Sunday morning walk of shame

The markets and investors are finally waking up and it's not pretty what they're in bed with. The final realization that the Fed cannot win this battle is slowly settling in and the prospects for the economy are a no win situation. Inflationary pressures have put the kibash on rate cuts, so the fed will have to back-off on bailing out the banks any further or risk a dollar crisis and commodity explosion. If the Fed raises rates though, the markets will collapse and the dominos will lead to an implosion in the financial industry. You're seeing the effects of the realization in markets worldwide both in equities and bonds. The US is really in a bad situation right now. All hope has been placed in the fed and they know, as well as anybody else who has a sense of what is occuring, that they can't fix this.

The fed's allegiance is to the banks, so I find it hard to believe they will capitulate to the inflationary pressures. Any rate hike would be minimal at best and probably followed by a quick reversal. I anticipate the fed will try and sit on their hands, pump up the alphabet soup crutches and minimize the dollar crisis through strong-arm tactics. This will continue to feed the fall in the dollar and surge in commodities.

We truly are in a rock and a hard place right now. Look for turbulent times in the market as investors whipsaw from one position to another. It will be a rocky road until the ultimate fate is sealed one way or another.

I'll be working on a strategy that hedges on both scenarios. I'll write it up later down the road.