Remember when I said I wasn’t gonna look at any stocks?
I lied.
Inside of The PPT, I set up some custom indexes to monitor certain things. What’s perplexing to me is seeing technology shares up almost 50% from their lows, yet raw commodities stuck in mud. When I say commodities, I am not only talking about gold, oil and silver. If you take the whole basket and gander at it: not impressive.
Here’s the chart.
Investors are racing for yield, bidding up closed end funds and bonds across the board. All of the frowns that hit the bond markets in 2011 have turned upside down, from junk to sovereign. Everything is being bid up. We are near the top end of the range here, with only 2-3% points left before we hit new highs. There is something to be said about the character of this rally. It is not based around commodities. We are rallying as if the economy were about to lift off.
Economically sensitive sectors like homebuilders, industrials and pulp paper stocks are airborne. It’s as if the european crisis never existed or will ever pose a risk to the stability of the global banking system.
How is this possible?
Last I checked Germany didn’t give the EU a blank checkbook and Italy still needs to raise a tremendous amount of money this year. Oh, by the way, those Italian bond auctions went swimmingly, which begs the question: who the fuck is buying Italian debt?
I suppose the ECB is propping everything up. However, during the dark days of 2011, there seemed to be a certain flavour of inevitability regarding the insolvency of the EU. I speak to you as an observer, having all but 25% of my assets invested on the long side. The market has been extraordinarily benignant to us all; I hope you appreciate how special this rally is and to take profits from it at once.
You are staring the gift horse in its face. At the moment, the horse is stupid, gnawing on carrots, pleasantly neighing about and nickering until it is fat and tired. Not before long, the gift horse is going to run out of carrots and fashion your nose for one, ripping it from your face, while kicking your chest cavity in with its asinine shoes.
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materials one of smallest sectors in the s&P. having said that, who knows whats going on. Im inclined to agree, but if europe keeps yields low, stocks are still “cheap.” as far as I can tell, stocks missing have been europe related, not so much China. But we will see when more earnings come online
I wonder if anyone has tried to geld a horse only to be chest stomped into cardiac arrest by said horse? That would be the greatest moment in equine history would it not?
True story. That thoroughbred is Le Fly.
also, senor fly, IF this is a real rally, why not consider buying something like WLT or ANR – or other material stocks that have been obliterated. Then have a hedge on that?
WLT is interesting
I bot ANR today … as well as AIN and IVN.
AIN has ties to the paper/paperboard industry and the composites division is a fast grower making light weight blades for jet engines destined for the Dreamliner.
You’re probably right and I thank you for the gift but I still wish I held the GMCR.
I never thought I’d say this, but this run up has to stop. I need back in.
Just a guess: Because money managers (like you) suffer under the tyranny of annual returns, and aren’t about wealth preservation?
You are right again, Fly, as usual except for one thing: your usage of ‘beg the question’ is utterly wrong in this context. The phrase ‘raises the question’ is the proper approach. Look it up, then repent.
I refuse to listen to you.
I love you, man (no homonym).
Yes, minus a half-point for that, but only a half-point because it’s the colloquial use (don’t get me STAHTED about “comprise”) and nobody knows or cares WTF your issue is with that anyway, Professor. Minus one also for “air born.” And I can’t decide if it’s minus one for this use of “asinine,” or plus one for the pun (horse/ass).
But see, the Fly still wins. Because he gets the +20 for content on this post, AND a bonus +10, because “benignant” was such a great word choice. Because if you be Ben-ignint, you won’t understand where this rally came from.
I bet you thought you were being witty when you pounded out that complete crapola.
now thatss fuckin funny!
Late December I bought VALE, MCP, PPLT, GDXJ, SIL, BTU, WLT, CLF, YZC, PMGLF, AXAS, NEP, PTEN, OGXPY – nice recoveries but all are still WAY below 52-wk. highs.
Dr,
I have seen it before and not just once, you can attribute it to many things; markets are forward looking and after all bull markets do not necessarily need catalyst to start, they start on hope and economy follows in time. By the way big British banks been buying Italian debt since last November and of course ECB is everywhere with their printing presses, you don’t have to announce QE, you can just do it.
So you’re saying we should go long commodities tomorrow since they need to ‘get them some’ too?
Wow, great post Mr Fly, I do grow carrots for a living which makes the post even greater.
The Fly has been getting more and more interested in carrot-farming for the last several years. I’m sure he’ll be most interested in seeing your P/L, discounting the natural gas inputs, and learning your permaculture techniques. Because that lawn – that poor, chemical-laden, barren relic of another age, really needs to get plowed under, decontaminated, and ready to put out what Casa de Fly needs to survive the zombie apocalypse. You know.
It’s almost like all this stupid bullshit was priced in back in October and that was the best time to start picking stocks. Amazing how it works!
I started a smal position in TZA today. I hope it’s not too early.
It is too early. That etf is like an MF Global account
Fly: I think the first movement from The Photographer will suit you well. It is, afterall, about a Gentleman’s Honour.
any chance the commodity markets have been solved? arab spring was scary and all. it is interesting bonds and tech stocks are ripping: peaceful assets.
LMAO:
“You are staring the gift horse in its face. At the moment, the horse is stupid, gnawing on carrots, pleasantly neighing about and nickering until it is fat and tired. Not before long, the gift horse is going to run out of carrots and fashion your nose for one, ripping it from your face, while kicking your chest cavity in with its asinine shoes.”
Tip of the hat sir 😉
LTRO, its how you say POMO overseas. For Equity bonds, there is a key fibo level I have been watching, even with this market rally they pulled back under it yesterday.
Fuck your key fibo level.
http://www.hulu.com/watch/231711/jamie-olivers-food-revolution-maybe-la-was-a-big-mistake
That time machine of yours needs some tweaking…you should still be long LULU & GMCR.
I am sure you are still long both.
“Oh, by the way, those Italian bond auctions went swimmingly, which begs the question: who the fuck is buying Italian debt?”
In case that was not a rhetorical question, I believe Soros is on record as being a buyer in size of deigo debt.
WTF? No Black or Brown racial bashing aloud but “deigo” is OK.