Australian Dollar Is Fully Valued. Not Advocating Long Positions.

“While the Australian dollar has good fundamentals in terms of interest rates, its valuation means we’re not recommending buying it at the moment. The same goes for the New Zealand dollar.”

Bilal Hafeez, head of currency strategy at Deutsche Bank AG in London

Related: CurrencyShares Australian Dollar Trust (NYSE:FXA)

6 Themes For 2011

Credit Suisse recently detailed their 6 dominant themes for 2011 and how they’re likely to influence markets:

(1) The rise and rise of the emerging market consumer remains the most dominant macro theme – for the third year in a row.

(2) Investors should focus on corporate spend areas in the stock market, one of our key themes since mid-2009. Corporate free cash flow, profitability and investment intentions are all abnormally high, while corporates have seldom been as under-leveraged. We believe corporates will want to focus on non-discretionary or short-cycle areas, i.e. areas where there is a relatively quick pay-back.

(3) Plays on abnormally low real interest rates: we believe that the monetary authorities in the developed world will keep real rates artificially low to facilitate the deleveraging of $6.3tn of G4 excess leverage. If real yields rise too far and threaten the economic recovery (which they would if QE2 ended, in our judgement) or if the fiscal authorities over-tightened, we believe QE would be renewed in the US – and via a weaker dollar would force other developed market central banks to respond.

(4) M&A is set to increase sharply

(5) Investors will pay more of a premium for both growth and pricing power. Growth will be at premium because the discount rate is likely to remain abnormally low (increasing the value of long duration earnings), while it is hard to see how this will be a normal recovery, with $6.3trn of excess leverage in the developed world, making growth more valuable. Companies with pricing power deserve a premium, given excess capacity of around 4% of GDP in the developed world on our estimates, increasing Chinese competition and rising input costs.

(6) Investors should avoid companies exposed to increased competition from Chinese companies.

in The PragCap

Rosenberg`s US Economy Outlook. Beware Of Global Multinational Cyclicals.

"In my view, real GDP growth in the U.S.A. is set to slow from around 3% in 2010 to 2% in 2011, or possibly even lower. This is not a double-dip but it is a slower growth profile. We went to 3% in 2010 from -2.6% in 2009 so the second derivative was positive. But for the coming year, the second derivative is likely going to decline. This augurs for a non-cyclical exposure; more defensive and still yield-oriented. As the Bank of Canada strongly suggested, global growth is going to slow and hence a sense of caution over global multinational cyclicals is warranted."- David Rosenberg, Gluskin Sheff

Related Stocks: General Electric (GE), Procter & Gamble (PG), Microsoft (MSFT), Apple (AAPL), John Deere (DE), Nike (NKE)

Rogoff On The Eurozone: We’ll Be Very Lucky To Avoid Restructuring.

“They can’t just be in a state of denial. They’ve tried to guarantee everything, to say, ‘Well, Germany is behind it and the IMF is behind it, it’s inconceivable for a euro-zone country to restructure.’ We’ll be very lucky to avoid restructuring in countries such as Greece, Ireland and Portugal."

in Bloomberg

The Story Of 2011 Will Be Interest Rates.

"The market story of 2011 I believe will be interest rates. In Asia, central bankers will raise them in order to normalize the level relative to growing inflation. In Europe, sovereign stress will keep them elevated and in the US, a recovering economy and rising inflation will see them higher in the face of the Fed’s best attempt to suppress them. With respect to equities, this rising rate environment will create a challenge in terms of impacting still overleveraged economies and companies and in pricing risk. Because of the influence of rates, a good economy doesn’t always equate to a good stock market as the past two years saw a good stock market and a weak economy."

in Ritholtz.com

Related: ProShares UltraShort 20+ Year Trea (ETF) (Public, NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (Public, NYSE:TLT) , SPDR S&P 500 ETF (Public, NYSE:SPY) , SPDR Dow Jones Industrial Average ETF (Public, NYSE:DIA)

Relying On Economic Data To Trade Is Difficult, If Not Impossible.

"Relying on government statistics to track the fundamentals of the economy is a lot like driving by looking in the rear view mirror—and a foggy one at that. The data comes with an unavoidable and sometimes significant delay, it is often manipulated and estimated, and many series are subject to substantial revision long after the fact. That's why it can be more rewarding to watch market-based indicators (i.e., prices), since they reflect real-time information, and they incorporate the collective knowledge and decisions of hundreds of millions of economic actors with access to every conceivable piece of information."

in Calafia Beach Pundit

Related: SPDR S&P 500 ETF (NYSE:SPY), ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), SPDR Dow Jones Industrial Average ETF (NYSE:DIA)

U.S. Economy Adds 39,000 Jobs in November, Far Fewer Than Expected; Unemployment Rate Up to 9.8%

Doubling And Tripling Your Money...

I am re-printing a story I wrote a few months ago:

"Last night I had dinner with some brokers in a party I`ve attended with my wife. We were talking markets even though I do not really like to talk about the market when I am out of the office. But these guys are funny and always have some nice war stories to tell about their costumers.

This one I think its inspirational for all of us. One of the customers opened an account in July with 60,000 USD. He only traded Dax Warrants during this period and he was able to run his account to an astonishing 1,670,000 USD a few weeks ago. Then a small disaster struck and the account come down to 300,000 USD but right away he rebuilt it to 800,000 USD. Of course this was all before this Dubai`s mini-crisis and I can`t wait to know what has happened to his trading account in the last 2 trading days.

Anyway, this client is a medical doctor over 60 years old that placed most of his trades through the phone because he thinks trading platforms are not user friendly...What about that?

Another 2 interesting numbers. Only 8% of all these brokerage house customers are able to win over an extended period of time and the median lasting time of a trading account before it goes to ZERO is 6 months. Where does that money go to? To the trading pros, of course."

General Electric Is Down For 6 Straight Sessions.

General Electric (GE) will probably open lower today again, after dropping for 6 consecutive trading sessions. It may be an interesting time to play for a rebound in this stocks.

I will keep track of this trade on the comments section.

Have a great trading day.

VXX, The Volatility ETF Makes A New Low.

The volatility ETF, iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX) is making a new all time low. While I do not recommend using the ETF for medium and long term plays because of the contango, a short term play on the long side seems interesting at this point.

3 Stocks That Are Up 10 Days In A Row.

If you are looking for overbought stocks to sell short, or to play via options, here are 3 stocks that have had a 10 day consecutive winning streak: Schlumberger Limited. (SLB), Virgin Media Inc. (VMED) and TransDigm Group Incorporated (TDG).

The market has been so enthusiastic that even a dinosaur like Microsoft (MSFT) has managed to rally for 6 consecutive session.

These are interesting very short term play on the short side of the market.

I will leave you with the amazing Pagani Zonda test drive:

Have a great day.

Whitney: I Expect Multiple Municipal Defaults To Trigger Indiscriminate Selling.

“The level of complacency around this issue is alarming. Most assume, as last week’s Buttonwood panel did, that the federal government will simply come to the rescue of the states without appreciating the immensity of the cumulative state-budget gaps. I expect multiple municipal defaults to trigger indiscriminate selling, which will prompt a federal response. Solutions attempted in piecemeal fashion, as we’ve seen thus far, would amount to constantly putting out recurring fires.

Rather than waiting for more federal intervention, states need to make their own hard decisions and not kick the can down the road. How will taxpayers from fiscally conservative states like Texas or Nebraska feel about bailing out threadbare Illinois or California? Let’s hope we never have to find out.”

Meredith Whitney

Are You Bearish? Here Are A Few Stocks With A Good Probability Of Correcting.

Schlumberger Limited. (NYSE:SLB) is on a 10 day winning streak, Las Vegas Sands Corp. (NYSE:LVS) is currently on a 8 day winning streak and very, very overbought and finally American Express Company (NYSE:AXP) on a 7 day winning streak.

I am bearish and short, waiting for a classic buy the rumor, sell the news reaction this week.

Have a great trading session.

If you want to relax 5 minutes while listening to a good sound, try this:

The national are one of my favorite bands.

US Economy To Slow Further

ECRI`s Lakshman Achuthan expects no double dip in the economy, but he still believes that the US economy is going to slow further:

"Lakshman Achuthan and the team at ECRI not only predicted the recession, but also predicted the recovery. In their most controversial call earlier this year they called for a slowdown, but not a double dip. That call is looking pretty good based on recent data. Achuthan sees no double dip going forward, but believes the economy is going to slow further."

in The Prag Cap

Milton Friedman On Capitalism

I have listened and read so many economic misconceptions recently that I think all readers will benefit from Milton Friedman`s words. I am going to post his best video interviews over the next few weeks, especially on weekends.

Have a great trading day.

Bill Gross Calls QE A Ponzi Scheme So Large That Probably Should Be Renamed To Sammy Scheme In Honor Of Uncle Sam.

Bill Gross is very critical of quantitative easing effors from the Federal Reserve and eevn calls it a a "Ponzi Scheme":

"The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not. This one is so unique that it requires a new name. I call it a Sammy scheme, in honor of Uncle Sam and the politicians (as well as its citizens) who have brought us to this critical moment in time. It is not a Bernanke scheme, because this is his only alternative and he shares no responsibility for its origin. It is a Sammy scheme – you and I, and the politicians that we elect every two years – deserve all the blame.
While Gross isn't sure if QE 2 will work due to our liquidity trap predicament, he is sure who to blame for getting us into this mess. Gross targets the politics of the country at large."

And Bill Gross adds,

"Each party has shown it can add hundreds of billions of dollars to the national debt with little to show for it or move our military from one country to the next chasing phantoms instead of focusing on more serious problems back home. This isn’t a choice between chocolate and vanilla folks, it’s all rocky road: a few marshmallows to get you excited before the election, but with a lot of nuts to ruin the aftermath."

The impact of this politcal mess and QE 2 is extremely limited returns for investors in the bond market (and the stock market too). That's because the combination of inflation and negative interest rates is creating a uniquely bad environment for bondholders, according to Bill Gross.

Related: SPDR Gold Trust (ETF) (NYSE:GLD), United States Oil Fund LP (ETF) (NYSE:USO), iPath S&P GSCI Crude Oil Total Return (NYSE:OIL) , ProShares UltraShort DJ-UBS Crude Oi ETF (NYSE:SCO), ProShares UltraShort QQQ (ETF) (NYSE:QID), Direxion Daily Finan. Bear 3X Shs(ETF) (NYSE:FAZ), SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ), ProShares UltraShort 20+ Year Trea (ETF) (Public, NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (Public, NYSE:TLT)

Fantastic Trading Session. It Does Not Get Much Better Then This.

Today I am sharing with all the readers the report sent to subscribers after the closing bell. We had a phenomenal performance in our "Earnings 1 Day Plays", hitting 5 in 5 for a cumulative performance of 25.67%. The system also did great today and is trading at new all time highs.

The daily stock picking system has gained +2.90% in today`s session Las Vegas Sands Corp. (LVS) +3.93% and The Progressive Corporation (PGR) +1.86%). It was a very good day for the system after a few subpar sessions. (DSP System`s October Performance (to date): +4.44%)


Extra System Trades Summary:

- I am still short eMini S&P Futures as an intermediate short play ( spreadsheet);

- There were no intraday trades on oil, the system did not trigger any signals; Nymex Oil Futures, had a quiet session on regular trading hours;

- we have a few "earnings 1 day" plays at work and by the look of it we will cash in big tomorrow; Our long play are rising on after hours trading: F5 Networks, Inc. (FFIV) 5.23% , Illumina, Inc. (ILMN) 2.71%, JDA Software Group, Inc. (JDAS) 9.26%, Life Technologies Corp. (LIFE) 2.01% and our short play is Century Aluminum Company (CENX) is falling -6.46%. So, its 5 in 5 for us tonight. It does not get much better then this, does it?

- finally our forex EURUSD short is gaining some traction and its up 110 ticks since we opened it; I am expecting it will hit our target in 2-3 days;

Have a great day.

Housing Data Disappoints. Stocks Down.

"A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows."

David M. Blitzer, chairman of the index committee at Standard & Poor's

related: iShares Dow Jones US Home Const. (ETF) (Public, NYSE:ITB), Lennar Corporation (Public, NYSE:LEN), D.R. Horton, Inc. (Public, NYSE:DHI) , PulteGroup, Inc. (Public, NYSE:PHM) , The Ryland Group, Inc. (Public, NYSE:RYL)

Volcker On Inflation

"Inflation is not a problem right now. It won't be a problem next year, it won't be a problem for several years. I see no possibility, frankly, that a deflation will take place. Over a period of time, price stability will be conducive to a strong economy."

Paul Volcker

Related stocks and ETFs: SPDR Gold Trust (ETF) (NYSE:GLD), Market Vectors Gold Miners ETF (NYSE:GDX), Newmont Mining Corporation (NYSE:NEM), AngloGold Ashanti Limited (ADR) (NYSE:AU), Harmony Gold Mining Co. (ADR) (NYSE:HMY), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Barrick Gold Corporation (USA) (NYSE:ABX), NovaGold Resources Inc. (USA) (AMEX:NG)

Is Bank Of America (BAC) Ready For A Bounce?

Bank Of America (BAC) is very oversold and looks poised for a recovery rally:

On other topic, if you are into alternative rock, watch this live performance, "The National - Secret Meeting":