Navigating the New Normal (Again)

 | Jan 26, 2012 | 6:21 AM EST  | Comments
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clne

,

f

Have you ever seen so many assumptions that were taken as gospel two months ago mean so little now?

How much that was considered to be etched in stone now seems like it was scratched in Play-Doh?

Let's just tick down some of the major changes:

  1. Let me start by saying I am not political and I have criticized Democratic and Republican presidents pretty equally in the last 16 years of writing. But I detect a rather amazing shift in thinking about politics courtesy the GOP Primaries. These hatefests seem to have been scripted by the candidates to give you a maximum view of how inept they are. I wouldn't trust any of them to be stewards of the economy because they don't seem to have any thoughts in their head about how to actually fix the economy in any sort of practical way. (Yes, I am including Ron Paul who most certainly, while the funniest and most intellectually honest, would have embraced policies that I think would have produced a depression.) They only seem to know one tune: you cut taxes and it creates jobs. We have not created jobs with tax cuts in this country in some time. We have a historically low tax regime. I am simply not even going to debate this stupid issue any more. Yet it is all they do when they are not talking about how to run our personal lives.
  2. The president seems to have spent a lot of time thinking about job creation and has decided to make oil and gas a centerpiece of new hiring, as we will see with his trip to a nat gas depot for trucks powered by Clean Energy Fuels (CLNE). The president is embracing the Boone Pickens plan, which I think is the single-biggest job creator we can have in America. The 600,000 jobs that Obama wants to create with fracking is UNDERSTATED, if you ask me.
  3. The European debate has gone from a discussion about how we are about to go back to the Stone Age to a discussion about how we are going to have a recession of some magnitude, not so bad as to disrupt the earnings of most American cyclicals. We will hear from Ford (F) Friday, but so far the only companies that have been really hammered by Europe are the auto-related companies.
  4. From worst to first, tech's been on fire here and we know that was supposed to be hurt by Europe. Again, Europe isn't bad enough to hurt tech. That's a major change.
  5. The players, and this is the biggest change, seem to have undergone a dramatic change. The people who used to press markets when they are down seem to have vanished. It's the same with those for when the market's higher. It is as if the people who used the double and triple ETFs to bang the market up and down are gone. This fifth point bothers me the most because I can't figure it out. How in heck did so many followers of a particular strategy of selling into selling squalls and buying into absurd lifts just go away? Where are they? What happened to them? Their departure is the single most important feature of 2012. And as long as they stay in the weeds or have vanished, then the constructive tone we have seen all of 2012 will stay constructive, as they were perhaps among the most pernicious forces I have ever seen in my 31 years of trading.

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