No time to own bonds.

www.bloomberg.com/news/articles/2016-11-16/trump-allies-urge-fed-to-shrink-balance-sheet-as-debt-wall-looms

...a kiss of death.

Interesting wind directions.

The crosswords tell me we could either remain in spring or soon move into either summer or fall.

Commodities do well in either spring or summer...so two out three ain't bad.

Ps setting up my new desktop today.

Match race week 44

All Ytd

Ga @ 3.63%
Qgmix @ 1.15%
Alternatve category @ 2.22%

Desktop computer fried.

Lost my desktop this morning
All posts will be cryptic until I get a new one
Bummer.

Been Covering My TBF w/TLT

...as the route continues. Don't want to wake up to the market being off 200 with TLT snapping back 2% offsetting the short equity gains.

XIV doesn't believe the rally will last. Didn't add to XIV today.

Trump Winners and Losers.

Winners: TBF, DIA, IWM, PSQ

Losers: TLT, DOG, RWM, QQQ

US companies with little exporting/importing win big.

US companies with heavy importing (read AAPL) lose.

...Speaking of AAPL, there's a good chance I'll cut my 50% holding to 0% tomorrow.

Two Edged Sword of Hot/Dry Weather.

http://droughtmonitor.unl.edu/Home/TabularStatistics.aspx

For grain prices the bad news is perfect harvesting conditions.

The good news (going forward) is bad growing conditions as D0-D4 conditions increases across the country.

Pivot Point #1 Breakout for SCS, and ASHR.

...rather excited about adding SCS (my global growth bellwether) for the first time ever! There are only two individual companies the GA will ever put in the hole...APPL, and SCS.

ASHR is above pivot #2, so an additional 1% will be added at the close, for 2% total. This will result in a 100% China hedge of 2% ASHR and 2% CHAD.

SCS is below pivot #2 so will have a 1% position.

Bond King Takes a Broadside.

http://www.marketwatch.com/investing/Fund/DBLTX?countrycode=US

...bond selloff really hurt costing 20% of years appreciation.

Trump = Spring.

http://stockcharts.com/c-sc/sc?s=%24DJTTR%3ATLT&p=D&b=5&g=0&i=0&r=1478785592751

...transports love faster economic growth and the inflation it brings. Bond HATE both.

From now on I'm calling Trump, President Spring (PS).

Stands to reason, PS is a real-estate developer, who LOVE spring.

Tough Year Being A LS Sea Captain.

http://www.barclayhedge.com/research/indices/ghs/Equity_Long_Short_Index.html

...being either long or short an asset is a compelling sirens sound that has caused many a captains to wash up on the rocks from repetitive cycles of being wrong sided whipsawed.

The old adage: Bulls make money, bears make money; but pigs get slaughter--is what all LS captains should have tattooed on his right arm.

Flexibility is a must, when your prior determined pivot points are hit, then execute the maneuver post haste.

Yesterday at the open I was 1% in VXX, at by noon 1% in XIV, with a great chance I'll be 2% in by the close today acting as a long hedge against my almost 100% equity side shorts.

If the rally continues the vol hedge will give me time to move from the short side to long without getting too roughed up.

The good news is that this is a 'good news' rally meaning bonds are tanking and helping out the portfolio. If this was a 'bad news' rally with both bonds and stocks moving higher I'd be on the wrong side of both!

Now if only the grains would cooperate, with yesterday hopefully being the climax selling on a bumper crop report.

Amazing Reversal Day!

At one point in the overnight the SP was down 5%, with LB up 1%. So how did the day end SP up over 1% and LB down 4+%.

So what did it?

Answer: The republican controlled the Senate, now having total control of the executive and both houses!

Get ready for GOP populism, which means higher growth and higher inflation...for a sovereign long bond holder (zeros got destroyed today down 6%) this is like being bitten by a cottonmouth on one ankle and a rattlesnake on the other.

Now there is just one long term problem for stocks. As sellers cash in the LB and buy equities, the equities bubble against the bond and then go kapooie!

Stocks will then have a Wiley Coyote moment and crash (dividends increase) to catch up with the higher bond yields.

There's an old adage: The stock market will only do what the bond market lets it. In a relative valuation framework stocks should have fallen right along with the LB...but of course that didn't happen.

Iowa Electronic Poll 3:1 Hillary.

...gap widened after the FBI all clear announcement. Watching Steven Colbert election coverage on Showtime tonight.

RJA (20) vs. JGG (3).

The numbers indicate the components which make up each index.

50% of RJA are grains, 10% livestock, and 40% 'softs' such as cocoa, coffee, and cotton.

JGG on the other hand has only three: Soybeans 40%, corn 40%, and wheat 20%.

So far this year the 'softs' have been the gainers while the grains, due to a bumper growing season and perfect harvest weather have declined...in spite of record exports due to drought conditions in Brazil.

La Nina will intensify the dry conditions in both Brazil and the US, but increase the Monsoons in India, which grows a disproportioned quantity of wheat.

In this environment, if La Nina holds and intensifies, JGG should have a very good 2017/18.

Magic Number is 70%.

http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

...the Fed is loathe to raise interest rates if the market has the odds less than 70%. Interesting that the jobs report when first published pushed the odds to 75% before falling to 67% on the increase in 'out of the labor force' being the driver of the lower unemployment rate.

All in all the report was a good one with wages increasing faster than expected and prior months being revised upwards. Here's what Fisher said after the date was released.

http://www.dailymail.co.uk/wires/afp/article-3906858/Federal-Reserves-Fischer-US-jobs-powerful-recovery.html

What the Fed needs to do, if they are planning to increase rates, is to jawbone the number back up above 70%, if they don't then no increase is in store for Dec.

Tough YTD for Long/Short Hedge Funds.

http://www.barclayhedge.com/research/indices/ghs/Equity_Long_Short_Index.html

...up a paltry .16% YTD with 25% of funds reporting for Oct.

What has made this year so difficult is the transition from CB increases in liquidity driving up both bond/stock prices as global growth soured, to the opposite as global growth has increased.

Where for the past three years, bad news has been good for the markets, now it's good news has been bad as the economies and markets again diverge in the opposite directions.

Complete Hole Manifest* 11/4 Updated:

Nifty fifty now stands at fifty-three with the addition of JJG, an alternative money to RJA.

Major changes this week was making RJA the first currency, with UUP now the second. MM continues to build now at 42%.

*current holdings

Short Bonds or MM = 40%

VTIP* 20%

SHY

MBB

MM* 20%

First Currency or MM 20%

UUP
UDN
FXY
FXA
RJA* 10%
JJG
MM* 10%
-----
FXC
CEW
GCC
RJA
CYB
SLV
GLD
FXE
EUFX-S
FXA
CROC-US (ultra short 1% max.)
FXY
YCS-US (ultra short 1% max.)

Second Currency or MM 10%

UUP* 5%
UDN
FXY
FXA
RJA
MM* 5%

Credit

2% max. each credit (10 longs / 3 shorts)

EDV
TBF-S* 2%
IEF
TBX-S* 2%
JNK
SJB-S* 2%
BNDX
LQD
TIP
LTPZ
EMLC
VWOB
IGOV

Equities

2% max. each equities: (10 longs / 7 shorts)

VT
EFZ-S* 2%
DIA
DOG-S* 2%
SPY
SH-S* 2%
IWM
RWM-S* 2%
EEM
EUM-S 2%
ASHR* 1%
CHAD-S* 2%
VPU
SDP-S* (ultra short 1% max) 1%
SEA* .5%
SCS
AAPL* 1%
VNQ
REK* 1.33%

Volatility

1% max. each volatility: (1 pos vol / 1 neg vol)

XIV
VXX* 1%

MM Total Balance

42%

Latest Prices Have Hillary 2:1

https://iemweb.biz.uiowa.edu/pricehistory/PriceHistory_GetData.cfm

PRES16_WTA in menu.

Trump peaked on Nov. 2, with Hillary putting on a mini spurt.

Match Race Week #43.

GA down .29% for the week and 3.59% YTD, in a steady drip down market week.

QGMIX run stopped this week as the mini-pulse of deflation continued driving up bond prices and the fund price down. For the week QGMIX lost .71% and 1.35% YTD. The Alternative Global Macro Funds (AGMF) took a bigger hit off 1.21% for the week and 2.61% YTD.

In a race to the finishing line the horse that runs least slow wins. Having a full length on AGMF is a good thing. Next week this god awful election will be behind us and the clouds should part.

My Favorite Global Growth Indicator.

http://stockcharts.com/c-sc/sc?s=%24DJTTR%3ATLT&p=D&b=5&g=0&i=0&r=1478182971300

http://stockcharts.com/c-sc/sc?s=%24DJTTR%3ATLT&p=D&st=2006-11-03&en=2000&i=t46954181450&r=1478183042793

...simply use the 50/200 cross to determine if global growth is expanding or contracting.

Note: This is NOT a market timing tool, but a relative measurement in which case both could be either increasing or decreasing. Relative to each other global stocks do better relative to sovereign bonds when the moving averages 'golden cross' as they have, vs. a 'death cross' when bonds perform better.

Out Goes EEM.

On Monday it was EEM, on Tues. EEM/EUM hedge, today only EUM is in hole.

Aye, If it Happens TLT/GLD/Yen Will Move Up.

...none of which I own, or will own prior to the election. So far this week the Orange One has cost me .25%. Doesn't seem like a lot, but then I hate to as little as a dollar.

Mayor Holding Cut By Mini-Deflationary Pulse.

...and I can thank the FBI for all of this--LOL.

Jesse use to say he loved the unexpected, since investing is rather boring without it. Set your pivots, and then buy/sell, and sit tight. But the unexpected throws a monkey wrench into the works.

Here's what's happening: Both the USD and RJA are in a mini-down pulse vs. FXY using the standard MACD, this has me reducing my exposure by 50% in each.

On top of that FXJ:UUP on my 'most favored currency' is at a perfect zero, so instead of having a 2:1 ratio favoring UUP today it's a 1:1 coin flip.

So in sum we're in a inflationary pulse, with a deflationary mini-pulse...this would blow out to a full deflationary pulse if the wisdom of the American electorate (I don't vote...keeps me objective) selects President Orange.

On the VTIP:SHY the story is the same an inflationary pulse, with a deflationary mini measured by the standard MACD, moving me 50% into cash.

As of now the GA is 45% in MM. If the deflationary pulse continues 'cash is king'.

Nope, to Lumber/GLD.

...I don't like gold to anything, given it can act at times as both an inflationary and deflationary asset.

Given the tightening in the polls, and the pop in the yen as a deflation hedge, gold is going along for the ride.

https://iemweb.biz.uiowa.edu/graphs/graph_Pres16_WTA.cfm

...FBI email announcement about nothing is having a HUGE impact on the odds.

BIG Manifest Change Day.

JNK is now fully hedged with SJB.

EEM is now fully hedged with EUM.

VXX is now at 1% (got lucky and placed the order at close yesterday).

All bond funds are either short or if long fully hedged.

All stock funds, save AAPL and SEA, are either short or if long fully hedged.

From What I can Tell 'Crazy Boy Gayed' in Cash.

...having bailed on EEM.

Janet Does Make for a Fine Looking Witch.

...but, as I've said, the Fed is the whipping boy for going off the Gold Standard way back in 1971. Since that day when 'paper' became money and gold didn't the world has never been the same.

Match Race Week #42.

GA down .07% for the week and 3.83% YTD, in a mostly flat market week, slightly drifting south on Thurs/Fri.

QGMIX still continues its remarkable run up .73% for the week now positive 2.08% YTD, and closing in on the GA. Alternative Global Macro Funds (AGMF) took a hit off .66% for the week and 3.82% YTD now flat against the GA.

Did a bit of research and found that QGMIX has been backing higher rates for the entire year. This of course hurt them over the first six months, but now with global sovereigns yields rising they're putting on an impressive run.

Complete Hole Manifest* 10/28 Updated:

Nifty fifty now stands at fifty-two with the addition of VNQ, long domestic real estate, and REK, short domestic real estate.

Major changes this week had me moving more into MM, selling 50% VTIP and 50% UUP. I also hedged my neg vol XIV with pos vol VXX.

*current holdings

Short Bonds or MM = 40%

VTIP* 20%

SHY

MBB

MM* 20%

First Currency or MM 20%

UUP* 10%
UDN
FXY
FXA
RJA
MM* 10%
-----
FXC
CEW
GCC
RJA
CYB
SLV
GLD
FXE
EUFX-S
FXA
CROC-US (ultra short 1% max.)
FXY
YCS-US* (ultra short 1% max.) .5%

Second Currency or MM 10%

UUP
UDN
FXY
FXA
RJA* 10%
MM

Credit

2% max. each credit (10 longs / 3 shorts)

EDV
TBF-S* 2%
IEF
TBX-S* 2%
JNK* 2%
SJB-S
BNDX
LQD
TIP
LTPZ
EMLC
VWOB
IGOV

Equities

2% max. each equities: (10 longs / 7 shorts)

VT
EFZ-S* 2%
DIA
DOG-S* 2%
SPY
SH-S* 2%
IWM
RWM-S* 2%
EEM* 2%
EUM-S
ASHR* 2%
CHAD-S* 2%
VPU
SDP-S* (ultra short 1% max) 1%
SEA* .5%
SCS
AAPL* 2%
VNQ
REK* .67%

Volatility

1% max. each volatility: (1 pos vol / 1 neg vol)

XIV* 1%
VXX* 1%

MM Total Balance

33.5%

Three Things Move the LB.

1) Inc/dec growth.

2) Inc/dec inflation.

3) Government buying/selling of bonds.

Looking at each, the world is in an accelerating growth phase with financials and services leading the way.

https://www.markiteconomics.com/Survey/Page.mvc/PressReleases

...the only release I read is the Global PMI, Oct. 7th, latest.

My inflation/deflation signal pivoted to on Oct. 10, this year.

Japan has said no to buying additional LB, the Zone is looking at stopping with the US on hold.

So you have a perfect storm brewing against the LB with increased growth, rising inflation expectations, and reduced government purchases.

The 35 year run for the sovereign debt bond bulls may have ended.

Follow the Iowa Money.

https://iemweb.biz.uiowa.edu/graphs/graph_PRES16_VS.cfm

...the Iowa market has Clinton at her widest lead 60/40. The Iowa market differs from bookie sites in that only $200 from anyone person can be wagered.

Brexit shook the world, but shouldn't have finding out the rich money which wanted a defeat bet more than the working class wanting exit...more money, but fewer bettors. At the poll everyone gets one vote making the Iowa poll more democratic.

Currencies a Bit Out of Whack.

In an inflationary environment the currencies should run from most favorite to least: RJA > FXA > UUP > FXY.

Currently they rank: UUP > RJA > FXA > FXY.

If RJA beats out UUP this next week then: RJA > UUP > FXA > FXY.

This means the USD would be overvalued vs. FXA.

Once (if) FXA > UUP, then all the inflation ducks will be in a row.

In a deflationary environment the order is reversed with: FXY > UUP > FXA > RJA.

Mid-March or Mid-August...That is the Question.

http://stockcharts.com/c-sc/sc?s=RJA%3AUUP&p=D&yr=1&mn=0&dy=0&i=t88776746785&r=1477598911008

...will grains beat out king dollar for the role of the global superior currency? Next week should tell the tale.

If grains win then I'll flip-flop my positions with grains being 20% of the portfolio and UUP 10%.

The GA Could Scuttle JNK and Add SJB

...by early next week.

http://stockcharts.com/c-sc/sc?s=SJB&p=D&yr=2&mn=0&dy=0&i=t67991376130&r=1477582446437

This would then have me short or in cash the entire bond complex except very short term TIPS.

Added the Pair VNQ/REK to the Manifest

...picking up a 1/3 opening position in REK.

Major Breakdown in UST LB.

http://stockcharts.com/c-sc/sc?s=EDV&p=D&b=5&g=0&i=t86660997974&r=1477578906859

...with zeros plunging below 200 day support.

Is La Nina Pushing up Grain Prices.

https://weather.com/climate-weather/drought/news/drought-south-la-nina-winter

...last couple of days I've seen weather reports now saying the La Nina, expected earlier in the year, has now arrived.

Typical La Nina's start in the South and drift to the Midwest grain belt. Cotton often leads the way in pricing for the grains.

Golden Cross Signals Higher Stock Prices.

http://stockcharts.com/c-sc/sc?s=%24DJTTR%3AEDV&p=D&yr=5&mn=0&dy=0&i=t27403645399&r=1477499565687

...Could this lead to another stock price explosion aka 2013 or is this a false alarm, June 2015? Time will tell, but until the golden turns into a death cross my money is moving me to back higher equities.

Inflation, the Destroyer of Debt.

One good thing that can be said for inflation, if you are a borrower, is that it destroys debt. This of course works against the creditor destroying their wealth.

Two ways to reset debt to zero, another deflationary debt liquidation bankruptcy aka Great Depression, or

Germany post-WWI when the wheelbarrow cost more than the money loaded inside it.

Deflationary depressions can last decades, whereas an inflationary depression (crack up boom) is over in a year or so.

Between the two an inflationary depression is much preferred by the general society as it increases the price of their homes, whereas in a GP the banks take possession.

http://stockcharts.com/c-sc/sc?s=VTIP%3AMBB&p=D&yr=5&mn=0&dy=0&i=t75819099538&r=1477493682434

Today is the first day in three years where the 200 DMA is higher than the day before.

Latin America's Newest Dictator.

http://americasquarterly.org/content/venezuelas-odd-transition-dictatorship

...what makes it impossible for South America and Africa to sustain economic growth and development? Answer: Corruption and socialism, which are one in the same, giving away the fruits of the productive to the nonproductive. Eventually the tree becomes bare and then all starve.