Fear of change has gripped the world. The centerpiece of “Western” foreign policy is becoming unhinged and the cost of commodities are getting a renewed shot of adrenaline.
The other day we spoke of “Breaking the Pattern”. Change is sometimes good. But when it comes to “cheap” oil supplies, no change is welcome. You can rest assured that no matter who takes control–short of Al Qaeda–the oil will flow. They simply need the money. And allowing prices to spike to some ungodly figure anytime soon would kill the goose.
This event is almost the only event that is bigger than the FED’s digital printing press. Obviously the Powers That Be lie regularly. But everyone simply snickers, winks and goes about their business. But there are doubts that even QEIII can stop what will happen, GDP at 1% or worse.
The Genie is out of the bottle, the cat is out of the bag and Pandora’s Box has been opened. The spike in cotton and wheat and silver is almost tolerable. The spike in oil is not.
Analysts should, right now, be taking a 20% cut to earnings over the next year. Of course they won’t do that until the market falls 20%. And the $200B left in QEII is NOT enough to stem the tide.
The technology group and the “anointed one’s” have begun a correction while the mega-cap laggards have led. This is a clear warning sign that hot money is moving in a different direction. We may get a spike in the energy sector that looks like the early 80’s. But be careful because it left an entire generation of energy investors in the hole.
You know that I have been very hesitant to chase POMO. I have sold the majority of our summer portfolio but still hold some stocks. I will continue to hold a few cheap and non-volatile stocks. But certainly the times, they are a changin…
Comments »