BRIEFS

The market spoke today. Bond yields spiked in anticipation of a stronger second half, the real idea behind Bernanke and crew ending the QE madness.

Bonds don't like the threat of rising interest rates. A stronger second half, should it happen, means less deflation and less deflation can spell rising inflation.

The bond market's been in a bullish gear for a long time. That in itself shouldn't be misconstrued. But at some point regression to the mean might again become meaningful.  Bull markets usually take on a life of their own and usually go on longer than most think.

During the QE madness banks have been privy to what essentially is free money. It was money they were suppose to lend out for the sake of the general market to help stimulate a recovery not play the carry game with.

Boys may boys as the old saying goes and banks will be banks. Making money on the spread is the real business of banks, especially the Wall Street kind. If you bother to check, bonds and stocks for the past few years have been moving in opposite directions.

Thursday's sell off in both may signal the beginning of the end of that.

What this most likely means for investors is rising volatility. The VIX, an index that reportedly gauges investor angst, was up nearly 30% and CNN Money's Fear and Greed index slumped back into negative territory.

In commodities those denominated in US dollars like oil and gold took a hit with oil falling below $95 a barrel as the money seeking a safer harbor poured into the dollar pushing it higher against it trading partners.

A stronger dollar would suggest an anticipated rebound for the US in the second half. If that happens things could indeed get interesting.
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                           The Return of Volatility

If you're a believer the sell-off might start you to consider some of those issues we've mentioned in previous posts. Conventional wisdom states a stronger dollar won't be good for US firms that make most of their money overseas. The hyped-up news about surplus US energy supplies might also provide opportunities that many aren't expecting.

Familiarity may breed contempt, but volatility often times begets opportunity. 
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A LITTLE DIFFERENT APPROACH

There's a lot of talk in the investment world about charts, fundamentals, technical analysis and the like. Terms like momentum, trends, profit taking, price-to-earnings ratios, yield curve are just a few.

If you look closely nearly every area in life or line of work has its own vocabulary. To be even modestly successful it's one we all must learn at least something about.

Another important area many believe is called behavioral finance, a kind of catch all term about how we humans interpret all those pieces of data. In short, it's a summary about how we humans behave when dealing with greed and fear, success and failure, disappointment and triumph.

We don't claim it will make you another Warren Buffett. But even pure number cruncher types, despite their claims to the contrary, have emotions and those emotions lead to words and those words precede thoughts and actions.

                               WATCH YOUR WORDS

                      Our thoughts are often worse than we are.

                                                           George Eliot

Most of us are familiar with self-talk. If you’re not, you should be. It’s something all of us do every day, carrying on a private conversation with ourselves in our head. A few of us even do it out loud.

Every time you make a mistake and cry out something like, “You dummy!’ or even worse, that’s one form of self-talk.  Most self-talk goes on more privately, between just you and yourself kicking it around in your mind. Psychologists say we have nearly 20,000 thoughts a day but are only aware of about 2,000. It’s also been called self-coaching. Check out the literature and you’ll even find books about it.

Lots of you won’t believe what we’re saying here. That’s okay. Folks didn’t believe Columbus when he suggested the world may not be flat or Galileo either. The path of history is littered with examples of people and things once thought not to be credible only to find out later they were.

 Keep in mind that lots of people try things just to prove they won’t work for them. That’s their problem, not yours. As an old chemistry professor used to say, “Render unto Caesar what is Caesar’s.” If it doesn’t work for you, fine. But that doesn’t mean it won’t work for others. Nor does it mean because it worked for others and not you it doesn’t work or isn’t real.

In journalism there is an old saying: “The pen is mightier than the sword.” Since we all today live in the electronic age we might have to substitute computer for pen. But you get the idea, the power of words. Confucius, when asked what would be the first thing he would change if he became Emperor of China, replied that he would reinstate the precise meaning of words. For what it’s worth, it doesn’t sound as if a lot of today’s lawyers or politicians would’ve ever voted for Confucius.

Think if you will for a second about these words. Words become thoughts and thoughts become the basis for all personal transformations. Words have power. A kind word can build, a harsh one destroy. Words become thoughts and thoughts become ideas and ideas, good or bad, often get carried out.

It’s an established medical fact that the body is roughly 80 percent water. It’s an established fact that the body’s seemingly hard, solid bones are really porous with canals for blood vessels and nerves. Marrow, a relatively soft material in bone is actually responsible for creating blood cells. Even given the millions of blood cells floating around in the human body, blood is still mostly water. The vital organs that make up and help regulate the body are mostly comprised of, you guessed it, water.

So once again appearance proves deceiving. We admire rock hard six packs, rippled muscles, strong, firm bodies. Firm for most of us is in and flab is out. But if you extract all the solid material in a human body it wouldn’t amount to more than a small heap not several feet but less than a few inches high. The rest is water.

Someone once observed that the strongest thing in your body is your thinking. It can also be your weakest. Shakespeare noted that there is little either bad or good but thinking makes it so. Roman Emperor Marcus Aurelius put it a little differently: “The soul becomes dyed with the color of its thoughts.” Most of us are aware of the biblical admonition about reaping and sowing. You can’t plant corn and expect to get water melons, genetically modified grains notwithstanding.

Several years ago when I was doing internal medicine I saw lots of patients every day with a variety of aches and pains from sore backs to arthritic joints to heart and stomach problems, to name a few. Many of them in complaining about their conditions would without the slightest hesitation unleash a fury of expletives on the particular area bothering them. Some of these names you would not level at your mother-in-law let alone worst enemy. But here they were calling their painful elbow a dirty so-and-so or their agonizing headache a lousy, rotten this or that.

Over time I began casually asking some of them how they would respond if anyone spoke to them that way. Despite the blank looks and an occasional leer, the most frequent answer, the one that always surprised me the most was: “I never really thought about it that way before.”

My response was always the same: “Maybe you should start.” Storms rile up the seas just as a lack of wind creates calmness. If the human body is 80 percent water, it’s subject to the same forces.

So watch your words. Choose them carefully, especially when you’re talking to yourself. Words affect your attitude and attitude influences your performance, in an out of the gym.

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BRIEFS

Who is the current biggest lame duck?

Well, if your Home Depot co-founder and billionaire investor Kenneth Langone, it's Big Ben Bernanke. Langone made his comment on CNBC recently.

More than once Bernanke has hinted at his desire to step down after he finishes his second term as Fed  chairman. And judging from President Obama's recent comments on the Charlie Rose show, Oama is not jumping up and down to reappoint Big Ben.

Obama's treatment of Bernanke caught the attention of observers who claim it unfair and not deserving of Bernanke's service.
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BIG BEN

Big Ben spoke today.

The Fed left things alone, to put it plainly. Some pundits are saying rates won't get changed until at least 2015. That could turn out to be true. But the market, as it always does, will have the last say.

And the market has already started raising rates.
Bernanke repeated his previous palaver, claiming tapering doesn't amount to hiking interest rates.

Below is a statement from the FOMC.

"To support continued progress toward maximum employment and price stability, the committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens," the FOMC said.

The Fed may push this as an example of more transparency. But the market may interpret it differently.

THE THREE MUSKETEERS

So like the three musketeers, which is it: one for all or all for one?

According this researcher since 2009, it's all three driving the market.

http://blogs.wsj.com/moneybeat/2013/06/18/the-rally-in-three-charts-hint-its-not-all-about-the-fed/?mod=WSJBlog&mod=MarketsMain

DIAMONDS

Diamonds may be a girl's best friend as the saying goes, but they ain't much of an investment asset.

Here's a link to a story that spills the diamonds on the diamond charade.

http://blog.priceonomics.com/post/45768546804/diamonds-are-bullshit

COACH

We've written about Coach COH before. If you go through our posts you'll find the blurb.

Below is link to more info on company. We think it's a clear bargain compared to Michael Kors. We think COH will make intelligent and important acquisitions as well as manage any previously thought disturbances in the long run.

http://ycharts.com/analysis/story/unlike_its_handbags_coach_may_now_be_a_steal?utm_medium=email&utm_campaign=YCharts+Analysis+Digest+MRK+COH+KORS+-+Non-Pro+-+DIGEST&utm_content=YCharts+Analysis+Digest+MRK+COH+KORS+-+Non-Pro+-+DIGEST+CID_931395e7da6cd13fb78fea4880d8e9ab&utm_source=email&utm_term=Unlike%20Its%20Handbags%20Coach%20May%20Now%20Be%20a%20Steal

MONDAY READS

Have Jobs Will Travel
http://www.spiegel.de/international/germany/italians-flock-to-berlin-to-join-flourishing-start-up-scene-a-903908.html

$100 Barrel Oil?
http://www.cnbc.com/id/100819317

The Fed And The Market http://www.thefiscaltimes.com/Articles/2013/06/16/Will-the-Fed-Be-Able-to-Rein-in-Volatile-Markets.aspx#page1

Economist Defends The 1%
http://scholar.harvard.edu/files/mankiw/files/defending_the_one_percent.pdf

Fed Meeting Hangs Over Market
http://www.reuters.com/article/2013/06/17/us-markets-global-idUSBRE88901C20130617

Figure It Out
http://www.bloomberg.com/news/2013-06-16/big-short-on-aussie-tells-loomis-time-to-buy-australia-credit.html

Good Or Bad For Economy
http://money.cnn.com/2013/06/14/pf/credit-cards/index.html?iid=Lead

ABOUT TIME

For a long time we've railed against the CDC nonsense about the flu vaccine.

Now a Johns Hopkins flu expert steps into the breech of what has been suspected for some time. First these flu scares are just that--over-hyped scares.  But the over-reaction about the flu isn't the only area where the CDC is little more than a panic-mongering group of pseudo-scientists who love power and authority.

That power and authority is the life's blood of their funding. Much of what they do is little more than incestuous scientific masturbation. Keep the funds coming. Vaccine makers love the CDC.

These vaccines, like the ones for pneumonia and herpes zoster, to name just two, are aggressively hawked by health care organizations and big-time workman's comp providers, mostly as a so-called preventative and public service.  Hundreds of firms have one of these health care providers come out annually and inoculate their entire staff.  It's like an annual annuity that just keeps throwing off income.

Walk into any major pharmacy during the so-called flu season and you'll see ads for the flu shot. The smell of money is everywhere. This is a self-perpetuating sham. America is the most over-medicated, over-inoculated nation on the planet.

Another one is the tetanus vaccine. It used to be marketed for every 10 years. Now overly-aggressive health care providers push it on unsuspecting patients every five or eight years. And they have, like more and more things in medicine, expanded or widened the net for those who supposedly should get it.

http://www.newsmaxhealth.com/Newswidget/flu-shot-risks-benefits/2013/06/14/id/510050?promo_code=F492-1&utm_source=Test_Newsmax_Feed&utm_medium=nmwidget&utm_campaign=widgetphase1

A FEW CENTS SHORT

I'm a few cents short. 

I'm a few cents short of putting gasoline in my car. Ain't it funny how the money can change our lives. I'm a few cents short of seeing you tonight, a few cents short of being where you are.

I'm a few cents short of holding you in my arms, a few cents short of keeping us from falling apart.

Those are the words of a John Michael Montgomery song from the past. Most of us know that feeling. Most of us at one time or another have been a few cents short. 

Today it's more like a few dollars. It's funny how the money can change our lives. And that's the big concern among investors if and when Bernanke and crew cut off the liquidity spigot. The proof's in the market's recent jitteriness.

Turning off the spigot finally is a newly sharpened blade. For investors caught on the wrong side of that action it could turn out like a dark and stormy night, a season full of rain and a horde of investment portfolios full of pain.

A popular gym saying a while back was go big or go home. Here it's more like get it right or get poorer.

The trend may be your friend, but politicians, bureaucrats and markets ain't. All three can turn into your darkest nightmare. Take your eye off the bouncing ball now and you'll most likely turn up more than a few cents short.