Ted Butler: Silver and Martha Stewart

Section:

By Jim Sinclair
Sunday, February 22, 2004

http://www.jsmineset.com/

If the U.S. bond market falls, the U.S. equity market will be
tested. You cannot remove a $72 billion dollar January '04
buyer from the bond market without removing the bull from
both the bond and equity markets.

If you remove the bull from the U.S. equity market, President
Bush would lose the presidential election to Mickey Mouse
if the furry little rodent was the opposing Democratic
candidate.

So Friday's yen market is a total disaster for the Republican
presidential candidate. If the yen moves higher in U.S. dollar
terms, then there will be no need for Bank of Japan
intervention and therefore no U.S. dollar funds flowing to the
New York Fed to be invested in U.S. Treasury instruments.

An appreciation of the yen is the worst possible scenario for
the bond market bulls. There is no question whatsoever
concerning what has bulled both the U.S. bond and equity
markets. Kudlow and Cramer may be gleeful over the rise in
the U.S. dollar on Friday but it is the one singular item that
will kill off the equity and bond bull markets deader than a
doornail within 15 trading days.

The powers behind the throne of President Bush are not
stupid. They might take a few days to wake up, but wake
up they will. This dollar rally and the yen over 109 are
temporary or the Bush administration will be even more
temporary. Just like his dad, President Bush might be the
successful warrior but he will be as unemployed as his
dad was after Kuwait, or as Churchill was after World War
II.

That being said, Friday's dollar rally is temporary because
President Bush intends to be elected or else go down in
flames after having tried every possible means, both
traditional and non-traditional, including the military option.
After November, the bill will be so high as to be beyond
the means of anyone or anything to pay.

I do not see any chance of the dollar rally surviving the
Ides of March -- if that. We are simply too close to the
November election to endanger the gains for the incumbent.

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