Squirrels and Cockroaches?

I have been getting a lot of questions about the squirrels in my attic. I have gone all the way with this project. I did all the right things. We took out a tree next to the house. We trimmed several back. We even had the specialists come out to make sure that all the openings around the house we blocked off so our furry friends could not find their way back in. I went up and got the invader and my daughter and I drove miles away to a park to give him a new home. We have made several calls to the pest control people to get them to come back out and reevaluate the house for possible entry points. They don’t seem to be in a hurry to get here.

Those following the market may feel like they have squirrels in their attic too. Chairman Powell’s speech last Wednesday was the same hard line he had taken weeks ago when he sent the market lower. In this instance the market rallied over 700 points!! Also, on Friday the market bulls were spooked in the early morning hours as futures went 400 points in the red only to rebound by the day’s close. What is going on? Positioning. It was all about how the market was positioned. Everyone knew that Powell was going to take the hard line and they were positioned for it. When he didn’t say anything, new markets rallied as shorts covered. As for Friday, the upcoming options expiration on the 16^th is the largest of the year. The 4000 (S&P 500) level is immense. The FOMC has a meeting scheduled for the 13^th. We are in positive gamma and options players will be selling implied volatility until the 13^th so we probably grind higher for the next several days. I am still looking at the 4150 level on the S&P. Remember, Santa usually comes to Broad and Wall- it’s when he does not that there is a problem. The Santa Rally is the last three days of the year and the first two trading days of the next. We need to consider that Santa might run out of gas after the 16^th.

There are some worrisome happenings in the market and the one that stood out for me this week was the stock of Blackstone. Four weeks ago, the well-known investment firm’s stock spiked higher and out of a downward trend that it had been in since December of last year. A week later it had given up all its gains. Something was afoot. We found out this week as it announced that it was putting the brakes on withdrawals from one of their large real estate funds. They are only redeeming half the withdrawal requests in order to protect the fund investors. Interestingly, most of the requests came from Asia. This is a $125 billion real estate fund. At one point Blackstone’s stock was down 26% from its recent highs. Not a recommendation. Blackstone is a bellwether. If things are not going well for the bright folks at Blackstone, there are other problems we haven’t found out about yet. There is never just one cockroach. Heavy redemptions in real estate and private equity funds could begin to put a strain on asset prices.

 

Be fearful when others are greedy and greedy when others are fearful. – Warren Buffett

“Short term volatility is greatest at turning points and diminishes as a trend becomes established.”– George Soros 

I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd  Blankfein 

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill 

To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com . 

Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.