"Troubles are a lot like people - they grow bigger if you nurse them"

I've been quiet for several days now because of my move to a new employer (Private equity world here I come :) And while the market has rallied strongly in the last several days- I haven't actually closed any of my short positions. I didn't do it for two main reasons- one- I simply didn't have an opportunity to sit down and assess the damage properly :) and two- I am still convinced that we are in for a rough ride in the months to come and thus my shorts are likely to rebound...

Some quick notes...

• Inflation is simply out of control and I find it simply outrageous that a Fed governor Kohn can state nonsense like this with a straight face:

"On inflation, Mr Kohn indicated that price pressures were moving up the Fed's list of concerns. He said higher energy prices, higher import prices and higher commodity prices "may be passing through a bit to core consumer prices"..."I expect the run-up in headline inflation to be reversed and core inflation to edge lower over the next few years."
What a bazaar and simply dangerous attitude...

• Think real estate related write downs are over? Why do you think the banks haven't really rallied much and some of the players that in effect define current real estate market like FRE and FNM actually declined?

How about some graphical evidence that things aren't that pretty and that it might be a bit early to call an "all clear" for most banks- the fact is- most ABX indexes hit a new all time low today!

ABX%202007%20AAA.png