Tuesday, August 18, 2009


Its time for another SMACKDOWN week. This time we'll be looking at areas of the market and the economy where there seem to be extreme views and/or those where there has been an extreme run of late. In each piece, I'll contrast an area where I'm more bullish with one where I'm more bearish. I suppose you'd say these will be areas where I'm more bullish/bearish than average, but in truth with so many extreme views out there, its tough to say how meaningful average views are these days. Hell, if we contrasted my view with the average blogger, my expectation that the sun will most likely rise tomorrow would seem like naive optimism.

I'll start with one area I won't be covering. The stock market itself. I suppose if you asked me whether I think stocks will be higher or lower two years from now, I'd say probably higher. But my confidence in that view is pretty low. Lately I've found more success trading on my short-term view, trying to make small gains add up over time, than trading on a long-term macro view.

I would also say that while I expect the market to be higher in two years, we could also see some very scary swings in between. I think the factors that kept volatility low in the past, namely leveraged investors who were willing to take on small arbitrage opportunities, is gone and isn't coming back. The result will be larger swings in all sorts of markets from bonds to stocks to commodities. No one leans against small moves, and therefore the small moves become big moves.

Anyway, here are some of the topics I plan to cover. If you have other ideas, please e-mail me. I won't promise I'll write about it (because I might not have a strong opinion) but the feedback is nice.

  • Commercial real estate
  • Banks
  • Consumers spending
  • Inflation
  • Housing
  • Commodities
  • Municipals
  • The dollar and foreign participation in U.S. markets

Finally, I know I haven't been posting and or e-mailing people back much. I'm sorry, just been really busy. I've always focused this blog on writing more quality than quantity. If you'd like to subscribe by e-mail, there is a link on the right-hand side of the page. This will save you the trouble of checking the site so often.


MSD said...

I'd be interested in your take on emerging market debt, and maybe not so emerging.

Lockstep said...

Emerging market debt is a great topic.

How about foreign debt purchases also?

Anonymous said...

Please cover muni categories
-general obligation - city/county level
-federally taxable munis (pension funding)
-state level general obligation

The rating agencies seem to be well behind the curve and overly slow in changing muni ratings even when the issuer files a muni disclosure document with negative news.

Kevin Rogers said...

I would like to hear your thoughts stock market impact/earnings impact from the Chinese government slowing their bank lending activity. China's strong GDP growth,driven by rapid bank lending, no doubt help world GDP, and select sectors. So who loses?

Unknown said...

I'd also like to hear more about munis. What are the different risks/returns for them and competitive investments?

Do you think Auction Rate Securities are dead for the long term?

In Debt We Trust said...

Second the emerging market debt - specifically China.

Any idea where we can look up the Chinese credit index? I have heard of the Yuwi Credit index but have been unable to find anything more solid than old press releases

Henry Bee said...

Last smackdown was great! Looking forward to this one as well. Please definitely cover the USD!