COMMENTARY

First, I want to say how sorry I am to the families of the DC train wreck. That dead conductor was likely on his phone texting, or maybe he had a heart attack. Federal law against phone use likely down the pike.

Back to the market. So it goes something like this:

The mortgage market is the heart of our economic difficulties. Since they have decided not to let it crash to bottom, and have instead insisted on propping up prices, so banks won't look anymore insolvent than they do already, they (the gov) have artificially kept mortgage rates down by buying up treasuries AND getting a little help from the slide down slope in the stock market until March 10th.

But then, China said, we no buy your Treasuries (ten years, which mortgage rates are pegged to) at less than 3.5%. So Timmy runs over to China to say we're sorry, don't worry. And after he capitalizes his banks by lying to us, by suspending mark to market accounting rules so banks can hide their real losses, and telling his broker friends at GS and JPM to buy the SPY, and we get the stock market to rally back up to phony earnings, rising commodities on sheer speculation cause we all know supply is high and demand low which will stifel any recovery real or imagined, UNTIL....

Mortgage rates rise because no one is buying the 10yr because everyone has been fooled by Green Shoots and heading back into stocks. 10 yr goes to 4.0%, voilah, everyone buys Treasuries again and back down it goes. So now......Fed has to buy treasuries again (today) and has to TANK the stock market so no one will buy stocks but RUN to treasuries so mortgage rates can go back down so foreclosures can stop. But they won't do what they should because banks come first, consumers and Americans, LAST. They will hold these zombies up until they have bled every last possible drop of blood from the unsuspecting public.

And we are headed into earnings season again July 20th. Banks have made lots of cashola second Q, just look at GS who will be paying RECORD bonus' to their employees in the middle of the WORST recession in our lifetime. 3Q will not be so kind and you would do wise to be stashing any cash you may have left in your proverbial mattress while the titans of Wall Street in collusion with Congress, shoot themselves yet again and we start the vicious cycle all over again.

Have a nice night...Tradebum