Tuesday, December 20, 2011

A BIG JUMPSUIT TO FILL - NORTH KOREA

As you know, I am a firm believer that our current economic environment is driven by forces that are global.   Due to the significance of world political events we must be aware of the issues facing each sphere of the world.   I am struck by how stunningly fast geopolitical changes are happening everywhere.   As a result of the pace of change, it is important to use excellent resources to understand the climate in these places.

With an armed military force of more than 1 million and of course at least 6 nuclear weapons, all of us should be watching North Korea.  Please examine this short video about the death of North Korea's leader and the transition to power of his son, Kim Jong Uhn by Stratfor.

  Kim Jong Il Update

 

 Like the global elite everywhere, remaining in power is the only thing that matters. I don't think it will be long before Kim Jong Uhn needs to demonstrate his power and authority on a global stage.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/

MORNING CUP OF JOY


Christian Gattiker, head of research at Bank Julius Baer & Co., discusses the outlook for stocks and bonds amid the ongoing sovereign-debt crisis. He talks from Zurich with Owen Thomas and Linda Yueh.



Just thought I would share what the perspective is becoming as market participants are becoming more and more.....realistic.  I will try to cut and paste a few items I've seen over the last week where I've noticed that big players are really putting a sour note out without any reservations.  I've seen a few Tweets from Bill Gross and the other Pimco guys that have been well, downright caustic and negative.  Could this be a time to go long?  I doubt it.  Sometimes, the crowd is correct even when all of them are negative.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Friday, December 16, 2011

EMU GIVES EUROZONE CITIZENS A TERRIBLE PRESENT


While mostly unrelated to economics I found this very entertaining video of the Jimmy Kimmel show that had me laughing about the contents hours later.

Please enjoy......




Oddly, after watching the video, I'm struck by how similar the "gifts" of Eurozone political leaders have been to their own citizens in this mockery of a sham called the bailout process.  In fact Germany's and France's leadership seem to be doling out these "gifts" overtime and yet the citizens of the periphery countries seem to be eyeing the gift and then opening them only to fall apart in tears or lash out in anger.  See, the bailouts provided by the IMF and ECB may be wrapped up and packaged nicely, but they really are nasty old hot dogs or half-eaten peanut butter and jelly sandwiches.

I'm waiting for the moment when Greece, Portugal, Spain, or some other nation takes the approach that the kid does at 4:27 in the video.

Have a Merry Christmas!


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/


Thursday, December 15, 2011

KYLE BASS - DECEMBER NEWSLETTER

As an add on to the previous post, I was able to find a copy of the December Hayman Capital investors letter.

Enjoy.

http://www.scribd.com/doc/75784106/Hayman-Capital-Letter-Dec-14

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

CRACKS IN THE FOUNDATION

Ok, we knew there were serious problems with Europe as this has been a topic of discussion for more than a year on this blog.  I need to write a more detailed post on the impact that MF Global is having on the financial system, but this interview with my all-time favorite hedge fund 1%er, Kyle Bass is a great introduction to the subject.




As usual, Kyle delivers a message of death in a matter-of-fact style.  He makes the following key points;

  • That the peripheral countries in Europe are already way past the point of no return and they are going to usher in the break up of the Euro system.
  • That the ECB and EMU leadership really have no plan.
  • Liquidity provided by the Fed recently in the form of dollar swaps is an indication that there is much more trouble in credit markets than you might think.
  • When looking at the dollar swap facilities you need to realize that they are trying to counter the seizing up of global credit markets.

Enjoy the 11 minute video.  Look for a post this weekend about the MF Global fallout.  I heard a really good interview on Bloomberg Radio about the impact this disgusting theft is having on ranchers and farmers and I will see if I can find it for your listening pleasure.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/



Monday, December 12, 2011

RANDOM THOUGHTS


There is so much going on right now I have very little time to manage and update the blog as this is a very busy time of year.  Despite my absolute craziness, I find myself scanning items and thinking, "I have to write something about that!"  Frankly, there is no time for long-winded notes about all of the complete non-sense that is happening in the world and in markets so I think I'll just post a list with a sentence or two of comment and then as we get deep into the holiday week, I will pull some details out.

WORLD POLITICS - IF YOU DON'T THINK THIS IS HAVING AN IMPACT YOU ARE NOT PAYING ATTENTION.


RUSSIA
Putin's party faces allegations of outright fraud and manipulation to hold power.  Opposition party Prokhorov billionaire says he will challenge Putin in March elections.  Let's cut to it right away, Putin is not a friendly guy and Prokhorov will find himself in jail soon enough.  Even if Putin somehow lost elections a circle of leadership exists in Russia that dates back 30 to 40 years and they run the show.

Funny, that is what world citizens are learning daily.  There was once a liberalization of thought that people actually had a voice in government and had self autonomy.  Unfortunately, that is untrue in Russia, Egypt, the EU, and the USA.  While it is an odd collection of nations grouped in my sentence it should be striking that we all exist in different stages of realization of our lack of individual control over our governments and our own self rule.  Sadly, I think we are actually all more alike than we'd admit.

If the challenge to Putin becomes more serious, be prepared for an orchestrated uprising and terrorist attacks in the homeland, in Russian vassal states, and even overt attacks on NATO forces by Syria and Iran.  These of course will be diversionary moves as Russians needs a bad guy, and I'm sure they will find one.

CHINA
The Chinese economy looks to be rolling over hard.  What can a country do with 300,000,000 poor people that don't have jobs?  Better find something to occupy them and focus their attention on stuff outside of their horrible conditions.

EUROPE
The financial collapse in Europe is now in the final stages.  Each political move continues to be found impotent to deal with reality and mathematical fact that spending more than your take in over many years leads to collapse.  As the final collapse draws near, I can only expect outright attacks in Syria and Iran.

PAKISTAN
Can this situation get worse for the US?  We hear that the Pakistanis are making nice-nice with the Taliban.  It won't be long till Obama engineers a caliphate in India's backyard.

ISRAEL / IRAN
Odd that tensions are rising isn't it?  Israel is running out of time to deal with the nuclear problem in Iran.  Lots of weird explosions and stuff are happening in the Persian country.  The USA lost control of a sophisticated surveillance drone over Iran and we state that we lost control over neighboring Afghanistan.

Isn't it convenient how every country needs a diversion at the same time?

US TOTALITARIANISM
Don't forget the good old USA.  We continue down a slippery slope in the name of fighting terrorism where our "leaders" erode any protections we have as US citizens from the abuse of power and creation of a totalitarian state.  The USA government continues to act without any check as we have assassinated US citizens abroad, can now detain anyone without charges with no set time frame, and also have our government actively monitoring social media for dissent and even comments about our economic leadership (the Fed).  Look at this interview with Larry Wilkerson regarding a new defense bill that is going to be passed soon.

AND BEFORE YOU FREAK OUT AND CALL ME SOME NUT JOB, remember, all it takes is one power hungry individual to change your life completely.  Imagine One SWAT team that accidentally comes to your home rather than your renter neighbor's, a reckless police officer that arrests you or kills your wife in the assault.  Our militarized police forces are now equipped to put down any peaceful protest or deal with any resistance and they typically respond with overpowering force and ask questions later.  Unfortunately that usually isn't good for the average innocent citizen that is caught up in the incident..





US POLITICS
Newt, Obama, Romney, Perry?  My goodness.  Romney's Obama-esque strategy of saying nothing and not having any real positions had almost worked.  He is being dragged into the fray by Rick Perry who fills the role of comedic relief in these debates.

Seriously, we have a sitting President that had no experience and is a complete ideologue with a Socialist or even Marxist bent and yet he somehow has a chance against an amoral smarty like Newt or a Liberal lefty in Romney.  Newt was for all for Obamacare and Fannie and Freddie when he was on the payroll and essentially Romney was the universal healthcare champion too.  Isn't there someone out of 307,000,000 citizens that can represent us better than any of these three?  Chris Christie where are you?


TRADES


GOLD IS GETTING SLAUGHTERED
In dollar terms that is.  Didn't I post last month that you needed to get long gold in Euro terms?  That trade is still a good one, in fact it is probably still a good one in dollar terms as well, you'll just have to wait for the collapse of the USD.

$SPX SHORT TERM TARGET 1185

MS TARGET $9


GETTING READY TO LIKE OIL AGAIN
We've discussed this many times in the blog that there is a season trade on oil and I've liked the refiners during this time as well.  While conventional wisdom exists that it is best to own oil during the summer months, I posted a story last year about the statistical wisdom of that and how it actually is a very good bet to sell your oil by the first week of May.  I mention this because it is probably time to dust off that strategy, especially with Iran practicing their wartime drills on how to close the Straights of Hormuz.

DIVIDEND PLAYS / DEFENSIVE RECESSION STRATEGIES
I just wanted to revisit the plays we've discussed all this year of trying to get in front of money managers that need to be invested even though many are calling for a recession.  The plays I outlined early in the year were XLV (healthcare), XLP (consumer staples), PPA (defense and aerospace), and XLU (utilities).  Those plays still look decent, but you need to be mindful of defense and healthcare cuts that may come as a result of the Super Committee's  failure to find meaningful resolutions to the debt and budget cuts.  Of course those cuts are over 10 years, so they are absolutely immaterial, but that doesn't mean that the defense and healthcare etfs won't over-react to the downside for a month or two.


RECESSION OR NOT?
My favorite bloggers and money managers are completely mixed in their outlooks for the domestic economy.  The best longer term trend watcher and money manager is Chris Puplava wrote "Bill Gross - Wrong on Bonds Again?" last week and we need to pay attention to his great article.  Chris is brilliant but has been faked out as much as anyone during this year.  While he has pretty conservative positions, he has made some bearish comments that have been reversed, and has made some bullish comments that he's had to pull back as well.  His longer term indicators suggest that we are actually heading toward expansion and that the recession is not going to stay.


Am I sold on what Chris is selling?  I don't think so, only because he isn't considering the impact of Europe's collapse in his article.  I think things get much uglier before they get better and there is a better time to position for the long side coming up.  His summary suggests that Bill Gross may get clobbered by rising US government debt rates as the economic outlook domestically improves.  That might happen if you take the Euro crisis away, but we all know that Greeks won't suddenly be able to stop spending and we also know that the ECB won't suddenly find a solution to the unsolvable either.

That's it for now.  As I have more I'll use the same format over the next couple of weeks till things settle down.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/