Tuesday, December 27, 2016

Be long but fearful of a sharp correction

We shall once again suggest that new purchases of stocks at these levels shall prove to be ill-advised in the not too distant future. 

Trend remains upward and fighting that trend…opposing that trend… or worse, being short into that trend is and has been debilitating. The proper course of action, obviously, is to be long of equities but fearful of the inevitable correction, which will be violent and sharp when it happens.

Finally, what does bother us is this: that the economy here in the US is strong and shall grow stronger in the New Year as the “animal spirits” of the populace generally are aroused after years of being caged. But… and this is the most difficult “but” of all… aren’t stronger economic circumstances good for equity values, one might reasonably ask? The answer is, “Not always” and the reason is that when the monetary authorities are erring toward tighter policies as evidenced currently by the sharp contraction in the adjusted monetary base AND as the economy strengthens capital moves from the capital markets… from equities… into new plant, equipment and labor.

It is quite common, historically, for economies to strengthen AND for equity values to fall during times such as that, just as it is quite common for equities to rise even as recessions deepen as the monetary authorities are then erring upon the side of monetary expansion while the demand for plant, equipment and labor is faltering. This is the “harsh” secret of economic expansions and economic contractions when compared to equity valuations that is all too often misunderstood and this is our great fear at the moment.

Nonetheless, for now, and until the current great good fun of this bull market has run its course, the trend is up; the music is playing; the women are beautiful; the men are well mannered and the punch bowl is still on the table.

via zh

Thursday, December 22, 2016

Dennis Gartman correctly predicts Fed rate hike

The Fed follows what the market does. Fed has never been a leader in rates whether to the upside or downside. Fed has always been a follower of the markets and the markets have taken the rates higher and will probably continue to do so.  

Tuesday, December 20, 2016

Trump's infrastructure spending will boost commodity stocks

The incoming president has made it abundantly clear he will focus attention on several areas, infrastructure being primary, defense being secondary and I think … I want to own the things that if I drop them on my foot will hurt: Steel, ball bearings, railroads that sort of thing. I think we will see continued movement into those very simple things,

The real movement now is that we will see a movement towards the Mahoney Valley which is where steel was born here in the United States.

Monday, December 12, 2016

Tough for Crude Oil to rally much further

I think $52 crude oil plus a $4 contango gives you $56 for a one year forward. It is going to be tough to push WTI over $52. I said that more than two months ago, I said it a month ago and I will said it today again. As long as there is a contango, as long as there is a carry charge for the 1 year forward crude oil, that's imminently profitable.

Monday, December 5, 2016

Normally OPEC agreements are cheated upon very quickly

If you can bet on one thing in this world, bet on a mother's love, and bet on the fact that OPEC cheats. But it will be a month or two before we know that is actually happening.

I've said for a long time that i don't expect oil to get above $52. There are so many people caught on the short side of WTI and that's what you are seeing right now. That will end sometime in the coming weeks.

A strong dollar is going to be detrimental to commodity prices. The strong dollar is going to continue to be overhead resistance on commodity prices. Clearly that adds to the price of crude oil and that is bearish in the long run.