Coal stocks are simply on an epic run due to worldwide shortage
issues. Again, thank you China. So much for the Goldman downgrade - the
whole sector is 5-8% up, regaining all of Friday's losses immediately.
As I wrote Friday [Beginning Small Stake in Arch Coal on Goldman Downgrade]
Myself, while I can agree with this call in the very near term (the stocks are very overextended) I disagree 100% long term - and although I've lightened up a bit on this large run in the sector I want a lot more exposure for the long run.
I have been lightening up on some of the fastest runners, and I sold a bit more Mechel (MTL) today near $118, as the stock is making an incredible run, but we appear to be heading to quite a perfect storm in commodities of all types. Stagflation in the US is looking more "in the bag" by the day. (I will laugh if tomorrow's CPI number comes in at something like 3.4%!)
Not only is my World of Shortages
theory playing out in every corner of the globe, but Fed- induced
liquidity will flood this world with useless dollars and they need to
go somewhere - I believe the world's hedge fund computers are going to
this area as well - notice crude making a run again to $100. Thank you
Ben for Bubble 3.0.
Much like Bubble 2.0 (housing) this is going
to cause serious pain - Bubble 2.0 hurt the US people more directly and
financials institutions worldwide. Bubble 3.0 - if indeed focused on
worldwide commodities is going to cause havoc globally, especially in
food. But at least we bailed out NYC bankers and speculators. Always a
silver lining.
p.s. Adding back to some of that Ultrashort Financial (SKF) I cut back late Friday.
We are now at the top of our near term trading range, so it seems most
likely we now revert down. If CPI even reflect 1/3rd of what is really
going on in the real world we will start to have serious inflation
fears begin to percolate in the mainstream media...
Disclosure: Long Mechel, Arch Coal, Ultrashort Financial in fund; long Ultrashort Financial in personal account
