Ouch.

Some of my favorite names are getting pounded, and I love to see that because that means I'm not far from making money. PTR, KRY, UXG, GFI, SLW, SHLD are all getting hammered. Stay tuned.

The Fed's Pickle...

The fed is in a major pickle of their own doing in my opinion. That probably isn't a newsflash. But I do want to take issue with what a lot of the members of the street and financial media are saying regarding the fed and the newly beloved Bernanke. The street has been singing the fed and central bankers around the world's praises since last weeks record cash injection. Why? Because it's just what the street ordered. They make the calls here. All the fed did was push back the inevitable. They are stuck between a rock and a hard place. Everyone knows the housing market is a mess, regardless of what the NAR tells everyone ("it's a buyer's market"). The fed knows if the raise or leave rates where they are to counteract inflation, the financial companies will lead (as they always do) the country into recession regardless of the fundamentals of the stock market. Without new liquidity coming online in the form of lower rates or fed capital injections, earnings will suffer, stocks will decline. Millions will lose their houses because irresponsible bankers put them in homes they could never afford over the long term. The flip side of the coin is that the fed lowers rates, helps the housing market land (albeit not softly) and keep the economy pressing on. That would be accomplished at the cost of higher inflation (i.e. oil and the like). If the fed lowers I expect to see $80 oil and $750 gold in short order. Friday's action by the fed and the world's central bankers appeared to me as more of an act of desperation than an instrument of policy. In the premarket it looked as if another 'Black Monday' was coming with the Dow Futures down nearly 200 points in premarket action. So the Fed did all they could outside of an emergency rate cut.

A cut is coming its just a matter of when. I'm not sure I buy the street's 100% anticipation of a cut at the September meeting. All these theatrics and the crazies ( like Jimbo Cramer: you gotta see this video if you haven't already --> http://www.youtube.com/watch?v=SWksEJQEYVU ) on CNBC sound like a bunch of beggars asking the garbage men to come clean up the trash they made their beds in. Goldman and the other Financials deserve to take a bath for putting themselves in the position they did. They reaped the rewards, now it's time to pay the piper. And I have no sympathy for Jimbo's buddies on the street who are losing their jobs. They are responsible for putting hard working American's out on the street because they wanted to make a quick buck selling Joe Smith a $400k loan knowing he can only afford $250k. Enjoy the unemployment line.

The Fed seems to want to continue to drive liquidity into the markets however it can to stave off a recession. Oh where, oh where is the M3 when you need it...that's right they conveniently got rid of that. Well a look at http://www.shadowstats.com/cgi-bin/sgs/data shows the reconstructed M3 running at 13% annualized prior to the central bank injection last week.

So what does this mean to my trading?? Well I continue to favor commodities, oil and gold...especially at these recently depressed prices. Any rate cut will really spark a serious rally. I'm waiting for entry points in GFI and PTR which should come as soon as the Dollar resumes its long term down trend, which should come sometime in the next week or so.