Staying at the Table

As a bull who feels like he's "won" of late, I am about as sure of myself as a gambler who has just had a couple of blackjacks, meaning that I expect to be given a 16 any week now. That doesn't mean you can't play out of a 16, especially when the dealer's got something similar. It does mean you have to be at the table.

I use the analogy because there's something about the "hotness" of this market after the employment number that flies in the face of what could happen if the big gains in the economy truly are all government and not private sector, especially if you look at the charts, which reveal an overextended and expensive market. The charts say we're about to stall out, and it bothers me because they've said that all the way up. And it bothers me because literally everyone I respect in this business -- except Steve Leuthold -- has emerged with a consensus view that the economy without stimulation would be near collapse, and even with stimulation will collapse anyway because of all the debt taken down to stimulate.

In other words, the dealer's got a face card and the bulls have 10s on top of sixes -- a real bad hand.

Here's the problem: What happens if the bulls draw a five? In other words, what happens if Ben Bernanke slows down his mortgage purchases, says that things are coming along nicely, and business does turn up of its own volition in the second half?

Let's think about this. It was real estate that brought us down. Real estate and corruption (lots of corrupt brokered mortgages, maybe a trillion dollars' worth, seem to be behind most of what we can't get out of). The residential has been written down to depression levels. The commercial? The commercial scares everyone to death, except the tenants who will cut good deals and the bondholders who, of course, will be screwed. But the bondholders, in aggregate companies such as Lincoln (LNC - commentary - Trade Now), Principal (PFG - commentary - Trade Now) and Hartford (HIG - commentary - Trade Now), can all raise billions in equity right now right here and get out of it. That's the five draw.

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