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There are code words used by the sell-side that are unmistakable as to their meaning. For example, a downgrade to “hold” means “sell”; “prices are drifting” means they are declining; and, when Ben Bernanke says “We are in transition”, it means “Bogeys on the radar – take cover!”

In transitioning from one Bull cycle to the next Bull cycle, the only thing in between is a Bear cycle. But, in the vernacular of the Financial Entertainment shows, the new term is “landing” – as in soft versus hard. In the touchy-feely-stroking-schmoozing world of make-believe, the new lingo is Goldilocks and soft landings.

As the Dow zeros in on 12500, I believe that the Gnomes have the target in sight [that’s code for "We The People”] and the bomb bay doors open. In terms of soft or hard “landing”, I think the issue is whether these are H-bombs or merely A-bombs.

In any case, here are the views of Merrill Lynch’s economist, David Rosenberg. Download ML Dec 14 Rosenberg views on 2007:

I think the Bulls need to clip and pin this item on the side of their monitors.

Cara Chart 1 17.12

And for those who think the U.S. housing industry crisis has abated [i.e Goldilocks again], why not clip and paste this illustration on your desktop? As Rosenberg says:

“When it comes to the housing market, we are in uncharted territory.”

Cara Chart 2 17.12

So, if Rosenberg is right, this equity market may soon implode due to the U.S. economic slowdown, including housing related issues. Others argue it’s the IPO’s and high-leveraged takeovers, or maybe a $WTIC that could zoom over $80, $90, $100, that will sop up the excess liquidity. But maybe it could be the inter-related wage and price inflation, or possibly a crashing $USD and a $GOLD price that pushes up through $800, $900, $1,000.

There is no shortage of issues facing the Bulls, or credible people like ML’s Rosenberg sounding the alarm.

But is anybody listening, or are they content to hear stories of “transition”?

Source: Bulls Take Note: 2007 May Not Be An Easy Year