Bastille Day

Not many bullish people have made money year to date.
We have spent most of 2010 trying to understand which forces would define the year. Would it be deflationary or inflationary?

The result has been a mixed bag around the planet. While food prices have been contained for now, we saw foolish commodity speculation in metals and energy.

An encouraging note is the backstop on Greek debt is holding (probably to unravel after labor day though).

The most striking anecdotal observation was in tourism. Both in Montreal and The Berkshires, we noticed incredible tourism spending. It is evidence that there is money flowing when the consumer is not reeling from leverage compression.

On a more somber note, which comes from Middle America ( as usual), we have come to the conclusion that TARP has hurt local banking which was unable or willing to write off the more toxic commercial real estate on their books. While Wall street knew how to use Tarp money and lavish it on adroit traders , the more than 900 regional bank on the TARP continued to deal with gangrenous real estates loans. While it is beyond hope for many, expect vulture funds to swoop in until the FIDC receives a fire sale mandate form the powers that be.

As emerging economies continuing to adjust to tight credit conditions, America and the Yankee dollar are going to feel the credit raters readjusting...

Lets hope the Q2 results now in full swing get massaged enough to create an environment where investors back job creators otherwise a Republican landslide in both houses is to be expected. At this point, this might not be a bad thing as Obama know how to spend but is definitely not on a value creation agenda.

Enjoy the dog days!

PS BP FIX IT! enough already!
DCW