Saturday, November 3, 2012

PIMCO is positioning itself for higher inflation

Via  Boomberg-

“Central banks have implemented increasingly far-reaching policy measures and they are more willing to take inflation risk as a trade-off for growth and employment,” Michael Althof, a senior portfolio manager in Munich, said in a phone interview. “Index-linked bonds are good assets to have, as longer-term we think the pressure for higher inflation is there.”

“We expect inflation expectations in the U.S. to increase over time because of the Fed’s policy,” said Althof. The near- term “part of the market tends to react more to oil, food prices and currency risks. Further out, they react more to expectation and the central bank’s policy stance. This is our favorite part.”

I am in the camp that inflation rates will rise. It will just take time and an otside catalyst that pushes short term rates higher.

Blame Christie and Cuomo for the gas shortages

As they limited the ability of service stations to raise prices in the wake of reduced supply. Simple economics, simple economics.

A picture is worth a thousand words- gas shortage edition

You have no doubt heard about the supposed gas "shortages" in New Jersey and New York in the wake of hurricane Sandy. What is not talked about is that the so-called shortage is primarily a result of human psychology run amok. How do I know this? Look at the wholesale price of gasoline.

Do you see the shortage? You will have to look very hard and turn your computer screen over to see it.

Friday, November 2, 2012

This is the greatest self-portrait in the universe

Davinci and Rockwell, eat your heart out. The below picture is as self-portrait of the Curiosity rover as it travels across Mars.

All that glitters- buying opportunity is developing in precious metal stocks

I am beginning to see a buying opportunity develop in the precious metal stocks. Despite lower than expected money supply, which according to the forecasting model used results in a step down in money supply estimates, the timing models improved in the latest week. This is a result of the pullback in the price of gold, which as of this writing is down more than 2%, declining past the $1,700 per ounce price point. Similarly, the price of the Gold Spider ETF (ticker GLD) is down a similar amount and is plumbing its 200-day moving average.

As for the latest models, the 1-year model registered in at a -0.55 in the latest week, down more than 0.5 points from the revised -0.03 last week.

As for the 6-month model, the model turned decisively negative (or positive as a timing tool), falling nearly -0.70 points to -0.08 from more than 0.6 last week. The model has finally fallen below the 0.

Lastly, the more volatile 3-month model fell by the most of the three timing tools, declining 0.80 points over the week to -0.82.

I think we are at an interesting juncture. All three models are in a semi-buyable range. I say semi as I would prefer a stronger signal, but you can't get everything you want. In addition, both the GLD and the Market Vectors Gold miners ETF (ticker GDX) are probing their respective 200-day moving averages. I would watch Monday's trading closely to gauge if we are close to buy point in the precious metal stocks or the semi-buyable entry point becomes "more favorable".