Steel resolve.

There is more tariff talk this morning.

From the Street of Dreams...
11/6/2009 7:33 AM EST

Mother Merrill (or is it Brother BofA?) upgrades Home Depot (HD) and Lowe's (LOW) this morning.

Position: Long HD, LOW

Looking for More Upside Momentum
11/6/2009 8:23 AM EST

I am respectful of the market's near-term strength, despite the technical warnings. But in a random and trendless environment, things could go in either direction.

My guess, as underscored by Rev Shark this morning, is that the market's momentum from Thursday should carry through today -- even if there is a modest disappointment from the soon-to-be-released jobs report.

Like Rev, I am respectful of the market's near-term strength, despite the technical warnings that were apparent to both of us earlier this week.

But unlike Rev, I still say that the market appears to lack memory from day to day -- and in a random and trendless environment, things could go in either direction.

The Crowded Trade
11/6/2009 9:10 AM EST

As I mentioned yesterday, I am shorting gold now. But strictly as a rental.

Position: Short GLD

Ignore the Jobs Report? Not I!
11/6/2009 9:24 AM EST

Many will try to dismiss the jobs data, but I won't. The prices on Wall Street remain ahead of the conditions on Main Street. I remain of the view that the U.S. is experiencing a structural change in employment.

The jobs report is a bad report -- let the talking heads and investors/traders who worship at the altar of price momentum disregard it or rationalize it away.

But I won't, because in the fullness of time, fundamentals always trump the market's price momentum.

The prices on Wall Street remain ahead of the conditions on Main Street. The increased certainty and consensus of a smooth and self-sustaining economic recovery as well as a $72-$73 a share in 2010 S&P earnings should be tested in the period ahead -- in all likelihood, the unemployment rate will remain elevated at levels far higher than assumed by most. And with this will likely come disappointing personal consumption expenditures and higher savings, and, most important, lower-than-expected business confidence, expenditures and profits.

I remain of the view that the U.S. is experiencing a structural change in employment in the current cycle. (Just speak to company managements (as I do every week) and ask them what their hiring intentions are -- even if the revenue delta improves.)

Today's report showed a 55.1% structural loss of jobs not coming back, duration of unemployment was at a high of nearly 27 weeks and temporary workers experienced its largest jump in two years.

I wanted to repeat something I spoke about on "Fast Money" Monday night and that I wrote as a follow-up, in my opening missive on Tuesday morning:

It is truly is different this time.

America is about to experience a transformation from a nation with debt growing faster than incomes to a nation in which incomes will grow faster than debt. And it's not because incomes are growing especially quickly. They are not; they are trending lower. It is because of the expected large contraction of consumer debt, and the great debt unwind is the obvious byproduct of the credit crunch just passed. Past cycles, businesses have consistently been the driver of consumer incomes and spending.

I learned in my economics classes at Wharton that this phenomenon is known as Say's Law of Production. Say argued:

1. against claims that business was suffering because people did not have enough money and more money should be printed; and
2. that the power to purchase could be increased only by more production.

But -- and this is the big BUT -- over the last century, the consumer was in far better health than today.

Consider the following facts:

• In the past, corporations didn't engage in the draconian cost-cutting that they have embarked on in the past several years.
• Globalization wasn't the mainstay condition that it is currently, so previously we didn't see the wage deflation and the magnitude of the decline in disposable incomes present today.
• Finally, consumers were not as tightly wound and leveraged in any of the previous cycles. Just look at the record level of household debt relative to incomes that exists today.

As a result of the above factors (and others), the U.S. currently has 10% unemployment, and if you count in part-time workers that can't get full-time jobs and those that have given up looking, the number almost doubles to one-fifth of all Americans. The consumer is in dire straits, and, for the first time in history, it is the consumer that is going to drive business' growth, expansion plans and confidence, not vice versa.

Sorry, monetarists and optimists, Say's Law might be dead -- and we face a structural rise in unemployment that the markets have not yet accepted.

My catalyst for additional shorts remains the weakening performance of financials.

Today's Shorts
11/6/2009 10:43 AM EST

		Bearish GLD TROW BEN SPY

Today I added to or initiated the following shorts: SPDR Gold (GLD), T.Rowe Price (TROW), Franklin Resources (BEN) and SPDR Trust (SPY).

Position: Short GLD, TROW, BEN, SPY

On the Metals
11/6/2009 10:49 AM EST

Gold and silver are now diverging.

Position: Short GLD

Calling an Audible
11/6/2009 10:54 AM EST

I am calling an audible on my gold short, and covering. The action in gold is too damn good.

Position: none

The U.S. Running Up Bills
11/6/2009 11:46 AM EST

As the U.S. provides economic relief, it is putting itself into a corner.

You cannot escape the responsibility of tomorrow by evading it today.

-- Abraham Lincoln

President Obama is speaking on the state of the economic union now and explaining his bill, which extends unemployment benefits and cuts taxes for small businesses.

From my perch and from the perch of those who are shorting our currency, the U.S. is putting itself into an economic corner as the due bills grow in size and are moved up in their ultimate effect.

Position: None

Favorite Long and Short
11/6/2009 12:30 PM EST

		Bullish PG Bearish HSIC

Favorite long: Procter & Gamble (PG). Favorite short: Henry Schein (HSIC).

Position: Long PG, short HSIC

Damn Yankees (Part Trois)
11/6/2009 1:28 PM EST

"A nickel ain't worth a dime anymore." -- Yogi Berra

Speaking of the New York Yankees, even New York Yankees catcher Yogi Berra knew a little about the U.S. dollar's debasement (see quote above)!

Recommeded reading this afternoon? Dr. Bobby Marcin.

"Theeeeeeeeeee Yankees win."
-- John Sterling

Recommended viewing this afternoon? A salute to the champions.

I Beg to Differ
11/6/2009 2:12 PM EST

Today's action can hardly be called decidedly bullish.

Despite Jim "El Capitan" Cramer's protestations, the reality is that the tape is very ragged today.

Financials are again leading to the downside, while retail is advancing after yesterday's underperformance.

A really indecisive day, in my view.

Sing a Happy Song!
11/6/2009 3:26 PM EST

La, la , la...

The Fed reports, for the eighth consecutive month (and the longest such negative series in history), that consumer credit fell as banks tighten credit and jobs are lost.

So Long, Farewell, Auf Wiedersehen, Adieu...
11/6/2009 3:34 PM EST

I am calling it a day... and a week!

Thanks for reading The Edge and enjoy your weekend.

I will be out on Monday, but back bright and early on Tuesday morning, but you will be in the capable hands of Gary Dvorchak.

Position: None