Olympics…funny…at least to me.

Quick Update

Lazy?  Yes….but for today, I’m back.

Although I’ve taken some time away from my borderline obsession with the financial markets, I continue to think about opportunities…or potential opportunities.   The automotive industry has intrigued me of late as the story just seems a little tired.  Whether your perspective is offensive (you want to short or buy some puts) or defensive (you own a pile of automotive stocks) in nature, I think this is well worth considering.  As I suggest at all times, think it through for yourself.

First, I am early in my attention to this theme.  It may have already played out and therefore may not present the trading potential I see at a glance.  Here’s what I’d suggest when beginning this exercise:  

1.  Listen to what’s going on in your neck of the woods and think about it.  Generally speaking, how is  Joe 6 Pack doing?  Alan Mullally said just this week that Ford’s success depends largely upon a solid middle class.  I’m not suggesting this is cutting edge information, but the guy’s commentary carries some weight.  I’m not going to waste a lot of time here, but the middle class in this country is a  freaking brontosaurus…not going to pretend to know the exact dates, but it’s a one way ticket to the history books.  If you see it differently, you better become very active very quickly.  

2.  Look at the charts.  Maybe they’re all about to bounce, but the auto charts look particularly poor.  I have not studied every sector from this angle, but I can tell you that some of the key auto related stocks look a little weak:  f, gm, gntx, jci, bwa…to name a few that I looked at.

3.  Do a little research into channel stuffing, maybe gm channel stuffing (although I don’t think gm is the only culprit).  I think you can even find some interesting info out there regarding china channel stuffing.  Again, follow this reading with some thinking.

4.  Think about how much of the actual (aka:  legit) auto sales are coming via low rate financing to buyers with little to nothing down.  Ask yourself if this is sustainable.  Trust me, I realize there are people out there who feel the plates will continue to spin like some sort of perpetual motion machine oblivious to fact induced gravity.  Everyone has an opinion and some are more conducive to a good nights sleep than others…totally cool with that.  

Actually have to run back to work, but I think there’s something here.  I will do a little more digging, but thought I’d share this.  Given the global backdrop, I continue to be very skeptical of what exactly is going on behind the curtain.  I can tell you that it certainly has a poor scent.

Good luck and I’ll try to hit back soon.

 

TD

 

Bernanke and The Queen of Soul???

So, my boy Bernanke tried to talk the U.S. dollar up (and, subsequently, oil and gold down) on March 1, 2012, by explaining that the fed may not be heading into another round of quantitative easing.  I don’t know if this should really be shocking…maybe annoying instead, but his snake oil works like a charm in the hours that follow dissemination.

Then, on Wednesday, March 7, 2012, the Wall Street Journal breaks a big story that suggests Fed Officials are considering a new type of bond buying program designed to:        “subdue worries about future inflation if they decide to take new steps to boost the economy in the months ahead.”

Allow me to point out a few interesting elements:

March 1 2012-no QE3

March 7, 2012-yes QE3…albeit, apparently new and improved

Fed Officials are worried about FUTURE inflation-Any thinking people out there looking past current inflation right now????  This is akin to Aretha Franklin taking steps to avoid appearing fat in the FUTURE. Let’s stop pretending, inflation is already here in a big way and the Queen of Soul…eeesh.

The big If-They then use the word “if” in a way that suggests there still exists some possibility that QE3 may not take place…that’s freaking precious.

TD

Our Boy Helicopter, Bullshit Artist Extraordinaire

So on Wednesday, February 28th, Bernanke had some very moving words to share:

“The unemployment rate remains elevated; however, the committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume it’s gradual decline toward levels that the committee judges to be consistent with its dual mandate.  Inflation has moved up recently, but the committee anticipates that inflation will subside…”

I could totally bore you by regurgitating his seemingly endless supply of utter horse shit, but I’ll focus on a few noteworthy results of the speech:  dollar (symbol DXY) up gold (symbol GLD) and oil (OIX) down.  Impeccable timing, no?

I will once again remind you to watch what he does and IGNORE what he says.  His only defense of the dollar has been lip service.  Expect this theme to continue.  Interestingly, a story in this weekend’s Globe and Mail suggests Iceland  is considering adopting the dollar….the CANADIAN DOLLAR that is.  Unthinkable?  See the table below for a perspective on how long world reserve status has been maintained historically.

 

 

 

 

Excellent Thinking Man’s Video on JFK…and really a whole lot more

the-umbrella-man.html