Folks,

We have a deal in Washington so the markets should rally right?  I think we might into “short covering Friday” but after that the question becomes….Really? We know that the government shut down is going to impact GDP in the short term anyway. We know the news coming out about Obamacare and the rate hikes that people are seeing are in fact real. We have been watching the Average Hourly Work Week past four years and it has been stuck. Why? and Why does it matter?  Well first is that the so called recovery never really took hold in terms of employment when you look at the U6 Unemployment Rate published by the Bureau of Labor and Statistics. We know that Obamacare has caused employers to cut hours to avoid the law. We know that UPS cut insurance coverage for spouses for 16,000 employees and they are only one example. We know that the out of pocket cost for the average consumer whether it be for premiums or deductibles has sky rocketed. This may not be inflation in the traditional sense but hell, it sure is going to feel like if for many. At some point in time something has to give. When I take a look at the monthly chart of the Russell 2000 and how it has hugged the upper Bollinger Band for the past 10 months with corporate revenues in decline I have to ask my self….WTF? To which I answer….Yes this is all very crazy and it will not end well. Oh by the way did I mention that IBM was down after hours on Wednesday on a revenue miss?

It seems as if earnings don’t matter because Janet Yellin will take good old Ben’s job and keep he punch bowl full. What has QE3 done despite despite make safe investments in cash and bonds adjusted for inflation money losers? It has forced money from those assets into the stock market creating an asset bubble in stocks. On a PE basis it may not look like a bubble because companies continue to squeeze expense savings to keep  earning looking good. What happens if we get a quarter or two  of disastrous earnings and all of a sudden a fairly priced market looks very expensive and the consumer which is the back bone of the economy s doing battle to survive for the very reasons outlined above. My hunch is that Janet Yellin and QE 3 will in the coming quarters become increasingly irrelevant.

QTWW I want to use a sell order for half of our position at $5.20. If it appears to stall I might book half profits at $5.00 assuming we see a continuation rally.

TSLA I will hold and see how it performs tomorrow. The jury is still out on it.

Bob