The Dead Consumer
If I thought that 80 percent of what President Obama outlined in the State of the Union message would be implemented, I would get bullish on the US economy. That does not mean that I would get bullish on the Stock Market as what has happened over the past 5 years has pulled the two data streams apart. But I will go back to my theme since QE 2 started, and that theme is that funny money has increased inequality and the consumer has only held on by increasing debt. That is not good and would have to change if we want to see real growth.
In our portfolios listed below, the major positions are long dollar and bonds and short commodities including oil. Short gold is a minor position because the short signal is weak (market is in the middle of a macro bounce at the start of a deflation wave). We use long Volatility ETF’s to handle the volatility issue.