Friday Outlook: Commodities, Emerging Markets

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Just about all the markets in the charts above are discussed by our friends at BMI in the YouTube videos.

Tomorrow is options expiry and things should get interesting if you found today boring.

California finally got a budget deal but did you know that the entire mess is unnecessary? According to recent reports, the state only has to lease readily available oil deposits to the big bad energy companies and they’d have plenty of revenues to pay for their bloated government. But no, the Goracle worshippers wouldn’t have any of it so let’s just tax the dickens out of the people instead.

The hero of the day is Rick Santelli who properly slams the BS coming out of congress and the administration. I think he’s the first qualified media personality to tell it straight. He also shows the anger many of us feel toward the nutty knee-jerk programs coming out of DC. Go get ‘em Rick!

I find it pretty annoying to read articles like this one posted on Bloomberg this morning where they mislead investors with a report that current PEs on the S&P 500 are only a little above 10, meaning stocks are cheap on that basis. This is just wrong. I’ve exchanged emails with the reporter who is unable to provide a reliable source for this nonsense.

I also read that Sir (cough) Allen Stanford was primarily victimizing people south of the border. Imagine being a Venezuelan trying to escape financial currency controls and other actions by Chavez only to land in the arms of Stanford. What a bummer!

That’s it for me. Have a great weekend!

Disclaimer: Among other issues the ETF Digest maintains positions in IEF, PST, TLT, TBT, GLD, DBP, DGP, GDX, FXE, and DRR.

Comments

[ozcutty:]

David, i like the USL one, when its off the charts, charting becomes more difficult! that about sums it up for me! i'm 50% down now, the wife is going to kill me!

Feb 20 07:42 AM

[Mad Hedge F...:]

GOLD! GOLD! GOLD! This is the cry being heard worldwide by investors in the Great Gold rush of 2009, looking for a generic “short America” trade. Where in the past gold seekers used sluices, shovels, and jackhammers to extract the glittery stuff in California’s Sierras, Alaska’s Klondike, and South Africa’s Rand, today the instrument of choice is the mouse. Online traders are unleashing clicks by the millions to buy ETF’s, American Eagles, mining shares, and futures contracts. With stock traders sitting on their haunches, wondering if the Dow will hold 7,000, this is the only thing that is working right now. Gold is no longer just catastrophe insurance. Traders are buying gold more for what it isn’t, than what it is. It isn’t made of paper, made in the US, or held in custody by Bernie Madoff or Stanford Financial. The yellow metal hit a new high for the year of $999 overnight, and the risk of a “melt up” is increasing. The Street Tracks Gold Trust ETF (GLD) is now the seventh largest holder of the barbaric relic in the world. For the newly aggressive, look at the DB Gold Double Long ETF (DGP), which gives you a 200% long exposure to gold, and is up 54% in a month. Who says there is nothing to buy out there?

Feb 20 10:48 AM

[corey mendel:]

Enjoyed the videos, thanks Dave!

Feb 20 06:45 PM

[Dr. O:]

Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.

Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker said.

Feb 20 10:07 PM

[Mad Hedge F...:]

If you believe that imminent and massive Treasury issuance is going to pop the Treasury bond bubble, and that Obama’s reflationary policies are long term inflationary, you have to be looking at Treasury Inflation Protected Securities. TIPS offer investors a US government guaranteed protection against future price hikes by raising the principal in line with the inflation rate. A 3% coupon TIPS facing a 10% inflation rate automatically boosts the face value of your bond from an issue price of 100 to 110, giving you a total return of 13%. You can buy these directly from the US Treasury, or buy the iShares Lehman TIPS Bond Fund (TIP). The best time to buy flood insurance is at the end of a long drought.

Feb 21 09:25 AM

[pansyed:]

Dave: You made the comment for Rick Santelli to go get them. I think Rick made a good start but he cannot be the lone voice. How do we get more voices, particularily TV commentators, to keep the drum roliing?

Feb 21 10:16 PM

[HiSpeed:]

Today, in a global economy in which everything is relative, the US actually looks pretty good (but only relative to so many other countries)!

Buying TBT on dips makes sense here imo. The cost of financing the US debt in the coming years is going be done at higher rates than what we have today.

Feb 21 11:45 PM