Pay Close Attention To The WARNINGS

The EU summit “deal” is noise; we knew going in there would be no “grand bargain” and there isn’t.  Britain said “stuff it” (rightly so) along with a few others; those who went along did so pretty much at gunpoint.

The vassal state model may look attractive as an alternative to Mekosy, but they’re nuts.  What they’ll ultimately get out of this is a war.  Oh Archduke, is that you over there somewhere?

The internal issue for America is more-acute in the market sense.  Texas Instruments last night warned on weakening demand and got clocked in the aftermarket.  This morning Dupont issued a warning.  Either standing alone could be looked at as company-specific.  The two together cannot.

I said a bit over a year ago that PPI pressures would eventually filter through and hammer margins directly, and likely would result in cost-push pressures that ultimately would hurt the top line — although perhaps not at the firms that had the cost pressures.  In other words the deteriorating standard of living would eventually have to show up somewhere — “charge it” only works for a while.

It appears that it now is showing up.  This sucks, to be blunt, but it is very unlikely to be contained.

My macro-level view has not changed much; timing is everything in the markets and I still believe we’ll more-or-less hold together until late in December — another couple of weeks, and perhaps into early January, but in 2012 it’s going to come apart.

Those who think that we’ll get through the election will be wrong — I’ll go out on the limb and put that out there right now.  No chance folks — there’s not that much dry powder available to anyone.

As such consider your positions carefully if you’re long the market — the wild gyrations are a warning — overall “bullish” markets don’t behave this way, but ones that are about to fall apart sure as hell do.

I expect a very profitable 2012 — and not on the long side either.

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