"The core of the American financial system is in a much stronger position than it was before the crisis. We're way ahead of any other major economy."
–Tim Geithner 2/23/2011
Are you ready to go shopping?
My favorite counter-indicator just signaled that some of the world’s best resource companies could soon be on sale.
I call it the Geithner-tron or maybe the Timmy-matrix.
And it essentially goes something like this: whenever Tim Geithner says something with a real sense of purpose or resolution, I know that the opposite is true.
The last time my Timbo-whatzit signal went off was on October 18, 2010. That’s when he dropped this doozy:
“U.S. Treasury Secretary Timothy Geithner vowed on Monday that the United States would not devalue the dollar for export advantage, saying no country could weaken its currency to gain economic health.”
To recap, that was just two weeks before Ben Bernanke unveiled QE2, the Federal Reserve’s $600 billion Treasury purchasing program – a move that can only be described as bearish for the dollar.
Back in October, the Geith-ometer signaled to me that we should short Treasuries, or at least not buy them. I actually recommended selling Treasuries back on September 29, 2010.
So yesterday, when he addressed a Bloomberg Breakfast meeting in Washington, D.C., and told the world that we’re actually in much better shape than we were before the crisis – AND that we’re way ahead of any major economy, I know that it’s about time to look out below for the broad stock market.
It’s not bad news, exactly, because it means that some of my favorite resource stocks will get whacked down too. But that’s okay – it just lets us buy more of our favorites at better valuations than we can today.
The Dow already lost nearly all of the gains it made in February in the past two days.
So I have to point it out again, our Treasury Secretary is either actively lying to us, or he’s not very bright. I’m inclined to believe that he’s a liar.
In any event, I’ll look for this correction in the broad market as a time to add to, or build, positions in resource companies.
I hope you do the same.