I've noticed Mondays have been very strong lately. The past few weeks, government officials worldwide reiterated stimulus, money printing and more stimulus - first in the G20 (2 weekends ago) and then in Asia (last weekend).

But, then I thought back and it seems like every Monday we walk into things that hammer the US dollar, and still the market soars. So I thought I'd look a bit closer.

Since that surge on Monday, this market is really scuffling and providing very little opportunities from either the long or short side unless you are an extremely short term oriented daytrader sort. We're essentially in a holding pattern circling the airport... it is just unclear if this is the correct airport.

I want to show quite an interesting divergence, one we have been talking about for 6 weeks: the lagging nature of the small caps versus the large caps. While the DJIA, S&P 500, and NASDAQ get all the publicity, the Russell indexes are quite important and something I look at a lot.

Rough day at the office for Tim Geithner

Two very interesting videos - whatever side of the aisle you are on, it sure is interesting to watch. Please note, I did NOT write these titles for the videos - they are from the youtube user.

One of the most powerful men in the United States, Bill Gross, has put out his monthly letter and its a doozy. Nothing new to FMMF readers, but when the most respected of investment managers starts waving the bubble flag, it's harder to ignore then when the "mavericks" of the blogosphere do so. That said, Gross essentially says the Fed is boxed in - at least using conventional Keynesian economic theory.

To reiterate the stance I've held for about 1.5 years now, I believe the economy is so structurally impaired we won't see rates increased in 2010. Remember, Ben would much rather have new bubble than to be accussed of "repeating the mistakes of the 1930s".

Aside from E-House Holdings (EJ) which completely fell flat on its face, one of the best earnings reports of the past few weeks was Ctrip.com (CTRP). Unlike EJ, the stock gapped up after earnings and tacked on a bushel of points.

On Thursday, the stock has came back and filled it's "gap" in the $66s, where I am going to create a starter stake of a 0.5% allocation. I would prefer to be a buyer around $60 (where I'll place a limit buy near) with a stop loss below that point. But it's an OK place to begin a position with hopes of lower prices in the future. (Click chart to enlarge)

Despite countless monies spent by the government to manipulate the housing market upward, [Mar 5, 2009: WSJ - Mortgage Bailout to Aid 1 in 9 Homeowners] we have reached a new threshold in our "recovery."

For the first time, the number of homes in delinquent status and foreclosure is greater than the number of homes for sale.

I keep looking for something that marks at least an intermediate term top in gold, i.e. a "magazine cover" indicator, like when everyone is on the same side of the trade and even your barber starts talking up gold stocks. This doesn't mean the thesis is not correct in the long run, but let's keep an eye out.

The latest bit of "piling on" in the gold trade comes from infamous hedge fund manager John Paulson, who already holds enormous amounts of gold in his main fund (over 8% of the entire SPRD Gold Shares (GLD) ETF). He is now opening a gold specific hedge fund, partially just to find a place to protect his wealth from the ravages of central bankers. He will be putting $250 million of his own money into the fund.

Hat tip to Paul Kedrosky for this eye opening chart. The source data can be found here, but as they say a picture is worth a thousand words; clearly there is a localized depression in the metro Detroit area. (Click to enlarge]

As you view in shock and awe, I'd also like to point out the city in the far left of the chart, i.e., where all the jobs are. It's a sick indictment of what is going on in the country.

*deep sigh* Just another day in Rome...

I truly wish those of us who have been warning about this impending mess could get tax exclusions from our wages to be raided for the bailouts that are to come. I do want to make a caveat, since I've made the FHA implosion my personal Roubini / Schiff call. Each time a government official denies FHA will need a bailout, I scoff on the blog and say "just you wait". Well I found some grave news dear readers about a week ago in some of my readings. The government officials are correct.

Just something to keep your eye on as your politicians promise you that the U.S. will be the world leader in green tech jobs. In fact they will have to layer countless more debt on your children and grandchildren for temporary "green jobs" jobs, to make this mirage come true - for a while. Most likely this promise will come next spring as the next massive stimulus is pumped to the masses to create "green jobs" retrofitting buildings and such. Meanwhile, ask where the production is and what work we will be left with after we borrow money from China to create temporary jobs. [Nov 2, 2009: Lack of Green Energy Manufacturing Capability in US Means 84% of Stimulus Goes to Foreign Firms]

Remember, Japan and Germany are a decade ahead of us as we decided daytrading homes was the real way to prosperity as a nation... and China is subsidizing every form of green energy.

I emailed the the originator of this list, Eddy Elfenbein of Crossing Wall Street, to see what his parameters for "Top Stocks of the Decade" were and there was but one:

The universe was any stock traded on a US exchange that had a price of at least 50 cents on 12/31/99.

I see a lot of extended charts out there as we move into what seems like day 82 of consecutive upside, along with some bondfide breakouts. While we should only be so lucky to catch another Potash (POT), one chart that caught my eye last night was Freeport McMoran Copper & Gold (FCX). Much like Potash had key resistance at $106, FCX has some at $84.$85... which it sneaked a peak over in the closing moments of the day yesterday. All it will take is some hammering of the US peso and off to the races she *might go*.

Her Peruvian brother in arms, Southern Peru Copper (PCU) is in a similar set up; here the magic number is "low $36s".

Much like Hugh Hendry, I can watch to Marc Faber videos all day, even if I did not agree with a thing either fellow said. They just have an entertaining spectacle about them. Hence we must devote 1 post a month to Mr. Faber. I am not sure what to make of today's video - the contrarian deep inside my soul is searching for a Gisele Bundchen moment that would mark at least a counter trend rally in the dollar - ala "I refuse to be paid in dollars" circa late 2007. Gisele almost nailed the dollar bottom to the month [Jul 20, 2008: World Currencies in the Recession] As I wrote in July 08

Many don't remember now, but right around when the recession "officially" began (we did not admit to it until nearly a year later) in December 2007 the dollar was the scourge of the Earth. Reports of supermodel Gisele Bundchen (speaking of nice graphics) not accepting dollars (Nov 07) but only wanting to be paid in euros marked the near term bottom in the dollar.

It's that time of quarter - when the whales of investing have to reveal what they are doing on the long side to the SEC (they can still keep secret their shorts). There are a lot of websites that will be looking at these disclosures in the next 48 hours so we'll just focus on a few. When I did some "Googling" on George Soros, I was taken aback how controversial a figure this guy is; there are more stories about his politics than investing. I could care less about his politics, he is a smart guy who uhhh... admittedly plays the gray side of the rule book at times, but Goldman Sachs (GS) is worshiped for the same behavior.

The big news with George Soros this quarter is his revelation of a stake in Ford (F). I've been very torn on this name because it has the benefit of being the only US car maker that did not go through bankruptcy, and actually has a competent CEO (who came from Boeing). So that already sets them apart from what the other 2 domestics have had the past decade. The company seems to be getting goodwill from the American people due to the fact they did not resort to handouts from the taxpayer. On the other hand, General Motors and Chrysler were able to wrangle some very competitive concessions from the UAW (union) due to their bankruptcy while Ford is now facing a major issue on that front. Due to their relative success, the union does not want to give the same deal to Ford.

The market often makes little sense to me; if a company like Caterpillar (CAT) reported an earnings report like we just saw from E-House Holdings (EJ), CNBC anchors would be in tears of joy and the stock would be up 20%. Instead EJ is up 2%, despite beating by 15 cents and increasing guidance. My first thought this morning when I saw the numbers was "going to have to chase another one" - guess not.

We had a very small long position as the stock had broken support the past few weeks, but we are using today's muted reaction as an entry point to expand our position by just under a 2% allocation. Even better, we have a nice entry point near $20.80 which is not too far above a nice support area, so if the market begins to punish E-House Holdings again, we can exit with minor damage. We'll place a stop loss somewhere in the mid to upper $19s. As the month of October shows - this is a volatile stock. (range of $17 to $24)

Good news! Just as Alan Greenspan never saw a single bubble in 20 years, Mr Bernanke reports no bubbles anywhere as far as he can see. [Sep 12, 2009: Federal Reserve's Kohn: We Plan to Keep Throwing Kerosene on the Fire] In that case, more money printing please! P-cubed is here. [May 19, 2009: Paper Printing Prosperity Defined]

Gold (GLD) is rocketing to yet another all time nominal high, and finally its kid brother has joined.

Chinese video game maker Perfect World (PWRD) reported a typical quarter; beating estimates in the current quarter and offering lowball estimates for the following quarter. Stock is volatile in premarket, but as long as $42 is held we should be okay.

Full report here . A quick glance at some of the metrics; analysts had been looking for $82M in revenue and 75 cents on the quarter. Revenue came in up 13.2% sequentially, and 54.5% year over year; expenses up a tad faster so gross profit "only" gained 8.9% sequentially and 48.0% year over year - gross margin dropped about 3%. Some of this is due to a non-video game blip that I'll come back to at the end of this entry. Net income up 9.1% quarter over quarter, and 45.4% year over year... impressive numbers, but quickly forgotten as stock market lemmings already move onto the next thing to worry about.

So many future bailouts to look forward to, so little time. So many cans to kick down the road via accounting adjustments, so few feet do keep doing the kicking. While I read this piece I was struck by my own reaction... not even $30 billion in deficit? This is peanuts! We've become so numb to bailouts that anything less than hundreds of billions seems like a normal part of Bailout Nation. Yet just over a decade ago, the world was in a panic over hedge fund Long Term Capital and its gaping hole of $3.6 billion.

How quickly we've adjusted to brushing off our shoulders handouts and bailouts 10 times that size. The cost for one of the smallest handouts, Cash for Clunkers was more than the bailout of LTCM in 1998. Need to manipulate housing prices higher? It's worth it! Only costs $16 billion; or with Cash for Cul de Sacs v 2.0 - $30B+. Peanuts.

I admit I am fascinated by these type of projections / analyses, and since much of the anticipated world growth (and hence investment) will be headed along these lines, it fits perfectly with what we sort through weekly on the site. According to PriceWaterhouseCoopers, over the next 15 years the "top 5" cities in the world shall remain the same but a new class of entrants will be hurtling into the top 10. It will be interesting to look back in a decade or two from now to see how accurate this becomes... i.e. are we making the same mistakes forecasters did in 1989 when it seemed Japan would take over the world?

It appears the measurement tool is a "gross domestic product per capita".

Similar how jobs are migrating from coastal (eastern) China into the landlocked (cheaper) west, we are beginning to see the first trends of this happening in India as well.

At some point in the future western China and rural India wages will be too high and I suppose these jobs will move to Vietnam or Indonesia. Then those people will earn too much and the jobs will move to... well, I am not quite sure. Africa would be a logical choice if there was more stability. Just know that the race to the bottom continues -- there are only so many jobs on Earth and an increasing amount of its people now will be available to do them.