Bloomberg

U.S. stocks staged the biggest rally in seven decades on a government plan to buy stakes in banks and a Federal Reserve-led push to flood the global financial system with dollars.
The Standard & Poor’s 500 Index rebounded from its worst week in 75 years with an 11.6 percent advance, its steepest since 1939, and the Dow Jones Industrial Average climbed more than 936 points. Morgan Stanley soared 87 percent after sealing a $9 billion investment from Japan’s Mitsubishi UFJ Financial Group Inc. Alcoa Inc., Johnson & Johnson, Chevron Corp. and Prudential Financial Inc. posted their biggest gains since Bloomberg began tracking the data. Europe’s benchmark index climbed 10 percent, its best jump ever, and Asia’s added 3.1 percent.

My comment: My trade, going long the SP 500, is working so far. However I will probably look to liquidate it in the next few days. This unprecedented rally is nothing more then a deadcat bounce. I was able to buy some more gold shares today as the metal was down and the gold stocks did not rally like the general market. I am still convinced we will at a minimum go back down and test the lows and might even go substantially lower. The next time down I will probably use a 2X short fund. The Ted spread came in just a little bit and so did LIBOR. I am not confident that the worlds governments will be able to fix this but it is apparent they are going to try. It appears our old friend Nancy Pelosi is going to lead the Democrats in passing another welfare check, I mean stimulus package.

House Speaker Nancy Pelosi said Congress must consider an economic recovery program and has ordered hearings to determine the size and provisions that should be included in the plan.
"A recovery package is needed,” and it may have to be higher, Pelosi said, than the $56 billion plan that was passed in the House and blocked in the Senate last month.

Pelosi said there was agreement in support of a recovery package among a group of economists, including former Treasury Secretary Lawrence Summers, who met with Democratic House leaders today to develop a stimulus plan.

Pelosi said last week that she may call lawmakers back to Washington to work on a new stimulus package that includes infrastructure spending and extended unemployment benefits.
If passed, it would be the second economic-stimulus plan enacted this year, after President George W. Bush in February signed into law a $168 billion measure that sent tax rebates of as much as $600 to individuals. Checks went to 111 million households beginning in May.

My comment: As you can see I put the national debt counter in the upper right hand corner of the blog. It is evident to me that when Obama gets in as President and we have substantial Democrat majorities in both the House and Senate that the spending is going to go into overdrive. My question is where will the money come from? We can only borrow so much and we are talking about the possibility of over a $1 trillion dollar Federal deficit next year. Not to mention bailout nation expenses and two unfinished forever wars. This presents a long term investment thesis. I have went short, through a fund, the long term Treasury bond. I think interest rates are at a generational low and have only one way to go and that is up. I think this trade is comparable to buying gold back at the lows in 1999. At that time the price of gold had only one way to go and that was up. My view is that interest rates are going up long term to levels that would get you laughed at if mentioned today. I think you can get one of these funds and just add to it on dips and I think you will do real well over the next decade as the budget gets busted, inflation comes back, and foreigners refuse to fund our irresponsibility. This is not a trade but a paradigm shift and is a buy and hold type situation. This is also not advice it is just what I am doing as of now.

John Polomny
The Real Deal