My Take on the Week that Past and What Lies Ahead

Stocks ended the week a little more than 1% higher, hardly an attestation of a great bull market. Year to date, the SPY is higher by 7.6%, while GLD is up 26% and TLT 16%. VNQ, the largest REIT ETF traded, is higher by 14% — not including the 3.3% yield it pays. On a micro level, there’ve been chockful of trading opportunities since the bottom, which far exceeds anything enjoyed in the aforementioned names above. However, I hardly know any bulls who missed out on the early 2016 drubbing. Do you?

The point I am making is that markets, as a whole, haven’t done all that much so far. If we were to closely monitor where the glacial, slow — but certain, money has been going, without question it has gone into bonds, gold and REITs.

For the week, stocks rejoiced after being harangued over a fortnight — due to unnecessary and unwarranted concerns over a Fed rate hike. Markets gave up the ghost today, and although losses were limited, I didn’t like the action in oil at all. My entire bear thesis hinges, mind you, on a precipitous drop in crude oil — which will then lead to the inevitable destruction of credit lines and subsequent equity positions. This deleterious effect on energy balance sheets will spill over into the banking sector, bringing with it a credit tightening that will tip the scales — placing America where it belongs — into an arduous recession.

I do not wish cast these events; I only know them to be our eventuality.

I remain steadfast, almost obstinate, long TLT, GLD, several miners, and cash.