Happy Birthday Elvis!

Did I forget on the King this morning on the Newsletter?  Sorry true believers…

 

So close

I so wanted it to be my Keystone theory, but there might still be time for that to come true.  What really happened yesterday with the oil sell off, the natty rally, the grains flow and the gold buyers bug may have been a fund closing some books.

The trick here is that the fund was not doing so great, but it was more window dressing for the parent company to clean up the books for an upcoming IPO in 2014.  As is such with all of this, it’s just speculation, but we are hearing it sounds about right by people in the know.  The aforementioned fund had about $2.5B AUM and had a few funds that covered all of the commods in separate portfolios.

Of course we don’t think the whole move was just this fund, but once the ball starts rolling, it’s tough to stop the avalanche.  Another scenario is that once the word got out that this fund was closing position, everyone was sprinting, not running, ahead.  You know how this works friends, a broker is always giving you the best information until that information is about you.

Can’t “Bear” to face this

If you’re wondering “Why so serious?” to start off the New Year, look no further than the hope that is Libya:

LIBYA’S NOC SPOKESMAN SAYS PREPARING TO RESTART EL SHARARA OILFIELD AND HOPES TO RESUME PRODUCTION WITHIN THREE DAYS

I’ll tell you what I think is much more surprising is the the BLS decided to move the Unemployment number to next Friday.  As late as last week it was scheduled for tomorrow.  Hope is a damning thing.

Welcome 2014 and …

Berkshire Hathaway to buy Phillips 66 unit for around $1.4 bn

Let’s start with that headline and take it a bit further.  First off, he’s not buying the refining side of P66, this is a deal for P66 Specialty Products unit.  That unit specializes in making chemicals to improve the flow potential of pipelines  Reread that last sentence if you want to guess what’s coming up next.

 

All hail Keystone!  It’s a pretty big coincidence that we just had a major oil train derailment in North Dakota yesterday and this deal gets done today.  Remember when Mr, Buffett was holding all of those railroads and that sector exploded with “shale on rail”?  Well he’s about to be the beneficiary of inside information again.  I hate to the guy always pushing the conspiracy theory, but Berkshire Hathaway’s timing on this deal as we are awaiting Presidential approval on the Keystone Pipeline is suspicious.  Better yet, I’ll take it as a person who’s had great insight into the future of America.

Auld Lang Syne my friends.

Happy New Year!

TO all of my teeming millions, I want to thank you all for coming here and checking in every day.  Even these days when volume is so putrid that it makes no sense to even bother watching these markets.  If you’re looking for a reason to why the market has faded from it’s glory from $100, I can tell you that there is none.  Like the flu that I’m saddled with right now, it’s hard to keep anything good down for too long.

We think that 2013 has been an amazing year and we have one that will be even more exciting and opportunistic in 2014.  We’re going to see more crude oil production, higher refined product exports and less oil imports ahead.  There will be a lot less players in the market as banks are just a whisper of trade, hedge funds have some catching up to do and a 27% return in equities is too good to leave alone and physical traders are going to have their hands full.

I can’t give away too much ahead of the 2014 beginning of the year special, but I can tell you I’m glad we’re going to be doing this together.  I also don’t care about what anyone says about New Year’s Eve, it’s my favorite holiday.  It’s outside religion and it’s something that most of the modern world shares together.  It’s a lot like oil.  So enjoy today and say goodbye to the markets of 2013.  I don’t care if you drink or what you drink, where ever you may be, I’ll hold up my glass tonight to you, me and $100 WTI forever.

$100 WTI

I had a few days left in 2013 to spare.  To those who believed, you’re welcome.  For those who didn’t, there’s still plenty of Kool-Aid in the pitcher.

Not for Kids

The way I see it, Christmas is for kids, but everything past the year end holidays is for adults.  We’re getting more and more strong econ data in a market that has checked out on vacation time.  I used to think that $100 WTI was my mark before the end of the year.  Now I’m thinking $104 on January 2nd.

DURABLE GOODS +3.5% VS. EXPECTATIONS OF +2.0%

After GDP over 4% and Consumer Spending up and out of the park, this only pushes the Bull further into the fight.  Putting “HO HO HO” behind me and getting on to the “HEE YAH”

99.76

It was so close to $100 WTI that I could taste it.  Then again, we all knew that I was predicting this back in November on CNBC.

“Tread lightly.”

For those watching the screen, I think the biggest flip was over some confusion about the size of this taper (-$10B/mo).  The headline I saw on Reuters:

FED SAYS TO REDUCE BOND BUYING TO $75 BILLION PER MONTH, SPLIT AS $35 BLN MBS AND $40 BLN TREASURIES

Catch that?  Reducing bond “buying…”  Have to think that those computers aren’t so smart to discern the English language so easily.

We think this is a Goldilocks taper.  Not too much, not too little.  We’re looking for the market to take this one is stride and start packing up the bags for the holidays.  Leave the popcorn tins for the less fortunate that will be here to the bitter end of 2013…like me.

Ho Ho…WHOA!

US NOV HOUSING STARTS +22.7 PCT, LARGEST RISE SINCE JAN 1990, VS OCT +1.8 PCT

OK, I may have been leaning to the wrong side of the table today and we very well may see tapering start today.   I’m still convinced that it would be a much better thing to wait until the January meeting, but I guess you best strike while the iron is hot.  This Housing Starts number is a pretty good indicator on what America thinks about tapering.  Like the markets, they know it’s coming and along with that higher mortgage rates.  We think that this is going to accelerate more purchases with the fortunate that are getting year end bonuses, the investors that made the +20% in the market this year and the blessed that actually get tax refunds.  All of them are seeing this QE tapering as the signal that low rates are coming to an end.

[Chart]

While this may slow the stock market down, it’s not going to stop the rally.  We think there’s going to be plenty of opportunity in 2014 for the mild mannered investor, but with rates back on the rise, we’re going to get a lot of rebalancing.  Money is going to get moved between rates, currencies and equities.  All in all, we think that returns on the stock market are going to remain in the double digits, but we’ll be earning those points a lot harder now.  Banks are heading back to the bread and butter that is the interest rate market and this QE tapering is going to help temper the Volcker Rule.

All eyes are on the 2:00pm meeting and until then my teeming millions, we wait and wonder.