It Has Come To Pass; Covered Half My UCO Short

You will recall if you please, some time ago when I said that if the Fed were to offer stimulus, it would most likely be a venture into Europe, providing liquidity to their banks so that they could further ease the Eurozone?

Today, that exact announcement has come out. The Fed, interested in further aiding the economy, will be providing stimulus. However, as I cautioned, their ability to impact our markets at home are greatly impaired by the current pricing valuations.

So they are attacking the problem at its heart.

In response, I have covered half of my UCO this morning, for $35.35, going into the open. I am not fucking around with this.

I will retain the other half of my UCO short, as the latest unemployment and manufacturing report was, succinctly, God awful.

We may see lower oil yet. However, a full scale crash is looking to be increasingly off the table. Brother Ben Bernanke came through, after all.

So was anything I read yesterday really true? That had to have been the most ridiculous series of misinformation and outright lies I’ve seen to date. First the China-BRIC-to-the-rescue 360 degree game of merry-go-round.

Then the Austrian announcement (has anyone decided if that was real or not?).

A half a million rumors about announcements from Merkel, Sarkozy, or both are springing up like weeds in my garden.

Euro banks were apparently being cut off of dollar funding two days ago. They were receiving emergency dollar funding yesterday.

Really, everyone spreading these rumors can get bent.

If you read my work, I apologize, for it seems that half of everything I wrote about yesterday may be complete bullshit. I’m usually pretty good about sifting through the nonsense and crap, but I dropped the ball it would seem.

Henceforth, I will be pursuing a policy of hyper-skepticism.

Let’s be honest with ourselves; nobody knows anything about potential talks to intervene/abandon components of the EU, least of all the EU themselves. Time to turn the newsfeed off.

Into the open, I am (as I have remained) long AEC, CLP, AWK, BG, CCJ, and silver, with a chunk of cash and a large short in UCO covering my ass.

Watch the dollar.

I am very busy this morning, so I shall cut this as short as possible.

First, to the announcement of a BRIC nation sponsored euro bailout. If it had turned out to be true, I would have busted out of my hedge so fast it would make your head spin. Such an event would stem the bleeding in the euro, shore up the balance sheets of European countries, and instill confidence in the credit markets. All of those developments would have naturally rushed back to the dollar, much like a leaking roof eventually floods your basement, and the dollar would soon thereafter have resumed its plunge.

Thankfully, for me, those rumors turned out to be fabricated, a.k.a. lies.

But I will still be on my toes in the event that the BRIC’s should ever rally to Europe’s aid.

Second, the ECB has been reduced to loaning its own U.S. dollar reserves directly to member countries, as they are incapable of finding any on their own. A month or two ago, I mentioned an offer I received from JP Morgan, soliciting a real interest rate of around 4% annual if I would agree to commit deposits with them for at least 90 days. Now the USD is spiking.

It is obvious that despite the Fed’s absurd level of printing, the real value of the dollar is still substantially higher than the interest rates in this country suggest and our national currency is still “scarce.”

Expect the dollar index to catapult above 80, and soon.

Third, Greece is now officially fucked, thanks to the large gonads of the people of Austria, who have put their collective foot down. I’d guess the new EFSF plan can still be approved without Austria, but if Austria is refusing to pony up cash, how many other similar countries will refuse alongside them. The more that do, the bigger the bill gets for Germany, which is already extremely reluctant to go through with this.

Greece will default before the end of next year, for sure. They may even default before Christmas.

Fourth, many thanks to those who have been keeping an eye on student loan default rates. I had let that issue fade to the back of my mind after my most brutal and demoralizing loss, but you have pointed out the blood in the water to me. It is the perfect time to strike, as global credit dries up and Sallie Mae’s options dwindle away. I will be pouring over old notes later, refreshing my mind and filling in the old cracks with new information.

Albert Lord shall get what is coming to him, shortly.

As short men in blazers are busy shouting in a pit somewhere, enthusiastically running the price of commodities higher, they are most unaware that the very fabric of the room has changed against them.

The texture of the floor has turned soft but it only serves to unbalance them for a moment, until they return fanatically to their cause. The computer screens have all vanished but these men continue to shout at them in their imaginations. And at the very center of the floor a great and bottomless chasm has appeared. The side walls of the pit have teeth, but they clamor inside anyway.

So these men are busy crying “higher oil and gas, the gulf was shut down!,” or “BUY Copper, it’s oversold!!” They shout for more expensive food, because of bad harvests.

Each of these statements is true. Sadly, each of them is also a point of minutia to a much bigger issue.

You see, these stupid bastards are standing inside of a fucking mouth. And the beast that owns said mouth is very, very hungry.

He waits patiently, unwearyingly so that as many people can be coaxed inside as possible. He dangles dollars like anglers above his maw, and idiot men and women clamor for them. They stand patiently on his tongue, stretching their arms upwards, thinking “If only I was a little taller, I could reach those dollars.”

The beast encourages this sort of behavior, elevating himself ever so slowly, so that he retains his guests and even more are desperate to entertain their wishes and thoughts while inside of his mouth.

Of course people aren’t stupid. Sooner or later, one of them will be like, “holy shit, I’m in a fucking mouth,” and start a rush for the exits.

That’s when the mouth will snap shut and swallow them all whole.

Well at least that gives me an explanation for why oil markets were trading up into this shit. OPEC’s announcement does much more though than to simply support crude prices.

It is a direct acknowledgement that global demand is significantly weaker than any and all forecasts before now. And although the allegedly reduced supply of crude is annoying to me, it also emboldens me greatly.

There were many things brought up in that report that I had known, but that I have not heard stated before now. The greatest, in my opinion, was not admission of the troubles coming out of Europe or the United States.

OPEC directly referred to weak demand from China. That is the elephant in the room.

Watch closely, dear followers of this 9th floor. The initial reaction to this announcement will fade to panic, as commodity traders feel the noose tighten. I will be given my next leg lower; if not today, then I can wait for tomorrow.

P.S.
I added to CCJ for $20.28. I figure I should state that in a post so it isn’t lost in the comments.

Oil markets are funny fucking things. They are populated by crazy people who have no concept of moderateness. Why just today, after watching last night as Europe quietly burned itself to the ground, oil markets are fighting to push back to $90 /bbl.

This is, naturally, a problem for me. When I slap on a hedge, I want it to work like a hedge as opposed to working like a psychotic inmate at your local asylum.

And of course, insult is being added as today my other “most favored short” to date, ERX, is down mightily, just as I don’t have any on my books.

I cannot accept that oil is fair priced at $87 a barrel; that makes no sense, when measured against the present state of affairs. If you are abetting this move by going long oil, I want you to know something. I take it personally.

I watched you get torn open when oil was above $100, betting it would be going to $200. I’ll see you dead now too. You need to get it through your skull that oil markets can, in fact, trade down.

Can and will…

As if my aggravation from UCO wasn’t enough, today some bullshit nuclear waste storage facility in France, the gayest of all countries, decided to blow up. In knee jerk formula, CCJ is selling off.

Guess what, folks? This doesn’t change a thing. Uranium utility is not going to be determined by cocksuckers who have a bug up their ass about nuclear power. It’s going to be decided by necessity, and necessity dictates that the world is in no position to abandon a constant, controllable source of power like nuclear right now.

You would have to supplement the lost current with a similar form of power, like coal or oil, which is going to be very expensive and virtually impossible to get past the legions of fanatic lobbyists.

But hey, if you lot are willing to sell CCJ shares for below $20, I’ll be more than happy to buy them, unrestrained, with both hands.