As you all know, the market is rallying on a daily basis. Yes, there is occasional good news; but is it really good enough to justify the huge point gains, or is it purely hopium based?

Did you know just how good this centrally planned rally is? The S&P is up 4.5% already this year, which makes it the best early gains since 1987. Moreover, at this rate (and all the talking heads say the rally will never end) the monthly gain will be 9%, and the annual gain will be 108%. Riiiigghhht. Speaking of 1987; weren’t the gains that year extrapolated to infinity too? And what was it that happened again? Hmm, bug meeting windshield comes to mind – splat.

Until then we have to trade the current market, and it is still horrible. The market gapped open higher again, which immediately led to a nap session. The majority of the initial 75-min of the day traded roughly in a 2.50-point range.

It didn’t get much better as the day wore on. Oh sure, there was another slow leg higher, but when this short-lived rally ended…that was it for the day. For the next 4.5 HOURS the market traded within a sickeningly narrow (roughly) 3-point total range.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

I often use phrases like “ramp-and-camp,” “hopium,” “drop-and-stop,” “fraud,” etc on a daily basis. Moreover, I have written volumes on the individuals scams of the government (unemployment & inflation lies) and Fraud Street with each passing week. What I haven’t done, however, is put them all together to ask; what would happen if the BS stopped? You will read an excellent piece below that does just that but I’d like to remove one more turd from the punchbowl that wasn’t mentioned. How would the market react if Fraud Street had to report the SAME financials to the public as it did to the IRS? Since Fraud Street keeps two sets of accounting books, someone is being scammed.

By Charles Hugh Smith from Of Two Minds
You Can’t Fool Mother Nature for Long: Financial Markets
Constant State and Central Bank intervention and manipulation is not the foundation of a free, transparent market–it is perception management in service of Elite control and looting.

You can fool Mother Nature for awhile, but not over the long-term. That’s the theme of the week. Every day I will take a look at a segment of American life that is currently based on the supposition that we can dodge reality essentially forever.

Let’s ask just how real our financial markets really are. We can start our inquiry with this thought experiment: where would the stock, bond and commodity markets be if all Central State and Central Bank intervention and manipulation were prohibited?

Where would the stock market be if the Plunge Protection Team (PPT) didn’t manipulate the stock market via massive purchases of ES S&P 500 futures contracts? These massive purchases are always executed in sparsely traded pre-markets, maximizing the ramp-up effect, which then triggers momentum chasing buys from high-frequency trading machines.

Voila, ramp-and-camp Mondays, which studies have found account for the majority of the market’s gains last year.

Remove ramp-and-camp Mondays triggered by massive PPT futures purchases, and where would the unmanipulated market be?
What if unemployment statistics were unmanipulated, i.e. the number of people in the workforce didn’t magically decline by millions every year? What if the bogus “Birth-Death Model” was banned as mere fantasy job creation? Where would the unmanipulated market be then?

Where would bond market yields be if the Federal Reserve were unable to print money to buy hundreds of billions of dollars of mortgage and Treasury bonds?

We can also shed light on the difference between a real free market and a simulacrum (which is Latin for ‘likeness’ or ‘similarity’) of a “free market” by asking: does anyone seriously believe the stock market would be higher if all market intervention and manipulation by the Central State and Central Bank (and their proxies) ceased?

We can extend this by asking: what if public companies were banned from issuing “beat by a penny” pro forma earnings and other accounting tricks?

What if the “shadow banking system” was outlawed, and all assets and liabilities were transparent? Does anyone seriously believe the fragile financial system that depends on shadow banking for its dodges and profits would survive transparency and marked-to-market accounting?

Americans have no real experience of free, transparent financial markets or of rigorously transparent accounting by their Central State, the Federal Reserve, public corporations or the financial sector. They have been presented facsimiles of accurate statistics and accounting, and simulacra of transparent markets.

Average Americans are responding to this systemic destruction of truth and fact by exiting the stock market–and that is just the start. As I described in When Belief in the System Fades (March 12, 2008), the Elites benefiting from the Status Quo depend on the active participation and complicity of millions of citizens.

When those participants’ faith in the Status Quo’s fairness and transparency declines below a critical threshold, then they withdraw or limit their participation, and the system enters a self-reinforcing death spiral.

To go back to the key question: does anyone seriously believe the stock market would be this high if the Central State and Bank and their proxies weren’t constantly intervening in the market and manipulating data?

Intervening in supposedly “free markets” for the purposes of perception management and political spin (“everything’s great because the market is up!”) is ultimately an attempt to fool Mother Nature. The Powers That Be have succeeded in manipulating markets since 2007, but reality (Mother Nature) eventually shreds the phony facade of perception management.
As the European attempts to fool Mother Nature (i.e. unmanipulated markets that are free to discover price and price risk) disintegrate, does anyone seriously think the PPT can prop up the U.S. stock market with its usual pre-market manipulations?

When Mother Nature reasserts reality, the frauds, scams and facades will shred like tissue in a hurricane. Maybe that process of reverting to reality is finally about to begin.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Did ya hear the new news? The USSA is broke…again! Well, the USSA is always broke because it spends more than it receives in revenue, but the president just asked for the debt ceiling to be raised – AGAIN.

In 2006, then Senator Obama said this of raising the debt ceiling…“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

Correct Senator…pardon, president – it is bad indeed. Aint it funny how stuff changes when you’re not just spouting off hyperbolic statements. Hopium & Changium is a little difficult when you have to actually “do something.”

Today president Obama sent another letter to the Clown Posse in Congress asking them to raise the debt ceiling yet again. President Obama wants another $1.1 trillion or so to throw away on useless spending, which will put the USSA on par with your garden variety banana republic with a debt-to-GDP ratio of 107%.

Boo-ya baby! Hopium & Changium is Awesium!

In the same vein of this thought we read the following from Charles Hugh Smith from Of Two Minds

Dear U.S.A.–your overdraft protection is about to be pulled.
Dear United States of America: We regret to inform you that your withdrawals exceeded your deposits last year by $1,600,000,000,000 ($1.6 trillion), including your “supplemental appropriations” spending.
Your account does have an overdraft protection, and so bonds were sold to cover your $1.6 trillion overdraft. While we value your business, we feel obligated to remind you that this is the third year that your overdraft protection exceeded 10% of your gross national product (GDP), and it seems your account is on course to register yet another $1.6 trillion overdraft in fiscal year 2012.

Currently, your overdraft account exceeds your GDP of $15 trillion.
Quite frankly, we are worried that you have become dependent on extensive overdraft protection–a feature designed to tide the account holder over for a short period of time in near-term expectation of higher deposits or lower withdrawals–and that relying on large-scale overdraft borrowing to cover your basic expenses is now your standard operating procedure.

This violates the intent of the overdraft feature, and as a result we must seriously consider modifying the terms of the overdraft protection on your account. Current conditions enable us to provide this overdraft, but the feature was not designed to be permanent nor on this scale.

In order to give you sufficient time to bring your deposits and withdrawals back into alignment, we will maintain the current low-interest overdraft protection on your account through fiscal year 2012. Beyond that, however, please be aware that to maintain the integrity of the system, we will have to raise the rate of interest on your overdraft and scale back the size of the overdraft line of credit.

We regret informing you of these modifications, but the overdraft protection was not intended to be permanent nor near-infinite in scale.

Yours truly,
The Global Bond Market

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

This might be getting old but here it goes: the market was dead again today. There was a little volume (better than the last few days), but NO volatility whatsoever.

The market is indeed a ZOMBIE; however, the title of today’s missive refers to a piece written by Bill Bonner here http://dailyreckoning.com/worlds-biggest-zombies/#ixzz1jD65LOdl Please enjoy this while the Zombie ES keeps stumbling across your screen looking for brains to munch on.

01/09/12 Baltimore, Maryland – Not much action at the end of last week… Gold closed the week over $1,600. Oil remained over $100.

The show goes on!

We are watching the destruction of an empire. All empires must go away sometime. They are natural things. And nature puts a time bomb in everything she creates.

The US empire is doomed. Just like all the others that went before it. It is doomed by nature herself — condemned by the gods to blow up and die.

None of this should be surprising to you, dear reader. We’ve seen this movie before. Hundreds of empires have come and gone. We know how this movie ends. More or less.

What we know for sure is that the US is going broke. There is hardly any other plausible outcome. We’ve gone over the numbers so often we don’t need to repeat them.

Yes, it is true that the feds could still save themselves….if they had the will. They could cut taxes to a flat 10%…and spend only what they raised in tax revenue… That would do the trick from an economic point of view.

But it’s too late for that — politically. Empires have lives of their own. They go forward…expanding…spending…stretching…until, boom, they go too far. Empires do not back up.
Some merely go bankrupt. Others are defeated in war. All end disastrously.

Only one candidate favors rescuing the nation’s finances and pulling the empire back from disaster. Ron Paul. He is considered such an unelectable kook that the newspapers barely mention him. And the papers are right. He is unelectable. Because he is opposed by the zombies.

We have explained how government really works. It is barbarism in action. Powerful insiders use force — police and military force — to transfer wealth and status to themselves. In the process, they turn their clients…and themselves…into parasitic zombies. The zombies support the insiders. The insiders throw the zombies a bone or two. Together they corrupt and destroy the empire.

Here is just one example from last week’s news. Bloomberg:
Despite the sluggish economy, the nation’s major health insurers have prospered in large part by expanding their role in government programs such as Medicare and Medicaid, according to a study released Thursday.

The share of large insurers’ revenues contributed by their Medicare and Medicaid business has jumped from 36 to 42 percent over the past three years. And the report by Bloomberg Government, a research division of Bloomberg LP, suggests that insurers will further increase their reliance on federal dollars with full implementation of the health-care law in 2014 — when Medicaid will expand to cover an eventual 16 million additional low-income Americans and the federal government will begin subsidizing private-insurance policies for an estimated 19 million more.

The insurers have become zombified. They no longer do honest work for honest reward. Instead, they lobby for more federal spending on health. They tweak the nation’s laws and its public health programs to make sure they get the grease. They are insiders now…

But no sector has more zombies in it than the ‘national security’ industry. Dwight Eisenhower warned the nation in 1961 to watch out for the ‘military, industrial complex.’ He might have saved his breath. The zombies had already taken over. The US was already spending more on ‘defense’ than the net income of all American corporations put together.

“In the years since,” writes Todd Purdum in Vanity Fair, “the trend has warped virtually every aspect of national life, with consequences that are quite radical in their cumulative effect on the economy, on the vast machinery of official secrecy, on the country’s sense of itself, and on the very nature of national government in Washington. And yet the degree to which America has changed is noticed by almost no one — not in any visceral way. The transformation has ten hold too gradually and over too long a period.

Almost no one alive today has a mature, firsthand memory of a country that used to be very different…”

Benito Mussolini was a socialist poet. But when he got into power he, like Barack Obama years later, discovered that it was not a good idea to oppose the military. Instead, he put on a silly uniform himself…and attacked Abyssinia!

Dear Readers may have noticed too. Between Obama’s military policies and those of George W. Bush, there is not a dime’s worth of real difference. Why? Because a zombie military is almost impossible to cut down to size. It has already corrupted the political process. Now, the zombies cannot be stopped…or controlled.

A bankrupt government can cut almost anything else. But not its military. National security industry insiders glide easily into the seats left by politicians who try to stop them. Ex-generals counsel wimpy Congressmen. Flies and flakes buzz around the trillion-dollar ‘defense’ honey pot.

Military spending rose about 70% during the George W. Bush years. Today, the US spends 43 cents of every dollar of military spending anywhere in the world. And now, with the hysteria of “terrorism” and a “nuclear Iran,” who will oppose it?

Many of the nation’s biggest manufacturers are weapons producers — Lockheed Martin, Raytheon, Northup-Grumman, L3 and KBR. The jump in employment numbers were largely the result of government hiring. We have seen a figure over 40% for the portion of domestic manufacturing devoted to the zombie defense industry. Among the most profitable businesses in the country are surely the 2,000 corporations getting money for counter-terrorism, homeland security, military intelligence and other boondoggles.

In Washington itself, 33 new building complexes have been put up since 2001 whose occupants are somehow involved in top-secret activities.

Yes, dear reader, the armed zombies pretend to protect the ‘land of the free.’ But they are its biggest enemies. In 2011, they put through a new defense spending bill…which removed Americans’ ancient habeas corpus rights. The Commander-in-Chief also asserted, and exercised, the right to kill anyone, anywhere…on his own say-so. And both the president and Congress continued to spend money they didn’t have on cockamamie boondoggles even though it is obvious that the nation is going broke.
It is only a matter of time now. The empire will be stabbed in the back by its own protectors.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

I didn’t think the market could get slower than the Christmas/New Year’s Day Holiday time frame but it has. Last Monday’s range was very bad, Tuesday’s was worse, but Wednesday’s was a bit better so things were looking up. But then we had last Thursday, which was slower then the earlier part of the week and we thought: It can’t get any slower than this; can it? Friday was indeed worse, and Monday the 9th was shoddier than last Friday…and somehow…today (Tuesday) was the worst of the lot! Today’s range was a sickeningly narrow 7.00 total points. What’s more, the value area tells us where the majority of the day’s volume traded and that was a putrid 4-point wide.

I’m not sure if the following video “explains” the reason for this lack of action, but it sure is funny.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

The market is dead. Continuing with last week’s theme – there was no volume, no volatility, and no “action” of any kind. If the market isn’t dead, it sure is in a very deep slumber. The range has been so tight for so long that when it does wake up, or come back to life, it should do so with a bang.

Speaking of today’s lack of action, Reuters said the following… NEW YORK (Reuters) – Stocks ended slightly higher on Monday in a light-volume session as investors stayed cautious ahead of corporate earnings and key auctions for European debt this week.

After breaking out of the gate with strong gains on the first day of trading in January, stocks have been confined to a tight range in daily moves and volume has been low. The S&P 500 faces strong technical resistance as it has been unable to pierce through 1,285, the closing high set in late October.

Months of summits and meetings have still not convinced investors that Europe will avoid messy defaults or a break-up of the euro zone.
“That is what the market wants to get a look at – what is it that these multinationals are seeing in the global environment that gives them pause, or is the tone going to be a little better than expected,” said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
Debt sales by Spain and Italy later in the week should provide insight about investors’ confidence in plans to solve the euro zone financial crisis.

“There is this sense that we really need to see something that is going to convince us that this EU challenge … is a headwind that can be managed,” Kenny said.

After meeting in Berlin, German Chancellor Angela Merkel and French President Nicolas Sarkozy warned Greece it will get no more bailout funds until it agrees with creditor banks on a bond swap and a deal to avert a potential default.

Perhaps the market will find whatever it is looking for that will provide a spark to the market on Tuesday?

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Last Friday was a day that would have normally been very volatile. Being the first Friday of the month, it was the day that the BLS releases its monthly employment report. Sadly and quite surprisingly, it created no volatility at all. What’s more, it was a low volume, very choppy, “inside day.”

The Bureau of Labor Statistics (BLS) December 2011 Employment Report read in part

Nonfarm payroll employment rose by 200,000 in December, and the unemployment rate, at 8.5 percent, continued to trend down, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in transportation and warehousing, retail trade, manufacturing, health care, and mining.

Revisions to the prior month’s data are as follows; November’s payroll data was revised lower from 120,000 to 100,000; the unemployment rate was revised higher from 8.6% to 8.7%; those “no longer in the labor force” was changed from 487k to 290k.

The “official” unemployment rate is 8.5% but this is clearly because the government is simply no longer counting millions of the unemployed. Isn’t that convenient? The civilian population increased by a reported 1.695 million, but the government says the labor force only rose by 274,000. Those no longer counted was a huge 1,421,000 and that’s why the unemployment rate is magically falling.

The government does keep track of what the unemployment rate would be if it told the truth, which is the U-6 statistic in the report, and the U-6 number shows 15.2% unemployment! Some actually say that the U-6 isn’t even the whole truth and it’s worse than that.

Perhaps the Ministry of Truth in the USSA is losing its ability to BS the market and that’s why there was no reaction last Friday?

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Thursday’s trade started out weak. The market was selling off with the latest (very) bad news out of Europe but then left the weak European markets in the dust. Another MIRACLE hit the tape and the US market took off like a rocket: the US housing market was getting yet another bailout. As it turns out this was BS; but since when has a false rumor mattered after the market priced it in? Never.

If you check the currency market before the open like I do, you were stunned to see the Euro was hammered Thursday morning. A partial reason why is here… http://finance.yahoo.com/news/dow-average-marks-first-tiny-215017640.html

Trading in UniCredit, a large Italian bank, was halted after the stock lost a quarter of its value. The bank said Wednesday that it would need to offer huge discounts to investors to raise money.

And a financial crisis deepened in Hungary, which had to pay a staggeringly high interest rate of 10 percent on its 12-month debt. That is far above the 7 percent level that forced Greece and Portugal to seek bailouts.
Taken together, the news raised fears on Wall Street that Europe’s debt crisis would spread from small countries such as Greece and infect much larger ones such as Italy that are too big to be bailed out.

“The positives that are coming out of our economy are less significant than the fear that is coming out of Europe,” said Ralph Fogel, an investment strategist and partner at Fogel Neale Partners in New York.

Stocks fell more than 2 percent in Italy, Greece and Spain. Markets in the bigger, more stable economies of Britain and Germany fell slightly. The CAC-40 in France fell 1.5 percent.

Never fear though folks! When the going gets tough; the tough get going politicians and banksters get to lying. There were some rumors that the banking cartel received Friday’s monthly jobs number early, but I think it was the “umpteenth” housing market bailout talk.

The “proof” of it is twofold; Hopium trumps reality, and US banking stocks skyrocketed. After all, if there was a TAXPAYER bailout of the housing market (never mind that the hundreds upon hundreds of $billions of prior schemes didn’t do a thing), Fraud Street sees this as a win-win for the banksters. And none would be helped more than the purveyor of housing deceptions than Bank of America. It was up a staggering 8.61% today, which doesn’t happen without a reason.

According to this article http://www.thestreet.com/_yahoo/story/11366791/1/obama-1-trillion-mortgage-fix-rumor-pushing-bank-stocks.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

A blog post by Jim Pethokoukis at the American Enterprise Institute appeared to generate much excitement on Twitter, although it was little more than speculation.

The article cited Jaret Seiberg of the Washington Research Group, who expects the President to appoint a “housing advocate” to the Federal Housing Finance Agency, the regulator and conservator of Fannie Mae and Freddie Mac, in much the same way he appointedRichard Cordray to the Consumer Financial Protection Bureau- by making the appointment during recess.

Seiberg believes that Obama will announce a mass refinancing program for agency-backed mortgages that goes well beyond the HARP program once he makes the appointment.

According to the article, the Obama administration could announce a program modeled on one that was originally devised by Columbia University economists Glenn Hubbard and Christopher Mayer. Under that plan, all homeowners with a Fannie or Freddie-backed mortgage can refinance with a new mortgage at a fixed rate of 4.2% or less if they have been current on their payments for at least three months. And the clincher is that the plan imposes no other qualification – no appraisal or income verification.

As it often (read: always) turns out, the White House denied the rumor. It was bogus, false, counterfeit, fake, phony, a scam…etc. But why would that matter?

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

Wednesday was another very slow day in the markets. By the late afternoon the S&P had only traded in a 10-point range and only closed with an eleven point range. Additionally, there was a stretch of time (4-hours) that traded in a ridiculously narrow span of just 4.00 points. Actually, that was the majority of the day! The lethargic chop seems never-ending.

While we wait for Rip Van Winkle to awaken from his slumber, please enjoy the following missive from analyst David Rosenberg, via ZeroHedge. The full piece can be read here http://www.zerohedge.com/news/david-rosenberg-coming-gunfight-ok-corral-between-mr-market-and-mr-data

From Gluskin-Sheff
Less Than Meets The Eye
Some members of our investment team asked me yesterday what numbers out of the U.S. have come out soft of late. Well, here’s a short list we came up with:
Industrial production
Core orders
Core shipments
Home prices (every measure)
Real disposable income
Real PCE for November

Keep in mind that Q3 GDP was marked down to sub-2% and I think Q4 will be around 3%. Last year’s Q4 also surprised to the high side but was no predictor for the next two-three quarters. To be sure, the economy has done better than I had thought five-six months ago, but much of what “bounce” we got was a belated comeback in auto production, the sharp decline in gas prices (which I wasn’t expecting) and the pullback in the savings rate which I can’t see being sustained. We are creating more jobs, but in low-paying industries and losing them in high-paying government and financial sector jobs.
Hence no growth in real personal income…

…Okay, so to recap: We have real personal disposable income growth running at a mere +0.5% annual rate in Q4. And according to S&P 500 EPS data, corporate profits are contracting at a 3.8% annual rate for Q4. This is the first sequential decline since the fourth quarter of 2008. So at best we have a flat quarter for real GDI on our hands — for the third quarter in a row (after 0.2% at an annual rate in Q2 and Q3). Now that doesn’t classify as a recession —just the next rung up that is called stagnation. This in turn explains why bonds got a heck of a lot more expensive in the past year and why it is stocks got a whole bunch cheaper. The U.S. economy, more from an income than spending perspective perhaps, is skating on some very thin ice here.

Let’s do some arithmetic to help explain what has happened on the spending side.

First, since mid-2011, gasoline prices have plunged 60-cents, which is in effect an $80 billion tax cut for the household sector. The problem is that this windfall is behind us, sadly enough. Eighty billion dollars at an annual rate is akin to a 4% pay raise for the average worker in real terms. That’s hardly trivial for the likes of Bob Cratchit, we can assure you.

Second, since June, the personal savings rate has plunged from 5% to 3.5%. This sort of decline over such a short time span has occurred but five times in the past 12 years. This in turn freed up $150 billion at an annual rate in real terms yet again for spending purposes.

So we have a total of $230 billion of support that temporarily bolster the consumer since the mid part of 2011.
Yet real consumer spending since June has only risen by $105 billion at an annual rate in real terms.

That means that in the absence of these dual effects — lower gas prices AND lower savings rates — we would have seen real PCE contract $125 billion or at a 3% annual rate since mid-2011 (looking at the monthly GDP estimates, there would have also been zero growth in the overall economy). Instead, real PCE managed to eke out a 2.7% annualized gain — but aided and abated by non-recurring items. Yes, employment growth has held up, but from an income standpoint, the advances in low paying retail and accommodation jobs have not compensated the losses in high paying financial sector and government employment.

Now it may be the case that prices at the pump have bottomed, but why can’t the savings rate still go down? Well, if it continued to decline at the rate since June, it would be at zero by summer. That is not impossible, but it’s not exactly a base case scenario either. What we do know is that in Q2 and Q3 together, the combination of weak equity markets and eroding housing values dragged down net worth by some $2.5 trillion. Now there are not a whole lot of data samples to pick from historically, but the last two times this happened, the savings rate rose in the ensuing three months.

As was the case last year, the first quarter promises to be an interesting one from a macro standpoint. The U.S. economy has indeed been dodging bullets for a good year and a half now. It might not be October 26, 1881, but something tells me we have a gunfight at the O.K. Corral on our hands this quarter between Mr. Market and Mr. Data.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.

I had high hopes for Monday’s trade when I said “Are enough traders home from their holidays to make for good trading Monday? That’s a close call in my opinion; however, there just may be enough scheduled economic data releases, including the Fed, to make our first day of 2012 a good one.”

Sadly, it was not a good trading day; volume was still low; volatility was non-existent; and news was plentiful but the entire intra-day range was less than 10-points. 100% of the day’s gains were put in at the open – it was all done on Globex.

The ISM manufacturing report in the morning was good, but not good enough to extend the huge gains of the pre-open session. Consensus for this report was for a reading of 53.2, but the actual number was 53.9. A reading above 50.0 indicates an expanding manufacturing sector.

Some analysts had expected this good reading because it was the report that covered the end of the year. And what’s important about that are the many expiring corporate tax incentives and credits of 2011 that businesses made sure they received by bringing production forward. Here are a few; Credit for Construction of New Energy Efficient Homes, New Markets Tax Credit, 15 Year Straight Line Depreciation, 100% Bonus Depreciation, and many more. They have now expired.

In other news, the USSA is now officially a banana republic. As of today, the US Treasury admits that it owes more than 100% of the USSA’s GDP in debt. To be specific, our admitted-to debt to GDP ratio is now 100.3%…not including the $100+ trillion in unfunded liabilities that the government refuses to count, yet refuses to cut.

Trade well and follow the trend, not the so-called “experts.”

Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.