Friday, February 11, 2011

I've been a quiet Blogger of Late

As I just watch with a degree of amazement at what is going on in the world. As I've written before, it's an inconvenience for the average American family to have to pay more for a jar of Cheese Whiz than it is for a third world family to pay more for basic staples. In the third world, you can't adjust the size of a grain of rice, or a bean and give them less for more money but still make it feel like its's a value. Here, all kinds of packaging tricks have been used in an attempt to mask price rises, unless you look at unit prices, as I do. So the rising cost of buying enough food in third world countries to merely survive is quite a problem as we've witnessed in Eygpt. This will also manifest itself in other countries eventually leading to civil chaos and more governmental change.

So if you were planning to take a vacation in Pakistan, certain N. African countries, you'd better revise your reservations ASAP with Travelocity and get going.

There's talk in various circles on the web that China is aiming to raise gold reserves by another 5 tons in the near to medium term. I believe it. We are hurtling towards a new SDR scheme and being a gold power will be important, as I've said before. This is not necessarily in the best interest of the US, so this could be a drawn out affair. But clearly we're entering a period where the dollar's days are in quite a bit of trouble. I'm not going to pronounce U.S. Federal Reserve notes as dead, but a new reality is ahead. (how's that for positive spin?). If the SDR scheme works and the world reprices various assets differently, we COULD see a bit more stability enter the picture. Right now, the harsh reality is that many essential items are priced in volatile dollars. This has led to big moves higher in every thing from energy, metals and agriculture. Can a SDR scheme save the day? We'll watch for developments. I'm skeptical.

Ag remains a great place to be if you're a bull. Metals can only resume their upward climb. The pressure is building based on demand for gold and silver in China. Remember I talked about the Asian put? The US banksters and their accomplice exchanges no longer are in complete control of this game.

As for QE, it remains, Congress and its silly hearing notwithstanding. QE to infinity (orgininally penned by Jim Sinclair)? Believe it.

Friday Night Oldies

Saturday, February 5, 2011

Saturday Night Oldies

From the 1965 Moview "Pop Gear". The dancers were great. Then a young Matt Munro... reserved, even a bit stiff but an amazing singing performance - kinda like a singing head. And, of course, a Beatles performance in wide screen color.

This clip is quite telling about the type of culture we had before Vietnam and the invasion of the Hippie Generation. What a concept: dresses and suits and jackets. Seems so old fashioned and quaint. lol. Today, I turn on the radio, or see music videos that promote all sorts of awful things and are quite bombastic. Never a good sign.

The Chase Attitude

It is just a small little post from a "friend" at Facebook, but a gloating little rib about how at Chase you can fly business class while the Cisco salesmen can't. (The names are redacted).
Ny response is the last one in the conversation. Sure to annoy ole David. LOL.

Friday, February 4, 2011

Did you have a nice Scoop of Unemployment Stew????

Pay no attention to the man behind the curtain. Funny how the seasonally adjusted U6 unemployment rate falls, while the non seasonally adjusted U6 rate jumps to 17.3%! Also nice the labor force participation rate drops to 1984 levels. So the 9% headline unemployment rate is a crock. This whole data series is toilet stew - the kind that comes the day after from eating Mexican or spicy Asian the day before.

Wednesday, February 2, 2011

Maalox Moments

Didn't Perry Como have a hit called Maalox Moments? Oh, forgive me, it was Magic Moments.

Traders will be gargling the Maalox in the morning as the Egyptian tensions flare. Classic sell the riots, buy the eventual overthrow? Look for market volatility at greater than usual doses until Hosni is on a plane to a villa somewhere. If the guy resists in the coming days, he risks being a candidate for a casket. The not running again in September idea is a non starter.

Crude and gold will be important tells in the coming days. 

When food prices rise in high per capita countries it is an annoyance since food is less than 10% of household spending. In poor countries where food costs may end up being 50% of a household budget, the picture is dramatically different. More riots to come elsewhere.  While we're able to pay up and live with more expensive Klondike Bars and Dinty Moore Beef Stew, unaffordable basic staples like rice and bread in far away places with strange sounding names is like showering the fabric of those poor societies with a flammable agent. Then it only takes a spark. Fun world. 

Dow Ekes Out 1.81 point gain Wednesday

Rising off modest weakness. It turns out that Bernanke did see his shadow in Washington. At least six more months of heavy duty QE on the way.

Wall Street Outlook

I don't mean to be sanguine, but Wall Street is a rose colored glasses kind of place.  Something will take the stock market down eventually, but don't hold your breath or bet aggressively for that day, whenever it comes.
The market is making minced meat out of the bears. S&P 1350 soon? Support held Monday, no doom and gloom. It's odd bot business as usual on the street. I don't believe in it, but you'll have your head handed to you shorting the market. Profit taking perhaps on Wednesday, but the pressure and momentum favor the bulls in spite of a future of food inflation problems and other economic woes to come (eg. pensions, states, etc).

Deficit reduction. Sham.  Washington remains so full of b.s. that all of their eyes are dark brown.  As far as I'm concerned it's a big toilet stew down in DC from both sides of the aisle. There needs to be actual debt reduction, not just spending cuts. There also needs to be reform of many systems to enable real economic growth, not this nutty federal spending stimulus that's been on going. All it has done is saved the banks for a while longer, given us tepid GDP growth with little employment gain - the list goes on and on.  The politicians are still in a spending state of mind ultimately.  Even if we saw a boost in tax receipts from a stronger economy, inside the beltway would find a way to spend any new revenue gains. Reduce the debt in the face of $100 trillion in unfunded future obligations? This cycle of unbridled spending and dollar creation will only continue. As a result I am bearish on long term dollar prospects even if we see a 2011 rally as seems to be shaping up.  My feeling is the longer the dollar is propped, the worse the fall will be when the bottom falls out.

Gold. Holding pattern to perhaps a bit lower. I will be more alarmed if $1300 area is broken.  The dollar continues to get the benefit of the doubt in times of crisis and that can hurt us goldbugs a little bit. For now it's as if the gold caravan is stuck at the railroad crossing, gates down, red lights blinking, as the dollar train takes its time moving through. Ultimately the dollar train is on a track to a big cliff, but for now it's chugging along. Don't bet against this dollar scenario. As always, I favor the hard assets. Buy rare coins. Even look at rare currencies. Speculate in the paper instruments like ag and metals futures only if you know what you are doing. The volatility presents good opportunities. ETFs of varying types in stocks, oil, commodities, also present some good plays, but know the risks well.