Being Hedged Is The Best Bet Now
Market Trend:
Down
Market Outlook:
Cloudy With a Chance of War
Media Watch:
Raj Gupta in Barron’s,
TradingMarkets’
War Scenario
Macroplay of the Week:
“Jump in the Box”
(
JBX |
Quote |
Chart |
News |
PowerRating) Vs. “Carl’s
Grossout”
(
CKR |
Quote |
Chart |
News |
PowerRating)
The Broad
Market Outlook: 1970s Redux?
We have long maintained that this first decade
of the new century looks a lot more like the stagflationary 1970s than modern,
deflationary Japan. With oil prices continuing to spike and tensions in the
Middle East increasingly coupled with an eventual and inevitable receding of the
strong productivity tide as we substitute guns for butter and “protective
capital†for “productive capital,†it is difficult to chart a bullish course.
In this environment, it is
essential to remain hedged: Pure long positions are at risk from acts of war and
terrorism. Pure short sellers are flirting with strongly oversold conditions in
the short run, while the exile of Saddam or the capture of Bin Laden represent
severe feeding-frenzy-rally risk.
The Week’s
Macro Data Market Movers:
The Macroeconomic Calendar
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DAY |
EVENT |
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Monday |
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* Potential major market
movers in red
We pretty much nailed it
last week with our call on an “unexpectedly†large trade deficit — Wake up
Wall Street and smell the weak dollar and high oil prices.
The other “surprise†— a jump in the PPI — really wasn’t, once you broke it
down. Sure, in the non-core, oil goosed it. But whad’ya expect in the core once
the auto companies backed off a bit from their sales campaigns on steroids and
let prices rise back to a level where profits are actually earned on car sales?
So don’t worry about this UNTIL you see other
commodities rise in price.
As for this week, ho hum — at least until Friday when the fourth-quarter GDP is
revised. The betting money has a slight upward revision in the cards.
As for other reports, the normally pedestrian oil and gas inventories will be of
interest on Wednesday with stocks now at very low levels while macrowavers will
find some interest in the German GDP: Unless Europe’s largest and most sluggish
economy gets off the deck and the Herrs and Fraus start buying more of US
imports, ze globe will remain in ze recession.
Finally, look for some mild interest in jobless claims while our call of the
week for a market mover (down) will be on news of imminent war in Iraq.
Media
Watch: Raj
Gupta in Barron’s, TradingMarkets
War Scenarios
At least from a macrowave perspective, the interview
with Raj Gupta in this week’s Barron’s
is one of the best
we’ve seen for sussing out these modern and turbulent times. While we find it a
bit of a stretch to go long the bond market at this point in time given the
risk-reward ratio, Mssr. Gupta nails a large part of the macro equation.
The other piece of yeomen macrowave work that has surfaced is the report issued
by TradingMarkets (tradingmarkets.com) on how to invest given different war
scenarios. Check it out. While we again find some of the conclusions suspect
(e.g., bullish on Israel if the war in Iraq goes well), the logic of the report
is very compelling.
by TradingMarkets (tradingmarkets.com) on how to invest given different war
scenarios. Check it out. While we again find some of the conclusions suspect
(e.g., bullish on Israel if the war in Iraq goes well), the logic of the report
is very compelling.
Art of
the Macroplay:
“Jump in the Box”
(
JBX |
Quote |
Chart |
News |
PowerRating) and
“Carl’s Grossout”
(
CKR |
Quote |
Chart |
News |
PowerRating)
There’s a great new company in L.A. that merges
high-tech mortuary services with fast food technology. It’s called “Jump in the
Box.”
OK. Just kidding. But the point is that bad jokes like the one above turn you off, while good jokes like
Jack in the Box’s
great new “Philly Cheesesteak†ad make you bust a gut.
And speaking of the gut, every time I see one of those grossout Carl’s ads where
some 20-something wraps his fists around this big blob of cholesterol dipped in
a gallon of ketchup and pickle, my stomach literally does a mini-heave. I can’t
even listen to the sound of the idiot biting into the burger as crap drops all
over his shoes. TOTAL GROSSOUT.
In contrast, I like totally get Jack’s ads Dude — I’d try a Philly steak in a
clogged heartbeat and may even a Chipotle (that ad is funny too). But even
though I’ve been seen more than once eating a Carl’s Famous Star with Cheese,
no mas.
I’m am boycotting that place.
My macrowave point is this. Ads matter. And
while Carl’s stock (CKE Restaurants) is so driven into the ground that there is not much left to
short, I ain’t buying the stock until they fire the ad director. As for JBX,
it’s certainly not the best-looking stock I’ve seen technically. BUT as a
long-term position play in a recessionary world where there is likely to be a
lot more dining at JBX than the Chart House or P.F. Chang’s, this one is worth
keeping your eye on.
high-tech mortuary services with fast food technology. It’s called “Jump in the
Box.”
some 20-something wraps his fists around this big blob of cholesterol dipped in
a gallon of ketchup and pickle, my stomach literally does a mini-heave. I can’t
even listen to the sound of the idiot biting into the burger as crap drops all
over his shoes. TOTAL GROSSOUT.
clogged heartbeat and may even a Chipotle (that ad is funny too). But even
though I’ve been seen more than once eating a Carl’s Famous Star with Cheese,