Friday, November 5, 2010

I am Bullish on Many Things

I know some of you think I'm a negative perma bear from the funny farm. But this is not really true.  I am bullish in many ways. Let's take a lookee.

On stocks. I have fully come around on the notion of quantitative easing and its effect on the stock market. It has been positive at least point-wise  for the major stock indexes.  Today the Dow was up over 200 points. Nice gains (though priced in gold, the Dow was actually down by about 2% Thursday). I expect that stocks, not adjusted for inflation, will benefit from QE and eventual hyperinflation.
As I mentioned, anyone for Dow 20,000 or higher due to an artificial boost in corporate numbers from inflation?

Which leads me to another bullish aspect of myself. I am bullish on nutty Ben Bernanke's efforts to devalue the dollar and cause prices to rise. It's neat that various corners of the market's are already looking forward to QE3. #3 will likely be dollar printing to rescue the banks (so ding, ding I am bullish on lack of moral hazard and more bailouts too! ).  Fitch on Thursday downgraded the whole MBS sector. Banks have said fraudclosure is like a flesh found with the problem largely contained.  You will soon see that it is not. When my blood sugar levels surged to 1000 earlier this spring I was fortunate that none of the blood vessels in my head exploded. That would have taken me out. It is great to live in a time to see all of this crazy you-know-what play out. So i remain bullish on life in general having almost lost it earlier this year and late last year when I had the blood poisoning (don't know if I ever mentioned that).

The specter of QE to infinity keeps me bullish on metals.The metals and all commodities are a daily referendum on the dollar's power. I don't view metals in the context of being a hedge against inflation, but as an indictment against fiat currency.

I am also bullish on the rare earth metals (the metals you can't easily pronounce). China is already withholding them.

That should be bullish for tv sales. But most people don't realize the little mining operation that makes up a tv, so they probably won't go out and buy one until they need it.  They will pay more than they should. So I am bullish on people eventually overpaying for home electronics.

I am bullish on old people. Time is an enemy to everyone of us. We're all getting older. I guarantee that 10 years from now we will all be ten years older. heh. This is truly significant. The great demographic makeup of the country in the 1950's that spurred growth is about a complete opposite today. So I am a bull on prospects for an aging population and the $200 trillion in social outlays that will have to be made, if promises are kept.

I am bullish on bread.  $10 loaves of bread will be a reality in our lifetimes. Too bad there are no Wonder Bread futures. All dollar based commodities are going higher as long as Ben Berserk-nanke continues to devalue through QE. I don't have a 20 year chart of wheat, but I've been watching it for that long. To my recollection wheat has had a tendency to rise in the months after serious volcanic eruptions. Enough ejecta (there I've gone and said it - EJECTA) into the atmosphere screws up the weather and crops. Volcanoes have been in the news recently.

That leads me to be bullish on pumice stone supplies. With volcanoes popping off all over the world, this particular stone will be widely available. Thus I remain a bull on the pedicure business, since Pumice is used to remove dry skin from the feet. (a bad joke)

I am bullish on stuff. A good wheel barrow might come in handy as the new 21st century wallet. Good, tradable stuff might be worth something more than present face value. (sadly, only half joking)

I've been early on crude, but I remain bullish there too. $5 gasoline I see as probable next year, at least on the West Coast. That would mean $4 gasoline back east.  crude is up $5 this week into the high 80's putting $100 (conservative call) crude back on the table. OPECers want $100 crude, Russia (the largest exporter) will likely see production diminish in the years ahead. China and Russia and other countries will enter into contracts with each other that will not be using the dollar. There could even be a little extra spending by business and industry now that Crap & Trade and other onerous legislation appear dead with the new Republican majority in the House (though unemployment and weak residential real estate (think glut) will still keep the consumer, 2/3rds of the economy, stymied). Remember MEW (mortgage equity withdrawal) ahh, those were the good old days. Won't be back for a few generations 

I am bullish on coal. While Odrama was on a fast track to killing the industry, the republicans may slow him down.  But China is a bigger reason to be bullish.  They are importers of the stuff, with such a voracious appetite for coal that one wonders if you can order some Moo Goo Gui Pan with a side of steamed coal. $150/ton for the coking coal used in steel making is a ... well a steal.

I am bullish on off the grid power generation. If you can afford it, a whole house generator powered by natural gas will be worth the money. Even a small generator will be worth it to have around.  If you're out in the sticks and in a colder northern climate, it's always good to have a kerosine heater available. I foresee less reliability in the power grid medium term. Propane tanks are good to have on hand for grill cooking even in winter. I once locked myself out of the house on a cold winter day. I warmed myself with the grill on the deck. lol.

I am bullish on bearish currency pairs. Yuan, Euro, Yen.. all going down together. They won't let the U.S. get an upper hand in trade by the dollar devaluation. US competitors will all print and do other cooky things to stay competitive.

That leads me to be bullish on trade wars. QE not only unlocks door #1 to dollar destruction, but it opens up door #2 to all  out trade wars, tariffs,etc. 2011 is gonna be a fun one.

I am bullish on being bearish about housing. Only the specter of all out multi million percent hyperinflation will lift housing prices. Buying a home is unaffordable to most people now, it will eventually become impossible for almost all non owners. Wages won't keep pace with hyperinflation. there is also too much inventory.

Ultimately, I am bullish on America. Even though the banking cabal is stealing from your grand children by getting the Fed to expand its balance sheet by the trillions by buying worthless assets at face value (who will buy worthless paper for even 1 cent on the dollar?), the people of this nation are the greatest asset. Yes, I believe we're headed for tougher times, maybe a messy societal reset, but it's the people who will eventually rise to the occasion and save the day. 

Remaining ever bullish, JimK

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