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Yippee, the Dow made a new record!

Why doesn’t it feel more like a party then?

Perhaps it is, as Barry Ritholz suggests yesterday, "demi-stagflation" or "blahflation," which is not the economic death of the 70's but more like an economy that is past its prime, wheezing as it reaches for the remote control to find some channel that will help it pretend these are still the good old days. Of course Barry’s a bit of a bear and I’m determined to be bullish this week as long as we keep in mind that there are quite a few problems, should someone look too closely under the hood.

Another one of Barry’s under the hood numbers is the household debt as a percentage of GDP (96%) and even more scary, as a percentage of disposable income (134%). Since it is a weekday, I will not assign any blame for this situation (I promised to try not to talk politics on trading days) so I will just post these numbers without comment as to under whose watch these two catastrophic increases (69%-83% and 97% to 134%) took place (hint, it wasn’t a Democrat):

Total Household Debt as a Percentage of GDP

Total Household Debt as a Percentage of Disposable Income

Wheee! Now we can all be fans of inflation - the faster they devalue the dollar, the lower those monthly payments will seem. Who cares if the average American is $60,000 in debt if milk costs $3.50 a gallon? What? Oh, it already does… Well how about if gas cost $3.50 a gallon? Oh, that too… Well, at least our loans are at a fixed low rate! What? Oh man - are we in trouble!

The Dow seemed to be in trouble too this morning as it dipped 30 points at the open but the SOX and the financials really pulled it out. We got the SOX signal right away and at 9:38 I said: "SOX are up 10, killing the Q puts, holding the DIAs." It was a good move as the market came back nicely and the Dow finished the day at a new high, holding that magic 12,800 line:

US Markets

US Markets

So neither the Russell or the Nasdaq cost us anything with their pullbacks while the SOX added two boxes and even the Transports came to life - a pretty good day overall!

NYMEX traders had a good day, knocking off 49Mb in a terrific show of force, leaving just 59Mb scheduled for May delivery to the overflowing facilities in Cushing, OK. Oil never made it below $62.75 and finished the day at $63.13. What was unusual about this move is those contracts were actually canceled, not rolled, as June picked up NO orders and July just 5K contracts, taking those orders to 54Mb. August ended up 3Mb to 50Mb and, on the whole, we will be heading into the June contract period with roughly the same 500M barrels we started May with at pretty much the same price we started this period at.

That doesn’t stop our energy stocks from holding 10% gains for the month with Peabody Energy Corporation (NYSE:BTU) holding a whopping 20% gain, down from 25% on Monday.

The dollar continued its downward spiral with day 7 of its recent drop, now at 81.70. Gold made a small advance and held firm above the $690 mark and copper continues to make new highs just under $370, up 50% since Feb 1st. The stock market collapsed last May 11th with copper at $394, gold at $730, oil at $75 and the dollar at 83. Hmmm, that’s a check, check, T Boone’s prediction and check…

Oil and Dollar

Have a great day!


Somebody asked me this morning what I thought about Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) being added to Cramer’s action alert portfolio, and my response was: "FCX - my thoughts are to short Cramer’s portfolio. He’s taking buy high, sell higher to new extremes - sometimes I think he buys things on a dare to test how fanatical his followers are."

Really people, when someone tells you to BUYBUYBUY a stock that’s up 15% in 30 days against a commodity that’s rapidly approaching an ATH, at least consider the fact that the concept of "buy high and sell higher" sounds more like advice at a drug festival than something Warren Buffett would say.

We did some LTP clean-up today and the closed positions of the week were:

AIGA$ 65C3/16-12$2.85$ 2.504/16$ (0.35) 12%
AMZNJ $ 38C1/2910$6.60$ 8.804/16$ 2.2033%
COFA$ 75C 3/16-20$3.30$ 1.904/16$ (1.40)42%
CATA$ 65C3/5-20$1.75$ 2.504/17 $ 0.7543%
BAJ$ 90C3/740$2.10$ 10.304/18$ 8.20390%
CYA$ 20C2/26-5$1.00$ 0.704/18 $ (0.30)30%
FHNA$ 40P2/2730$0.80$ 1.604/18$ 0.80100%
MOTA$ 18C3/16-35$1.25$ 0.604/18$ (0.65)52%
YHOOA$ 30P4/17100$0.35$ 1.904/18$ 1.55443%