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.
80'S HAIR BAND ANTHEMS – DESTINY LOST
Long-time readers of the blog know that I have shared some of my deepest thoughts and closely held dreams. As you know, before I became a blogger and market watcher I wished to live the care-free life of an 80's hair band lead guitarist. Shredding on my flying V, wearing leather pants and studded arm bracelets, and causing my loyal fans to head bang in rhythm could certainly be listed as my greatest desires in life. This week's market news reminded me of those memories of long ago and I recalled the song of a band I didn't like that much. These guys weren't hardcore like me, but they were obviously big time and therefore were able to define the 80's heavy metal movement. Speaking of heavy metal, what is up with silver?
THE NUMBER OF OUTCOMES ARE DIMINISHING
The good thing about time and uncertainty is that as time passes, uncertainty also usually fades away. I have found this to be the case in so many areas of life, especially in dealing with the family situation I've been a part of for the last couple of months. I typically like to have a good plan (guess) of what will happen and then I like to make small adjustments to the plan as reality unfolds. I stress out when the number of variables are so large that I can't truly grasp what will ultimately happen. As you get closer to specific dates or milestones, your choices tend to be reduced and your actions are often dictated by one or two choices rather than ten or eleven. Oddly, that has been the scenario we've all been investing and trading in for the last several years. Will we wake up with a "fat finger" flash crash event, will another big black swan hit the markets destroying what is left, will Europe's experiment with the Euro finally be ended? Each day I've wondered how will these events happen and what will the resulting impact be on us. The trouble with trying to really dig into these uncertainties from afar is you'll have so many unanswerable questions and scenarios that you'll drive yourself crazy attempting to create contingency plans.
AMPLE PAPER FOR EVERYONE!
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.
I had an interesting discussion with a friend the other day when he asked me if I spent anytime on Facebook. I answered that I didn't "do" Facebook since I was too busy. (There are a host of other reasons of course, but that's another topic).
I asked him why he Facebooked and he suggested that he did it to keep in touch with people and to network a bit. I told him that I had read an article recently that had stated that research is beginning to show that Facebook makes people depressed. To my surprise, he totally agreed.
The 2012 year is off and running and before it gets away from me, I wanted to publish the outlook for the new year and get it done before the middle of January like last year. I will do a review of the 2011 Predictions later, which I might suggest you read here – 12 FOR 2011, where I might say I was right more than wrong and really on point in several key macro level directional calls. (Back patting over now).
Let's jump into it.
VOLATILITY, VOLATILITY, VOLATILITY
NEW IPO, SAME OLD SCAM
Groupon (GRPN) is a company that recently held its IPO (initial public offering) where it went public and attempted to squeeze in its fundraising in before the equity markets closed. Other firms like LinkedIn (LNKD) and Pandora (P) all paved the way for the final scam which is eerily similar to the 2000 Tech Bubble days.
OCTOBER MONTHLY MACRO ECONOMIC UPDATE
I took a month off last month and it was very good to have a break. I'm excited to "get to" put this together and see what the data is telling us. As of Friday, October 21, the equity markets have stabilized a bit after a thrashing and we are back to the 1235 level on the SPX. Earnings have been mixed and there have been some misses that shocked the world and then some beats that have been quite good. Overall, I didn't expect this earnings season to be all that bad, but the next one should be more than interesting.