Well... after 2 solid weeks of pressing the flesh with my back office and intrepid support team, I am on my way back to oil country. Yes, spring is in the air. The sun is out and flowers are starting to bloom (here in Toronto). Charlie Sheen just played his first show here, and people seem to be in general good spirits... Yet, in the back of my mind I know that I am flying into a foot of snow back in my dear city. (But I do so armed with a vast wealth of knowledge, preened by the good folks of Scotia McLeod, that I did not previously have before.) So, saying that... Time to move on to the markets.
The Presidential Election cycle continues onward... On Friday (today) Peter Gorenstein had a good comment on the Yahoo Finance page titled: Don't Call It a Stimulus: 2012 Election Spending Likely To Top $8Billion. (http://www.finance.yahoo.com/)
And with that, the cycle continues as predicted... We need to turn our attention to the indicators that will help us to spot and navigate the coming top of the cycle... Upward pricing continues... Caution as we go... 3 charts of interest. (Courtesy of Credit Suisse):
Global PMI's are rolling over, but still consistent with healthy global growth.
QE2 has had an incredibly high correlation with higher equity prices.
Jobless claims remain one of the very best bullish indicators for the equity markets.
I felt it appropriate to comment on Mr. Bill Gross' recent letter to investors. At $1.2 Trillion AUM, his words carry some important weight. In his closing statement: "I am confident that this country (U.S.) will default on its debt; not in conventional ways, but by picking the pocket of savers via a combination of less observable, yet historically verifiable policies - Inflation, currency devaluation and low to negative real interest rates." Mr. Gross and his team have put their money where their mouth is. Pimco owns virtually no US Treasury bonds on behalf of its clients, which is remarkable given the size of the Treasury market and the size of a company like Pimco.
Moving from a pointed individual security selection method on to a broader sector and country call will help us watch (and act) on the much larger trends as they present themselves... Small profits to cash is a kingly idea.
Best Regards and Safe Investing.
