Peter Dag & Friends

3/21/11

Thought of the day

March 21 (Bloomberg) -- Oil rose as allied air strikes in Libya threatened to prolong a supply disruption in Africa’s third-biggest producer and on concern that escalating turmoil may curtail Middle East shipments.

It's all about money and power. We just have to find out how we fit in because what is happening is out of our league.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Disclaimer.The content on this site is provided as general information only and should not be taken as investment advice nor is it a recommendation to buy or sell any financial instrument. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Idea

March 18 (Bloomberg) -- U.S. feedlots probably bought fewer cattle to fatten for slaughter last month as surging corn costs spurred losses, signaling smaller herds this year and further gains in beef prices that already are the highest ever.

The markets always win. Feed them ethanol.

3/20/11

Commodities strong

Sunday night (ET). Commodity futures strong. Across the board. Oil up $2.21 at $103.28. Gold up $12. It looks like a strong market tomorrow morning (Monday).

Oh, well. I have been wrong before.

Question

My question to SNS. Why do we keep messing in the Middle East?

SNS answered with great simplicity and insight. Because there is a lot of money in that area.

George Dagnino, PhD

Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

3/19/11

Thoughts about Libya and Japan.

March 19 (Bloomberg) -- President Barack Obama said the U.S. and its allies launched attacks on Libyan air defenses today to prevent Muammar Qaddafi from continuing his assault on civilians.

Another coalition, another war. When will it end?
Japan. Crises are bullish for the financial markets as central banks print even more money to solve one more crisis. They have to keep interest rates below inflation, creating great investment opportunities.

3/18/11

Observations

Thank you AAII and NAIC. I had a lot of fun, as usual. I always enjoy discussing my charts and outlook of the financial markets.

The audience was particularly intrigued when I suggested that the Fed has more a role of umpire than trendsetter. In other words, they make sure that the US banking system remains viable. In order to achieve this feat they make certain that changes in interest rates, which are solely driven by the markets, are orderly.

It would be very disruptive for the whole system if, for instance, short-term interest rates would fall from 5% to 1% one day and than jump to 4% the next day. The Fed tries to understand the strength of the economy and then smoothes out the vagaries of the marketplace. It is not an easy task.

If they feel the system needs extra liquidity, they provide it in order to cushion any economic weakness we might experience, as it is happening now. But they still follow the market. They do not establish a trend.

Investors are always baffled when I discuss the chart showing the volatility in liquidity we experienced since 1955. A boom or a bust has inevitably followed a jump or decline in the growth of monetary aggregates. The Fed knows that. We know that. If they were so powerful, then why have they not found a way to avoid the pains that such volatility in liquidity has caused after so many decades? The answer is very simple. They cannot do it. (More on this subject can be found on my website http://www.peterdag.com/).

(This Observations appeared in the 6/25/01 issue of The Peter Dag Portfolio).

3/17/11

Interesting pattern

I am fascinated by this pattern. I know you know. I am fascinated because there is money to be made with low risk.

The market is soaring this morning. LQD is very weak. But JNK is up more than 1% with a 8.8% dividend/interest.

It looks like the market is trying to find a bottom (see also the post below about the market is oversold written last night). But there is too much noise around the world.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.

Is the market oversold?

The S&P 500 rose from about 1200 to 1325 from November to February.

Since February the S&P 500 retraced about 50% of this move. Markets usually regroup around a 50% correction.

Let's hope it is true also this time.

3/16/11

Technical patterns

At 11;24 ET market weak. LQD very strong. This is the way it is supposed to be. Even on a macro long-term view (according to busines cycle patterns-- lead lag indicators for those who read my book now even in Mandarin). This is also a "fundamental"pattern.

If the pattern continues for several weeks, possibly months, then ...

Continued weakness in stocks leads a slowdown in econommic actvity.
A slowdown in economic activity leads to a decline in interest rates and commodities.

Thought of the day

It will take a lot of energy and coal and copper and cement and special machines to rebuild the damage caused by the earthquake in Japan.

It would not be the first time that I am wrong, however.