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Replaying 1929 "Standup Economics" This economy is a what? |
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Updated: Saturday October 20, 2007 07:55 CDT The Early Briefing - In depth perspectives are for subscribers to www.peoplenomics.com |
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Why I am Still Bullish We need to have us a little chat about the markets here. While one headline this morning modestly claims that "Wall Street Remains Bullish Despite Data", I'd remind you that I've been one of those bulls for nearly a month now. Several readers have sent me emails like this one in the wake of yesterday little sell off in the markets:
No problem! As I explained before, I am a steadfast Bull until the first of November. From there, I expect to be changing my tune 180 degrees. So, while I will outline the bigger picture - and my specific target number this weekend for Peoplenomics subscribers (Hint: It's under 10,000), I'll just say in passing that "You ain't seen nothing yet" and tell you that by the end of next week, that's when we should get our solid bounce and that's where I stop being bullish. That bounce, I think, will be the one to be sold into - aggressively.
Will I try to play that one? Heck no! The problem with stocks right now is that so many people try to pile onto shorts via put options, that there's no good money to be made in most of the index options and many of the Dow stocks. I like an option set-up where I can bag a return of 4-6 times (or more) and I just don't see much of the rich risk-reward ratio out there.
What I think will happen is that we might see a little more weakness early next week (or maybe not, depending on how easy the Fed is with the repo dough) and then we should bounce nicely. That bounce could come as early at the 23rd, but more likely will crest around the 26th if my view works out. But, as always, this is not trading advice - just ravings from the backwoods of east Texas.
Where I do have my own money parked is in precious metals and corn. A couple of readers wondered why the precious metals were not going skyward during the decline so far and the answer, I think, is that the declines in the metals were driven by some of the big players liquidating metals positions to cover deliveries in the paper markets yesterday.
This weekend the G-7 is meeting and there are two headlines which may give a long-term thinker some grist for the mill. First is the headline that a G-7 draft seeks 'accelerate Yuan appreciation. What that means in simplest terms is that the Chinese currency will be gaining value and possibly quickly.
The second thing that I'd point to is the IMF's World Economic Outlook released on Wednesday which says the Dollar is still over-valued, even after the recent weakness.
As the old Disney nursery rhyme went (sung by Jiminy Cricket, I think, though it's hard to remember now that the kids are creeping up on 30) "Put it together and what do you got?" (Bippity boppity boo...) Screaming foreign import price appreciation here in the USA.
While I am not a Marxist (in fact my great great grandfather Andrew Ure was a noted apologist for the British elites and was singled out by Marx for criticism of his support of child labor in England in the 1830's for his book "Philosophy of Manufactures") but I'm not above lifting an idea from Marx now and then. The one that's a winner now, I think, is getting ownership of the means of production. That's why I have been buying up farm land and tools for both woodworking and metalworking as fast as I can afford to without going into debt. I can read the handwriting on the wall. High quality metalworking tools for 50-cents a pound if you shop judiciously, and less than $2 a pound for the spendthrifts.
That's why I am continuing the process of drawing down cash (which is losing value quickly) to buy the last few big ticket items we might need for the coming 5-10 years. A new HDTV is on the shopping list, although prices have stopped falling as rapidly as they were recently. The big shop tools (metal lathe, milling machine, drill press, and metal working gear, is largely in place. An automobile is on the list too, although I keep holding out for a mid-sized something which will do 40+ MPG. We have a new lawn mower already. Considering a washer, dryer, and fridge, and roof on the house too.
The problem, as I see it, is that a person might be able to pour money into the markets and possibly double their stake over coming months - if they were especially fortunate playing "catch falling knives", only to take the money back out to buy "things" and discover that the prices will have gone up enough to eat the paper gains.
Dry Up and Roundup When the Fed and corpgov finally run out of serial bubbles to bail out the rich folks at the top, what will be the control mechanism to keep folks sending money to Washington? And email from a reader yesterday falls neatly into line with one major bank study which said a long time back that in order to have a major economic crash, you need a currency crisis as well as an agriculture crisis. A reader email brought up a curious point (bolding and highlighting mine):
Oh? I hadn't been following the war of words between Georgia state officials and the Army Corp of Engineers, but sure enough it has been making headlines in the parched South this week.
Animal Control Will the National Animal Identification System (which is the corpgov plan to chip every farm animal out there) come to a head in Michigan? It might, by the sound of this report.
More Punishments That B-52 flying nukes over the country will result in a lot more than just 5 officers being canned. Seems 70 are being punished. Question is, how high does this go and does it lead back to any particular office in DC?
Strike Writers in Tinseltown have OK'd a strike. Maybe I could sell a screenplay about the Fed's paper dollars and Wall Street causing a global economic collapse. For now it's fiction, but give it a while...likely to be a docudrama later. Bonfire of the Idiots I call it...
Comcast Hacking
Data discrimination by corporate police or the digital equivalent of theft prevention?
Sharpened Up Marines are being told not to wear their cammies off base - changing the whole look of communities says an AP report.
Around The Ranch No sign of our heat-seeking mouse yet. Wonder if he read yesterday's column?
It touched 50 again last night - and this is the time of year when weather just doesn't get better: About 85 for a high and 50 for a low. Darned near perfect working weather. Think I'll for saddle up the Kubota and get a little work done.
Peoplenomics: It's Kinda Like Baseball This is an especially conflicted time of year for millions of Americans. We don't know if we're supposed to be Baseball Fans or Football Fans - and most of us don't have enough money in the bank (or a big enough severance package from the last gig) to pursue both. Besides, little matters like lawns, leaves, and families do require attention. Along with the nest egg. So in keeping with season I'm only going to cover three things today and be "Out!" - mind amplifiers and computers, a macro-trend to be on the lookout for in high tech stocks, and a high water timing mark for a major decline in Winter. Of course, the only way I can cover all that ground in about two minutes is to use football minutes. That's a particularly anomalous area of physics where "2-minutes remaining" is a long enough period of time to kill all humans daring to hold their breath for just two minutes. Most pearl divers would die with more than a minute left..
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Throw the Bums Out To get your "No Incumbents in 2008" click here. They're just $5. And no, that would not keep Ron Paul from running for the White House - he is not an incumbent for that office - having never held that job before, you see.
More With Less Order our handy ebook "How to Live on $10,000 a year or less - and learn to live like a Third World person now. It's coming anyway, with big job layoffs this summer - and by ordering now, you can beat the rush...You may have more time to read this fall if the economy falls apart as I expect...
Friday October 19, 2007 $90 Oil and All That Oil futures have passed $90 a barrel for the first time ever in trading overnight. Not by a lot (in fact by only 2¢). Still, that means your local planet is pricing oil just $10 away from $100 oil - if paid for in declining USA Dollars.
And it doesn't look like the increases in oil prices (and all other goods made overseas) will end any time soon. Although the dollar has scrambled back in the early trading today to 7-10th's of a Euro for a buck, the LA Times duly notes that the Dollar has a new record low against Euro.
Things have only been made worse by the latest Philadelphia Fed report out on Thursday. The summary version is that the rate of growth declined and prices were continuing to climb.
We'll perhaps get a little more insight into what's going on in Fed Boss Ben Bernanke's mind when he talks today to the St. Louis Fed meeting. Although we have a week and a half till the Fed meeting (Oct 30-31), speculation continues to mount that the Fed will lower rates at least a quarter point, but that's a two-edged sword, as we've discussed before.
On the positive side, a rate decrease will be welcomed by folks being strong-ARM'ed into refinancing their homes at higher rates. A lower Fed rate presumably means a little more mercy in the refinancings. The Fed is aware enough of the impact of the foreclosure crisis that the Fed web site now features a whole section of "Foreclosure Resources for Consumers." Thanks for all that...just remember who helped get us here.
The downside is that if we are paying a lower interest rate to holders of US debt, the more overseas investors will be prone to leaving the dollar to sink their hot money into investment vehicles denominated in anything but dollars because if you invest in 5% US paper, and the dollar drops 10% on the international currency bourses, then you're down 5%.
It also means that the prices of things we buy from overseas will likely go up in price.
A few really savvy readers have been willing to share their market thoughts on how to play this. Here's a good sample email that outlines what could be ahead:
Yes, sure as heck, this reader has nailed the rising wedge, and like all wedgies, this one could be uncomfortable soon enough. The newly found Bull in me continues to hope that we will get a big bounce ands go sailing off to new highs, but the odds seem to be petering out. Fortunately, my bullishness expires the day of the Fed meeting. In my personal account, I'm neutral stocks, long corn and silver, and waiting around for silver to return to its historical relationship with gold. I know that might sound like a fools game, but compared with investing in financial stocks, it seems to me to be the height of reasonableness. Some Anniversary 20-years ago, the big "Crash of '87" took place. A number of stories out today ask "Could it happen again?" You mean "Are people still herd animals, greedy, and all thinking they're really smarter than anyone else and they'll be the only ones to get out just at the right time?" Gee...let me think...
Bloody Return Former Prime Minister Benazir Bhutto's return to Pakistan yesterday was marked by a bombing that killed 136 people and wounded scores of others. In the aftermath, no one if pointing an official finger, but Muslim extremist groups are suspected. I wonder if president Musharraf might not to too thrilled with Bhutto's return either...
B-52 Firings You may recall that B-52 incident at the end of August where 6-nukes went on fly-about over the USA heartland by "mistake", flying from Minot ND to Barksdale (LA) Air Force Base? Well, looks like heads are starting to roll - five officers are being canned. Question is: Will they talk to the press about what happened? I can't be the only one asking if there wasn't more to this story than meets the eye...
Fired Up Kansas has cited carbon emissions as the reason for blocking a proposed coal plant. No telling how far this will go, but it argues for investing in LED lighting and more insulation if I've got it figured. The Supreme Court haqs given states "Not in my back yard" powers.
Volcano Jitters A lot of scientists are watching to see if Mount Kelud in Indonesia will pop - a 6-mile zone around the mountain has been ordered evacuated. --- Getting less coverage, unless you happen to live in potentially downwind Edmonton, is a volcano in the wilds of British Columbia. The CBC reported earlier this week that micro-quakes had been recorded, leaving us wondering if there's no some magma movement going on there, too.
The Runs Senator Same Brownback may quit his run for the White House today. If you're thinking "Who?" you're apparently not alone... --- And shades of Pat Paulsen, it seems comedian Stephen Colbert has announced he's running for the WH as well.
Dry, Drier, Driest Worth seeing: The drought map- and special on USAToday's web site: "Measuring the Drought"
Not So Free Press A couple of media execs have been arrested in Phoenix - on charges they published "secret grand jury" information. But, the story could be viewed as a revenge case...your call.
Winners, Losers AMD goes red in Q3 - on cost of their ATI deal. Google had a great Q3, And, Xerox beat estimates; copy that.
Bot Hits? A reader in the San Francisco area seems quite impressed with the web bot (predictive linguistics) for the period. One of the problems with the technology is that b |
