To The Moon Alice

by Larry Levin

Technicians at Wall and Broad were seen filling the market's 15-story tall fuel tank this morning with more than 1.9-million liters of super-cold liquid oxygen and liquid hydrogen. Shortly after the market opened somebody yelled, Hey, let's light this candle! It was either that or I heard one of my buddies in the pit do his best Ralph Cramdon imitation as he yelled, To the moon Alice! Either way, equities took off, nearly leaving Earth's atmosphere; however, something weighed it down.

The explosive fuel for today's rally wasn't really liquid oxygen and hydrogen, but a mixture of oil, short covering and finally some decent news form the banking sector.

Oil fell $4.14 today to settle at $134.60 a barrel on the New York Mercantile Exchange, adding to a drop of $6.44 yesterday. Although this is a nice respite from the ever escalating energy rally, does a 2-day swoon actually make a new trend? I think not.

The good news from the banking sector came by way of WFC. Wells Fargo & Co. said its second-quarter earnings fell (cough...FELL) 22% as more customers at the nation's fifth-largest bank failed to repay loans. (FAILED TO REPAY THEIR LOANS!) But the company's results beat Wall Street's remarkably low expectations, and investors were pleased by Wells Fargo's decision to raise its quarterly dividend to 34-cents from 31-cents. On the heels of the admission that its customers are deadbeats and its earnings (read: profits) fell like an asteroid from the heavens, Wells Fargo rose $6.72, or 32.8% to $27.23. Yep, that's good news indeed.

I checked several websites to make sure the LOSS I mentioned above was correct, and it is. In fact, Wells Fargo has now logged three straight quarters of profit declines! With this so-called wonderful data Kevin Giddis, managing director at Morgan Keegan & Co. said about Wells Fargo, "Not all banks are on the verge of bankruptcy. This is a major victory for the banking business, and these guys need to be held up as the 'poster child' of present and future banking activities." Ahhahahahaaaa - the poster child of present and future banking activities, oh that's rich!

Goldman Sachs analysts Richard Ramsden and Brian Foran wrote in a note to clients today that Wells Fargo's dividend increase is questionable in an environment when capital is extremely scarce. I wonder where the money is coming from to increase the dividend. The Fed perhaps? Why not, after all it seems like banks don't have to ante much collateral these days for the cheapest loans going. I can hear it now from WFC, Mr. Bernanke - what kind of collateral do we need to put up in order to secure a few billion dollar loan to increase our dividend? The Chairman of the Fed thinks about it and thoughtfully responds with: A stapler will do.

Weighing down today's equity-shuttle from reaching space was the nagging problem of inflation. The Consumer Price Inflation (CPI) data was released today - and it was red hot! This is the inflation that has come down from the producer level, mentioned yesterday, that is robbing you of purchasing power. But once again in front of Congress today, Ben Bernanke gave us all the finger. He just doesn't care.

Prices for a gallon of milk, a plane ticket, vegetables, beef, gasoline and a host of other products skyrocketed last month at nearly the fastest pace in a generation. Consumer prices rose 1.1% in June, which was nearly 60% worse than most never-get-it-right-economists had predicted. Moreover, it is almost double the reading from May.

Reported consumer prices are up 5% over the last 12 months, the fastest one-year change since 1991. However, the current rate of change (higher) is out of control. If inflation stayed at this level and didn't get any worse, by this time next year I will be reporting 13.2% inflation, and Ben Bernanke will probably still be waving his middle finger at you.

How long can he ignore this growing problem? Isn't defending the US dollar by curbing inflation his freaking JOB?

Real Time Trading Signals*for

Trade Date: 7/16/08

E-Mini S&P Trades*
(before fees and commissions):

1) VA buy @ 8:45am at 1212.75 = +1.50 & +8.25

2) OTF buy @ 10:40am at 1221.75 = -.50 & b/e

3) OTF buy @ 12:40pm at 1229.25 = +1.50 & b/e

4) TP sell @ 2:05pm at 1238.00 = -1.00 (1 lot)

5) Algorithm trades (6)...combined total...+13.50


E-Mini Russell Trades*
(before fees and commissions):

1) No ER trades today.

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