Dangers Lurking on the Macro Front

That speculation and stock prices continue to ratchet higher only increases the risk of an even more severe dislocation, should something go wrong. Based on what the outside markets and the macro picture are telling us, it's very difficult to conclude anything but that the rally and the economy are on borrowed time, even if that borrowed time is measured in groups of weeks, rather than groups of hours.

Meanwhile, as bullishness swaggers in the face of reality, I have not gotten aggressively short yet. (The few small stabs I've taken have not worked out very well, so I've kept my exposure light.) But I think that folks who got long in February/March and have big profits ought to either exit the market or figure out some way to protect those profits, because it seems to me that the backdrop is getting dicier by the day.

Housekeeping note: In tomorrow's Rap, I will share more of our reader's email about the state of IT spending.