The 10 year bond finished today at 2.78%. The 10 year yield has fallen considerably from the 4% level from only a few months ago. The current yield is approaching the panic levels of late 2008 when it briefly bottomed at around 2.1%. The current yield is almost exactly where it was during the March 2009 stock market lows.

This is not good. The bond market is flashing major warning signs that deflation still persists and that the economy is about to get weaker, not stronger. Keep an eye on it. I always use my own brain to determine what is going on, but if I had a choice to believe the government and their economic outlook, or the bond market, I would choose the bond market every time.

I do not have time to respond to every e-mail I receive, but I am always happy whenever I receive one that thanks me for helping a reader make some money. It is hard to make a living these days and even harder to save money for a house, or raise capital for a business, or just taking care of your family so I am very glad I could help.

To those who are thanking me, you are welcome! I am happy to help when I can.

I am also asked alot in emails what I would recommend buying now and what advice I currently have etc. The thing is, I am a very patient investor. When I see something that is a sure thing, (or as sure as anything gets in life and the market) I bet big. Like anyone, there are some things I keep private of course. Also, in many cases what I am doing personally only makes sense for me given my situation. We all weigh risks differently depending on our own lives.

For example, maybe for me a 50% downside risk in a stock VS a 300% upside makes sense. For you, 50% downside might be simply unacceptable and therefore that advice would be worthless even if it turns out to be a great bet. That is why I made such a point about my March 2009 buy call on the stocks I listed. I KNEW you would make money on those and there was no ambiguity. Why? Because I bought those very same stocks that very day I published that post. The economy was still bad but the market was ready for a bullish phase. I was right. You made money. I made alot of money.

In 2003, I knew the economy and market would boom with the tax cuts and I bet big.

In late 2007, I knew we were headed for a deflationary credit collapse, so I bet big.

In March 2009, I bet big on stocks as you read on this blog.

In April 2010, I bet big  against stocks when I told you it was time to get out.

These are just some of my calls over the last 18 months and you can go back the see the charts and the track record by reading old posts. Unlike the freaks on TV who push new stocks to you everyday, I keep my powder dry until I can see the whites of their eyes. “Their” being the next great investment opportunity.

Anyway, Thanks for the e-mails. It is always nice to be appreciated:)

Congratulations on the seemingly inevitable passing of a financial “reform” bill that does not reform anything of consequence and has ZERO CHANCE of preventing the next financial crisis!

Oh yeah, and it violates the 4th amendment.

“But Dan, I heard on the the news that…”

STOP!…There is no good way to end that sentence.

My calls have worked out pretty well as you can read here, here, here, and here as well as other posts you are free to read. It’s almost like I know exactly what I’m doing. Oh wait, It’s exactly like that!

I point this out because I feel it necessary to establish some credibility with you as I now have a track record that can be read and seen here. You are being sold a bill of goods literally everyday by the Lame Stream Media and they will bankrupt you and destroy this country economically with their reckless Keynesian policies if you aren’t careful. This economy is a tinderbox. Big things are coming, and I will warn you about them. I hope my track record gets you to listen or at the very least gets you to think about it.

Here is David Rosenberg’s latest take on things. I really like David and think he makes alot of sense. I would not say I agree 100%, but his overall theme the last year has been in line with mine. I have posted some charts over the past year that show what he is essentially talking about which is that these de-leverage cycles last longer than the media would have you believe.

Global debt issues and investor fear have the US mired in a “meat grinder” stock market that likely will last another six to eight years, economist David Rosenberg said Thursday.

Debt-cleansing cycles generally last six to seven years and the current run is in about its second year. Global economies are trying to shed debt, with varying levels of success as several European countries run risk of defaults and uncertainty grows over the effect debt will have on the US.

“The sharp down was the 57% slide from October 2007 to March 2009. The reflexive rebound was the 78% runup from March 2009 to April 2010,” Rosenberg said. “And, Stage 3, the re-emergence of the fundamental downtrend, in classic Carpenter fashion, has only just begun.”

At the same time, broad cycles of low market returns and wild stock swings usually last 16 to 18 years, and this is the 10th year of those conditions, Rosenberg, chief economist at Gluskin Sheff, said in his morning note.

Neither trend, if kept intact, would bode well for stock prices.

“It will not be a straight line down but the fundamental trend line is down as far as US equity prices are concerned, and racked with intense volatility,” Rosenberg said.

He pointed out that 22 of the past 26 trading sessions have seen swings of 200 points or more in the Dow Jones Industrial Average, while positive moves often are accompanied by low volume.

“Look at what has happened just this cycle-the worst stock market since 1937 followed by the best stock market since 1932 followed by the worst May for the Dow since 1940,” Rosenberg said. “There’s a word for this type of market. It’s called a meat grinder. No return for a decade and yet plenty of sleepless nights on this roller-coaster ride.”

For investors, “classic long-short strategies” should be the order of the day in which investors protect themselves against lower moves in the market.

“This is an environment extremely conducive to income-oriented investment strategies,” Rosenberg said.

He referenced legendary analyst and investor Bob Farrell’s 10 Market Rules to Remember, particularly citing Rule 8 which says bear markets run in three cycles: a sharp downturn, a reflexive rebound and “a drawn-out fundamental downtrend.”

A few people in the media in collusion with certain members of congress are accusing people who tell you to buy gold as being “fear-mongers” who just want to make money for themselves etc. Well, as you can see from this chart, what has been a better investment the past few years, gold or the S&P 500? So if these people were “fear-mongers”  as they are described, you would have made alot of money listening to them! That is odd huh? Maybe, just maybe, they weren’t “fear-mongers,” but rational economic analysts and others who were worried about global instability and currency problems? Nah, that can’t be it.

Sometimes I own alot of gold in various forms. Other times, not as much. Sometimes, not at all. I am not telling you to buy gold. Buy it, don’t buy it, I don’t care. However, it should interest you that people have been telling you to stay away from gold for years as it has risen while stocks have been terrible.

The blue line is gold and the orange line is the S&P 500.

I had a conversation with someone yesterday about the FED’s interest rate policy and the booming expansionary recovery that our corrupt media tells us is taking place. He is a huge Obama fan and a Keynesian. Here is how it went…

HIM: I really think this is a real robust V shaped recovery. Obama’s stimulus worked and he saved us.

ME: OK, if that is true then we should raise interest rates back to a normal level so we don’t get hit with inflation.

HIM: Whoa, we can’t do that . That will kill the economy!

ME: You just said we had a robust recovery. If it was so robust, we wouldn’t need virtually zero interest rates.

I could have talked about so many other economic issues like unemployment for example, but why? My point here cuts to the core flaw with the argument that we are in a robust recovery. I see this on CNBC all the time. People say the economy is great and getting better and then bristle when higher interest rates are proposed.

The recovery is not real if it only can exist in a basically zero interest rate environment. A complete idiot could make tons of money if they were allowed to borrow unlimited money from the FED at .25%.

As of the close Friday, oil is $75.11 a barrel. Remember that the market has been crushed the last 5 days on fears of huge debt and continued economic weakness and oil fell right along with the market. Until this latest drop it had been above $80 for almost 3 months and was on the way to $90.

We still have a weak economy here in the USA and the dollar has actually held up pretty well lately. Yet, oil has climbed. Remember the last time that oil was climbing like this towards $150 we had an extremely weak dollar and a strong economy with much lower unemployment than we have now. This is a big problem.

While the economy in the USA is still limping along, most of Asia is booming. Bubble or not, for now they have a demand for commodities including oil. Top notch investors know that all paper money is suspect right now. Government around the world to varying degrees have spent trillions of dollars they do not have to bail out everyone and engage in massive government intervention. Oil (and gold) is being used as a de facto currency right now which means more accumulation by professional traders, countries, and even the people who run pension funds. This puts upward pressure on the price.

Obama’s latest sham announcement of new drilling is a complete lie from top to bottom. Net, it is a loss for oil production. He locked up tons of resources and said in a few years their will be lease sales. Yeah, good luck with that guys. Even if Obama was really interested in this, he would get rolled by the oil companies. He’s already been rolled by Wall Street and all our enemies. Sarah Palin kicked the oil companies asses and in the process got more oil to market for the people. She would lift all restrictions and play hard ball. She would cut good deals that incentivize new production while making sure that we aren’t getting ripped off. She has done it before! Of course, she’s the dummy according to the media and Obama is the genius. I want you to remember that when you are cursing up a storm as you fill up your gas tank.

With the terrible oil spill in the gulf, idiots are out in force declaring that no more offshore drilling be allowed. Their stupidity will actually result in more oil spill accidents and higher prices. Less offshore drilling here means far more oil tankers from overseas will be needed to bring us IMPORTED OIL. Tankers are far more likely to have accidents. Lack of production means upward pressure on price, and our current government has no interest in increasing production. Actions speaks louder than words.

The dollar has been stronger lately, but do not be fooled. This is happening because the Euro is in full meltdown as the European socialist welfare state collapses into riots and anarchy. By comparison right now, I suppose the dollar is good. Eventually, the dollar will return to its weakness. After all, are the fundamentals for the dollar strengthening or weakening? Trillions of new debt is obviously a sign of weakness. Other countries forming a cabal to replace the dollar with a currency that is backed by commodities is obviously a sign of weakness. I could go on.

Now, what happens when the economy does actually pick up and demand increases? What happens when the weakened dollar returns to put more pressure on commodities priced in dollars like oil?

Do I have to answer this question? Isn’t it obvious?

As you see here, had you listened to me you would have made alot of money the past year or so. If you did, you are up huge right now and should get out. Could the market go higher? Of course it could. I have said that the FED and the Obama administration are both engaged in a reckless free money agenda. This agenda can drive stocks up, but is doing incredible damage long term. It is a bubble, but bubbles can last a long time so the market moving higher is not impossible. When the bubble pops though, look out.

So, you are up if you took my advice and now you should take your huge profits and be happy. You won’t go bankrupt making a profit.

This is one of the most entertaining people I know who talks about the economy and makes serious points at the same time. He hits a few important issues here and does it with his typical delivery. Trust me, the video is five minutes you should see as there are too many gems for me to highlight. These quotes are great, but it is ALL in his delivery.

On those responsible: “They buried the American financial system, and they’re all working for Obama.”

On Chris Dodd: “His record is just a tad shaky.”

On March 13, 2009 I told you I had bought positions in…
MO,BP,NOC,LVS,MGM,T,NTGR,CHK,RIG,DE,UA,INTC,COP,DHIL,GD,BA,LMT,RTN,GROW

That was just over a year ago. Excluding dividends, here is how those stocks have done since then.

When I invested in these stocks on March 13, 2009 I did not distribute my cash evenly like I show in this chart, but you can see that even if you did with the hypothetical dollar amount I show here you outperformed the market by a wide margin. I used the same dollars invested for each stock so you could see the percentage gain without any distortion. For example, if you put more into LVS then you would have made more overall.

Below are two charts of the Down Jones Index and its similar counterpart in Japan the Nikkei 225. Notice how horrific the Nikkei has been since 1990. In the last 20 years, it is down roughly 70%. In the last 26 years it is flat. Our last 10 years in the DOW were essentially flat.

The steady drop since 1990 in the Nikkei can be described as a debt deleverage cycle. This has happened before all over the world including in the USA, but the last 20 years in Japan is an extreme example. The USA economy is far more dynamic than Japan ever was, which means it will be more difficult to repeat their anemic market performance.

However, we are making many of the same mistakes Japan made in dealing with our current economic crisis and therefore the economy will sputter along for years until we get our act together. What shape that sputtering takes is still in question. Just how bad will it get, and how long will it stay that way is a question that has a wide range of outcomes.

I have studied this situation non stop for years. I knew it was coming and I acted accordingly. I warned everyone on the blog and everyone who would listen to me in person. Here’s the problem…

Every scenario that I give a decent chance of happening going forward is bad. The staggering deficits and low interest rates (free money) from the FED point to serious inflation at some point in the future. At the same time, residential housing still has not bottomed, wages are doing anything but rising, unemployment is still a disaster, and credit has been cut and may still be contracting for consumers which all point to deflation. There is also the possibility that we enter into 1970′s style stagflation where inflation picks up and growth lags. Oh yeah, or the whole ponzi scheme the government calls the economy could just blow completely.

I have worked every number and model I can and I cannot see a good scenario playing out. Now, a less bad scenario could certainly occur, but that is still not good. People in America have gotten used to rising standards of living and luxuries most countries can only dream about, but that is changing due to inept government policies finally blowing up in our faces.

Does anyone believe the DOW would be up the way it has been the last year without the FED’s next to zero interest rate FREE MONEY policies? If you don’t, then what happens when these rates rise?

By the way, lately bond auctions have not gone that great and rates have started to climb.

It is is said that history may not always repeat itself, but it often rhymes.

You think nothing as bad as Japan the last 26 years can happen in America? Remember, it could happen to you.

About 9 months ago, I wrote here that Obama’s 10 year budget forecast was way off and I said it would end up with our nation being $20 trillion in debt minimum, as it will increase as more of his radical spending gets passed into law. Well, a few days ago the CBO said exactly what I told you 9 months earlier.

NEW YORK (CNNMoney.com) — If President Obama’s 2011 budget were put into effect as proposed, the U.S. federal government would add an estimated $9.8 trillion to the country’s accrued debt over the next decade, according to a preliminary analysis from the Congressional Budget Office.

Of that amount, an estimated $5.6 trillion will be in interest alone.

By 2020, the agency estimates debt held by the public would reach $20.3 trillion, or 90% of GDP. That’s up from 53% of GDP in 2009.

Ya know, I’m not that smart. I’m really not. However, I am a genius compared to the morons in our current government who are responsible for the economic policies that put us in this position. This is one reason why I am able to see this crap coming long before they can.

This must be said.

Warren Buffet is celebrated throughout the media, and by CNBC in particular. Given the events of the past 18 months you would think they would have asked the great oracle a tough question or two, but that never materialized.

This is a man who champions himself a great capitalist. He also advocates liberal economic policies like high taxes on “the rich” while decrying wealth inequality. He seems like a nice man, but that does not change the fact that he is a fraud and a hypocrite of the highest order.

This is a man who calls his annual shareholder meeting, “Woodstock for capitalists.” Yet, he was on the phone with congress in late 2008 advising them to pass the $700 Billion bailout that was going to directly impact his very own portfolio. Take a look at the all the TARP companies my friends and you will find that Mr. Buffet benefited probably more than any single person in regards to the bailout. His investment portfolio was invested to the tune of billions and billions of dollars in companies that needed bailouts. So, Mr. Buffet who decries wealth inequality, lobbied for the richest man in the world (himself) to get a taxpayer funded bailout for his investment portfolio. What a guy! What  man of the people! Odd, how no one at CNBC thought this was worthy of questioning?

They were not interested since he pushes their social agenda and is useful as a club against true capitalists like myself and others when they are actually given air time.

When his money was on the line, all of a sudden he was not interested in protecting the middle class taxpayer. No, this time he was fine with looting them in order to bail out his bad investment choices. Had the TARP not been passed, the oracle would have lost billions.

Remember that the next you see him sitting with Barack Obama with his big smile and his “man of the people” routine as he praises Obama’s policy of wealth redistribution.

China is back on top after some revisions now showing on the treasury website.

United States Treasury Department. http://www.treas.gov/tic/mfh.txt

This is a good link to keep going back to as it is updated, so keep it in mind.

This chart was put together by ZeroHedge using BLS data. They have some interesting posts from to time but if you are not familiar with some of the more exotic investment and economic terms some of their writing might not make sense to you. This post however is right to the point. As you can see from the blue line, the trend looks like it will start to tick up again in the wrong direction.

http://www.zerohedge.com/article/mass-layoffs-surge-january-highest-july-2009

The above data is provided by the United States Treasury Department. http://www.treas.gov/tic/mfh.txt

(The data in this link will change due to revisions)

Recently, China has lightened up a little on it’s U.S. Debt holdings, and Japan has picked up the slack. We have to finance trillions more in the coming years thanks to the super geniuses who are running our country. So, we will have to wait and see if these foreigners get tired of bailing us out at 3% interest. The FED has been and will be stepping in. You can count on it.

Remember these numbers are just the foreign owners. The total debt is about $12.4 trillion. Our debt will hit 100% of GDP in the next few years or sooner.

Below is a condensed version of a longer interview with Thomas Sowell. He is my favorite economist/commentator and is also the author of several books. I have them all in my library.