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I am still with my overall recent bull run plan to trim equities as they advance. I sold equities down by about one percent with the 1525 close on the S&P 500. My previous trim was at 1500. The next planned near term trim will be S&P 500 Index at 1550 for about another one percent trim should they continue an upward run. As the equity train continues climbing the mountain my cash ballast continues to grow along the way. At some point this train will reach its peak and have to transverse the down slope. Currently, a five percent pull back will put the Index at about 1450 and a seven percent pull back would put it at about 1420. And, this is most likley where I will be doing a little buying in some special equity ballast possitions.
As the old saying goes ... Buyer Beware! Do you really want to get sucked into this vortex?
I am looking for those $112.50+ 2013 per share earnings estimates on the S&P 500 Index to soon get revised downward possibly by as much as five percent. Heck, we are only in the second month of the year and a roll back to the $107.00 range ... and possibly further as we move further into the year.
From my thoughts you just can not position into equites at or near fifty two week highs. Learned a long time ago ... Don't buy at the top ... Sell at the top!
Reply to @Skeeter: I've never viewed market highs as great buying opportunities. However, you attribute perhaps more logic to the markets than I do, as valuation & logic seem long separated. If the downdraft becomes more serious - especially in the commodity sectors - look for couple or three Governors to "make nice" in front of the cameras: "Gosh, we didn't really mean that ....."
Reply to @hank: I see it as more "baffle with BS" (one day, it's "we're thinking about lessening QE", two days later when the market drops a little, "Oh, don't worry - easy monetary policy as far as the eye can see! No worries!" Or, my favorite from Yellen: "Everything's really looking better, but we're going to need to have ZIRP until 2016.")
It's been said that the majority of Fed meetings discussions are taken up by how to communicate policy (ie, propaganda), and I believe it. I'd also be willing to bet the US will grow less than 3% this year and go against what Bullard notes below.
And in a CNBC interview with legendary fund manager Stan Druckenmiller yesterday, " If you normalize interest rates, i'm not talking about a spike, just normalize where they were before QE and took them to 5.7% federal funding costs of the debt, that's $500 billion a year in interest expense that goes out door. We're having a heart attack over an $85 billion sequester when we can lose $500 billion just if you normalize. The way markets work if and when that were to happen, you don't normalize, you keep going because the market figures out that you now have a credit problem which is exactly what's happened in the foreign nations. The bond market is a funny thing. In Greece the bond market was perfectly fine until February of 2010. Not moving, not doing anything, and then in two weeks it was over."
Another bit of truth from the interview: "... Congress is not getting the market signal we talked about in the article so you can scream all you want about congress and the president being clowns, I can't think of any political system anywhere where they acted without interest rates going up. When did greece act? When the bond market blew up. When did Spain act? When the bond market blew up. What was Clinton's response to Rubin, "you mean the f'ing bond market is in control." Doing what they are doing the politicians have no incentive, but the market is a very fickle and violent thing."
This morning: "Fed's Bullard says Fed's easy policy to stay for a long time
Says: - Fed's 'forward guidance better' - 'Global uncertainty is way down' - Sees 'encouraging signs' in labor market. - Fed policy has become more aggressive recently because outright treasury purchases are more potent than operation twist. - Sees US economy growing 3% in 2013. - Sequester would have minor impact on growth.
Reply to @scott: lol, and Bullard just pretty much admitted what I said above on CNBC: "8:27 AM More from Bullard on Squawk Box (previous): "We work hard on the (FOMC) minutes .... they're wordsmithed." So the Fed deliberately floated a hint of tighter policy with Wednesday's minutes. After seeing market reaction, the bank is quickly walking it back (I, II, III). [U.S. Economy] Comment!" http://seekingalpha.com/currents/all
Mr. Jordan looking forward to Mr. B's visit on March 5, or not; perhaps just a few 100 pages of "yes, we can". The text writing has already begun, eh? Who will be bringing the "smoke and mirror(s)" for the show?
We had a view the past two days of withdrawal symptoms of the QE. Bonds at this point okay with the plan in the short term; the equity markets not pleased at all.
Reply to @catch22: It's a struggle, but somehow we've managed to get along without you. Boy do we miss those weekly Fund Boat updates---not. Reegards, Ted
Reply to @scott: "Baffeling" to me is how these "minutes" have shown an ability to influence markets since being introduced by Bernanke a couple years ago.
I've tried unsuccessfully to determine what if any legal sanctions exist to assure they really reflect a completely "open" exchange. For example, can two or more members discuss potential policy actions by phone or over coffee in advance? However, I doubt they're subject to the same stringent standards as a meeting of your local school board or city council would be.
The tendency for members to correct any "misrepresentations" stemming from the minutes in the days following their release makes me skeptical of the whole process. (Anybody wanna buy a bridge?)
Reply to @hank: They're going to have to continue QE, ZIRP and all of the other games, while teasing that they are going to lessen them along the way. Of course, the market - now addicted to QE - will be continually upset every time it's hinted that it will be taken away.
Mervyn King, outgoing head of the BOE, said it well the other day:
"…there are limits to what can be achieved via general monetary stimulus - in any form - on its own. Monetary policy works, at least in part, by providing incentives to households and businesses to bring forward spending from the future to the present. But that reduces spending plans tomorrow. And when tomorrow arrives, an even larger stimulus is required to bring forward yet more spending from the future. As time passes, larger and larger doses of stimulus are required."
And yet more from random Fed talking heads: "Friday, February 22, 12:03 PM ET There's more push-back from the doves as the Boston Fed's Eric Rosengren (FOMC voter) tells a crowd he disagrees with an academic paper making the rounds arguing excessive government borrowing and the Fed's asset purchases could lead to trouble down the road. What could possibly go wrong?"
Comments
I am still with my overall recent bull run plan to trim equities as they advance. I sold equities down by about one percent with the 1525 close on the S&P 500. My previous trim was at 1500. The next planned near term trim will be S&P 500 Index at 1550 for about another one percent trim should they continue an upward run. As the equity train continues climbing the mountain my cash ballast continues to grow along the way. At some point this train will reach its peak and have to transverse the down slope. Currently, a five percent pull back will put the Index at about 1450 and a seven percent pull back would put it at about 1420. And, this is most likley where I will be doing a little buying in some special equity ballast possitions.
Good Investing,
Skeeter
As the old saying goes ... Buyer Beware! Do you really want to get sucked into this vortex?
I am looking for those $112.50+ 2013 per share earnings estimates on the S&P 500 Index to soon get revised downward possibly by as much as five percent. Heck, we are only in the second month of the year and a roll back to the $107.00 range ... and possibly further as we move further into the year.
From my thoughts you just can not position into equites at or near fifty two week highs. Learned a long time ago ... Don't buy at the top ... Sell at the top!
And, so-it-goes.
Good Investing,
Skeeter
It's been said that the majority of Fed meetings discussions are taken up by how to communicate policy (ie, propaganda), and I believe it. I'd also be willing to bet the US will grow less than 3% this year and go against what Bullard notes below.
And in a CNBC interview with legendary fund manager Stan Druckenmiller yesterday, "
If you normalize interest rates, i'm not talking about a spike, just normalize where they were before QE and took them to 5.7% federal funding costs of the debt, that's $500 billion a year in interest expense that goes out door. We're having a heart attack over an $85 billion sequester when we can lose $500 billion just if you normalize. The way markets work if and when that were to happen, you don't normalize, you keep going because the market figures out that you now have a credit problem which is exactly what's happened in the foreign nations. The bond market is a funny thing. In Greece the bond market was perfectly fine until February of 2010. Not moving, not doing anything, and then in two weeks it was over."
Another bit of truth from the interview: "... Congress is not getting the market signal we talked about in the article so you can scream all you want about congress and the president being clowns, I can't think of any political system anywhere where they acted without interest rates going up. When did greece act? When the bond market blew up. When did Spain act? When the bond market blew up. What was Clinton's response to Rubin, "you mean the f'ing bond market is in control." Doing what they are doing the politicians have no incentive, but the market is a very fickle and violent thing."
http://www.zerohedge.com/news/2013-02-21/stanley-druckenmiller-we-have-entitlement-problem-and-one-day-feds-hamster-wheel-wil
__________________________________
http://ransquawk.com/headlines/fed-s-bullard-says-fed-s-easy-policy-to-stay-for-a-long-time-22-02-2013
This morning:
"Fed's Bullard says Fed's easy policy to stay for a long time
Says:
- Fed's 'forward guidance better'
- 'Global uncertainty is way down'
- Sees 'encouraging signs' in labor market.
- Fed policy has become more aggressive recently because outright treasury purchases are more potent than operation twist.
- Sees US economy growing 3% in 2013.
- Sequester would have minor impact on growth.
Print 12:07 - Economic commentary - Source: CNBC"
http://seekingalpha.com/currents/all
Mr. Jordan looking forward to Mr. B's visit on March 5, or not; perhaps just a few 100 pages of "yes, we can". The text writing has already begun, eh? Who will be bringing the "smoke and mirror(s)" for the show?
Dear Mr. Bernanke, Love & Kisses; Signed: Mr. Jordan
We had a view the past two days of withdrawal symptoms of the QE. Bonds at this point okay with the plan in the short term; the equity markets not pleased at all.
Okay, back to me project.
Take care,
Catch
Reegards,
Ted
I've tried unsuccessfully to determine what if any legal sanctions exist to assure they really reflect a completely "open" exchange. For example, can two or more members discuss potential policy actions by phone or over coffee in advance? However, I doubt they're subject to the same stringent standards as a meeting of your local school board or city council would be.
The tendency for members to correct any "misrepresentations" stemming from the minutes in the days following their release makes me skeptical of the whole process. (Anybody wanna buy a bridge?)
More tease here than Marilyn with that dress out in the breeze
Mervyn King, outgoing head of the BOE, said it well the other day:
"…there are limits to what can be achieved via general monetary stimulus - in any form - on its own. Monetary policy works, at least in part, by providing incentives to households and businesses to bring forward spending from the future to the present. But that reduces spending plans tomorrow. And when tomorrow arrives, an even larger stimulus is required to bring forward yet more spending from the future. As time passes, larger and larger doses of stimulus are required."
And yet more from random Fed talking heads: "Friday, February 22, 12:03 PM ET
There's more push-back from the doves as the Boston Fed's Eric Rosengren (FOMC voter) tells a crowd he disagrees with an academic paper making the rounds arguing excessive government borrowing and the Fed's asset purchases could lead to trouble down the road. What could possibly go wrong?"
Oughta do it.
http://www.reuters.com/article/2013/02/22/us-usa-fed-idUSBRE91J15Y20130222