Fate Steps in and Changes Equation
Jamie Dimon and Chancellor Merkle got a slap in the face the last few days. One was the face of de-regulation and one was the face of European austerity.
This changes things in a significant way. The Administration is finally going to get the Volcker Rule and Dodd Frank implemented in a stronger way. European austerity is going to get a push back. What this means for markets is less clear, but the biggest thing is that Europe buys more working time before it collapses.
We are watching macro technical indicators to see what we do next.
1) Our asset index (stocks plus commodities) is close to turning bearish but hasn’t yet so yesterday we put on modest long positions in stocks and gold. The micro indiators are currently bearish, if that changes going forward we will add to these new long positions. Keep in mind we try to run a contrarian program.
2) We will be exiting our long dollar position today, a position that we have held for a long time, this is not so much because we are bearish on the dollar, but more that currency values on a relative basis will be moving in a bounce towards the European direction.
3) Also positions in T-Bonds will be moved to short positions using the short bond ETF TBT, interest rates will rise somewhat here.