Money’s New Decade:
Tower of Babel,
Tuna or your House
Yesterday’s spectacular debut of the world’s tallest building — twice as tall (!) as the Trade Center towers were — in Dubai, whose related sovereign debt is number six on a recent list of Most Likely To Fails after its corporate sister pleaded poverty in December …
Leaves me speechless.
Floyd Norris managed to say something. Hear him, sigh.
And check out the business prospects for this white mammoth. Those prospects are nil, but Murdoch’s man closes with assurance that the “image of yesterday’s fireworks display” will surely mean alot to Dubai in years to come.
Meanwhile, farther east, into the creditor hemisphere, a single tuna sells for $177,000. In Japan. Our second biggest banker.
Back at the ranch, a prominent finance CEO today accused the Fed and Tsy of steadily buying stock futures during 2009 to ignite and prop the miraculous rally of March-November.
The money-management world is full of serious people who are certain this began in March 2003 — in an effort to support the (world?) war also set in motion that month by Bush-Cheney. “The Market That Will Not Go Down” then ran up despite news and experience in highly abnormal fashion until the weight of the credit crisis finally crushed it in October 2007.
Meanwhile, more mundanely, the media are full of forecasts for the year. Here is a quick summary of twelve prominent money minders, all foretelling doom as Obama cements his administration’s feet in the status quo ante on the finance front.
In same vein, the Times editors today forecasted doom for US real estate this year in light of Team Obama’s Do Nothing agenda.
Finance. Pakghanistan. Health Care. No Change We Need in any of these, and very little change at all.
Who would have thought, fourteen months ago?
“He went down with the ship.”
My own thoughts about the year ahead in the markets are almost entirely neutral, having been neutralized by the odd three years now past. The future is a mist and the postwar’s First World is as fragile as it has ever been. No reason for long-term confidence of any sort. Investments are all trades.
The stock market just had a fabulous, perhaps basically fraudulent, run, so one must be cautious. And yet if the combined forces, public and covert, of the Fed and Tsy and their international investors continue to juice the markets perhaps there’s some profit yet to be had in being long stocks.
My retirement account went all cash in early December, selling its gold fund FGLDX near peak (on the report of the November employment numbers, which juiced the dollar, breaking gold’s uptrend). Had already sold its China and Tech in May and summer (too early). And its energy by September. So the autumn was about 40% gold and 60% cash, until cashing out entirely in December.
Yesterday I stepped back in with some China. About 14% of the account. Rest is still cash.
Why China. Simply because it’s in a fundamentally sound position, bad news is less likely to appear here, or cash in reaction to flee from here, and the chart is somewhat more inviting than the others.
In my mother’s account of free cash I bought some CTL, the fourth-largest telecom in the US last time I looked, something of a takeover possibility, with a very healthy dividend and rather nice chart. I should have bought it before Christmas — had been watching — but was without an internet connection when the opportunity arose. I’m unhappy buying it here — 36.75 — but will be even less happy if it breaks out over $37, which bad news elsewhere is likely to make it do. The buy was a small lot, about a third of what one hopes to buy if things work out.
In short: I’m trying to get my head back in the morass.
Gold jumped the past two days as the dollar (which broke its downtrend late in the year) sank a bit — but then gold sold off this afternoon and its bulls seem flummoxed again, after 36 hours of unrestrained crowing.
The big news here is Friday’s December employment numbers, which will clarify the dollar (and thus gold) picture. I will be looking for the right time to get back into gold. Perhaps already missed the best time, but there’s plenty of upside left if the bull thesis has merit. Gold’s LONG-TERM prospects seem secure, up up and up as the postwar First World continues its descent into the maelstrom for wont of political will to regulate capital and large corporations.
But it’s not clear yet that the dollar’s late-year rebound is done. I tend to think not, and thus have done nothing. If Friday’s numbers are unexpectedly not bad, the dollar should resume its rise and the time to restock gold will have been pushed further into the future. If the numbers are unexpectedly poor, the dollar may roll over and gold go off again to the races.
Finally, if the dollar continues to rise, it will pressure american stocks down in general, although other factors may be countervailing.
Otherwise, there are certainly some inviting tech stories. But for now the macro picture outweighs in my mind any stock-picking enthusiasms, all of which will get funnelled into short-term trades or the trash.
This has been a poorly written report from a mind mostly elsewhere.
ed says:
Here’s somebody picking up the TrimTabs CEO accusing the Gov of rigging the stock market:
http://www.businessinsider.com/trimtabs-ceo-biderman-was-the-fed-responsible-for-the-entire-rally-since-march-2009-12
So far the NY Times seems to have ignored it.
January 5th, 2010 at 9:43 pm
ed says:
Here’s Todd Harrison, founder of Minyanville.com, with his annual Ten Themes:
http://www.minyanville.com/articles/themes-2010-decade-fed-indices-tarp-dollar-economy/index/a/26217
January 6th, 2010 at 12:06 pm
ed says:
Well, lots of contrariness a day later.
China makes a big central banking move to restrict its economy for the year, fearing asset bubbles.
This weakens any reason for holding Chinese stocks, although they may yet be one of the better markets a year hence, I imagine.
Japan’s new finance minister says he wants a weaker yen. Feeds the strong dollar thesis. And makes Japanese manufacturers like Toyota more attractive. TM. Honda HMC. Or a Japanese ETF: EWJ. Or Sony. zzz
And wouldn’t you know it — a valuation downgrade by a minor brokerage on CTL, the day after my unhappy purchase.
Today, however, they present at a telecom conference. Perhaps something positive will make the valuation dump a buying opportunity.
Never a dull moment.
January 7th, 2010 at 2:42 am
ed says:
Ha! Fortune smiled: Yesterday’s CTL fill was only a single share. ?!?
Have just listened to the CTL presentation, live, at a telecom conference today, after the valuation downgrade yesterday.
Nothing newly negative in the presentation or questions. They’re a landline company, 4th largest, with focus on broadband competing against local cable.
Are in process of digesting recent acq of Embarq, another small landline company.
Thus … the current 35 level on chart, which is major support for several reasons, seems a good entry.
Thus am in, for the third-lot intended on Tuesday.
Dividend here yields just under 8%.
If it breaks down thru 35, one must consider stopping out.
January 7th, 2010 at 12:05 pm
ed says:
Looking at charts and the big news out of China and Tokyo re currency and monetary policy …
Japan is indeed looking attractive — but — CRAZY — the Japanese prime minister came out today and publicly rebuked the FInance Minister for talking down the yen yesterday. !!!
In Japan!
Much face down toilet. Suparuku or whatever.
Nevertheless, Japanese stocks are up and nobody seems to think the Japanese are not going to work on getting the yen back down. Good for the big japanese exporters.
January 8th, 2010 at 12:29 am
ed says:
Thank goodness its Friday post close.
Bad employment news in Europe and US (although not as bad in the latter perhaps as the headline suggests).
Japanese intent (despite Prime MInister’s rebuke (!) of Finance Minister) on pushing the Yen back down where it belongs.
Thus, the picture has grown clear: All three — dollar, euro, yen — will be racing to the bottom for the coming months.
Makes the currency pairs hard to call — but gold seems a reliable winner, and the chart set up is nice, coming off a little correction.
Thus I got back in gold in my retirement account today, and also into Japan, to join China.
Hoping for a little tech drop this month to allow an opening there.
That should take care of the first quarter.
As for short-term trades, unable to resist some gold miners today and a little critter I won’t name (since it’s so little).
But … Unhappy that I bailed out of my Financials calls on Tuesday with the targeted modest gain. Holding thru Thursday would have been a major kill.
Then again, happy to have bailed on the UPS puts with negligible loss before they Revised Up this morning.
So … First week back in harness. Feeling not bad.
January 8th, 2010 at 4:19 pm
ed says:
Jumping from the new World’s Tallest Building:
http://www.juancole.com/2010/01/jumping-from-worlds-largest-building.html
Catch a falling knife
And put it in your pocket
Save it for a rainy day
January 9th, 2010 at 2:45 pm