Posts Made By: Paul Kammueller

So today was one of those explosive rallies I was talking about. The Dow is now fully 20% off its intraday lows from Friday (!!) -- again on volume that any time would represent a fabulously big day.

That said, the mood has gone from doomsday to exhuberant a little too quick for my tastes, and it has kind of the same 'feel' as the super-rallies we had during the bear market of 2000-2002. And while the vix has fallen out of its exponentially-upward accelarating curve of the last few days, the linear uptrend of volatility of the last couple weeks is still intact, albeit barely so.

Opinions? Predictions?

Gold mining index is massively under-performing actual gold, the XAU index is down 50% while the price of gold is down about 15% -- while oil is down massively, indicating the potential for more profitable production due to lower fuel costs(?)

Add to that the potential for the massive multi-nation coordinated liquidity push to impact gold relative to various currencies?

How does everyone feel about gold mining stocks? The risk of course would be if the economy slows down enough to cause a flat-out crash in gold prices.

A lot of zig-zagging this week after the big slide. The market may have just executed a fast double-bottom, but not perfectly and really it showed kind of a similar pattern just before the big drop.

The volatility index is still running ridiculously high, in fact hit a new high late in the week and is still generally trending upward. This despite signs that the money is starting to 'loosen' a bit, and money supply numbers that came out on Thursday showed the printing press is running pretty fast (3-month annualized growth of M1 at 19%?!?)

Index of leading economic indicators comes out next week. Several recent signs point to an abysmal number, though at least one of the numbers (M2) will be a strong positive contributor.

So we're down 40% or so -- I've been checking out various international funds:

Chinese stocks -- down 55-65%
Japan - down 55% this year, flirting with 2003 lows, still down 80% from the 1989 Nikkei high
Russian stocks - down 75% or so
East European funds - down 80% (down 70% in just 5 months!?!)
Latin American stock funds - down 65-70%

It is UGLY out there.

Well, people who bought oil and weapons after election day 2000 did very well the next 8 years. Politics aside, what stocks would one expect to outperform in a democratic presidency?

Given the noises that have been made, and the known history of the last 30 or so years, I would wager technology. Under a dem administration I would generally expect more government-sponsored civilian technology innovation, in this cycle likely under the subcategory of energy technology.

But the history also bears it out: Upon Clinton's election, the Nasdaq composite from November 1992 to November 2000 returned an average 22% annual return and widely outperformed the Dow Jones Industrial Average. At Carter's election, from November 1976 to November 1980 again the Nasdaq returned roughly an average 21% annual return and again it very strongly outpaced the Dow. During the Reagan, Bush and Bush II years the Dow decisively outperformed the Nasdaq as technology stocks seriously lagged.

So after losing by the biggest popular vote margin in over a generation, what's the game plan for the R party now?

Leaderless, and without any clear agenda even during the election campaign, it would seem that they are really back at square one -- or even zero. It is my personal opinion that GWB, through 8 years of misguided, mishandled and mischievious policy basically brought the party to its knees. How are they going to define themselves for the next cycle?

Obama won because he had a theme, a message, and even when McCain tried to divert things to the character assassination path, Obama stayed on message. If someone tried to divert the conversation to another round of the culture wars, Obama stayed on message. He won because he maintained focus and didn't allow the campaign to become distracted by all the stupid stuff.


My advice to the GOP would be thus:

1) Give people a reason to vote for you. Talk about policy, develop a message. McCain just didn't have one. The character-assassination shtick just isn't selling anymore, the trouble is that's what the GOP election machine is now geared to produce, at the expense of everything else. They need to retool. The public has gotten used to (and come to expect) Dem Candidate X to be portrayed as every conceivable historical bogeyman every single election cycle and has become numbed to it.

2) Stop couching everything in pejoratives and sound bites and have an honest debate about economics. The idiotic oversimplification to trickle-down vs. socialism insults the public's intelligence gets this country nowhere. There is more to economic debate than this.

3) Stop wasting our time with useless wedge issues. The eternal issues where NOBODY ever changes their mind and their only purpose is splitting the electorate, has become a transparent election tactic. People aren't falling for it anymore so it's losing its effectiveness.

4) Stop catering to the fringe elements and become a party of reason again. Every election cycle you alienate more and more 'normal' people. Nominating a VP who can gut a moose and prays to God for oil pipelines may have 'energized the base' but it sent hundreds of thousands of previously neutral voters flocking to Obama's website to donate money. We hear much whining of how much Obama was able to outspend McCain, but no one wants to look closer and ask WHY so many were suddenly eager to give so much, immediately after the Republican Convention.

5) Drop the anti-science and anti-environment planks. Simply a case of being on the wrong side of history.

6) Stop insulting the public's intelligence. The best the Republicans could do was send us lots of junk mail (almost daily) on black paper with Obama's shadowy face on a black background with words like "TERRORIST" in large menacing letters on the front. This fear-the-black-man stuff was the best they could come up with, we got lots of this junk but I don't remember getting anything that gave any credible case for voting FOR McCain. This was NOT the GOP's finest hour and it would have been a travesty of electoral history if this kind of disgusting propaganda had carried the day. Thank God it didn't. In fact I'm reasonably sure it motivated more people to vote for Obama out of sheer anger.

I think it's simply energy technology. Yes there's the climate change angle to that, but the inescapable fact of the matter is the oil isn't gonna last forever and it's gonna stop being cheap way before that.

If we were smart, we would spend at least as much every day ramping up alternative energy as we spend each day in Iraq, preferably more. I mean we get serious, just pretend it's another war, or another Apollo program, except it's spending in real tangible infrastructure and technology that's going to support the economy at the roots a long time after the spending is over. Forget dead-end stop-gaps like fission, just skip it and go straight to full-blown fusion in a seriously big way, makes way more sense. It'll have halo effects on other technologies and get some new job engines going. Then when the time comes for the economy to really start to turn, some of the groundwork will be laid for a new energy base to grow along with the economy.

Very tempting to call it today, at least a near-term one. I see key reversals in QQQQ and also big-name techs like Microsoft, Intel, and National Semiconductor. Also Templeton Emerging Markets (EMF), the clean energy ETF (PBW) and the small-cap value index fund IWN. Probably lots more I haven't seen. All of these opened below the previous close and rallied past the previous day's highs, completely enveloping the previous day's descending range, on very good volume across the exchanges. A rare formation but one of the most reliable when it does happen. This could also make for a quick double-bottom formation in the NYSE. Very interesting.

This got my attention, I think that's the biggest one-day move I've seen in a whole index, after getting pounded even worse than the general market. While the price of gold lost about 30% of its value, the gold mining index lost about 70%. Now suddenly it springs to life with a 26% one-day pop.