December 22, 2016

 Keep Buying Stocks

Keep Shorting Eurodollars

First up, all the chatter about the importance of 20,000 is meaningless…The market is STILL on the move and the worldwide cumulative flow of funds that is pushing stocks higher is like an accelerating ocean liner that is not yet even close to full speed…and 20,000 is just another wave cutting across the bow…in other words, TOTALLY meaningless, and having NOTHING to do with the future business prospects for GE, IBM, Microsoft, Boeing, etc…including any other listed company you want to name…To be clear, Dow 20,000 is just something all the nitwit analysts and talking heads are currently using to justify their  cyber existences…to SOUND like they understand SOMETHING about the markets…even though they have virtually ALL been bearish for the entirety of 2016 (and in reality, ever since the Dow’s 6500 lows back in  2009).

Markets do move on news…which in a sense is like the adrenaline for price movement…and short of some out-of-left field major event or catastrophe, I think the news from NOW until AT LEAST very late spring is going to be NOTHING BUT, “Let’s build. Let’s spend. Let’s deregulate. Let’s stimulate.”, and that while we might see Trump softening or compromising on some of his social issue positions, one thing he won’t be backing off on, at all, will be his pledges to “fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals….to rebuild our infrastructure, which will become, by the way, second to none and we will put millions of our people to work as we rebuild it.” And furthermore, unless he suddenly undergoes an enormous personality change, I’m pretty sure Trump is going to frame his “first 100 days” around AGGRESSIVELY pushing for ALL of that…

Specifically stated, as I see it, the news…the juice that moves the markets…for many months to come, is going to overwhelmingly favor making strong equity bets (BUYING) predicated on a “hugely” jacked up US economy. And furthermore, when I note that all this stimulus is going come on TOP of an economy that is ALREADY firmly in growth mode, that ALREADY is operating with 4.6% unemployment, that just registered 3.5% GDP for the 3^rd Quarter, and that is ALREADY beginning to see increases in inflation, IT SUGGESTS TO ME THAT THERE IS NO TELLING HOW BIG THE CURRENT MOVE IN STOCKS MIGHT BECOME…nor HOW MUCH INTEREST RATES WILL BE RISING TO OFFSET WHAT WILL BECOME AN OVERHEATED AND OVER INFLATIONARY ECONOMIC ENVIR0NMENT.

I CONTINUE TO BELIEVE THAT STOCKS ARE NOWHERE NEAR EVEN SLOWING DOWN AND THAT INTEREST RATES HAVE ONLY JUST BEGUN TO RISE TO LEVELS THAT THE MARKETS (AND ANALYSTS) ARE NOWHERE EVEN CLOSE TO EXPECTING.

For sure, we are now seeing a few more “brilliant” analysts get on board the bullish wagon (after having their bearish calls shoved down their throats) but there is still PLENTY of caution, negativity, doubt and outright bearishness out there…as evidenced by just a quick collection of a few headlines from the last week or so…

And as I pointed out recently, even the Wall Street geniuses who have finally turned bullish have such modest upside projections as to be relatively ludicrous, as in many cases, their “revised” expectations for ALL of 2017 have already been superseded by the markets…

AND AS  I KEEP REMINDING YOU, I BELIEVE THOSE SAME FOREVER WRONG PEOPLE ARE GROSSLY UNDERESTIMATING HOW FAST…AND HOW BIG…INTEREST RATES WILL BE GOING UP…AND I THEREFORE CONTINUE TO LOUDLY SAY: BUY PUTS IN EURODOLLARS. I MAY BE DEAD, DEAD WRONG, BUT I DO PERCEIVE THIS AS REPRESENTING MORE LEVERAGE THAN I HAVE EVER SEEN IN THIS BUSINESS…

And again, with an economy that is ALREADY in lift off mode (as I have been saying for months, just look around you at the roads, stores, airports, construction sites, etc.), and a president and congress that are about to ramp up spending and stimuli to levels probably never seen before in my lifetime, I think there is NO TELLING how high rates will be going during the next 1-2 years…

After a solid break following the last Fed meeting, Eurodollars have bounced slightly over the past few days…and I immediately see the option shown below as being just dirt, dirt cheap…

I DO STILL RECOMMEND BUYING PUTS…HERE…I HONESTLY BELIEVE THAT THIS MOVE HAS ONLY BARELY BEGUN…

Give me a call if you want to talk about it.

Merry  Christmas to you all…

Bill

866-578-1001

770-425-7241

All option prices in this newsletter include all fees and commissions.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Eurodollars