On Friday I closed out my positions in the American Century 2030 Trust (ACTAX) which had been opened in late April. This mutual fund is a zero-coupon unit trust of Treasury strips maturing in 2030. It therefore has a 26-year duration, making it very sensitive to interest rate swings.

Immediately upon my entering this trade, to my surprise this fund was featured on CBS Marketwatch as “The Stupid Investment of the Week”. The conventional wisdom at the time was that interest rates were going steadily higher. This of course was not the case and I was fortunate enough to close this trade at an 8.2% profit in four months. Approximately 27% annualized. I need more stupid trades, please.

The moral of the story is that taking advice from financial journalists, whether print or television, is not wise. By the way, I switched into the American Century International Bond Fund (BEGBX) because I think the dollar rally is just about done. Comme dîner.

Another 90’s Bad Dream.

“It was just an online classified ad, under Collectibles for Sale, but it sounded like a cry from the heart: “I’m tired of these things now. Please save me from them.”

Kelly Cabral of Tracy, Calif., placed the ad recently after coming across a box in her garage crammed with dozens and dozens of Beanie Babies, the floppy little stuffed animals that sparked an international trading frenzy in the late 1990s.

Years earlier, there were days when Kelly and her husband, Dan, would join the early-morning crowds laying siege to gift shops that were expecting shipments of Beanies.

There were times when the Cabrals would post themselves at different McDonald’s outlets to buy stacks of Happy Meals in hopes of scoring a few of the promotional Teenie Beanie Babies they didn’t already own.

“I don’t want the food,” Kelly would say when she reached the counter. “I just want the Beanie Babies.”

Now, she says, “My husband’s like, ‘Where did we get all these?’ Then you realize you spent way too much time on this insanity.”

TheUBend on capitalstool.com: “re the crude oil thing..anecdotally, spans (which are inquiries for bunkers - the fuel oil for ships ) are an excellent insight into the insiders view of energy prices. A week before the current snapback in crude, spans in Fujairah (gulf ) and Singapore ( centre of the biggest freight demand - far east ) fell back. Well here’s the new one. Spans are picking up sharply again. And for good reason; we are about to enter the period when fixtures are made for the winter season, and demand ALWAYS increases.. Again, purely anecdotally, the tanker community ( and I know a couple of the big Greek tanker operators ) for them $50 crude in the short term is yesterday’s news.

The laughable thing is the way that the weaker ( highly leveraged ) specs are shaken out by news from a mosque in Iraq. So I’ll regurgitate what the CFO of one of the world’s biggest tanker operators told me last week - “keep your eye on the big picture”.”

The POR, or Point of Realization, should be getting close. The flow of data is starting to be compelling. Jobless claims up, help-wanted advertising down this morning.

“Overall economic momentum is no longer firing on all cylinders,” said Conference Board Economist Ken Goldstein, “and hiring intentions this summer are suggestive that companies may not increase hiring until the economy regains more solid footing.”

No kidding. But the bullhorning from the administration - “Just a soft spot, nothing to see, move along, please” - is nearly continuous. A stream of fed governors - Easy Al himself tomorrow, no doubt - and of course the overwhelming interest by the Bush camp in maintaining the illusion - are providing a continuous propaganda assault on the masses. Can they keep it going until the election? Not at all clear to me. Depends on the employment report next week. My guess is that the fix is in, though, this data will be a flat lie or Ms. Chao will be out of a job next year. If the truth is told there will be a loss of jobs.

The housing market, which is the main source of bubble financing, is finally rolling over:

“NEW YORK (Reuters) - … The Mortgage Bankers Association said its seasonally adjusted market index, a measure of mortgage activity, declined for the week ending Aug. 20 by 6.3 percent to 646.3 from the previous week’s 689.4….The Washington trade group’s purchase index, a gauge of new loan requests for home purchases, fell last week by 5 percent to 443.7 from 467.1 in the prior week. The purchase index was still well above its year-ago level of 375.5…. Meanwhile, the Washington trade group’s seasonally adjusted refinancing index decreased last week by 8 percent to 1,824.9 from the previous week’s 1,982.7.”

“WASHINGTON (CBS.MW) - …Sales of new homes in the United States fell 6.4 percent in July to a seasonally adjusted annualized rate of 1.13 million, the Commerce Department estimated Wednesday…. There was also a large downward revision to June sales…. The department said sales fell a revised 5.6 percent in June to 1.21 million units, compared with the initial estimate of a 0.8 percent drop to 1.31 million units…. The number of new homes for sale on the market rose about 4.2 percent to 393,000, representing 4.2-months of sales at the July pace…. The median sales price rose 9.0 percent year-over-year to $207,400, but was down 2.6 percent from June…. The National Association of Realtors reported earlier this week that sales of previously owned homes fell 2.9 percent in July.”

And one more data point (anecdotal, but…) Las Vegas cools off

This means liquidity generation from housing is declining rapidly (6.3 percent in a week is rapid). This means the economy will be heading south because it is only new liquidity (debt) generation which drives it, in the absence of savings and investment. While price action today was less than satisfactory to this bear, the economic news is encouraging. All is evolving as expected.