I got up in the morning , just took a quick look a futures to see that the Bank of Japan has gone completely insane. As their QE program has failed they decided for MORE QE! In addition, the Japanese pension plan is allocating 25 percent of their assets (up from 12) into foreign and domestic stocks (great move right at the top or near the top of global markets) .

Japan is now on the road to ruin. The Fed Tapers then Japan prints more. There was a recent study that showed that it would take about 200 billion a quarter in printed money to keep markets going. Ironically, that is about what the US and Japan were printing mid year. And now that is about what Japan and Europe are printing.

The Dow futures are up over 200 and the S and P futures are up over 20 on the news. I am not going to panic and cover at the open but the QQQ will now make a new intra day high. We have to see if this leads to blow off reversal top or if this is the start of a blow off breakout for the fourth quarter.

What I can tell you is I am pretty fed up with the entire mess. I try to find overvalued stocks, with bad fundamentals to short or undervalued ones to go long. The markets are becoming increasingly for lack of a better term Bullshit with all the central bank intervention. I blame everyone, the central bankers for being insane, politicians for being incompetent buffoons who can't stop spending and the majority of the populace for being whipped sheep who won't stand up to the mess or are part of the problem by sucking from the government.

Most of my shorts are company specific, Chinese garbage stocks, the awful US auto companies . We have a few of our QQQ puts and the BIS. However, this is why i did not go heavy trying to short the S and P or market averages.

Anyhow, lets see how this unfolds tomorrow. Do we get a blow off reversal similar to the alibaba top. Or is this the start of something larger to the upside?

I definitely am not going to panic and cover right at the open. I remember in late October 2008 all markets gapping down on the last Friday of the month which ended up being the bottom for many of them. This has sort of the opposite feel to it. However, if it is obvious we are about to break out and see some sort of 4th quarter blow off we will have to cover in the coming weeks.

It is obvious that these central banks are coordinated and will continue in their never ending cycle of printing. The bubble will burst, just when?

Japan is now on the road to total destruction. What they are really doing is getting the Bank of Japan to own a huge chunk of debt so they can then do a partial default on the part the Bank owns (get it out of the pension plans hands). The Yen is a ticking time bomb that will collapse to 200 one day. Japan is the closest thing in modern times to the Weimar republic which too saw deflation, followed by hyperinflation. I recommended Japanese stocks two years ago but sold out last year when I thought the easy gains were in. The Nikkei will probably continue to soar because countries that debase their currencies (Argentina, Venezuela) always see soaring stock markets as the money needs to go somewhere.

Oh and of course the only thing down on this news is gold...

Anyhow 3am beautiful night in the Bahamas, can't sleep might as well jump into the hot tub and listen to some Led Zeppelin and Leonard Cohen for a bit.

More updates later in the day today.

David Skarica

Box 25517
Gregory Town NA 33172
BAHAMAS