Tuesday, March 16, 2010
Down on the Farm
Spent the last few days driving on I-75 from South Florida to Tennessee. Other than meeting with a couple investors along the way, I spent my time observing and contemplating. My quick take away was that the level of truck traffic had plummeted. This is my 5th Spring with the farm; in 2006 the truck traffic was nothing short of frightening - grumpy, pushy, and speeding truckers surrounded us it seemed. Pretty much the same in Spring 2007 and Spring 2008. We noticed much less truck traffic last year, and this year it was obvious that 20% to 30% of the trucks were missing.
Like I said. We did no detailed, scientific study to measure truck miles traveled. We didn't need to. It was that obvious.
The U.S. equity market has had one hell of a run. I am somewhat surprised at the depth and breadth of this rally. Retailers, as measured by Retail HOLDRS is less than 10% below its all time high. For all I know, it may even set a new high.
The market seems conspicuously unconcerned with the price of Oil.
This is what happens when excess liquidity meets optimism. Anybody on Wall Street think that retailing is in good shape? Not a one. Or that we need 6 times the retail space per capita as Europe? No one on Wall Street thinks that, either. So what's up with the market?
Or Government Sachs.
Ever wonder why those nice folks at Goldman never even had so much as a hint of an investigation blow their way (under Democrat and Republican alike)? They sold the very toxic sh*t that nearly collapsed the system (and could have plunged America into anarchy and martial law), then covered themselves with derivatives, backed by AIG, to cover their a$$, then had their cronies in Congress and Treasury bail them out (both directly and indirectly), with nary a bad word from the U.S.(in) Justice Department.
Most folks cannot comprehend how incestuous the financial markets have become. Clearly, no one in Government can, either. (I wonder if we will ever see the Federal Reserve audited. I would be curious to see if they have no small number of S&P Futures on their books.) I have never been much of a conspiracy theorist, but there are certainly more coincidences here than should be the case.
In the end, even the U.S. Government would fail attempting to control markets. In the mean time the market is always right. Until it isn't. Of course, it would seem that the Fed is willing to do whatever is required...
I need to noodle this some more. Though the market seems to be forecasting better times ahead for the U.S. economy, my bet is that that will not turn out so hot for those coming to the party now. U.S. Oil imports will not be there to support the optimist's case.
Despite bulging U.S. inventories and slack U.S. demand, the price of Oil is once again over $82 per barrel. India has stepped up to the plate to challenge China in the acquisition of Oil assets around the globe. While I think China might, in fact, be the Mother of All Bubbles, that does not mean that that is true when it comes to Oil. Now we have India throwing their hat in the ring.
Posted by The Short Story Man at 6:19 PM