Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Bullishness at Record Levels

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Howdy folks, and a happy last-day-of-the-decade to you. I've been doing foot exercises to give 2009 a firm kick in the butt as it goes out the door tonight.

The folks over at Elliott Wave International posted a compelling pair fascinating sentiment charts in their Short Term Update last night. The percentage of bears has reached levels not seen since Ronald Reagan was still in office and before the crash of 1987. In other words, there are fewer bears now than there were when the Dow was over 14,000! I feel our corner of the universe is becoming one of the last bastions of bearishness.


Just to drive the point home, they also show the bull/bear ratio, which also is at almost unthinkable levels. Simply stated, virtually everyone in the country is in the bullish camp.


I'm looking forward to next year. A lot.

The Slope of Hope. Vox Clamantis in Deserto.

USD & Various Treasury Yields (by Gary Tanashian)

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Hey, happy new year all Slopers, and TK, a special happy new year to you!  I wish we had more honest and rational voices out there in the wilderness, which is exactly what Slope is in my limited but increasing experience.  Something I wrote this morning while pondering a trigger point in treasury rates:

What is the story here? 5, 10 and 30 year treasury yields are marching
in lock step saying these bonds' would-be buyers want greater
compensation if they are going to take on the debt of a society that
literally lives by inflation, and by debt. The yields are rising as if
to say "Look, we will keep the
illusion intact as long as you are willing to manufacture more debt to
sustain it, but we must be better compensated as the moral risks get
higher here in Full Hubris '10"

The key yield to watch
is of course the 3 month t-bill, which will tell the Fed what it is
going to do (you don't really believe these clowns are in control of
such things, as they pretend to make these decisions, do you?) and if
the T-bill tells the Fed that rates are going to rise, then we will
find out how sustainable the economic recovery is.


As an aside,
you may know that I have a position in the real world where my finger
is on the pulse of the US manufacturing economy. The better than
expected mid-west manufacturing activity is not a lie. There is
recovery, and I see it elsewhere as well. I'll talk about my vantage
point on the 'real' economy a bit more in NFTRH. 'THE' recovery is not in dispute and mine is surely no perma-bear, perma-Armageddon blog.

it is sustainability that is the question, and rising yields, if they
are not stopped at our 'line in the sand' of secular change, will
answer a lot of questions in that regard as we move forward. The dollar
has predictably been rescued from the abyss that the MSM were
trumpeting. Now there are actually strong dollar wise guys coming out
of the woodwork. Now things get interesting.

Any Last-Day Oddities?

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I guess I feel a little silly doing all these posts over the holidays, but my commitment to my loyal readers is strong. I particularly appreciate the guests doing posts, since that gives me a chance to actually vacate on my vacation. I notice some formerly-popular blogs have virtually shut down, doing a post only once every few days or so. People are gearing up to say adios to 2009, it seems.

And here we are, down to the final trading day of this year. I imagine it will be a low-volume affair, although there's bound to be some freakiness, particularly in the final hour. I mean, these days, we can't seem to close the day out without something totally bizarre happening in the final thirty minutes. Monday, a ramp-up; Tuesday, a ramp-down; today, another ramp-up.

Will there be any special reasons to buy or sell tomorrow? My hunch is that whatever end-of-year weirdness there is, it will be on the buy side. I mean…….tax-loss selling? What tax losses? Everyone who bought stocks is in the green. So what losses would they try to take?

How about window dressing? Yep, that would make sense. Stuff those portfolios with AAPL, GOOG, and other winners.

I personally think the tax-driven selling won't take place until March. Why? Because one year will have passed since the bottom on March 6th. If you bought a ton of, say, DTG in early March and have a multi-thousand percent gain, wouldn't you like to score a 15% tax rate instead of 39%? I personally know of people that have gigantic profits on these securities that are praying to God that things hold together until March so that they can get the hell out at an advantageous tax rate. I imagine such tax-based selling will continue for a few months, commencing promptly on March 6th.

It will be interesting to see what stocks like PIR (Pier One), shown below, are going to do in the coming months. I mean, how many scented candles and imported bongo drums does our nation need? Stocks like this, which have gone from ten cents to five bucks (for instance) have created a lot of very profitable positions. They're going to want to take their profits sometime!


As for me, I think I'm going to sign off for the day. The Santa Claus effect definitely seems to have pooped out last week, and my numerous positions are finally making minute progress in the right direction. I, for one, will be pleased to start with a fresh slate next Monday. I'll see you in the morning, before the opening bell!

Bear in a China Shop (by Fayssoux)

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Jim Chanos and Mark Faber have been making high profile observations about a potential implosion in China due to excess credit and overbuilding ("Dubai, 1000 times worse").  The inference from the Chanos interview is that he is looking to short raw materials companies that have been riding the China infrastructure boom, as well as companies listed in Hong Kong.

FXI is already down a bit since November.  Near term, the Baltic Dry Index has started to dip, possibly a seasonal effect, but potentially a signal the decline has begun.   .


Are You Bullish? (by Gary Tanashian)

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If you are bullish now, but were not bullish last March, you are the
guy or girl in the room saying "who's the mark?" and may be in for a
rude surprise. If you were bullish at the March bottom, perhaps you
have got your stuff together and I am just a cranky contrarian jumping
the gun.

Every instinct I had in November '08 and March '09 told
me that deflationist and bearish were the wrong way to be. The current
situation with the long bond yield rising muddies up the waters today,
so until it is resolved, the commodity and inflation trade must be
considered ongoing… along with perhaps the stock market dragging its
tired ass higher as part of what is now becoming the anti-treasury

But any bull reading anything decent, reputable or sound
into any of this is just a slave to convention, and believe me, there
are many highly educated people in finance. That could prove to be
their undoing. Talk of risk premiums in bonds and the like is just so
much bromide now because we are off the charts, Treasury is talking
about somehow taking us further off the charts (despite the mini
rebellion in the t-bond) and stock market longs are populated by the
momentum herd, trend followers and increasingly, a weary public.

is funny; an early subscriber of NFTRH cancelled last summer as he had
come across some information that the markets were going to crash in
the Fall. It would be lights out so he no longer needed the newsletter.
I should have known right then and there that the rally would extend
longer than I thought likely. It is amazing how easily people fall for
bear fairy stories in the age of inflation policy a go-go, which works
constantly against the deflation/bear market argument.

right now, it is bull fairy stories being constructed by the
troubadours on Wall Street and the massive and self-interested
financial services industry the world over, not to mention the
financial media that touts the agenda 24/7. The risk to the bullish
stance – at least for interim hard correction – remains untenable. Real
contrarians endure and await opportunity, whether it be next week or in the spring (repeat: I only need one or two good trades a year, I only need…)

Meanwhile, the
gold-silver ratio remains subdued but in bullish pretense. Dat be
bearish for everything else my friends, if it turns up. A rising GSR
would signal the draining of the swamp despite the best efforts of
policy on crack.