| We are way overbought on lots of metrics, but markets can stay insane longer than I can stay liquid. Step aside if you must but don't bet the farm on the short side. Reversion to the mean occurs, but when is anyone's guess. Data are still conflicted and bulls are grasping at any reduction in bad data to make a bull case. Can't blame them, but it does not sell me yet. Government is spending money on pork at a rate that is crazy. Little is stimulating the economy. Lots of balls up in the air still and I am not convinced this is just not a bounce off a bottom from which we will experience lots of volatility, both up and down, for the next 5+ years. China's bubble WILL pop because they sell to the rest of the world that is in a funk. So while they spend their money transferring reserves from dollars to hard assets (commodities), they are simply buying time hoping the world recovers soon enough IMO. If things don't get better very soon, they will rethink spending their reserves in the way they have, and since they are the marginal buyer, watch prices collapse if they slow down. Just my very cynical and humble opinion. I would like to add hard assets on a dump possibly later this year, like NG at under $3, or the companies with the largest reserves like BP, COP, DVN, when/if the price goes down. Best, |
