Ok, so you missed most of the money on the short side the past couple of months, and, sitting on your hands, like me, you missed most of the explosive 20% upside move in the past 2 weeks. Now what? Well, my friends, the "easy" trades are over for a while.
The S&P 500 is right back around its "magnet zone" of 800, the financials have had a blistering rally and now flop around 10% per day, and oil has run up from the 30s to the 50s. The US Dollar has dropped, spiked, dropped, and spiked within the past year.
Now the Fed is creating money in Fed computers to buy bonds issued by the Treasury to fund our enormous budget deficit while simultaneous keeping the 10 year Treasury rates artificially low to keep mortgages artificially low to stabilize the housing market which is saddled with enormous supply and dropping prices as a result of the last time the Federal Reserve kept interest rates too low for too long and caused a real estate bubble. Got all that?
The President is on TV every other night talking about his plan to semi-nationalize health care, tax carbon emissions, increase taxes on the wealthy (anyone with a job), stimulate this or that, castigate corporate America and its leadership, while Congress is passing laws in direct violation of the US Constitution to tax AIG bonuses (like that matters), that were specially permitted in the stimulus bill that he said had to be passed so fast no one had time to read it!
And by the way, the Treasury Secretary wants the authority to "seize" (as in Government takeover Hugo-Chavez style) any company it deems a risk to the "financial system." Oh, as an aside, Treasury Secretary Geithner is "open" to the idea of giving up the US Dollar in favor of a "world currency" to placate the Chinese and others who are freaking out about Obama's plan to double our national debt in his first year in office.
Secretary's Geithner's plan to remove toxic paper from bank balance sheets seems to involve the Government putting up or guaranteeing about 90+% of the cost of buying the toxic paper in collusion with private investors. One of the problems is that once a market "develops" for this toxic paper, it's likely to be valued at much less than current valuations, leading to more enormous write downs by financial institutions and the need for additional capital. Then do the Feds "seize" the banks and nationalize them anyway? Who knows with this crew.
So, in summation, we have, broadly speaking, highly correlated stock markets all over the world that have spiked off their recent lows (check out Chile (BATS:ECH) and Taiwan (NYSEARCA:EWT) for some out performance), but are now overbought. The currency markets are a mess with all the financial and political turmoil, gold is at the upper end of a trading range, and the economic engine of the world, the US consumer and the US corporation, is in the cross hairs of the Obama Administration designated for termination via socialization and taxation.
Frankly, I have no idea what to do with my money - currently I'm all in cash. If gold breaks out, I'll follow it up. If the dollar breaks down, I'll short it. If the stock market wants to sprint up another 20%, I'll try to catch a piece of that with one eye on the exit. If most of the rest of the world weren't such a wreck, or potential wreck, I'd have some theme to chase.
I'm just afraid I'm going to wake up and find Poland has defaulted on its debt, and the Swiss and German banks are near collapse, and then who knows?
Stock position: None.