Tuesday, February 4, 2014


We have had almost 100 inches of snow so far this year: we average 66.  Tonight we are expecting another 3-6 inches.  It's getting a bit old.  No one can explain the crazy weather pattern that has caused this.

No one seems to be able to explain the massive switches in market sentiment that has occurred since the start of the year either.  The DOW is down 700 points, the 10 year yield, in the face of a seemingly less-generous Fed has lost nearly 40 B.P.s in yield explained partly by the rush out of emerging markets in into "safe" investments.  Of course if you were onto the emerging markets story early-on, lucky you; if you weren't…Last week the drop in equity markets was blamed on the emerging markets; yesterday's major sell-off was caused be bad industrial production numbers.  Friday's job report is rumored to be poor and despite today's rally (at least as I write) the overall feeling is there is more gloom to come.

The mumbling and grumbling Over There hasn't helped the situation.  First, we have Greece, which, amidst the charges that the books have once again been cooked, it is becoming well-accepted that it will need another bail-out of substantial funds.  Right now they aren't available nor is the delivery mechanism nor is the ECB if the German high court has anything to say about it or so it would appear.  The same situation is being charged against Portugal much against the denial of the finance minister of the country--the debt/GDP ratio is second-worse in the EU--but gaining on Italy which presently holds first place with it's banking system looking shakier by the day.  France is a political mess and as the economy remains in the doldrums, the politics looks worse and worse.  And as for the Euro?  Well, it strengthened against everything once again today.  Go figure.

All of this is a background for the Olympics which start this week-end in Sochi, Russia, which just canceled a major bond offering due to "adverse market conditions"--no kidding Tovarich--and where a lot of really bad things could happen.  If they do, the overall effect will be far more significant that could be justified by pure logic.   Therefore, on top of everything else we are looking at event risk for the next few weeks which has all the traders sitting out there with their fingers crossed and not in a hurry to be long anywhere.  At least I wouldn't be but this generation has always been far more long testosterone than ever I was.

Finally, to add to the list of worries, we are looking at the perfect storm…no not in finance but in the convergence of our 3-6 incher with a n'or-easter heading up the coast on the weekend.  We in the Fly-Over Zone just love to see our detractors hammered every once in a while.  Good for their hubris.  Good for our sense of being.  Good for the world.  No worries, mate.

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