SIGNS

Signs...look for signs...there are no coincidences.

June has been described here in the USA as the worst performance for stocks since the June in 1930. And in Asia, the worst first six months in sixteen years. GM is back to where it was in early 1970's. Goldman Sachs has a sell on the nations largest bank and the nations largest auto manufacturer.

Financial stocks account for 55% of the $1.9 trillion decline in the equity market cap of the S&P 500 over the past 12 months. With the top in financials last summer....remember the bigger the top, the bigger the drop...and financials are still going to go a lot lower...buyer (bottom fisher) beware.....everyone we talk to is trying to pick the bottom here....

The worst way to try to make money is to pick bottoms.....the best way to MAKE money is to invest in relative strength....our theme. The growth differential between the USA and the developing world favors stocks with a majority of international revenue exposure and not with any financial liabilities...like GE.

Individuals in the USA have been big sellers of stocks in the past few years. They dumped a net $995 billion in 2007, $760 billion in 2006 and $467 billion in 2005. The stocks they kept have grossly underperformed the markets. Thus the reason for such poor investor sentiment right now. In addition with record cash on the sidelines and record short interest outstanding. Even margin debt is now being paid down.

"Frazzled investors (are) sending money to the relative safety of government bonds, pushing the price of Treasury notes to yield 4.033%." In our opinion this is the next major market to get creamed.....and many will lose even more here as re inflation and rising interest rates are the long term theme and trend....

DID WE SAY SIGNS!

Did you know that in the next 20-25 years twice as much food will be needed as was produced in the last 10,000 years? At the same time, the amount of arable land per head will continue to decline as the global population expands.

Never fight trends especially long term ones....traders get killed in environments like this....July and August tend to be very dangerous months.....keep your powder dry and enjoy the signs, have them work for you, not against you.

Danny Boy seen here enjoying the summer.