Friday, February 16, 2024

Miscellaneous stuff

I think I'm ready to start sending out my newsletter in Substack.  TinyLetter is going away, so I had to find a replacement, and I decided to go with Substack.  There will be some cosmetic differences in the emails, but hopefully there won't be any real snags.

SpaceX is heading for the moon.  On the one hand, I'm not a fan of moon missions because I think it's just a useless rock with no real promise, but on the other hand, it's still a really cool thing to do.  I even picked up some shares of Intuitive Machines as a result of the successful launch and in the hopes of a successful landing and mission.  Which brings me to my next point...

I bought shares of a couple of stocks on Thursday.  I did this in spite of the fact that I think markets are overbought and in need of a correction.  My gut tells me that this purchase of mine can be considered a contrarian indicator; in other words, my finally giving in is what will signal the start of the decline.  Will we see a correction within the next few weeks?  I think the odds of it just got significantly better.

As part of the moon mission, the Columbia apparel company is using its Omni-Heat Infinity technology to shield the craft from the extreme temperatures of space.  Here's a YouTube video about it:

 


I like and sometimes wear Columbia's stuff, and I think this promotional venture of theirs, while admittedly a bit gimmicky, is nonetheless pretty darn cool.  By modern marketing standards--by which I mean we live in an era in which corporate marketing departments seem to be purposefully trying to destroy their brands--it's downright genius.  After I publish this blog post, I'm going to go over to Yahoo Finance and take a look at Columbia's stock info.

I've started gaining weight again.  I'm about ten pounds heavier than where I'd like to be.  I'll try to reduce that in the weeks ahead.  My overall fitness level is really quite pathetic.

I finished The Hour of the Dragon, the only novel-length Conan story by Robert Howard.  It was a serviceable enough book.  I could have done without the "he ejaculated" dialog tags and other goofy devices, but it was still a Conan story, so it still had all the awesome stuff for which such stories are famous.

Monday, February 12, 2024

Charging ahead

I just can't get a handle on this stock market.  Nothing seems to faze it, not even the usual technical indicators.  RSI over 70?  Doesn't matter, we're going higher.  Low volatility?  Doesn't matter, we're going higher.  

Geopolitical unrest increasing in various places around the globe?  Doesn't matter.  Credit and mortgage problems on the rise?  Doesn't matter.  Chinese stock market falling to lowest levels since 2019?  Doesn't--well, you get the idea.

I think there's an inflation report coming out tomorrow, so maybe that will cause a ripple.  But I doubt it.

Thursday, February 1, 2024

Rates unchanged as expected

The Federal Reserve left rates unchanged, and that's no surprise.  The question everyone is trying to figure out is when they'll start cutting.  From what I can tell, no one is considering the possibility of zero rate cuts in 2024, and the notion of a rate increase is basically unthinkable.  The market has priced in rate cuts, and any news that shakes that faith should have a bearish effect on stocks.

Meanwhile, the S&P 500 has charged ahead to new highs this year.

 


The chart is just a bit misleading, though.  The S&P 500 is heavily weighted towards the Magnificent 7 stocks.  Most of the gains have come from those stocks: Microsoft, Alphabet, Amazon, Apple, Meta, Nvidia, and Tesla.  A significant part of those companies' gains are undoubtedly due to the A.I. craze of last year.

So, those companies aside, what does the market look like in general?  For that, we look at the "equal weight" chart of the S&P 500.  In this one, all of the components of the index are given equal weight.  Here it is:

 


As you can see, no new highs in 2024 for the equal-weight version.

In fact, the lack of gains is even more apparent when you broaden the timeline out to five years.  Here's the normal (unequally weighted) chart for the index:

 


And here's the equal-weight version over the same time period:



In this second chart, the market peaked in January of 2022 and has yet to revisit that high.  Take out the bias towards the Magnificent 7, and stocks have basically gone sideways for two years.

I thought in December that we'd see a correction in the first quarter of this year, and I still think that.  So far, though, all the would-be catalysts for market declines have amounted to nought.  Red Sea traffic disruptions, Middle East conflicts, Russo-Ukrainian stuff, farmer protests in Europe, all of the myriad American domestic issues... none have succeeded in spooking the market.  It seems highly irrational to me, but, as the saying goes, markets can remain irrational longer than you can remain solvent.

Just FYI, though... the VIX is about where it was in late 2019/early 2020.  I expected a correction then, too, and we got an outright crash in February/March of 2020 as a result of the Covid panic.  Here's the five-year chart of the VIX with the 2020 spike readily apparent:



The starter gun is cocked.  All we need is some event to pull the trigger.

We'll see what February brings us.

Monday, January 1, 2024

Happy New Year!

The 2020s have been a difficult few years.  I think we can all agree on that.  But hope springs eternal, and for all things there is a time, and perhaps 2024 will see some positive things come into their own.

Best of luck in the coming year, folks, and take care.  :)

Saturday, December 16, 2023

Higher prices inbound?

In a global economy, prices of goods are directly affected by the price of oceangoing shipping.  If shipping is safe and cheap, then the prices of goods will also be cheaper than they would be if shipping was dangerous and expensive.

For a long time now, shipping has been relatively safe by historical standards.  The U.S. Navy has ruled the waves for decades and has kept the sea lanes free and clear.

Recent activity in the Red Sea threatens to disrupt that status quo.

After taking a hit from a missile to one of its container ships this week, Maersk has decided to avoid the Red Sea and the Suez Canal altogether and go the longer way around the Cape of Good Hope.  A few other shipping companies have followed suit.

https://www.wsj.com/articles/maersk-hapag-lloyd-rethink-red-sea-voyages-after-attacks-on-ships-f117b471

How long will the Red Sea be too dangerous for commercial traffic?  How high will the prices of goods rise?  How long will they stay high before coming back down?  Those are good questions, and I don't have any answers.  But here are a few things to consider:

1.)  Egypt collects fees for use of the Suez Canal.  Decreased traffic means a decrease in foreign currency revenue.  I doubt the Egyptians will be very happy about this, and I'm sure they're currently trying to decide how to deal with the Houthis in a way that will restore Canal traffic to its usual level.  They might resort to military action, but I think a diplomatic solution is far more likely.  They may have already made their decision; who knows.

2.)  The Chinese have a significant interest in the Canal.  About 60% of their exports to Europe pass through it.  Until their Belt & Road Initiative is up and running to a degree sufficient enough to allow them to bypass the Red Sea without suffering any inconvenience, they need the Canal.  Like the Egyptians, the Chinese might pursue either a diplomatic or a military solution, but I think they're more likely than the Egyptians to pursue a military one.  They have the muscle, and due to their status as the world's factory, they would almost certainly have the world's support if they went in and flattened the Houthis.  Also, some Chinese companies own stakes in some Egyptian ports, so there's some added impetus for action.  On the other side of the argument, the Chinese have a long history of making threats but not following through, so the prudent presumption is that they'll back down from conflict as usual.

3.)  After decades of off-shoring its manufacturing base, the U.S. is now dependent on China for manufactured goods.  This dependency was predicated on the assumption that the sea lanes would remain free and clear.  An increase in piracy and privateering changes that equation.  I doubt anything short of the political dissolution of the U.S. will be enough to repatriate the manufacturing, but I can't rule it out.  A quick-and-dirty solution to the Red Sea crisis would be to issue Letters of Marque and Reprisal and let bounty hunters take out the Houthis.  That would be a radical step, and so unlikely that I'm embarrassed to even bring it up, but I think it might be the most politically palatable across the board.  Official action by the Navy and/or Marines is possible, too, but doubtful due to the military's current state of decline and a general demoralization and enervation among the citizenry.  We simply don't have the guts and vitality that Americans had in the days of President Jefferson and Stephen Decatur.

4.)  European nations need Chinese goods, but they don't have the military muscle to solve this problem, so they must go begging and horse trading.  Perhaps the EU will make offers to Turkey or Iran in exchange for their assistance.  I can easily see Erdogan seizing this opportunity to secure boons for his country in exchange for taking action against the Houthis.  He has so far played East and West against each other quite expertly during the Ukraine conflict, so he's definitely clever enough.


So those are my thoughts at the moment.  The biggest loser here is Europe.  They're the ones most directly affected by the disruption in Red Sea traffic.  China doesn't need the Canal to ship stuff to the Americas or Australia, so supplies to those continents should be uninterrupted.

Europe is already facing a cold, dark, expensive winter, and this Red Sea stuff is just piling on.  Add in the various nations' preexisting domestic issues and conflicts between natives and foreigners, and the whole place seems ready to boil over.  Might we see a for-real revolution or shooting war in Western Europe?  I wouldn't put money on it, but I also won't rule it out.

2024 threatens to be exciting.  Prepare accordingly.

Tuesday, December 12, 2023

New high for the year

The S&P 500 closed at a new high for the year after Monday's session.  Gold, meanwhile, was down, a bit unusual in an environment where dollar strength or weakness is driving most of the action of both stocks and commodities.

There are still plenty of warning alarms going off.  You can't raise interest rates the way Jay Powell has and not end up with a correction or a crash or something.  Those chickens will come home to roost at some point.  It's just a matter of when and how many.

There are rumors of a new disease on the way, another 2020-style pandemic.  There are also rumors of other catastrophes, things like cyber attacks.  I don't know how much credence to give those rumors, if any, but I know that a Presidential election year is a good time for something crazy to happen.  Just as the stock market crashed in March of 2020, so might it do the same in 2024.  And, as in 2020, there might be a nice buying opportunity when everyone panics and drives prices down to highly discounted levels.  I missed the great buying opportunity of 2009 due to my own fear; I promised myself I would never make that mistake again.

As things currently stand, the market is making new highs, and that's a bullish signal.  It's also overbought, though, according to oscillators like the RSI, and the MACD has turned slightly downward in what is usually considered a bearish signal.

I think the tiebreaker here is the matter of gaps.  The sessions gapped up several times in recent weeks, and those gaps have yet to be filled.  I think the market wants to consolidate recent gains, and I think it will, but I also think fundamentals and election-motivated media hysteria in the first quarter of 2024 might drive it down further than it currently wants to go.

R.I.P., David Drake

I admit I haven't read much of David Drake's work.  I started one of his books years ago--I think it was Redliners--but just couldn't get into it.  I abandoned it and never tried his stuff again.

Nevertheless, Drake was an important part of the science fiction scene, particularly the mil-SF part.  There's no denying his popularity, and he'll be missed.

And perhaps I'll give another of his books a chance some day.  It's not really fair, after all, to judge an author by only one of that author's books.

But even though I'm not yet a fan, there are certainly plenty of others who are, and I sympathize with them now.  Drake was a big name, and his absence leaves a big hole.

R.I.P., man.