I’m Building Positions In These 4 Stocks
Market Trend: Meandering
Market Outlook: Looking For a Bounce Early in the
Week
David’s Pick: RRPIX
Peter’s Picks: CASH, but —
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DYNT |
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Sector Watch: Up: The Broad markets, with the relative strength coming from
Technology;
Down: The Bond market, and the Financial Sectors.
Navarro’s Broad Market Outlook: CNBC Gets Giddy
So I’m
listening to CNBC as the jobs report data is released
and when the jobs number
is over 300,000, I hear a bunch of hooting and hollering and clapping from the
commentators. Meanwhile, within seconds, blood is flowing in the bond market
streets as bond prices plunge in the futures market. Don’t these guys get it?
They are NOT supposed to be cheerleaders for the economy or stock market but analysts for traders and investors — as well as mindful of the carnage in the
bond market that “good†economic news can bring. Dolts.
The
fact is that that jobs number was so BIG, it has to be doubted. This is
especially true since the DAY before, the same Bureau of Labor Statistics
came out with a Producer Price Index that showed inflation was benign even in
energy products EVEN AS gas prices are going
bananas and a sustained oil price shock continues. I don’t believe that for a second.
And
get this. On Friday, my trusty teaching assistant sticks a Business Week
article in front of my face that questions why there is such a big divergence
between GDP, as measured by consumption, investment, government spending and net
exports vs. GDP income, as measured by wages and profits etc. Well, as we
have pointed out before in this column, the GDP numbers are fudged upward to
reflect changes in productivity and technology. So even though a new
computer costs only $500 now, the government’s statisticians will charge a higher
value to the GDP — but, of course, there’s no real dollars on the income side.Â
And income lagging GDP is a recipe for eventually flagging GDP.
So yes, I’m a bit cynical and suspicious about the numbers we are being fed
right now, particularly in advance of a Presidential election that is going to
be decided at least in part by what the numbers say.
LAST TAKE:
IRAQ IS A DISASTER. The Kurds, Sunnis and Shiites are heading for the civil
war and anarchy that sober analysts within the CIA and Department of Defense
warned about. If the Bush Administration clings to its June 30 transition of
power, the pace of this civil war will accelerate.
No good can come of
that for the markets.
listening to CNBC as the jobs report data is released
fact is that that jobs number was so BIG, it has to be doubted. This is
especially true since the DAY before, the same Bureau of Labor Statistics
came out with a Producer Price Index that showed inflation was benign even in
energy products EVEN AS gas prices are going
bananas and a sustained oil price shock continues. I don’t believe that for a second.
get this. On Friday, my trusty teaching assistant sticks a Business Week
article in front of my face that questions why there is such a big divergence
between GDP, as measured by consumption, investment, government spending and net
exports vs. GDP income, as measured by wages and profits etc. Well, as we
have pointed out before in this column, the GDP numbers are fudged upward to
reflect changes in productivity and technology. So even though a new
computer costs only $500 now, the government’s statisticians will charge a higher
value to the GDP — but, of course, there’s no real dollars on the income side.Â
And income lagging GDP is a recipe for eventually flagging GDP.
right now, particularly in advance of a Presidential election that is going to
be decided at least in part by what the numbers say.
Unless
Iraq news weighs down the market, look for it to get out of the gate fast early
in the week. BUT my play of the week on the data will be a possible Thursday
short. If the March PPI shows the obvious inflation that exists, look for a
downward move.
^Next^
David’s Pick: Continue to Reiterate–Long RRPIX (Bearish Bond Fund)
For a few
weeks now, I have brought this out as, in my opinion, one of the best
reward-to-risk long term plays around. I have been adding to my short position
in bonds using this 1.25 leveraged “bearish†bond fund (ProFund’s Rising
Rates Opportunity Fund). I am now pounding the table on this one! Again,
if you have been reading my column, you now that my broad outlook on the market
is bearish for US equities, bonds, and real estate, with my thesis being:
Interest rates will experience an upward shock when the artificial manipulation
of the mid-to-long end of the yield curve created by the “carry trade†and
overseas intervention unwinds. This will cause a sharp rise in rates (drop in
bond prices) and reversal of the downward interest rate trend—