Recently I was invited on a consulting assignment and now back in Iowa. Sorry for the lack of posts recently, but to me nothing has changed with the market. The stock rally has been minor on no major news events. The Wall Street spin on earnings releases and weak guidance appeared to be falling on deaf ears in most cases. A few stocks were pounded on the earnings misses recently.
Pay attention to the riots starting in Spain with the long term bond yield now over 7.2% in the country. No bread no peace!
With the U.S. corn crop now appearing to be really bad, the outlook for more strain on the U.S. consumer has started. The deflation process should now weaken end demand further ex food, and while I cannot predict a drought, the end deflationary environment for items other than food will likely lead to prices falling faster now. As far as positions I recommended, I would look to exit UUP on a move on the Euro below $1.19 to the dollar. Do not hurry and take your time as Italy will be next in line for funds causing more pressure on the Euro.
The VIX looks poised for a move sharply higher. The index has performed well despite the stock rally. I am buying the XVZ to participate in the stock decline I see straight ahead.
As a further note, if any firm would like to hire me for my services, I am in the market. Of course that has been the case for a while. Feel free to contact me with a post. However, as the way Wall Street works "bears are not invited" to the party. I will love to turn into a bull someday, but 2012-2013 will not be a pleasant experience for most of my former associates/co workers. All my friends on Wall Street I wish good luck and I may see you in the unemployment lines soon. I know many of you have expressed a desire to leave the business and I can understand why. You are the real heroes as you continue to try to help clients in a depression.
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