Quote of the Day: Death Wishes -- or -- Deficit Spending

As I've expressed herein a thousand times and in a multitude of ways, markets are people. Famed trader, Richard Dennis, who, in his heyday was far more interested in David Hume than he was the details of any employment report, while expressing where his interests lied, spoke to the force that inspires markets and moves investors/traders to all manner of self-destructing behavior:

I think it's far more important to know what Freud thinks about death wishes than what Milton Friedman thinks about deficit spending.

There's Certainly Uncertainty Around the Impact of Higher Interest Rates

The Federal Open Market Committee meets next week, and futures pricing says a rate hike is a virtual certainty:     click charts to enlarge...



What's is clearly uncertain on Wall Street is the impact higher rates will have on the economy. The chart below shows us that futures speculators are heavily short treasury bonds (betting rates are going up and bond prices are, thus, going down) -- and that asset managers who trade futures are, on the other hand, heavily long (suggesting rate hikes will be considered virtually out of the blocks as constraining, and leading to lower yields and, thus, higher bond prices):



While markets can forever surprise us, my best guess is that the speculators are ultimately on the right side of this particular trade. The economic data generally supports their position, and, while showing a slightly stabler picture of late, on balance, the technicals are in their favor as well:

Beware the Junior-High-Genius! -- And -- Pain is Essential

"If Washington rolls back financial regulations, could we see a replay of 2008?" That (words to that effect) was a question posed to me during a meeting last week. My immediate response was
"no. Not, that is, with the current players in the banking system. Not that shenanigans of the sort -- regardless of the prevailing regulatory regime -- aren't indeed likely to repeat, it's just that I suspect the likes of 2008 (a financial sector meltdown spawned by careless securitization of mortgages, and layers of speculation on those securities) will have to come at the hands of future geniuses who now attend junior high school, and who are, thus, oblivious to the happenings of 9 years ago" (words to that effect). I then proceeded to ramble on about the history of bailouts and my belief that had the powers-that-be not rescued the politically-powered bankers/investors of old from their folly, Wall Street's (I generalize) confidence that it could privatize its gains (it keeps em) and socialize its losses (taxpayers forced to come to its rescue) would never have been ingrained in its psyche.

This Week's Message: I'm not feeling late- '90s euphoria right about now -- And -- The Prudence in Political Agnosticism...

It's interesting, I keep hearing "experts" suggest that investors are way too giddy about the stock market these days. But, honestly, that's not my observation. While, sure, folks have to be feeling good about the present state of affairs, I'm certainly not sensing giddiness in our clients as we conduct our semi-annual reviews. Again, not that they're not liking their results these days, but nobody's threatening to mortgage the farm and throw it all at the stock market. I'm definitely not feeling the late-'90s right about now.

My Friend Dick

There's a school of thought that says if you want to be successful in business, discover what it is that truly sets you apart from the competition; the one thing that you can do better than virtually anyone else. I have this friend who embodied that concept. This gentleman, either through thoughtful self-analysis or instinct (I suspect the latter), discovered at an early stage that he indeed possessed a one thing that made him unique in his business. And this gentleman, my dear friend Dick Wetnight, exploited his one thing to the fullest -- while he outsourced virtually all of the minutia and the mundane to others. I've often referred to him as a master delegator; a mastery that I've come to understand is absolutely essential to success in business.

Market Commentary: What does breadth say about the current trend?

Click the icon in the lower right corner for full screen. Wait a few seconds for focus:

Quote of the Day

Big rally today! As I type the Dow's up 330. Per last week's message, some on Wall Street, as well as main street, are wondering when the inevitable fall will come.

Yep, for sure, there'll be a fall. In fact, there'll be many this year -- I'm certain. That said, as I continue to chart for you, there's also the current trend, and, per Jesse Livermore below, that's what smart investors focus on:

The big money is not in the individual fluctuations, but in the big movements. That is, not in reading the tape, but in sizing up the entire market and its trend.