Gridlock Is Good
I spent yesterday in NYC for the first time since early June. And I did something I said I would never do again, or at least for 5 years. I rode the subway, multiple times. I was surprised at how empty it was. I was surprised that people take dogs on now which is against the rules. I was shocked at how many just jumped the turnstile in front of MTA agents and not a single person even flinched. Why spend $2.75 a ride when you can so easily hop over? It’s accepted behavior now.
In the green rooms at Yahoo and Fox I tend to chat with anyone who can fog a mirror and doesn’t walk away. It was funny interesting that everyone I spoke with thought I was out of my mind for being positive on 2023 in the financial markets even though I think recession is coming. What can I say? I call it like I see it although I do tend to be on the optimistic side. Life is easier that way.
The news flow and markets have quieted down. The GOP has officially won the House and the Senate will either be a 50-50 split or 51-49 with the Democrats in control. That means divided government with the Biden agenda dead, at least until January 2025. As I keep mentioning, gridlock is good when it comes to the markets. Neither party can exert their influence without compromise. And that’s the most favorable outcome for stocks historically.
It was be helpful to see high yield bonds exceed their Q4 highs before Thanksgiving. Less stress in the credit markets into 2023 could give the stock market an extra jolt. Pundits keep talking about selling S&P 500 4100 which is only a few percent away. If we don’t get any bad news I can see the S&P 500 tacking on another 5% by year-end. That could take the Dow Industrials up to 35,000.
Right now, I am looking for signs or new leadership or some laggards that act constructively. Preferred stocks, convertible bonds and perhaps some deeply discounted closed end funds.
November is flying by and I actually thought there was another week left before Thanksgiving. For the second week in a row, I was hoping to make some turns on snow, but it doesn’t look like Mount Snow will open this weekend. BOOOOO! Other mountains a bit farther north are having better luck. That leaves cleaning the garage on my list. YIPPEE! And let me leave you with this tidbit for Husky fans. UCONN is the only university in the country to have men’s basketball, women’s basketball, women’s ice hockey and men’s ice hockey all ranked in the top 25. And field hockey is also there. That smaller university in the remote area of CT has arguably the strongest athletics in the U.S. Swallow that Alabama, Texas, Michigan and UCLA!
On Wednesday we bought SDS, levered inverse NDX and levered inverse Russell 2000. We sold EPI, XME and levered Russell 2000. On Thursday we bought EEM, levered NDX and levered Russell 2000. We sold PDBC, levered inverse NDX and levered inverse Russell 2000.