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
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