Treasuries, REITs and Japanese stocks have been hammered this past week. On top of that, we’ve seen notable risk aversion in many high beta names, like NFLX, UNXL, RSOL–just to name a few. The PIMCO high income fund (PUK) dropped by 6% for the session and commodity related stocks have been behaving as if runaway deflation is taking place.
My Risk Appetite Index has fallen below $100, coming down from $105.
Either the large cappers and income names are foretelling dangers ahead or the rotation out of stodgy non-risk names is so acute that we can coexist in a world where rates soar, the dollar rises, and stocks continue to make new highs, all the while “old economy” stocks get placed in the doghouse.
All I know is that I’ve been tempted, perhaps by The Devil himself (you never know), to buy a wide array of super risky stocks, like BLDP, CPST and PLUG, at a time when my assets under management are at levels that have marked my top in the past. Each and every time I hit this level, I am rebuffed and sent seaworthy, like a viking without a paddle.
Going into today I was fully invested, so I sold some stocks to remain nimble towards the end of the session. There isn’t anything wrong with raising one’s flexibility in the face of a profound sell off in treasuries. No matter what they say, there isn’t a pleasant outcome to this story, if it plays out like it did today.
We cannot, must not, have higher treasury rates, else all is lost. The initiative of the bulls will be snatched, like a purse from and old lady in Brownsville– and the housing market will stiffen up a bit (no rigamortis).
With cash, I reserve my god given rights to depravity and will exercise this enablement whenever, wherever, I choose, with the highest degree of talent and penchant for performing “market magic” afforded to me through my patrons: the gods themselves.
NOTE: Today was the first in four days that overall market breadth eclipsed the 50% threshold.