Alarmism about the climate seems to be reaching a crescendo with the vaunted United Nations Climate Change 2009 convention in Copenhagen on December 7-18.

…..read more HERE.

This is the quote from Ben Bernanke at his famous “What If” speech he delivered over how a central bank can fight deflation … using exchange rate policy as a tool.  This is why the current countertrend rally in the greenback and the giveback in commodity and gold prices are noise around the trendline.  There is nothing wrong with using corrections in the resource complex to add to long-term positions at a better price because this is a secular bull market.  The dynamic growth in Asia is not merely some flashy cyclical deal — it is more permanent than that.  But the reflation initiatives the U.S. is going to have to take to make the full transition to the next sustainable economic expansion are going to very likely involve the competitive boost from a weaker currency … and Helicopter Ben outlined the strategy seven years ago:   Summary HERE – Full Article HERE.

THE SWEET SPOT IS OVER  TOPICS DISCUSSED IN THE FULL ISSUE HERE

Below are 10 reasons why we believe this:

1. For the time being, the equity market is going to have to contend with more chatter of the Fed’s exit strategy. 

2. The market also faces a new reality.  While employment stabilizing (maybe) is a good thing, it means the era of declining unit labour costs and margin expansion is behind us.

3. Market leadership is beginning to fade as seen by the receding advance- decline line on the big board.

4. Market complacency is a worry with the VIX index back down to 21.25.  The good news is that insurance against a correction is priced about as low as it can go. Protection is cheap.

5. The WSJ (page C1) reports that not only have individual investors been selling into this last leg of the rally (then again, the S&P 500 has really done nothing for over six weeks), but pension funds have been rebalancing too.

6. Volume has declined markedly and has surpassed 4.7 billion shares on the NYSE just once in the past three weeks.

7. With the correlation between a weak greenback and a positive stock market above 90% over the past eight months (versus zero over the past 30 years), a countertrend rally in the U.S. dollar would likely coincide with sputtering equity prices.

8. The Dow transports/utilities ratio has turned in a classic triple-top and this is a signpost to get defensive.

9. The latest Investors Intelligence poll shows the bull camp at 50%; the bear share at a mere 16.7%.  In other words, there are three bulls for every bear.  This is negative from a contrary perspective (another sign of complacency).

10. Corporate bond yields have stopped narrowing over the past three months and have actually recently shown modest signs of an upward bias.

….read more HERE

Although it’s too early to know for sure, Friday’s action suggests we could be seeing the earliest stages of a carry trade reversal. Remember that hedge funds and other highly leveraged institutional investors have been borrowing here in the United States at ultra-low interest rates, selling the dollar short, and using the proceeds to snap up stocks, bonds, and gold.

…..read more HERE.