Yep, I agree. And then we lump in MEW drying up (the fuel for the economy for the last 3 years), real CPI (not published) climbing nicely due to such things as "Dethanol", wheat harvest 40% below trend, past peak oil, and I see a very nice consumer led recession hitting us in a manner which cannot be denied in 4th Qtr 07. 1970's all over again.
I see plays in Puts on retailers (or shorts right before Thanksgiving, to allow the uptick for a day). I see Puts on builders, banks (Wamu for easy pick), home improvement. IndyMac = easy pick for a Put (anyone can see that one). Pulte & Toll for easy Puts ( no Jumbos = them dead). KB, Richmond American, Horton getting close to a buy (bottom feeders, another 6 months before a buy). There are so many plays right now it is sick. (buys) Futures = shit you eat ( South America, big plays down there for buys, they feed 30% of China) etc...
CC delinquencies are going thru the roof (lender of last resort), that says Mr. Consumer is done & baked. Cash would be king if there wasn't so much of it. It is tough to try to guess which way it will run now but my call is:
By end of 4th Qtr 07.....consumer led recession (easy picks on puts)
08 through 10, stagflation (picks to buy in Tech and meat & potato)
11+ Unknown, the fed choses between high interest rates (Volker moment) or high inflation (game over).
$17.5B shortened credit last week + $18B foriegn T bills recycled out = Hmmmm.......
China is about to float Yaun, I bet by 09 or 10 Yuan is floating and the USD is finished (N. American Lire). Everyone chanting "We're #1" needs to start practicing We're #2 (or 3, 4, 5....).
We're checkmated, it is only now a matter of seeing how far we could spread the toxic loans outside of the borders (share the pain).
