Treasuries, REITs and Japanese stocks have been hammered this past week. On top of that, we’ve seen notable risk aversion in many high beta names, like NFLX, UNXL, RSOL–just to name a few. The PIMCO high income fund (PUK) dropped by 6% for the session and commodity related stocks have been behaving as if runaway deflation is taking place.
My Risk Appetite Index has fallen below $100, coming down from $105.
Either the large cappers and income names are foretelling dangers ahead or the rotation out of stodgy non-risk names is so acute that we can coexist in a world where rates soar, the dollar rises, and stocks continue to make new highs, all the while “old economy” stocks get placed in the doghouse.
All I know is that I’ve been tempted, perhaps by The Devil himself (you never know), to buy a wide array of super risky stocks, like BLDP, CPST and PLUG, at a time when my assets under management are at levels that have marked my top in the past. Each and every time I hit this level, I am rebuffed and sent seaworthy, like a viking without a paddle.
Going into today I was fully invested, so I sold some stocks to remain nimble towards the end of the session. There isn’t anything wrong with raising one’s flexibility in the face of a profound sell off in treasuries. No matter what they say, there isn’t a pleasant outcome to this story, if it plays out like it did today.
We cannot, must not, have higher treasury rates, else all is lost. The initiative of the bulls will be snatched, like a purse from and old lady in Brownsville– and the housing market will stiffen up a bit (no rigamortis).
With cash, I reserve my god given rights to depravity and will exercise this enablement whenever, wherever, I choose, with the highest degree of talent and penchant for performing “market magic” afforded to me through my patrons: the gods themselves.
NOTE: Today was the first in four days that overall market breadth eclipsed the 50% threshold.
http://www.youtube.com/watch?v=UqDt0rnNYvU
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I think the market can absorb another 100 points of rate increase before things get sketchy
since when did you know anything at all?
BANNED
lol
My gut told me to take some money off the table today. Down to 75% invested. I also fed my gut a juicy ribeye, medium rare, lightly salted and peppered, as tribute.
Good to see you back.
Have you ever shared the AUM amount? Enquiring minds would like to know.
Some rate increase prob not a bad thing but……. the pace at which it adjusts will be telling. Fly did you ever dip into UNXL? That thing sure is getting brittle in the transformation from white hot to ice cold! I admit I bought some on the dip to 22.5 and bailed with a 1.25 profit. Might take a look again under 20 but why should I?
fyi – small typo. phk not puk.
u play with markets, i play with god.
Is that what you call it?
Godzilla is gonna fruck you shima the widows and orphans. Freefall for the sold to you trade of 2013.
And….gibberish like that leads to white marsh does the market when you sell, no?
Really? Wow. It was a bad pun. Or joke. Relax. Thought police are not good. No?
I like to put on the headphones and listen to your musical offering as I read the responses to your blog. But when I post something the music quits! Is there a work-around for that?
Funny you say that. I post whatever music I am listening to at the time of my post.
I did not buy unxl, only pamt.
Devil sold unxl today
Is this the time to start looking for select shorts?
Alternative “overthinking it” scenario to consider.
1) Sell off in Asia is about a global relocation of capital, rather than domestic capital selling shares to take profits. (Hence why it was a monster one day 7% decline in Nikkei among others)
2)Sell off in treasuries is about recognizing the cracks in the euro and/or yen showing up AND fears of long term viability of the dollar. They don’t like the dollar long term but its still the only global game in town as reserve currency and would benefit greatly from euro collapse. Alternative 2b sell off in treasuries is about risk off being dead. Alternative 2c Bernanke selling aggressively into global strength in demand for treasuries believing economy can stand on its own.
3)Dollar strength is a tell that if 1 and 2 are right, a global shift is favorable into US based assets. Domestic rallies favors weak currencies as everything in dollar terms goes up, but global capital favor strong currency, and should stocks rally in the face of rising dollar it may signal a lot of global inflows. (Dollar denominated assets are attractive to those holding weak currencies because balance sheets priced in those weak currencies are even stronger as dollar strengthens)
4)there is some initial confusion by the short term quick shifting capital as a result of some of this larger big global institutional capital moving. They incorrectly diagnose higher costs of borrowing as bad for real estate and ignore the larger global capital in play here. Higher interest rates may mean there is a bid for cash, and it will attract capital globally to support growth both of which is good for real estate (see Volcker days and long term correlation of market returns and interest rates).
Of course the obvious answer is perhaps the right one, and this is nothing more than a precursor to a correction. Asia is more sensitive to the economy and higher interest rate and end of QE and shift into lower risk names and out of high risk names would naturally occur if we were going to correct.
But at any given time I like to have an alternative in mind so I don’t get married to an idea as price action proves otherwise.
Pretty screwy.
But then again, what the hell do I know?
This reminds me of that post I read on this site by that guy who killed somebody.
How dare you.
That crack spread being up 10%, is that today?
yes
BLDP get some
bldp fast run to 3 if interested