I have
a short story to tell you before we dive into the meat and potato’s of things.
Many many years ago, I wanted to change the name of our Newsletter. We sat
around with our tech people, and friends, business associates, etc, and finally
decided on the "Financial Intelligence Report". We felt it had a nice ring to
it, and truly reflected what we do here. So, we name the letter the FIR, and
life went on. This was somewhere around January of 2001.

It was at that
point that I made a very stupid mistake. Very stupid. I never went and
registered the "dot com" for Financial Intelligence Report. It simply slipped my
mind. InvestYourself was our parent company and the FIR was our newsletter. No
more, no less. Well, one day out of the blue a call came in from a big outfit
looking to see if we wanted to advertise with them. We had a grand chat, but we
didn’t do any business.  Interestingly, several months later there was another
"financial intelligence report" out there by this same company and they did
register the dot com. I sent a few emails, suggesting that "wasn’t nice" but got
no replies.

I didn’t make a big stink about it, and life went on. But
now, so many years later it’s clear that someone else is getting a lot of the
"traffic" we generate for FIR. When I do a radio show and the host says "Here’s
Bob, publisher of the Financial Intelligence Report…." anyone listening that
googles FIR will find we are not the first response google gives. In fact we are
number 3, because we don’t own the Dotcom.

I am tired of giving away
free advertising. I am tired of radio show listeners trying to find our letter
and going somewhere else first and getting confused. So, it is now time for a
change. The Financial Intelligence Report is going to be renamed. So naturally
that brought up a million problems. First off, what can we call it that shows
who we are and what we’re trying to do, clearly? Then,  if you find a great
name, is the "dotcom" available? With billions of dotcoms registered, you
wouldn’t believe how hard it is to come up with something refreshing that’s
still available.

So, we thought about it. We searched the whois
directory. We put words together from financial, to economy, to review, to
forecaster. Some of the names were pretty stunning. But then we’d look it up and
sure enough it was already taken. Back to the drawing board we’d go. This wasn’t
going to be easy.

Trader Rob is a close friend. (a darned good trader
too). He suggested "Main Street Market Watch". At first I didn’t really like it
that awful much, because of the association with another well known marketwatch.
But the fact is, we are Main Street’s market watcher. We are the guys that call
out the fraud, the manipulation and the games they play. We are the guys who try
and steer Main Street towards good investments, good management. I sent out some
emails for other opinions and they all came back positively on the suggestion. I
checked the domain name, and it was available. I slept on it a few nights and
decided it’s a go.

So, in the VERY near future, this letter will be
rebranded as the "Main Street Market Watch"  We also own the "dot com" so that
if someone hears of the letter and searches, it will be right there, front and
center. Naturally there will be a billboard type web site at that dot com that
will explain the letter, allow a sign up, etc, but then direct all other things
like the Insiders Club, or our videos etc, back to InvestYourself.

I
figured I’d give you all the heads up on why the change, so that when you get an
issue of our letter with the new Title, you don’t get confused. I’m not terribly
thrilled that I had to do this, but sometimes you have to do what you have to
do. So, welcome to the Main Street Market Watch folks. Same people, same letter,
new name. Okay? Good.

Now what about this
past week? Where can we even start? I guess we’ll start with Obama’s
State of the Union Address. I sat there, listening intently. And what did I come
away with? Well, what I heard was very much like a campaign speech. Since he
couldn’t say he stopped job losses, or cut the deficit, or balanced the budget,
or got us out of wars, or what have you, he reverted to making a "sales pitch"
about what he’s going to do. Hey the guys smooth, very good orator. He puts the
pause breaks in just right, and can seem like "one of the boys". But frankly we
had a year of him and what did he actually do?

For months he pushed hard
for cap and trade, over global warming. I remember being invited onto Fox news
in March because Cap and trade was in the news every day. No word about jobs,
just cap and trade. Then that faded and it was healthcare. Day after day, bloody
battles over healthcare. Then it was bail outs. Cash for clunkers. Cash for baby
sitters, cash for everything. Not a word about jobs. So, coming into the SOTU
address, I knew he was going to try for the "hey lets pull up a chair and chat"
and that’s what he did. Frankly, it left me and an awful lot of people very
short changed.

Look, heres the deal. NO President can waltz in and save
an economy as big as ours in a year. That’s just a fact. But, another fact is
that he didn’t try and save anything. All he did was spend money we don’t have,
help out his banker buddies, push through things no one wanted, and here we are
a year later in worse economic shape than when we started. Now, is that because
he had a lot of great ideas that went wrong, or is there something deeper here?
You know the answer as far as I’m concerned. He always talks about making the
really tough choices and that he’s the guy to do it. Really? Well the tough
choice would have been to let the big banks fail, and let the hundreds of well
run Regional banks take over. The Tough choice would have been to tell AIG "no
thanks" and let Goldman take it on the nose. But he didn’t make the tough
choices, he did exactly what the bankers told him to do. Use Taxpayer money to
bail us out and make us wickedly profitable.

So, yes I have a poor
attitude here folks. His continuing bashing of Bush is old. Didn’t he have any
Democrats in the Congress during the Bush years?? OH wait, weren’t they sort of  like a majority for Bush’s last years? Why didn’t his upstanding Democratic
Senators and Rep’s stand up to all the ills? Give me a break. Stop the blame
game. Tell the people the truth for a change. You like socialist policy, you
think the nanny state should be in control of energy, healthcare and business
and most of our personal lives. You told us you were going to run trillion
dollar deficits for 9 years and then you tell us you want a spending freeze??
How can you have a stimulus and a freeze?  I wasn’t impressed. It seems very few
were.

The market wasn’t impressed at all. The very next day, we fell for
115 points. That’s a pretty sad state of affairs no? Yes. Was Wall Street voting
against his "get tough on bankers" stance? Yep. Was the market telling us they
weren’t terribly impressed with appointing Ben Bernanke to another term? Yep.
Add them together and what did we get? Same ole, same ole.

Let’s rip on
Benji for a moment shall we? This little smurf lookin elitist came to Washington
because supposedly he was a scholar of the Great Depression. He said he
understood it fully and would know what to do if we had one. Well, isn’t it a
bit odd we pick a supposed scholar of the Great Depression, just a few years
before the second great depression hit? Coincidence? And if he’s this all
knowing seer of all things Depression, why could he not see the second biggest
financial disaster in 80 brewing, when silly little Newsletter writers like us
could?  Remember some of his famous quotes? Here’s a few of them for you. This
coming from the "expert" on the Great Depression.

"Given the fundamental factors in place that should
support the demand for housing, we believe the effect of the troubles in the
subprime sector on the broader housing market will likely be limited," -  Bernanke May 2007

"It is not the
responsibility of the Federal Reserve – nor would it be appropriate – to protect
lenders and investors from the consequences of their financial decisions." Dr.
Bernanke. October 15th, 2007

"I
expect there will be some failures. I don’t anticipate any serious problems of
that sort among the large internationally active banks that make up a very
substantial part of our banking system." -Dr. Bernanke. February 29th, 2008

Shall I go on? No, it would just infuriate you. The point of
course being that Bernanke knew exactly what was happening, and lied about it.
Maybe he did it on purpose just to see for himself if his Solutions would really
work, once the second depression hit. Well we’re IN that second depression now
folks. Are his policies working?

Now for those of you who don’t believe
we are in a depression, consider this for a moment okay? Back in the Great
Depression we didn’t have the safety nets we have now. When you had no job, you
had to rely on neighbors and your church for food gifts. Today we have
unemployment insurance, "extended benefit" programs, food stamps and what have
you. Right this second more people are on extended unemployment benefits and
food stamps than ever in our history. If indeed they were not there, guess what?
We’d be seeing the same bread lines, same soup lines we saw in the 30′s.
Millions, yes folks that’s MILLIONS of people are living week to week on hand
outs from Uncle Sam. We are in a depression, it’s simply being softened by the
social net.

Okay, so I hated Benji getting re appointed, I didn’t get
much out of the State of the Union Address but yet another campaign speech. What
else happened? Oh that’s right, we got our GDP number on Friday. According to
the bean counters we posted a 5.6% GDP gain. Can that be right? Uhm, what do you
think?? 5.6% growth in a wildly successful economy would be exceptionally
strong. Were we "strong" in the fourth quarter? Give me a break. Here’s the real
story folks.

The way these mutants come up with GDP is quite the twisted
story. But to make it fairly easy on this one point, consider this. For most of
09, companies had all manner of inventory laying around. They surely didn’t want
to produce anything more, they just kept dipping into the inventory on the
shelves. As we got into late 09, they didn’t even have to dip into their
inventories that much, that’s how slow things were. But in a magic twist of
Uncle Sam’s wand, a SLOWDOWN in inventory reduction is actually computed as
economic GROWTH. That my friends is where the bulk of this magic number came
from.Take out that little twist and GDP was 2.2%. But wait a minute. Does anyone
really think we grew 2.2% last year? With the layoffs, foreclosures, falling
homes prices, etc etc? No that will be whittled down time and time again in
"revisions" Oh and one last note, Government stimulus is included in GDP
calculations. Think there was any of that in 09 to help boost the number?

Let’s see is there anything else I can whine about today? Oh I guess so.
Wasn’t it neat how Congress hiked the debt ceiling again? In a rush to get the
debt ceiling as high as they could before they’d have to meet and do it again,
possibly by November, they decided to stop fooling around with little increases,
and went hog wild. The Senate voted to increase the debt limit by 1.9 TRILLION
dollars, to 14.3 trillion total. Roll that number around in your head for a
while. They fully intend to use every bit of that ceiling folks. 14.3 trillion.
That’s DEBT. That’s bigger than an entire year of our GDP. That’s the value of
every single monetary transaction that takes place between all our people in 365
days. That my friends is a big number.

Yes they "need" it for their
endless stimulus. But more than that they need it for their pork spending. Just
this week we found that Madame Pelosi has spent 101,000 dollars over the past
two years on Food and Booze as she uses Air force jets to fly her to her little
junkets around the globe. In what can only be best described as a snapshot right
out of the famous book "Animal Farm" where everyone is assumed to be equal, but
the supposed leaders are "more equal",  we get news this week that Speaker of
the House Nancy Pelosi has radically abused her position of power.

News
Week Daily tells us Madame Pelosi has spent 101,000 taxpayer dollars on
expensive food and high priced liquor over the last two years, as Air Force jets
have flown her around the globe like some form of personal taxi service. This
doesn’t include the enormous cost of servicing those jets, piloting them, and
keeping them ready at her beck and call. This woman sits as Speaker of the
House, firmly pushing for wide spread social agendas that will further bankrupt
the USA. Yet as her own constituents continue to lose their jobs, see their
homes erode in value and struggle to make ends meet, she acts like some Queen,
to be pampered with all the luxuries available to the elite of the world.

The hypocrisy is outstanding, almost surreal. Pandering to the lower
classes via high cost Government programs, precisely as the US struggles with
the single largest debt load in the entire planets history, while she and her
delegates party hearty is the ultimate in hubris. What right does she have to
demand the finest liquors, and a staff of chefs at her beck and call, to cater
to her political jaunts? Every American has the right to demand that this
outrageous spending of taxpayer dollars stops immediately, and a public apology
is mandatory.

When our political leaders are so out of touch with Main
Street’s needs, wants and desires, it’s simply time for new leadership. The
Nation as a whole can afford no less. But this is indeed the "people’ we have
running the show. Do you think it’s fair that you might have to give up some
benefits this year, but Madame Pelosi can order cases of Grey Goose Vodka for
her little trips overseas? Don’t you find it odd that some 33 million folks are
on food stamps, but she can have a personal chef whip up the most exotic foods
for her storybook trips? Call me nuts, but I don’t think she deserves our air
force jets, nor 101K dollars worth of liquor and food while on them. So until we
find a way to stop the abuses of those in power, they have to keep raising the
debt limit, that vodka isn’t getting any cheaper.

Now onto the market

How has the market
taken all the news this week? A quick glance says, "not so well". We can’t even
manage a silly 200 point bounce, all we seem to do is continue to slide. What’s
up with that? Well, pull up a chair, it’s not so easy to explain.

How
many times did you hear us say "the market doesn’t belong at the levels it’s
at?" A zillion. If the market was a true reflection of the economy, we’d have
the DOW at 7500 as we speak, on it’s way to 4500 over the next couple years.
But, the market spends about half it’s time in the twilight zone, completely
disconnected from any link to the true economy. In 2007 when the market was at
14,000 just a couple months ahead of the biggest economic meltdown in 80 years,
did that make sense? Nope. But it was there. Then just two short weeks back,
when the market was at 10,723, did that make sense? Nope. The economy surely
didn’t match that lofty level.

There was never any question in our minds
that the market was going to roll over, it was simply a matter of "when?" As the
2009 run up was getting long in the tooth, there were many times when a logical
person could have said, "that’s it, it’s time to short the market" only to see
the market move up another 1000 points. With all the fraud and manipulation,
with "someone" (wink wink) buying 28K S&P futures when the market looks
vulnerable, with stimulus and bail out money not being lent, but being put to
work in the markets, there was no telling how far they could push this thing.

When we hit that high a couple weeks back, We decided  to "sell out",
and sit on our hands. We didn’t go short, simply because with all the
crosscurrents, and "free money" sloshing around from the Fed, we didn’t want to
get it tossed back in our face with another blast higher. So, except for some
silly daytrading, we’ve been neither long or short. Even our 401K’s been sitting
in cash. Now the Question is…what’s next?

The thing that is so striking
about this sell off is the fact that they can’t even manage a silly bounce. As
the market was falling, 10500 was a first thought for a pause, and then we
figured 10200 is where they’d make a decent stand. Well they tried their best,
on the 22nd, after closing at 10,178 and we saw the market touch 10300 a couple
days in a row, but they couldn’t close us that high. We melted off almost every
day. Now we’re down to 1067 after flirting with 10K even.

They couldn’t
hold 10.2K, But it looks like they might make a bigger stand here at 10K. But so
what? Are we going to soar higher and post new highs? I don’t think so folks. I
am looking for nothing more than a big fat 3 – 400 point bounce, and if we get
it, I’m going to start loading the boat on shorts and puts.

Okay, so
where’s this going anyway? Even if we bounce for 500 I think that we’ll see 9500
soon enough. I said a while back that you long term holders should consider
lightening up on any decent bounce and I sure do still believe that. We have
become oversold in the short term, there’s no doubt. At some point the market
will reflex snap back a bit. I expected it on Wednesday, and told our Insiders
Club members that we might want to play some ETF’s at first if it happens. Well
they did bounce, but Thursday it couldn’t hold and down we went again.  That’s
awful weak action.

My game plan is to play a few daytrades for a bit,
until I get a bounce big enough to use as a short entry. You guys might consider
the same. Have a great weekend, we’ll see you on Wednesday.