A CERTAIN AMOUNT OF PERSISTENCE (Why the USA is doomed)

I'll post this video and encourage you to simply soak in the fullness of the awful realities that are set before the United States.



Please spend 2:00 peering at the fruit of an education system in the US that is preparing us to compete in a global economy.  Without some significant help; all of our grit, determination, and a certain amount of persistence won't help one bit.  My concern is that if this is a view of our average guy in America, we are simply doomed.

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/

WHERE ARE WE? (Sector Rotation Models)

I suppose that I could lavish you with lots of thoughts about how were are stuck in some crazy feed-back loop of Fed induced mirages and half recoveries yet it would only be tired old cry that prattles on about how the deception will work well, till it doesn't.

So, instead of singing the same old tune and holding my nose and buying those stocks that have been defensive and leading this nutty rally for the last year or so, I'll simply provide a snapshot of the old sector rotation model that we've examined before.  My guess is that we are nearer to the far right side of this image which would suggest that the equity markets have topped AND we are in early recession.  The only fly in the ointment if you will is that I have been holding utilities, healthcare, and consumer staples for almost two years and these stocks have been our leaders!  This segment of the equity markets usually doesn't maintain leadership for this long, so as usual, there are new, weird, and unknown forces at work in this screwed up Fed driven market.

If we think we really are progressing along the economic cycle, you might dip a toe in the finance area, (which I did when I bought some regional bank stocks several months ago).  Those are about flat still, so I guess we'll see how long it takes for the economy to finally break down in a real way and have those interest rates rise, bringing helpful and healthy rising net interest margin...... hold  your breath about rising rates, it probably won't ever happen.

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/

RECOUPLING....T-BOND REVIEW (TLT,TBF, XLU)

I've posted a number of charts in the past months that examined the amazing experience we had in 2012 where typical market relationships melted into nothing and became completely useless.  One old notion that treasuries acted inversely to the equity markets was one of these.  In 2012, we witnessed treasuries increasing in value (yields falling) and equities rising, frankly, this isn't normal.

We've speculated as to why this happened, but without fail we always came back to, "Fed manipulation" as the key distorting factor.  Is it really that foreign investors needed safe sovereign holdings and continued to by US bonds without regard for yield?  Maybe.  Was it that Joe 6 Pack was abandoning his fear and rushing headlong into the equity market.  Possibly, with a portion of his holdings.  Each answer may be correct as the Fed's insatiable desire to buy up mortgages and treasuries has artificially suppressed yields and also forced Grandma and pension managers to elect for riskier assets with "new" money in an attempt to make something.  I think this is why our equity leadership has been focused like a laser in dividend paying stocks in defensive sectors.  The average investor doesn't trust this rally and hasn't, so as he holds his nose he buys utilities, consumer staples, and healthcare and shuns small caps and technology.

Don't think utilities have been a safe-haven?  Check this out.  I haven't sold my XLU yet, but is is on the agenda.

As 2013 dawned, we've seen a recoupling of the old relationship in the first few months, and I for one, am very happy.  Yet, as happy as I have been, an odd sense of dread kicked in as the relationship over the last few weeks started to break down.  Perhaps it was Cyprus, or perhaps the huge rally in the first quarter just needed a breather, but bond yields started floating lower, yet the equity markets just continued to press higher and float out in space to new highs.  I 've highlighted the chart of TBF (which is the etf that shorts treasuries which shows the relationships I've been watching).  In this chart, TBF should move in lock-step with the equity market (SPX) which is the black line behind the TBF chart.

A month or so ago I put this chart up and called for a change in direction for the stock market, but it didn't come.  The weakness in TBF suggests that a healthy correction is in store for stock markets.

Don't get too bearish and over extended here, but certainly the chart suggests a bit lower in equity markets.

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/

ALL YOUR HARD STUFF, IS WORTHLESS!!

SUDDENLY, GOLD, SILVER & BITCOINS ARE WORTHLESS.....
Just when the bitcoin mania was going great and everyone I knew was emailing me about them, blamo!  Goodbye bitcoins!

What specifically happened today to make all assets (excluding paper dollars and bitcoins) much more worthless than Friday?  While I am not stepping in front of this train that is heading south, I find several things quite odd.

WEIRD THINGS IN THIS MARKET OVER THE LAST COUPLE OF WEEKS
First, that everyone in the world could watch oil, gas, and every other commodity collapse and assume that the stock market would continue ramping higher.

That all conservative stock holdings like utilities, consumer staples, and healthcare easily beat small caps and other companies and no one was concerned about the market's path.  If everything is great, why was all the money going into defensive stocks?

That unemployment was greater, housing, was slower, and consumer spending was falling, didn't worry anyone.

That the market reached all-time highs everyday yet emerging markets kept getting destroyed.

Bond markets suddenly were going higher even though the equity markets hit highs.

THOUGHTS ON GOLD AND SILVER
I think gold can visit $1,200 so I'm not moving too quickly to buy this drop.  Longer term, I am betting on physical assets as there is no way Japan can continue their actions without destroying the yen.  If they destroy the yen, the daisy chain of connected global financial entities will pretty much destroy it all.  I'd rather have some shiny stuff than an electronic asset in a bank that can be given a haircut to save a few important financial institutions.  Don't believe me, just ask the citizens of Cyprus.

THOUGHTS ON BITCOINS
Do not do it!  I have not had time to finish a post on bitcoins, but at the end of the day, you don't want to own this very interesting and scary electronic currency.

No other comments are necessary.  By Friday the markets will be back to moving higher, nothing to see here folks!

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/