Hi, I think PPI and CPI can come in at 6% and the ...

2008-01-13T22:45:00.000-05:00

Hi, I think PPI and CPI can come in at 6% and the Fed will still cut. The scenario they will need to do is cut rates severely to try to ignite growth and then deal with inflation later. All the while giving lip service to inflation.

I have no idea what the CPI/PPI figures will be because they are useless information. Aside from the Labor report the CPI # is probably the 2nd most useless report we have. Its been saying 2-3% inflation for years. Does anyone really believe that? Heck with housing deflation maybe they can make it say inflation is negative ;)

As for precious metals I don't have enough but I do have Silver Wheaton (SLW) - which I cut back after a huge move. I bought a little last week as it pulled back but I saw too many other bargains. With the continued cuts and money printing presses in Europe along with USA I do like precious metals in the year ahead as I wrote in my Outlier themes (gold to $1000). But $900 to $1000 is 11% and I can make more in other names - that said the mining companies have a lot more leverage than say the GLD ETF... their costs are fixed to extract gold (maybe in the $250 - $300 range) so every dollar it goes up drops to their bottom line, sort of like fertilizer companies.

As for financials I don't know if logic dictates they go down. I think most of this round of damage is already priced in. I still am more inclined that we get some rally in the financials near term, as they are washed out, and then we continue downward as people start realizing the next batch of mortgages, consumer loans, auto loans, and the like are going to hit the banks. But before that happens, I think up. But let's let the stocks tell us - if they hold flat or even slightly up in the face of this bad news Tue-Thu you can say we are making a tradeable bottom in these names.

Remember, its not the news. Its the reaction to the news. When bad news ceases to make stocks go down, its priced in. But as I say, "this round" of bad news is probably priced in. Just like they said in August that was the "kitchen sink quarter", and I said - wait for the bathroom sink, the living room sink, the bedroom sink, etc etc. We still have a long way to go.

Hey Mark,Great post as usual. This weeks PPI and ...

2008-01-13T22:36:00.000-05:00

Hey Mark,

Great post as usual.

This weeks PPI and CCI numbers are going to be a HUGE determinant to what happens in the market. You get above expectations and I think we go to March lows as this gives little flexibility for the Fed to cut rates. Below expectations and we rally since the Fed can cut more. Common sense would seem to indicate the numbers are higher but I don't have a clue how they come up with these numbers. So what do you think it will be?

Also given your stance on stagflation I would think that you would have some exposure to gold/mining companies. Looking at the portfolio I don't seem to see any. I could be mistaken since I don't know all of them. I've been looking at some these companies charts and most are looking like they are ready to explode.

Oh and of course the financials report this week. I think these write downs are going to be ginormous! Larger than estimates. Logic would lead to the sector taking a beat down this week but then again there was news of Merril writing down 15 billion, higher than the estimated 11 billion, and it was actually strong for the day. The entire financial sector was showing strength on an otherwise dismal tape. I read your post about the market being immune to write downs, but that is 1/3 of its market cap!? I'm starting to think the financials are going to rally off these writedowns... I just don't get it sometimes.

Comments on Fund My Mutual Fund: Another Myth Falling Flat - Exports Will Save the ...

Hi, I think PPI and CPI can come in at 6% and the ...

Hey Mark,Great post as usual. This weeks PPI and ...