Ouch! Ouch! Ouch!

Sales at U.S. retailers fell more than twice as much as forecast in December as job losses and the lack of credit led Americans to cut back on everything from car purchases to eating out.

Is there anything in the economic data that would (or should) give any comfort and support to the cheerleaders on CNBC?  Even GOLD has broken down, though not even close to everything else,  (If you have been selling covered calls each month you are in still in pretty good, and profitable, shape). Unemployment continues its trajectory, the Financials are bleeding to death in spite of the "forced" feeding of capital by the U.S. Treasury (or should I say "Government Sachs"?).

Here we are in the middle of the Northern Hemisphere winter and Oil inventories continue to build.  Well, Oil is not as important as a heating fuel - Natural Gas is now well over 50% of the heating market - but the decline in distillate usage tells me that the trucks are not rolling.  And why would they be?  Take a look at the retail numbers - retail sales have collapsed, 

Retail sales last month were down a record 9.8% compared with December 2007, the Commerce Department's data showed. Sales excluding autos fell a record 6.7% in the past year.

and are MUCH worse than they appear.  The margins on goods sold dropped far more than 9.8%.  In order to get the sales the retailers got they slashed prices more than Freddy Krugger in a bad mood. 

The markets are puking it all up and out, as expected, with the U.S. S & P 500 down nearly 10% in 7 trading sessions.  This is my kind of sell off.  Yes, we are going to go lower (in my opinion) but that will not happen in a straight line - otherwise, all one would have to do is come to work, short everything, and sit back and collect billions, and that just ain't how things work - I like to go long after 7 to 10 day market selloffs for a trade.  But that's trading (I don't give specific advice or share my positions in equities in this forum).  The data tells me that we are still in the grips of deflation and GDP contraction, and that these are going to get worse.  I can comment on the commodity market (I hold no commodity registrations) and I will tell you that I think we are close to the point where I will be selling puts and trying to buy some stuff (notice I did not say which and at what price).

Lastly, stock market crashes come from OVER SOLD conditions, not because the market is too high.  I am not saying the market WILL crash, only that it CAN crash.  I would define a 8,000 Dow dropping to 6,000 in less than 1 week as a crash.  I also believe we could see a 6,000 Dow WITHOUT a crash, just slowly grinding your #$%! off.  In short, a trading range between Dow 6,000 and Dow 9,000 for the next 5 years is not unreasonable (in today's dollars, that is - the question is: Will we have inflation? And when? If not, in a sustained deflationary environment the Dow could go a lot lower than 6,000 - and in a hyper-inflationary environment the Dow could go a lot higher than 9,000.  Those are nominal, not REAL, numbers).

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Everyday, I get more and more excited with Barak Obama.  He is pissing off people on BOTH sides of the aisle (but especially those in his own party) - a sure sign that he is onto something.  I am still deeply sceptical of the "Fiscal Stimulus Plan", which is surely going to lead to more "bridges to nowhere", influence peddling, and outright thievery, but what can I do?  I am just trying to make a living in a crazy world.

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New York voters prefer Andrew Cuomo to Caroline Kennedy in a recent poll.  I hope Governor Paterson does not pander to Kennedy's monied connections for the 2010 election, but I hold out little hope for that.

Caroline Kennedy should not be appointed to anything.  If she runs for office and wins, well, good for her.  APPOINTMENTS should only go to those with a lifetime of service and/or accomplishment.  If Ms. Kennedy's last name was "Smith", would we even be having this discussion? 

Governor Paterson: Do the right thing!  And it doesn't have to be Cuomo, but he should be at the top of your list.

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You heard it here first:  The Banking industry will need another "bailout" that will total over $1 TRILLION.  Housing has not bottomed, not even close.

Good Luck!

Mentatt (at) yahoo dot (com)