This is a Must read article.
http://www.mybudget360.com/lining-up-at-midnight-at-wal-mart-to-buy-food-is-part-of-the-new-recovery-banks-offering-mattress-interest-rates-the-invisible-recovery-outside-of-wall-street/


If You Thought the Housing Meltdown was Bad...


Jim Sinclair’s Commentary
Yra Harris shares his genius with us. I
consider his summation all you need to
know to be right up to the minute of
what is real out there. All else is prattle,
blather, and simple nonsense.
It is all here.
Dear CIGAS,
Not only can Geithner speak Mandarin
and Japanese, but he can also evidently
moonwalk as well as Michael Jackson.
It seemed on Thursday that Geithner
was trumpeting the insertion of the phrase “market oriented exchange rates that reflect underlying economic fundamentals.”
Unfortunately for the Treasury Secretary,
the Chinese had not let this desired phrase
to be signed onto. Hu Jintao the Chinese
president would not allow it to be entered
into the final memorandum.
This was yet another slap at Geithner which
will force him to do more back stepping than
the late Michael Jackson. Not only did the US
fail to get a discussion about currency floatation,
but the USA was widely criticized for inflating
asset bubbles with their low interest rate
policies. The US was then hammered on the
lack of a free trade policy. Even Mexico jumped
on the US for its incipient protectionism.
This was not a successful meeting for the US
and we can only hope that Obama comes off
better on his trips to China and South Korea.
President Obama’s speech in Japan was met
with general acceptance and deemed to be
constructive for US – Japanese relations.
The Korea/US free trade agreement still
hangs in the balance as Congressional
Democrats prevent its passage. This is causing
more embarrassment for the President on his
Asian tour.
Geithner and company have to do less posturing
and more negotiating if the US is to be seen as
a leader on global economic issues.
Up to this moment this presidential trip has not
gone well, and we believe it will bode ill for the
dollar.
Until the Fed starts removing the stimulus, the
US will continually be viewed as a serial
bubble blower.
There was a story on Bloomberg today
suggesting that the Treasury was going to
push for TARP to be extended, so we have
even more evidence of the administration’s
dedication to continual use of the liquidity
pump.
There is simply no desire to reign in liquidity
and when Obama arrives home he has
promised a full-blown White House conference
on job creation.
We see continued dollar weakness and further
curve steepening.
More importantly is that U.S. leadership is seen
as deteriorating as they fail to take the lead on
free trade.
The equity markets will like the continued
effects of the global carry trade still maintaining
its robustness.
We commented in Friday’s piece about some of
the reversal action we saw on Thursday and
noted how the gold and Aussie dollar reversed
off highs and wanted to see if the reversal action
was sustained. Friday we received our answer
and it was unequivocally a one day event as
the Aussie especially rallied on Friday, going out
on its high. Gold also turned and rallied most
of the day, also going out on its high.
We cannot stress enough that economic models
are inherently flawed as a trading indicator
because they fail to take into account the market
ramifications of political missteps. That is why
we continue to iterate that 2+2=5 is also a
beautiful thing and why we give greater
credence to the analysis directed by political
economy.
The impact of the global recession is met by
domestic policies and as long as this holds
true all the G20 meetings and APEC take
a back seat to the needs of the political nation-state.
Congress will do what it needs to do to ensure
its re-election. China will do what it needs to
do to make work for the millions displaced
from its rural economy. This thought process
will continue to drive our trading views, of
course relying on the technicals to spot
breakouts both up and down as the soundest
technique of risk management.
We also look to what we have referred to as
negative divergence, which is when markets
react contrary to the fundamentals of the
market.
We saw this by the close of Friday when the
long end of the debt markets rallied even
with the dollar weak and the carry trade
back in full force.
This catches our attention, as we know
the underlying fundamentals of the DEBT
markets are terrible as the continuing
abundant supply weighs heavily.
We will be attentive to checking resistance
levels to see where the strength ought to ebb
but with retail sales and the empire state report
out today we hope to get a good test of resistance.
We know that the long end of the DEBT market is
viewing deflation as a greater threat but at some
point that will have to turn against itself as the
Fed and Treasury begin to panic.
That is what gold and the dollar has been
anticipating.
We look for the debt market to eventually
paint a similar story, especially when its
major creditors have so derisively received
the U.S.
Yra