From Acting Man:
If It Were A Security You'd have to Short It …
The
so-called 'fiscal cliff' receives an amount of attention that is
completely out of proportion with the likely importance of the issue –
which we would estimate to reside somewhere between slim to none. Does
anyone seriously believe the US government's deficit spending will
somehow magically cease to be anything but gargantuan?
See, that one was really simple.
Yesterday
a friend sent us a few recent Google trend charts. One of them confirms
loud an clear that the 'fiscal cliff' is a short sale at this time,
metaphorically speaking.
The
'fiscal cliff' via Google trends…it cannot go higher than where it now
is. Ergo, it is a short – click for better resolution.
Go Long 'Recession' Instead
There
are a number of reasons why one might consider going long 'recession',
although the major recession indicators are not yet in 'red alert' mode.
For the moment, they still indicate that the economy is muddling
on…albeit with its imbalances growing, quietly and rarely remarked upon, below the serene surface. However, on the Google trend chart it looks like a buy actually:
'Recession' has just turned up, but at 22 it is still a bargain. Nice rounding bottom. We hereby upgrade it to 'speculative buy' – click for better resolution.
There
are a few market-based reasons for considering going long recession
here. One is , as John Hussman reminds us (even after the recent swoon
in the stock market, or rather, because of it actually), that stocks
remain at dangerous levels. Quoth Hussman:
„In
mid-September, our estimates of prospective market return/risk dropped
to the lowest figure we’ve observed in a century of market history (see Low Water Mark).
That week turned out to be the high of the recent bull market, though
it’s certainly too early to establish whether that was the ultimate
peak. During the recent correction, I’ve noted a modest improvement in
our return/risk estimates – which focus on a blended horizon looking out
from 2-weeks to about 18-months. However, last week, the stock
market experienced some significant damage to internals (breadth,
leadership, price/volume measures, etc). As a result, our estimates of
prospective return/risk have plunged lower again, to what is now the
second most negative figure we’ve observed in a century of data – the September 14, 2012 weekly close of 1465.77 continues to mark the most negative estimate.“
(emphasis added)
Since
we are not aware of an imminent asteroid strike or some such calamity,
what could possibly bring this teflon-like miracle levitating on 'QE'
fumes down? A recession sort of suggests itself as a possibility....MORE
The 'fiscal cliff' via Google trends…it cannot go higher than where it now is. Ergo, it is a short – click for better resolution.
'Recession' has just turned up, but at 22 it is still a bargain. Nice rounding bottom. We hereby upgrade it to 'speculative buy' – click for better resolution.
