Tuesday, April 13, 2010

Cutting the Deficit: Easy Math, Dicey Politics

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CNBC's Steve Liesman has the details about the secret plan to reduce the deficit. Link Cut costs and raise taxes, to be expected...bottom line everything has to come together for it to work. High expectation in which many do not believe will happen. Best hedge is precious metals...however the commodities have been taking a hit this week as Itz highlighted in Friday's post. Oil is under $83, looking more likely to test the lower end of it's rising channel around $78 maybe $75. AA reported last night and missed, Intel reports tonight and should beat and help tech. The big one is JPM. Itz has pointed out before that the financials need to lead this rally. The market is now going to have to trade on fundamentals and earnings not price action. The $VIX is at lows, but as highlighted in past blog posts can stay or even go lower from here, basically its saying that buying puts is cheap. Itz still sees a 5% to 10% pullback for equities. Gold/silver as well as oil will correct also. That's the near term...longerterm commodities should do well as U.S. as well as global debt remains a problem. As suggested in previous blog posts, hedge via covered calls, also use Proshares SCO & DUG to hedge energy positions.

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