Monday, January 14, 2008

Another week not to be fooled

Markets opening higher on IBM's numbers but don't be foooled as 60% is currency driven growth at the company. In a recession environment, can we really expect that 40% genuine growth to be sustainable in 08? It's like picking a fighter with one hand tied behind his back... At $910 an once, goldbugs probably backed by hedge funds are continuing to see the greenback in a downward spiral. This will reverse... still saying gold below 800 at one point this year.

I hate what I am reading on the mortgage fiasco solutions being provided. Wether it is a five year moratorium on changes to the floating rates, postponments on foreclosures, it sounds like prolonging the pain. Market hates uncertainty and the sooner this is all cleared up the better. In the meantime, I see companies floating 14% paper to shore up their balance sheets. I think that is really healthy and that the right pricing will show there is liquidity and that more money will come into play. In the meantime, Bernanke should change his tune on the hinted 75bps of cuts and some shorts might get kicked in the shins...
Meantime looks like a good time to look at renewable energy investments while adding to short positions on heavy machinery manufacturers...
All for now

DCW

Friday, January 11, 2008

Right off the bat 2008 top 5 ideas...

Ben at the Fed tries to become a political animal. Market has been discounting a recession since November so on Thursday the 9th he comes out and says 75 bps of freebies to come in the next 3 meetings: Is that 50 and 25 or 3x 25? WHo cares? Gold bugs saw this coming and pushed Feb futures near $900. Every new Fed chairman starts with either a crash or a meltdowm. 26% loss on the financials in 2 months shows that Mr. Bernanke is following in the tradition. I can't help myself but being reminded of one of my favorite James Bond movies where the protaganist (Greenie) is being chased while in a speed boat by some nasties and manages to squeeze through some vessels. The chase boat ( Ben) doesn't have enough time or power to prevent himself from being blown up... Nice For Greenie to make money while he keeps prognotiscating the ever increasing odds of a recession... Corporate America for you... Come on America wake up, your average grocery bill rose 42% in the last three years and the Fed tells you inflation is under control. You elect those people and you get what you deserve. With falling home prices, you can't refinance yourself on your path to conspicous consumption and at 3.83% you need $20MM in the bank to live of your nest egg...

So here are my 5 Overall bets

1- Foreigners will force the UST 10yr over 5% a some point this year from the current 3.83%. The current return doesn't cover anything close to consumer price inflation.
2- Gold will be a buy below $800 this year
3- US financials are still NOT in a OVERSOLD situation as it will become as hard to continue hiding off balance items as to deny Steroid use and have anybody believe you
4- India will still be the place to invest in 2008
5- China' stock market is going to implode within 60 days on either side of the Olympics. Not to lose face ... it probably will be after ...

So here is my general overview, good trading to ya. On my next blog, I will share with you some of the sotck ideas that should make you some coin in 2008.

DCW