#147: Oil Price Shock! GOP Primaries! Pensions! Rebalancing!

Sunday Oil Shock Randomosity

• The big threat to the world the past week is skyrocketing oil prices.  Always something to worry about, right?  Here is a column from Marketwatch. A big batch of economic data this week is likely to show the U.S. remains on a modest growth path — but rising oil prices threaten to block the way.
• Oil rattling Wall Street’s nerves. “Either we are going to have resolution to the geopolitical tensions in Iran or we’ll continue to be concerned about disruption in supply and watch it rise,” said Art Hogan, a managing director at Lazard Capital Markets.
• But say, isn’t the market near all time highs?  Here is the monthly chart on VTI, the total stock market index.  Looks near the highs to me.  (Ignore the MA trendlines).

• Of course, you could say “hmm, maybe it’s time to sell…”  No one would blame anyone for playing the secular bear market angle here, and suspecting that the next move is down.
• Rising Demand for Oil Spells More Price Pain.  Analysts warn that oil could become even more expensive in the second half of the year as supplies struggle to catch up with rising demand.
• Meanwhile, President Obama mocks drilling for oil in yesterday’s weekly address.  Not only has the President killed the Keystone XL pipeline, but Senate Democrats killed another attempt to open ANWR. 
• With regards to ANWR, we won’t have a drop of oil for up to 10 years!  (That’s what they said in 2003.  Hey, 2013 is right around the corner and we need the oil!)
• But Obama’s energy plan is to run cars on algae and to tax oil companies.  Yeah, LOL.
• Remember when Jimmy Carter asked his daughter, Amy, about nuclear war?  Maybe President Obama should ask his daughters what kind of fuel we should be using for cars.

Selling Some High Beta Stocks to Reallocate

Reallocating to lower beta stuff.   Still 80% long, just cutting NDX and going to boring preferreds and utilities.

#146: Stocks pullback from 13000; Oil Up; Iran and Israel; Google Glasses

Presidents Day Randomosity

• Payroll tax cut, meet $4 gas. The sad reality is that a lot of the payroll tax cut is going to the gas pump.  That means Big Oil Profits!  At some point, expensive fuel will impact the economy.  I don't think $4 is the number, but maybe $5 or so.
• The market sure seems flat today.  Oh!  It's closed!
• Wasn't Greece supposed to be resolved today, Monday?  Er, not yet.  The market is rallying anyway, as if it isn't as important as economic growth.  Yet, you know everyone is looking at Europe to see if this is going to be resolved.  So Europe and Greece continue to be a dark cloud overhanging an otherwise good looking market.  A chink in the armor, if you will.  The remaining issues?  Reducing the debt load and cutting spending.
• By the way, as oil heads to 9-month highs, Iran announces it is cutting exports to Europe.
• Rose Cliver passed away.  Who?  Rose Cliver.  She was a survivor of the 1906 San Francisco earthquake.  She was 109.  Wow.
• "We're all Knicks fans now" - Richard Nixon.  But seriously, bad paraphrases aside, who isn't cheering for Jeremy Lin?  The NBA needed a hero, and here he is.
• Foxconn!  Yes, ABC goes inside Foxconn, where iPads and 40% of all electronics are made.  The big news is that Foxconn workers are getting a raise.  What does that mean? Is it good news?  Will the price of your iPad increase?  Will Apple and others move the jobs to Vietnam or somewhere else?  Something to keep an eye on.  Labor costs are often the most expensive part of what we buy.  Keep an eye on it, that's all.

Thursday Randomosity

• The Nasdaq is at 11 year highs.  Really.  It was December 2000 the last time the Nasdaq was at these levels.  The dot-com era!
• Meanwhile, oil surged to over $102 a barrel.  With the US economy improving, there is more demand for oil.  Pay up!  This is something to keep an eye on going forward.  Yes, the freeways are crowded with folks who have more money in their pockets.  But the economy is vulnerable to oil shocks, right?
• In the battle of charitable giving, Rick Santorum gave 2.2% of his salary to charity.  Not as big of a percentage as Mitt Romney.  For those keeping score. You know who you are.
• Did you see that manufacturers want more workers, but they just can't find skilled workers.  I wonder if the workers are at home on unemployment waiting for the benefits to run out before looking for work?
• 11-year highs for the Nasdaq.  12/2000.  It seems like only yesterday.  Heck that was before Peyton Manning had any of his neck surgeries.

Market Rips Higher on Economic Data!

Another good day to ignore the Black Box! Stocks went higher on "positive economic data" today, combined with lowered tensions in Greece and a potential European resolution on Monday.  

The US economy saw initial unemployment claims fall to the lowest figure in 4 years!  Housing starts and building permits exceeded forecasts.  The PPI was tamer than expected, coming in at .1%.  This is all good news for President Obama in a re-election year.  Who wants to run against a recovering economy?  Maybe it is all pumped up by stimulus dollars and low interest rates, but it is what it is.  Folks are feeling better about things.  And people vote their pocketbooks, right?

The Greek bond redemption in March is getting closer.  Greece needs some bailout money.  It seems like this is an ongoing crisis, but the world is hoping that there will be some resolution next week.  Europe was trading down today, but the US markets seemed to be unfazed by any concerns.  Today, anyway.

So far, the Black Box has generated about 4 sell signals since January.  The market continues to move higher despite the red sell arrows generated by the Black Box.  It's not unprecedented.  Just last January-February it did the same thing, and the last time it was right heading into a March low where it nailed the low with a buy signal.  The market curiously looks a lot like last year.

I remain 80% long, and mostly in high-beta stuff in the Nasdaq and small caps.  I thought about selling this morning, but decided not to react just yet.  The market top tends to be a process more than a single event.  Part of the process could be volatile days where the market starts to move back and forth without making new highs.  Maybe we're starting that.  Even if that's true, there usually is a double or triple top in the process.

***

Lin-sanity.  The New York Knicks are 7-0 since Jeremy Lin started playing as a starter, right?  Last night the Knicks pasted the Sacramento Kings.  The local newspaper had an article about the Kings strategy for shutting down Lin.  Apparantly, the strategy was to get behind by 30, so that the Knicks would take Lin out of the game.

It worked, and the Kings only lost by 15.

Nice job.