Wednesday, April 12, 2017

Old Paradigm President

Presidente Trump states he thinks the U.S. Dollar is too strong and that he prefers interest rates to be low.
He also states that he hasn't decided whether or not to extend Janet Yellen's tenure.

Hint, hint....

I guess our fearless leader prefers the old paradigm.

I do too, actually. There is no other way for the world to escape the debts we are in.
I just hope we raise taxes on the rich when we start to inflate away our problems.

Just saying,


Saturday, April 8, 2017

Jobs Numbers

Jobs numbers came in for the month. 98K new, much less than expected, with previous months revised down.

Is this the start of a slowdown, or just an oddball number?
Some say the low number is because employers can't find workers, so don't hire.
If we assume this latter answer is true, what does it mean?

Demand is still high for products and services? Yes?

Wages will go up? Yes?

Interest rates must rise? Yes?

Corporate profits under pressure? Yes?

President Trump wants infrastructure spending and to build his wall. Labor needed.

What does a rise in interest rates do to the oil industry? Junk bonds?

And this at a time when U.S. corporations await a tax cut, which if enacted would increase U.S. govt debt.

All of these types of things take time to play out, but from a big picture perspective could be game changing.

And our Federal Reserve seems intent on raising rates to show that they can, but with a very cautious stance.

Europe recovering? Oil recovering? Emerging markets?

Time to tread water? No firm choice. Wall of worry. Or change from decades of disinflation?

How well do paradigms change?


Thursday, March 30, 2017

One Good Trade?

Long time between posts, just waiting to see how the Trump circus shakes out.

Dollar finally showing weakness along with the new Administration.

Interest rates want to stay low.

Housing starts warming up. Complaints of lack of labor.

I found what appears to be the possibility of a good trade in Lumber Liquidators.

This stock crashed a couple years ago due to bad publicity about chemicals in their wood, as I recall.
I don't really give much attention to "news". I watch price.
If this stock gets much above $20/share it has the potential to run up quite sharply, most likely due to short covering.
Recent volume says as much.

Housing news....

Add to strength.


Wednesday, March 8, 2017

Smoot-Hawley Redux?

From the article:

" America’s monetary and capital structure from 1921 to 1929 was primarily shaped by six factors: first, a centrally planned monetary system; second, a decade of disguised inflation; third, branch-banking restrictions; fourth, state deposit insurance programs; fifth, agricultural subsidies; and finally, a plethora of taxes and regulations."

After the Republicans in Congress sweep the remains of the ACA under the rug they move on to trade.....

More uncertainty ahead,


Wednesday, February 22, 2017

Why Raise Rates?

Everywhere on CNBC are the talking heads lamenting that the Fed is behind the curve.
Bob 'Cool Breeze' Pisani asks, "why not raise in May?"
Santelli is always mad at the Fed. That is his default position.

Yet the dollar stays strong....
And the long bond hangs steady.
And Trump and Congress seem to have no decisions imminent on whether austerity or fiscal stimulus.
They are pushing through tax cuts, unless we consider border taxes, which may raise costs for the little people.
Autos are bought almost entirely with credit...
We have a rental housing crisis.....
Farm labor is getting kicked out of the country....
Social programs are under assault....
N. Korea rattling sabers...
Trump places govt. hiring on hold.
Most appointees not appointed.

I see quite a bit of uncertainty for the Fed to consider.


Tuesday, February 14, 2017

Fed Balance Sheet

Janet Yellen discussing the Federal Reserve Boards bloated balance sheet and the need to reduce holdings at a time that they find it will not hurt growth. (to paraphrase)

I am reminded of the lessons in Reminiscences. When you have a big position you have to wait for the right time to turn around. Given the size of the balance sheet I suspect they will have to wait a while longer. Buyers are disappearing from the bond market and the fiscal side is simmering.

Now is not the time.

Quote, "We will wait for greater clarity."


Monday, February 13, 2017

Worldwide Inflation

"Inflation is always and everywhere a monetary phenomenon."

Milton Freidman

Famous quote. Inflation is the result of devalued currencies.

Stock markets rocketing up all over the world.
Commodities strong. Lumber..... Steel....Silver....

Most people watch their domestic currency and lament strength. Lament the difficulty of putting people to work exporting goods. Populism strong. "Do Something!" they yell.

I think all currencies are going down in value. We must stop seeing them only in relation to each other. The fruits of the currency wars are getting ripe!

The reference points are resetting.

Control risk,


Wednesday, January 11, 2017

Confidence in a Conman?

Today was interesting.

Today was the day that President-elect Donald Trump had a press conference. All was well until Donald Trump started to speak. At that point stocks went down, bonds went up sharply.
And the U.S. Dollar went down rapidly.

With this market reaction to the amateurish clown we have elected to be leader of the free world in mind, I couldn't help but think that a weak U.S. Dollar would be in the interest of Russia.

Russia depends on oil and gas for hard currency income. Energy is about the only game they have.

If the world loses confidence in the leadership of the United States, and the United States economy, the currency will suffer, interest rates will ultimately rise, stagnation and inflation will set in, furthering the weakness in the dollar as the citizens focused on the stock indexes scream for stimulus.

The winner will be Russia and the oil exporters around the world.

If there is a bigger and more focused reason for Russia and Putin to meddle I can't help but think it may be the price of oil.

On a side note: Have you noticed uranium lately?

Control risk,