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“Courage is being scared to death, but saddling up anyway”
-John Wayne
 
Short sellers can be scary, particularly if they are the kind with real capital that don’t know what they are doing. Some short sellers know exactly what they are doing – trying to scare people to death with their narrative fallacies. Don’t be scared of them – they are Slum Dogs, and you can make a career for yourself in this business picking them off.
 
As sad as this is to say, making stuff up is actually an investment process that some market participants use, daily. If you have no moral compass, and the SEC isn’t going to regulate your slumming tactics of fear mongering, heck … why not keep doing it? Well, as one of our clients said to me on Friday, “these raccoons all have a plan, until someone punches them in the face.”
 
I am a proactive risk manager and short seller, and I have had to endure these Slum Dog Short Sellers for the better part of my career. The difference between my last 10 years in this business and now, is that now I have a platform by which I can shine a flashlight on them, publicly, when they are slumming in the garbage cans of information transfer. As I wrote in Friday’s missive, “it’s time to drop the gloves.” I’m saddling up for this fight, and while I am scared of socialization, I am not scared of raccoons.
 
On Friday I dropped the mitts with the Slum Dogs at 1:21PM EST, and posted a real time note to our clients to “Buy SPY, with the SP500 at the 754 line.” Now call me a knucklehead hockey player or call me right – that turned out to be both the low of the day and of the year to-date. I sincerely hope that those Slum Dogs who were floating their shameless rumors and pressing their shorts in Citigroup on that line doubted the power of The New Reality.
 
This market needs leadership. This market needs a voice. That voice can be Chinese, Arab, or American – global markets are as interconnected as they have ever been, and collaboration amongst the uncompromised is going to get this done right.
 
Despite the Slum Dogs shopping their short thesis’ into the US market close, Asian markets charged higher last night, reminding us that there are new Chinese leaders in town. China was up another +2%, taking the Shanghai Stock Exchange to +26.6% for 2009 to-date. How is that short China “because they lie and make up the numbers” thesis treating you this year Mr. Slummer? Isn’t it annoying when someone who is lying like you are is crushing the short side of your P&L? Or are they lying? Inquiring and accountable minds want to know…
 
Asian governments also took slum lord matters into their own hands over the weekend and, with China’s leadership, established a massive $120 billion dollar Asian Currency Pool. After seeing Asian currencies hit 3-month lows last week, this proactive risk management move makes sense. Remember, China owns both her own cash and liquidity at this stage of the game of global economic power re-balancing. China is doing what she needs to do, when she needs to do it – she is controlling her own destiny, and with our being long China via the CAF closed end fund, I support her message.
 
In the Middle East, they rang the short squeeze sirens in the United Arab Emirates last night, taking the Slum Dog Short Sellers for a little visit up on top of one of their monstrous buildings, giving the perpetrators of storytelling a peek over the ledge. Like the Chinese, the UAE decided to take matters into their own hands and lend Dubai a cool $10 billion at a 4% rate – I bet the Pandit Bandit wouldn’t mind some of them petrodollars – no regulation strings attached! The UAE’s stock market is trading up +7.9% so far this morning – leadership matters…
 
Saudi Arabia’s stock market is also trading higher in the face of what looks like a bottoming process in the price of those petrodollars. I had been buying oil for the last few weeks and stating my case against the Slum Dogs that buying oil under $38/barrel gets we un-compromised American capitalists paid. Despite all of the manic media’s noise about gold last week, oil actually outperformed gold on a week over week basis. Gold was +5.6% for the week, while oil was +6.7%. This has not happened for a long time. This doesn’t fit the narrative fallacy of the Slum Dog momentum trader either – oh what is a raccoon to do when that light is shining in his face?
 
For the immediate term “Trade”, I am long oil and short gold. On an intermediate term basis, gold is bullish and oil is bearish – so why trade? Trading is the only means of survival in this market, and it’s also the best way to pick off the Slum lords and Slum Dogs of the land without moral compass. Is it a battle in these trading trenches? You bet your Madoff it is  - and I am signed up for it. Gold is trading down -1.5% so far this morning, and oil is up again, testing $41/barrel – game on!
 
My downside target for the SP500 remains a higher low versus the November 20th low of 752. I have put my money where my mouth is and taken my cash position down to 58% versus the 64% position I was carrying into Friday’s open. I have a 21% position in US Equities, and I am Long America, for a Trade. I am short gold and short the Slum Dog Short Sellers, at a price.
 
Best of luck out there today,
KM

 

Slum Dog Short Seller - etfs022309