What is Normal?

1200.

That's where the S&P would be if the SEC and CFTC and Congress had not gutted financial market regulation to let the Vikings rape & pillage stocks without any rules or regulation.

• They repealed Glass-Steagal to let banks speculate in the financial markets with depositors' money.
• They dropped the uptick rule so raids could push stocks down with no relief to cause fear & panic.
• They gutted efforts to regulate derivatives, which then let credit default swaps and equity derivatives become new "weapons of mass destruction" for the Vikings to manipulate stocks and cause more panic.
• They permitted creation of uncountable numbers of short and ultra short ETFs that are essentially betting machines for speculators.
• And they opened the field to the Street market makers via the Madoff rule and the ETF short sale rules to let market makers "print" stocks to short with NO rules at all. Short selling of nonexistent shares rose to huge amounts.

[Doubters: when Warren Buffet and George Soros agree with Bunkerman, question your thinking.]

And the panic happened last July to October. The retirement savings of middle America was gutted by 35%. The drop stunned the people and they reacted, gutting spending on everything. The real recession began. Thank you, libertarians. I hope you enjoyed the fruits of your "no regulation" mantra. Letting the Vikings raid the financial landscape sure helped, didn't it.

So the panic dropped the markets to the 800-900 range last fall. Then the Obama "panic of the conservatives" dropped it 666 in March. All the rally from early March to April did was wipe out the Obama panic, to get the markets back to the fall trading range, i. e. to the Viking Raid panic levels. The "too far, too fast" crowd doesn't seem to recognize that. Erasing a panic fall - which did go too far down too fast - is NOT becoming overextended. The baseline is the fall trading range.

The stock markets have been consolidating in those levels since late March. Now the S&P 500 is over its 200 day moving average. The 50 day moving average is rising.

Commodity prices are rising, perhaps to re-entry by speculators, or perhaps to user hedging. Shipping rates are rising. Demand in Asia is rebounding. And all that "stimulus" money remains to be spent. The Fed is still accomodative. TALF is working. Well-run major banks are re-paying TARP monies foisted on them.

Lots of pain exists in housing, especially in the sun and surf areas where speculators & the second home crowd played. And the jobs market stinks. Thanks to the Vikings. And the financial libertarians. But all the newly free people of the world want to improve their lives and that tailwind is huge.

Obama Fund is sitting long at about 125% long on stocks that should continue to outperform on a "Return to Normalcy".

Word of the Day

"Crawfish" - noun and verb [$10]
Crawfish means (noun) = crayfish; (intransitive verb) (often followed by 'out') US colloquial retreat, back out.
Sentence: As Bunkerman watches Congress and the Obama administration crawfish away from real, comprehensive reform of the financial markets and regulation, he feels disgust and anger.

Le Mot du Jour

"Salir" - verb, regular -ir conjugation
Salir means 1. to make dirty, to make a mess in, to mess up; 2. to corrupt, to defile.
Le Phrase: Les libertaires de la haute finance salissent le monde.
Sentence: The libertarians of high finance messed up the world.