The reaction of the IRs to the Beige Book was as expected. However, the dollar is not reacting to indications of higher interest rates This is very problematical, and shows that oil futures may have more momentum to the upside than I thought. You know, in every bubble, if you wait until the first signs of disaster to start putting on positions against the bubble, you do much better than realizing there is a bubble, but fighting the market by being too early because you think you are smart. Think back on the sub prime bubble, and the tech bubbles. Realizing that there was a bubble was nowhere near enough. If instead you waited for the first sign of real trouble, even then you had to wait months for the panic to ensue and the trade to unwind and take profits. People with deep pockets can maybe start to play the anti bubble game early. The rest of us need far more accurate timing. If that is true, oil has at least $10 to $30 higher, or at worst sideways to slightly higher. It is a lesson hard learned, and I guess I hadn't learned it yet. How will we know what constitutes a disaster warning sign? We will know when we see it. I would love to see one EU rate cut. That would clarify things far more than even a FED rate hike, imo. nitro
A friend of mine asked if the TIP ETF is a good way to hedge for inflation if commodities is not an option. There is a booklet , "Inflation Protected Bonds", by PIMCO's John Brynjolfsson, where he speculates that the market behavior of TIPs could change dramatically in a period of heavy inflation. He believes that heavy duty inflation would cause TIPs to be priced for their inflation protection alone, with little or no premium. I told him that if he wants to invest in bonds for inflation protection, he should consult experts on it. People that blindly buy TIPs are gambling since there is no algebraic equation that says TIPs = inflation + whatever. Probably the only real way to diversify the inflation risk is to buy US companies that have exposure to China/ the BRICs. Even that is fraught with risk when emergent markets they catch what we have. nitro
If we were to close where the YM is trading as I write this pre-open, and by proxy where the DOW cash would be trading, this would be seen as a very bullish breakout to the upside by DOW theorists. While we take note of the DOW, it is SPX that we watch. Looks like we test the first of three key resistance levels today, 1392 SPX. We may even test 1400 SPX. But imo a change to aggressive long is not warranted unless we close above 1420 SPX. None of this is new. Keep the discipline of small shares long until the market tells you it is time to shift gears. Until then we are range trading. The euphoria in the media will hit a shrill if we go above 1410 SPX. Tie yourself to the mast... nitro
imo, oil wouldn't be fair value at $10 a barrel, let alone where it is now if the "efficient market hypothesis" truly was in control. Take for instance the following development: http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=59402 For those too lazy to read, it's basically about an invention that is shown to work - it's uses bacteria that turn any organic matter into hydrocarbons, and is estimated that it could easily produce billions of barrels of oil yearly, all from waste. The reaction after breaking the news several months ago??? http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=61808 - virtually nothing, nada, zip! The main news agencies won't even run the story, not even to try and poke fun at it - what does that tell you! So, if this was embraced, what do you think the oil industry would be worth overnight?
Those are interesting articles. Using bacteria as a catalyst like this is an old technique. For example, it is used in water recycling. I can't comment on the viability of the technique since I know almost nothing about it. nitro
While the housing # to be released this morning may not show positive activity, my ex's business (she is a realtor) has picked up dramatically. I am also seeing tons of open house signs again all over the place, and I no longer see foreclosure "deals" being advertised. It will be interesting to see what the number is, and how the market reacts to it. The pickup is likely priced in. nitro
We listed our house last week here in Northern NJ. The realtor is telling me her office is packed. We've gotten two calls on it already. She's also a friend and says business has picked up dramatically. PErhaps people realize the Fed is done cutting and rates are about as good as they're going to get. Call me a hopeful.
Euro hits 1.60. Very difficult to tell where this ends, but I do know this, E2.00 will be catastrophic for the US economy, and it will push QM to stratospheric heights. SIFs will retest lows if EURO heads towards 1.75, imo. nitro
Nothing new. Everything we have discussed in this thread still applies. On the short term, I would be very cautious long today. Shorts probably have the upper hand. nitro