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February 23, 2017

 I do mean it…I may just be an old hack broker who doesn’t understand diddly about the markets, but I am just amazed at how many people DON’T seem to agree with this idea…I DO think the economy is definitely heating up (IT’S CERTAINLY NOT COOLING), and with all the stimuli that WILL be coming from both Trump AND Congress, I HONESTLY BELIEVE THAT SHARPLY HIGHER INTEREST RATES ARE ALL BUT INEVITABLE…AND MUCH, MUCH SOONER THAN ANYONE ANTICIPATES…And I just don’t understand why SO many people I talk to see it otherwise…or “want to wait and see what happens.” My consolation however, after having been through this before, is that at many times in the past, especially in the interest rate market, this sort of set up is precisely what has preceded some of my most successful trades. We’ll see…

 Stocks are nowhere near being done…



The curbs and gutters of Wall Street have recently become littered with brokerage house analysts, “strategists”, and economists who are NOW belatedly acknowledging that we ARE in a bull market…I mean, don’t they HAVE to with the fact of an almost 3000 point Dow rally since the election? But…Let’s be clear, they are reluctantly straggling towards the bullish side after having repeatedly advised selling throughout ALL of 2016…AND the rally since November…and the fact is, they have TOTALLY missed out on this equity explosion, which again, as I have noted for years, IS typically the way this stuff always works…All the well dressed, well spoken, seemingly so logical guys who spout “advice” on the internet and from the brokerage houses are mostly just wrong-way shills who don’t EVER get the big calls right…and anyone who actually believes those guys “know” anything about where the markets are going is just begging to lose money…The truth is, the best thing all those suits do is cover their tracks…to the extent that after they have been so, so DUPED by the markets, they still can make it sound like they “knew” what was coming…And they never, ever do.

Okay, my intent is not just to sit here and say, “I’m smart and all those other guys are stupid.” Far from it. I have had more than my share of occasions when I was horrendously wrong…What I’m trying to address here is what sort of “logic” you are NOW going to hear from all those same nitwits, maybe for many more 1000’s of points on the Dow, AS IT CONTINUES TO MOVE HIGHER AND HIGHER…

I would say your average Wall Street “expert”, who has had his bearishness and “caution” shoved down his throat, is now sitting there thinking, “I’d better start telling people to buy this thing” (or he’s out of job at some point), but the next thing he thinks is, “It’s GOT to back up somewhere. How can it just keep going? I’m bullish NOW, but scared to buy it here.” …So what do we start hearing from that guy and all of his equally backwards cohorts?

Just more of the same “Don’t buy it here” bunk that those guys have been “advising”…forever…For sure, the bullish pendulum is swinging north, and there are now some of them who ARE saying, “Buy it here”, but as I keep pointing out, week after week, month after month, there are PLENTY  of geniuses STILL on the bearish bandwagon…and until those people all become bullish, the market will keep on going…

Here are more examples of those same-old-bearish-nonsense opinions from just the past few days…


Again…Whenever you see or hear comments about “red flags”, “overbought”, “valuations”, etc., all you are hearing are the same old hackneyed buzzwords that are totally useless in determining what the “values” (prices) are for THE PIECES OF PAPER that are the basis for this worldwide, mob psychology GAME. For sure, we are talking about INVESTMENTS, but as written here for years, every price in the marketplace is nothing more than a functions of today’s fear, greed, money flow and mass media driven perceptions…And as regards the stock market right now, as long as there is ample evidence (as noted above) of doubters, my experience has been that the market will CONTINUE to run…REGARDLESS OF WHETHER VALUATIONS ARE PERCEIVED AS “LOFTY” OR NOT.

In the same vein, I would also say the move higher will continue until there is at least SOME degree of investor and media EUPHORIA…which I believe is still nonexistent…and, in fact, I believe the term that currently best describes the average analyst or investor is…NERVOUS...Simply stated, NOBODY IS EUPHORIC…and EVERYBODY IS NERVOUS…ESSENTIALLY SCARED TO SERIOUSLY BUY IT HERE…and that is NOT the way it generally is at the top…At the top, NOBODY is NERVOUS. At the top, everybody LOVES the market.

I will also point out that we have STILL NOT SEEN ANY TRULY ATTENTION-GRABBING BIG UP DAYS that are often a hallmark of markets approaching the end of a move…where, for example, you get something like the Dow knocking out a series of maybe 500-600 point up days…after which you then get, FINALLY, and literally, OVERNIGHT, virtually ALL of the talking heads and brokerage houses becoming  just giddy with, “No way it stops here!”,  rhetoric….AND THEN…THEN, IT’S TIME TO LOOK FOR A MAJOR PAUSE…And I say we are NOT there yet…not even close.

The major reason I continue focusing on the Stock Market is due to the fact it DOES serve as one barometer of what is coming economically in the FUTURE…and with the bullish move we’ve ALREADY seen in recent months, and with my conviction that there is still a LONG way to run, I can only conclude that some degree of an outright BOOM is dead ahead for the USA…and…one more time…IN THE MONTHS IMMEDIATELY AHEAD, I BELIEVE THE IDEA OF A SLOWLY RISING RATE ENVIRONMENT WILL BE BLOWN OUT OF THE WATER…THAT, AS HAS BEEN THE CASE ON COUNTLESS OCCASIONS I HAVE WITNESSED SINCE 1980, THE FED WILL BE FORCED INTO AN AGGRESSIVE CATCH UP MODE…AND RATES WILL BE THEREFORE BE RISING FASTER AND BIGGER THAN THE MARKETS (AND ANALYSTS) ARE EVEN CLOSE TO EXPECTING. SO…


And just to clarify, Eurodollars have nothing to do with Europe, or the Eurocurrency. The Eurodollar market represents international short term interest rates on US Dollars either borrowed from, or deposited in, banks outside the United States...If three month interest rates are going up, Eurodollars will be going down…which is exactly what I am expecting.

Where might stocks be headed?

Even though you have all these guys talking about the market being “overbought” or “overvalued” or “up for too many days in a row” or “overdue for a correction” or “having too many days without a 1% selloff”…and all the other negative sheep herd bearish malarkey?

Here’s a little history, that for me, visually implies there could be a LONG way to go from here…

The Dow since 2009…


And much longer term…


If I have this right…If stocks are signaling a robust economy…and if Stocks are going to keep heading higher, I believe it is important to recognize that the Wealth Effect of a rising stock market IS very real…that, in essence, what does happen is that the values of any number of other assets also increase in value, including homes, commercial property, businesses…AND prices on everything, from services to commodities to consumer goods, tend to rise as well…AND, not to forget, WAGES…with the bottom line being that INFLATION can quickly become elevated…BEYOND ANYTHING THE FED WOULD CONSIDER ACCEPTABLE.

In other words, as what the stock market is “predicting” does become reality, I believe the Fed…LED BY THE MARKETS …will become progressively (and imminently) more aggressive with their higher rates policies.


Here is the big picture in short term interest rates…and I encourage you to totally ignore any opinions that suggest “rates will be staying low for a long time.” The Great Recession is history...I firmly believe we are now headed back to norms in rates, that when you get down to it, are FAR beyond even my current 2.5% target.

You decide…


Here is the September contract in which I am currently buying puts…I FIND IT MIND BOGGLING THAT THIS CONTRACT STILL HAS BARELY MORE THAN A 1/4 % INCREASE IN RATES BUILT IN BETWEEN NOW AND SEPTEMBER…But I also understand that this is the way the markets work…They are NEVER fairly “valued”…and that SERIOUSLY misguided perceptions by analysts and investors ARE what create opportunities in this business…


Maybe I am wrong, which will obviously mean losing money if this is the case, but I still think this trade is like nothing I have ever seen in this business…a ton of time and MAJOR leverage.

Pick up the phone if you are interested…Either get in…or Get some more…I think 5.5 or 6.0 ticks for this 9850 put is just an incredible price…Really.




All option prices in this newsletter include all fees and commissions.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Eurodollars

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