mocking the market, what else can I do in such a time as this?

Come now, until two of the clock the market was higher on really nothing but a rumor and a side of carrots. Now, we cascade lower with the Nasdaq and crude down about two percent, because of a second announcement by Sarko the American.

How can I not get riled up? This is pure idiocy.

Ignore the news here; it’s not important. What is important is the actual economy.

Did the U.S. pumping trillions of dollars into the economy correct our problems here at home? Of course not; there’s no way any small group like that found in Washington could ever hope to properly wield such a weapon, no matter how big.

So is China or Europe going to alleviate their own crises by doing the exact same thing?

The recoveries – the true recoveries – will come when the people of our countries get our collective acts together. Right now, we aren’t doing that, so no recovery.

It really is that simple.

Check your expectations, then wait patiently a while longer. But for the love of your own flesh, stop betting it on these damn announcements.

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Quick, do some coke and buy stocks…

If I bought every rumor of a Euro bailout fund or saving grace maneuver that was popularized in the last year and a half, I would be down something like 50% over the same time period.

You guys are so fucking gullible, it would be laughable if it wasn’t so sad. Somebody made off like a bandit today, because some first years who haven’t cut their teeth yet were hand delivered a hard lesson about journalism and news feed.

As a rule of thumb, unless you can verify the sources through at least three major outlets, then it’s not true.

Hell, sometimes even after verifying it through three major outlets, it still isn’t true. Which is why it’s good to use bipolar outlets, like Fox and CNN, or Fox and MSNBC, or Fox and … because sources that hate each other tend to only agree on the facts.

I’ll see you “blood buyers” at the receiving end of a volley of arrows, presently in transit and set to arrive first thing tomorrow morning.

P.S. Did you like how, like clockwork, Bernanke followed my first post with a speech that detailed the threats of inflation, and not the imminent need for more monetary stimulus? That speech, in my eyes, said one thing: input costs are issue number one of the Fed’s list of “Things that need addressing.”

If you’re still running on the QE3 dream, buying PM’s and commodities, guess who doesn’t have your back right now?

Plenty of time for monetary stimulus after you’re dead and gone…

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You really have to be kidding me. After that slate of news this morning, you have the gall to bid up stocks and crude oil?

Angela Merkel came out and stated point blank “no fire hose.” Angela Merkel was the biggest cheerleader for “the fire hose.” Yet you bid up equities and commodities happily as an entire continent burns.

Do you want to know what this all means? It means holders of EU based debt are in serious trouble. It means the billions of dollars being held in Greek debt (not to mention Italy and Spain and the likes of them) are circumspect. It means a lot of money is about to go static.

The U.S. dollar should be ramping here, because Europeans are going to need dollars very soon. They will need dollars to escape their problems. They will need dollars to escape their union.

And it’s not like we’ve had a spate of incredible news coming out of the economy. Manufacturing information from the Empire State was abysmal for the ump-teenth month in a row. Information is displaying yet further drawdowns in our economic output. Reported layoffs are coming in again. Yet you think now is the time to send oil catapulting to $90 /barrel?

Hell, the principle of oil going for more than $80 a barrel right now is counterproductive all around. If you think the Fed is going to jump in and save the day here with you pushing the country’s life blood to near unaffordable levels, you have another thing coming. The Fed can’t even consider acting with crude oil this resilient to adversity.

They’ll check back in at $70 /barrel oil.

Just remember, Captain Crude, you have no support here. You have zero reasons to buy up oil, yet you continue to do so. Why? You really should consider giving up this trade.

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