Foolish FedsDay - Goodnight Bucky, Goodnight American Economy, Goodnight Republican Party

Ok, let's start with the PPI - Core up 2.2%, headline down 1.4%, annual 2.2% up.

Huh? Headline down? All of it came in food and energy. Well let's see, that'd be August, what has food and energy done in September?

Psst - look at the 12 months of data in Finished Goods column. Notice the TREND? In particular, look at the entirety of 2007 from February until now! Likewise, the intermediate goods numbers for this year, Ex-January, has all been trending the WRONG WAY.

THERE IS NO GOOD NEWS HERE FOR INFLATION.

Oh you know..... Of course the market cheered this number, popping the futures up about four points.

Oh, and speaking of popping, Lehman reported results this morning that were nowhere near what had been feared, and were indicated up $1.20 premarket.

"Lehman Brothers Holdings Inc., the largest U.S. underwriter of mortgage-backed bonds, said profit fell less than expected as fees from equities trading and investment banking offset some losses from subprime home loans."

Sounds like awful results? Hmmmm.... maybe not. Unless, of course, you bother to read them, in which case you'll find plenty of book-cooking, including a change in their assumed income tax rate. How do you get a change in income tax rate? You make less money, or you blatantly cheat in the current quarter to hit the numbers, praying that your business recovers so you don't have to recognize the loss (which would otherwise double back on you) next quarter.

Best Buy came in ahead of expectations and got a $2 (or 5%) premarket pop. I'd love to know how they pulled that one off. Certainly it isn't on the back of the local store here - I've been in it a number of times in the last couple of months and it has been an absolute ghost town. In fact, I've never seen it that slow! But obviously, Chucky is burning the numbers off his plastic somewhere in their stores.....

So exactly what, may I ask, justifies a cut in the Fed Funds Rate in these numbers? You have investment banks claiming all is ok, you have a major retailer claiming not that all is ok but that sales gains are accelerating,

Producer Prices reflect August while we've had very high wheat, soybeans and oil prices in September, the trend is clearly going the wrong way and you want to slash interest rates?

Oh, and let's not forget Bucky. HE is not ignoring this. As soon as those PPI numbers printed he took a nice swan dive! Somewhat abortive, but there was an instant reaction - and not the kind The Fed is going to like.

Hmmmm.... me thinks that our 2-year-old "market model" is back in play today and might be throwing a tantrum in a few hours.... we shall see....

This much is certain - we're going to open higher, and probably go snaking after the 1490 level again up to the 2:15 PM ET announcement from the Fed.

In Europe we had the government step up and guarantee all bank deposits at Northern Rock, which has been suffering from a punishing bank run. Now we'll see if they allow the common shareholder's equity to be destroyed and the executives fired (and they should) or if we have a new definition of "moral hazard" from our buddies across the pond.

Foreclosures were up 35% from July and up 115% from last year (!) Nevada, California and Florida were the leaders (gee, big surprise - NOT!)

"The number of Americans who may lose their homes to foreclosure more than doubled in August from a year earlier as subprime borrowers with adjustable-rate mortgages saw their monthly payments rise, RealtyTrac Inc. said.

Lenders sent notices of default to a record 108,716 homeowners in August, up from 42,144 a year earlier, RealtyTrac said today. California had 41,714 new foreclosures, the most in the U.S., and Florida was second with 26,203, the real estate data company said."

This is good news too right?

Let's not forget the ICSC Chain Store Sales Index (although the media sure has; they haven't reported it on CNBS at all today), which was down 1.1%. Is that good news too? No? Well then I guess we'll just not report it, right?

Oh, and what you did NOT HEAR on CNBS? A TWENTY print on the NAHB Builder Index. Worst ever (ok, matched one month in '91.) Oops. (Update: They did mention it - a half-hour late.)

Ok, so the FOMC caves. 50 Bips.

BERNANKE: YOU STUPID BASTARD!

Guess what Bucky did - went straight in the shitter - straight off the cliff.

EXACTLY AS I SAID IT WOULD.

This is really, really bad, and the 10 year bond yield DID NOT COME DOWN. In fact, the long end of the curve WENT UP!

So now we have a 10 that is sitting, the currency is going in the toilet, and it will not be long AT ALL before the capital flight danger becomes "real".

SHORT THAT SHIT BOYS! WE ARE FUCKED!

I immediately took my profits from my hedges on the initial pop. I didn't get it all, but that's ok. I got some, and that's enough - that was the point.

It will be days, or at most a week or two, before the market figures this out and when it does things are going to get very, very dicey. Oil spiked higher as the dollar was debased, as one would expect. Gold ran but not enough to be a breakout (we need $730) and Silver didn't get its break on either, although it did move north on the announcement. HUI still has not broken out, which is a key confirming indicator on Gold - beware buying into this now until that confirms, as there is a potentially VERY SEVERE correction coming in the equity markets when the state of the dollar sinks in, AND IT WILL.

To those who said that "The dollar won't get hit by a big interest rate cut."

HORSESHIT.

Its damn near PARITY against the Loonie and 1.40 on the Euro! The fucking dollar lost 1/2% instantly on the announcement!

So enjoy your rally today guys, but were I you, I'd be goddamn careful and take your profits while you have them. It might even continue through Friday, although I'm not sure I'd take that bet.

This much I'm quite sure of - it won't last, and neither will our economy given that Bernanke just imported a huge fucking slab of inflation that is about to hit us on the head.

REAL INTEREST RATES ARE GOING TO GO HIGHER, NOT LOWER. MARK MY WORDS ON THIS.

This will NOT help homeowners, and in fact will HURT them!

Oh by the way, I'm done with the lying Republicans. While I'll get buttfucked voting for a Democrat, at least they're honest enough to tell me that they're going to fuck me up the ass straight up.

With Bush, I get to hear him tell me that they won't bail out speculators (meaning the investment banks) - but then he does.

He appointed Bernanke, he and the rest of the Republicans get to eat the consequences.

You folks who are reading this - you better get off your asses right now and get politically active on THIS SPECIFIC ISSUE or you can kiss the middle-class goodbye!

We're fucked boys and girls. Enjoy it and make all the money you can in the market.

Your dollars won't be worth dick.

YOU HAVE LOST NINE PERCENT OF YOUR PURCHASING POWER IN ONE FUCKING YEAR!

THANK YOU BEN, THANK YOU GEORGE BUSH, THANK YOU TO THE REPUBLICAN PARTY!

GET ACTIVE NOW AND GET DOUCHEBAG BERNANKE REMOVED FROM OFFICE OR YOU WILL LOSE TWICE THAT IN THE NEXT TWELVE MONTHS. EIGHTY-NINE AND CHANGE TO SEVENTY-NINE POINT TWO! IN TWELVE FUCKING MONTHS!

MARK MY WORDS - ACT NOW OR IT WON'T MATTER!

RANT (technical below)



Technical on where we go from here