Torture, government spending and the markets!

Forget the fact that Feinstein, Pelosi and many other Dems on committees knew about enhanced techniques on terrorists. Forget the argument on whether enhanced techniques were right or wrong. Forget the utter hypocrisy on capturing terrorists and then using enhanced interrogation techniques equals bad but blowing the terrorists up with hellfire missiles along with the collateral damage is good. Forget the ignoring of America’s security in releasing this report. Forget that the report should have been an op-ed piece in the NY Times. Forget that they did not interview anyone with a different opinion. The real story is the media…the all of a sudden breathless media which are going nuts over 10 year old news. The bottom line is that if this report was about the Obama administration, the national media would have never reported it. We repeat, if this was Mr. Obama, this would have been buried.

The spending bill…we repeat, when it comes to spending, there are no Democrats and there are no Republicans…there are just spenders. That’s how you get to $18 trillion of debt. One is worse than the other.
And the market.

We remain bearish on the long list of areas we have been reporting to you. This includes:

Energy
Oil & Gas
Solar
Steel
Coal/Aluminum
Metals/Ores
Mining
Construction Mining
Building/Cement
Gaming
Yen and Euro
Commodity countries- Russia, Brazil…
Emerging markets
Gold stocks- though we are now neutral on the metal
Big Telecom
Machinery
Small caps vs large caps

We are also less than thrilled about the failed breakouts in the big financials that occurred this past week. As you know, we put a lot of weight on this area. Besides that, there remains a good list of areas still working…but word to the wise, they are now in pullback mode with some pulling back harshly. This includes:

Semiconductors
Biotech
Reits
Retail
Airlines
Hotels/Cruise Lines
Food/Drugs/Beverages

But…and we have a few big buts. We remain very worried about central bank-induced bubbles. We have been telling you for a long time about the price and yield distortion of the bond market, most notably the junk bond market. Junk bonds are now getting smoked. We also believe a lot of this crash in Energy is also central bank-induced as currencies are all over the map which in turn affects price. We just don’t believe all these wicked moves are healthy and have to be cognizant of markets joining the ugly. The market teased the ugly into October but was saved by Europe, Japan and China with more money printing and more easing. We do not want to be long when the market starts to ignore these maniacs. This past week’s action was nothing but distribution and now must be watched. We continue to see major weakness in the small caps…and you can now add the NYSE to the ugly party. Mid caps are also suspect.

Near term, markets are already oversold with seasonal bias ahead. Bounces are due but damage is being done!