END OF YEAR RALLY ON CUE – SEE WHAT $85 BILLION/MONTH WILL BUY

Before we get started, my prayers go out to the families affected by the senseless tragedy in Connecticut. My heart aches over the interviews I have been watching of the parents who lost a child. Frankly, I don’t know what I would do if it was my child.

The anticipated end-of-year rally that this report told you about…has started on cue. All major indices were in constructive pullbacks into support/moving averages…combined with the end of the year coming up…making it almost a gimmee. The set up was there as important areas like financials are now breaking out to the upside. As I have stated numerous times over the years, markets do not get in trouble when financials are working…and when they are on the move, markets follow. Other areas coming on again are the housing and housing-related names…and finally, starting to see a few growth names starting to kick in.

On top of this, the foreign market/commodity play is still working. Steel, metals,mining and now oils are getting into gear as countries like China are now getting a bid. The dollar is being crushed on purpose…enabling these moves.

For me, it is simple. In the past couple of days, GE lowered numbers and economic stats continue to be a big blah. The fiscal stiff is still at hand as taxes will go up….and there will be no spending cuts as Boehner will get nothing done. But the Fed has decided if $45 billion/month is not enough….let’s just print $85 billion. I gather they will raise it even more if they deem necessary. I need not going into what I think of the trifecta of debt in Geithner, Bernanke and this President. The market continues to not deal with reality. The good news is that we only care about reaction. As I have stated, when you have a fixed asset like the market…and you add $85 billion/month which in part, chases that asset…the asset will go up. Of course, until it decides not to. So the bubble just gets bigger and bigger.

My next report will come from the beautiful beaches of Wailea on the Island of Maui. Enjoy the holidays and make sure you hug your children.

Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.