My Thesis in a Nutshell

In the US, a "Jobloss" Recovery will crimp spending and keep companies from hiring or expanding.

Zombie Banks…Japanese Style…this will ensure that no lending takes place to spur growth.

On the bright side though, the global inventory bounce continues strong…mostly led by China.

But, they are starting to rein in stimulus to avoid asset bubbles. Who will pick up the slack?  Certainly not the US as they are in a “screwing the dollar” mode which increases the value of their exports to us. Geithner is starting to look like a clown every time he says that the US supports a strong dollar policy.

A big factor here is that I believe that the US consumer is still the global consumer. Global structural changes have still not fully taken place.

Could investors be sensing this finally?

Will the “extend and pretend” strategy advocated by the gov’t and being implemented by the banks payoff as a recovery, mixed with a massive monetary base reflates us out of our debt? That is the question.

Will our creditors continue to lend us money to finance all the stimulus, while we depreciate our dollar and thus depreciate the real value of their US debt holdings? I believe so, simply because at some point (in the near future), there will be a realization that we will not embark on a V-shaped recovery. This will set off a tidal wave of dollar short covering and will cause sharp drops in most asset classes. The safety of Dollars will be once again sought and Treasuries will once again be bid down to the 2% range (maybe even 1%!).

My main point is that the US economy will not undergo a V-shaped recovery, one that has been more than fully priced into the US stock market already. Signs continue to surface supporting this basic belief.

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