Holding pattern

The Dow continues to flirt with multi year highs, 14,162.  I can’t help the nagging feeling that we are at the top of the hill on a roller coaster and the question we have to answer is how big of a dip is ahead of us?  We did get some good news out of Qualcom today, they raised their dividend and are doing a $5 billion buy back.  They have navigated Apple and the Iphone better than any of the other suppliers, well done.  Google, GOOG, is making new all time highs, slow and steady.  An interesting development is going on over in Europe.  The tiny nation of Cyprus needs a bank bailout of around $17 billion, not a lot these days but it is who the money is going to that is causing the real problem.  Cyprus is a well know tax haven for all the Russian Oligarchs and the money will be used to make them whole.  Now if you are any of the countries that are preaching austerity, Greece, Italy, Spain, to name a few, are you going to send a Euro to Cyprus to make someone whole who is gaming the system?  I don’t think so, but can Europe afford to upset the Oligarchs and risk having important services, specifically natural gas, shut off?  The new game of commoners backstopping big institutions is getting very interesting and I really don’t know how this will play out.  

All is quiet

So far another quiet trading day.  It seems like everyone is watching and waiting for something, not sure what.  Apple, AAPL, make another new 52 week low at $422.  If you are looking to buy you should be able to get in at $400 but I still think you should wait.  The Euro has broken the 1.30 level versus the dollar, a new 3 month low.  President Obama appears to be saying the right things to get the ball rolling on the sequester, specifically that social programs may have to be cut, they will.  The main driving forces this week will be PMI, purchasing managers index, several central banks meetings and at the end of the week the Friday’s US jobs data.  The expectation is 166,000 new jobs were created in February, similar to the number in January. As a side note we need a much larger number to truly get the economy running again but if this number is significantly smaller there will be a sell off.

New month same story

Well so far we have an ambivalent market, it doesn’t really care about the sequester.  There are a couple of interesting things going on anyway.  Apple, AAPL, is at a 52 week low, which raises several questions but the most important one being: Is the cult of Apple finally done?  The stock is definitely in bear territory but will it have a round trip reminiscent of 2001?  I am not sure where it will stop but I think Apple’s world domination is over and they will again become a niche company with very loyal core customers.  The President is upset with the Republicans because they won’t cave in today and give him what he wants.  Mr. President just give it a few days of complaints and hysteria and you will come to a compromise that will do nothing for the country but allow both sides to claim victory, we’ve seen this story before.  So the story looking forward will be how television stokes the fire this weekend to see if it has an impact on the market. There is still a lot of veteran market pessimism and while I won't be long this market, I certainly won't be short.  I have had my face ripped off enough times that I have learned to never short something making multi year highs.

The wait

The market continues to go higher, today the Dow is over 14,125 and the S & P is over 1,520, but there are a lot of market veterans that don’t trust this rally.  The Italian elections have thrown Europe into chaos, but they did manage to do a decent bond auction.  Walmart, WMT, is even having problems with its supply chain, so how well can the rest of the US be doing.  Japan is raising wholesale wheat prices by 10%, kind of like the rise in gasoline prices in the US.  JC Penny, JCP, and Groupon, GRPN, are both getting hammered due to terrible earnings but all anyone is really concerned about is what John Boehner will do.  Come the stroke of midnight the cuts begin and we will be living with the minute by minute update of how our country can’t function without an additional $85 billion.  People love to watch car wrecks as long as they are not involved but the American public is not sure if they are the driver, passenger, or spectator in this race.   We are about to find out.

The Sequester

The sequester will begin on Friday March 1, 2013 and some and somehow I am supposed to be concerned with an immediate government spending cut of $85 billion.  We are currently running deficits annually of over $1 trillion and this is supposed to grab my attention.  I am tired of the current state of politics in this country.  I have no faith in the current government and even less faith that my representatives will do the right thing to get the country back on track.  I have been a lifelong conservative and for better or worse, especially lately, I have been identified by my peers as a Republican.  It is obvious that the Republican Party sold out to big business starting in 2008 and has no intention of working to my best interest unless I am a lobbyist.  The Democrats continue to try and buy their votes with generous welfare benefits that continue to hamper the economy and make it difficult for small business, the country’s true life blood, to function properly.  The simple fact is that eventually taxes are going to have to increase and social programs are going to have to be cut, even a fifth grader can figure out basic math.  The Republicans are going to have to accept defense cuts and tax increase.  The democrats are going to have to accept Social Security and unemployment cuts.  On a side note, 2 years of unemployment benefits is counterproductive for employers and workers, there needs to be an incentive to get into the work force.  These are all just basic starting points and I am sure none of them will be addressed in the next week.

Why I'm here

I am a former trader.  One of those nasty market makers from the 90's who was cheating and stealing and completely fleecing the public if you remember what was written and believed of us.  Actually I am a very good trader, more right then wrong, and I have a different view of the world then most.  I have been replaced by an algorithm that can get you the volume weighted average price (VWAP); so you are never better then or worse then average. I have been replaced by central bankers bent on keeping the markets going higher, no matter what the cost or the reality of the economic situation.  I will be sharing my thoughts and experiences from the past and present.  Hopefully this will add a new perspective and give you a laugh as well.  I am looking forward to this, thanks for stopping by.