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The seasonal gasoline trade has been my target for the last two years and so far they have been quite profitable. I've highlighted trades in WNR, VLO, and UGA and all have done well. As I have laid out previously there is a seasonal component to this trade, but it is also one based on the view that Benny has our back and he and his central banker pals are finding ways to goose the global financial system through their respective liquidity providing measures. (Explicit or not). As they go to work making sure that no civilization is ever short on paper or electronic currency, this forces things with real tangible value like commodities to move higher.
THE GLOBAL FEDOLUTION
Last year around the time the Tunisian riots began to break out I suggested that our Fed could be directly and indirectly to blame because global food prices were sky-rocketing and starving people have little choice but to rise up and take action. I coined the phrase the Fedolution as we can give the credit or rest the blame for the Arab Spring's spark largely with the Federal Reserve.
As we fast forward, incarnations of Fed action have resulted in a continued liquidity driven asset frenzy that has spilled into other commodities. Since early 2011 we seen hard asset prices bounce around, but thanks to a significant rebound in December 2011 and January 2012 we see that almost all commodities move higher significantly. Our economic measures suggest that price inflation is really almost non-existent according to the Fed's definition, but somehow we find that domestic gasoline prices are at the highest level for a January ever.
Since becoming concerned by the unnatural imbalances being placed upon the financial system in 2002 and becoming outright alarmed by 2004, I have done all I can do to get my house in order, so to speak. This, as a normal citizen and business owner has included normal things like paying off debt and seeking out the safest cash vehicles (and for this I'll always thank Robert Prechter, no matter what criticism is launched his way from casino patrons), and some abnormal things like becoming a gold bug and a financial market writer.
Today, the requested change (to revoke margin 'privilege') has gone through on our brokerage account, which doubles as the NFTRH 'capital preservation' portfolio. I mean, in the wake of MF Global and years of knowledge that the modern financial system is ultimately sitting on a foundation built of Balsa Wood and Duct Tape, who needs the convenience of margin anyway? Routinely shorting the stock market is a fool's game anyway. I'll use options or those inefficient short funds if I feel a need to hedge. But this account is for 'preservation' after all, as it is balanced by actual things of value in real life, so going high cash and T bills – as it is now, along with a very few investments – is by far the preferred route.
In honor of The Hun's postulate that emerging markets were the buy of a lifetime, I offer you my latest short idea – EEM – which I've shorted at 43.87. I've placed a stop at 44.25, just above the prior gap.
I see that the EWI January 10th "wave 3 is starting" short has been stopped out as of today (S&P cash crossed 1360). Who knows, maybe that's a sign. In any event, the Russell 2000 is mashed right up against its descending trendline. Everyone seems to be in deer-stuck-in-headlights mode since this Greece this is going to be settled (oh, absolutely! no delays! this time for sure!) on Monday……..a market holiday.