I am back in the markets working hard. Today made the following trades:
VYLAH
TYC JAN 40 C
VYCAW
CSCO JAN 17.5000 C
IBMGA
IBM JUL 105 C
GEIH
GE SEP 40 C
SPTDL
$SPX.X APR 1160 C
As usual I am confident in the US economy and acting upon todays consumer confidence number, I think its worth taking these positions. I believe that TYC is a good stock in my universe, moreover with low capacity utilisation @ 74%, all this talk of inflation is pure nonsense. I strongly believe unemployment is quite high and wage pressures are just not there. Due to oil price hikes, there will be some upward commodity pressure but the CRB index indicates that a top is in place. In addition, I imagine that EMC may have some bad news and the stock may hit $10 where I would like to some positions on the long side. SUNW is also on list.
I will be regularly posting my trades and hopefully try to learn from the mistakes of pre 9/11 and see if I can hedge my portfolio better. In this whole period of the last 5-6 months, I have never doubted the ability of the US to recover from the ruthless attacks on the very heart of its financial centre. I certainly see this as a V shaped rebound and nice to see that low interest rates did work in a great economy like the US. Those who compare the US economic woes to Japan would have not very much liked to see the talks of hike in interest rates. I would rather have hikes in interest rates that would show a pro-active FED ready to take on any signs of inflation and indicative of an economy that is rebounding whereas in the case of Japan, the economy being in the dog-house for several years and zero-percent interest rates, the economy does not show any signs of movement. I like a little inflation in the system as a result of signs of consumer activity.
At the heart of the US economic turnaround drama is the ability of US like in case of resolution trust and in the case of LTCM or Enron to act firmly although with different strategies. The concept of creative destruction in case of Enron and Anderson or managed resolution of crisis in case of LTCM and resolution trust is what differs the US from the Japanese model.
This economy has seen post 11th sept any global economy could have faced and have rebounded very well with housing and consumer spending leading the way out. The only thing that worries me is the indebtedness but with low interest rates on the short end companies like GE with huge amount of short-term debt on the books will be able to manage well. I expect their revenues to be better in march and that will them to manage the debt much more effectively. The spreads in my opinion between treasury and corporate yields would narrow and as such TYC, CD and GE are some of the conglomerates I’m looking at.
On the economic front, there might be some days that we shall see sharp sell offs as a result of rising fears of interest rates, however the very reason that hikes are being talked about is a reason to cheer not to be worry about. If the FED still had to worry about cutting rates, this means that the cuts have not really worked and the economy has gone into a tail-spin and Japanese longterm recession syndrome has taken place. That would be a more worrisome thing for me. As soon as the market sees what im seeing that the Fed is pro-active, rising bond yields will reverse. There is a window of opportunity that bonds can be sold and be bought back before the hike really comes on. On a hike, bonds will actually rally.
Thanks for asking and I’ve decided to return to the markets and actively trading. The trauma of 9/11 which impacted me quite a bit and diverted my attention and focused on issues relating to my country have given way to a nicer rosier picture of the world. On a lighter note, I am also inviting my bearish friends who hate to see me projecting a rosy tinted picture through my crystal ball.
But if we were not depressed post 11th Sept, we should not be depressed at any time in our life. We should take challenges as they come and be positive.
Best Regards and I want to thank everyone for being so nice to me when I went through my own grieving and self-knowing process. This does not mean coming back to the market will take away all my attention from my region..that will continue but my emphasis will be on trading. Iqbal Latif |
