Markets Continue To Melt (higher!)

Macro   The Bank of Japan (the central bank) left rates on hold at -0.1% and also revised its timetable for achieving 2% inflation to 2020. There is a quote that goes something like “inflation is the easiest thing in the world to create, except when you need it.” Before the financial crisis, the only concern was that of inflation. The crisis was a deflationary event that fortunately did not create a deflationary debt spiral but global GDP has not really gotten going, for developed countries anyway, and countries are struggling to get inflation to levels that would go with healthy growth. The Great Depression from almost 90 years ago cast a pall over the country for decades and that appears to be a possibility with the Financial Crisis. One difference (there are many) is that developed countries have demographics working against them, moreso Japan and Europe. If there is always a bull market somewhere, and we believe in that saying, finding it may become a little harder to do. Domestic equity markets mostly moved higher last week except for the Dow Jones Industrial Average which fell 0.27%. The S&P 500 gained 0.53%, the NASDAQ added 1.16% and the Russell 2000 was up 0.48%. The yield curve flattened some last week as the Ten Year US Treasury Yield fell to 2.23% as the previous week’s dovish sentiment from Janet Yellen was echoed by ECB president Mario Draghi. If you’ve been following this report lately you know that we watch the impact that the slope of the curve has on style and sure enough as the curve flattened growth outperformed...

Is A Minsky-esque Moment Coming?

The weekly Market Update is posted and includes the following; In several previous weekly updates we have talked about volatility in political headlines increasing but not being matched by equity market volatility as measured by the CBOE Volatility Index. In addition to the above mentioned volatility in the slope of the yield curve, WTI has become more volatile as measured by the VIX for crude oil which can be tracked through symbol OVX. Since March 1st it has increased 19% while the VIX has declined 26%, closing last week at 9.51. Please click through to read the entire update. The rear of a Type 4 engine that I believe is from the Tonto National Forest in Arizona. Forest Service trucks usually are usually numbered with a state abbreviation like AZ or CA, then a three letter code for the forest like TNF in the picture and then the engine number. This one doesn’t have a state identifier. Type 6 engine from Lolo National Forest in Montana Panoramic of the staging area behind our fire house for the structure protection group assigned to Walker during the Goodwin...

Even The “Experts” Get It Wrong Occasionally

My latest post for Alpha Baskets is published and includes the following; The best example of why this is, comes from the tech wreck. For a while, the options market appeared to be giving money away, you could sell a semi-deep out of the money put on a $300 stock and easily bring in a couple of thousand dollars. This worked for a time and then the crash came and put sellers were paying $250 for stock trading at $80 on their way to much lower prices. That’s permanent impairment of capital, Holmes. Please click through to read the entire post. Mendocino National Forest parked along side Goodyear AZ Fire Department Private contractor type 4 engine Bureau of Land Management law...

Do Investors Want More Correlation?

The weekly Market Update is posted at Alpha Baskets and includes the following; The history of earnings recessions was that they lead to economic recessions but this did not happen (yet?). This is one of several supposed to’s in the aftermath of the crisis that did not pan out as people expected. Another one was maintaining a zero percent interest rate policy would cause extreme price inflation and obviously CPI has been floundering for years, the bigger risk to ZIRP arguably was deflation and luckily things didn’t play out that way either. Please click through to read the entire update. A couple of pictures of Klamath National Forest Water Tender 17 filling up at our station house during the Goodwin Fire. And Finally a type 6 from Timber Mesa...

The Goodwin Fire

On June 24th a fire broke out southeast of Walker that was quickly named the Goodwin Fire (pretty much any fire bigger than a smoldering stump gets a name). The terrain was very thick with manzanita and chaparral at the lower elevations (about 5000 feet) and Ponderosa pine higher up. This was what the smoke looked like from my house around 4-5pm on June 24th. At around 6pm on that first day I went out with one other firefighter to scout the fire. There really wasn’t much to do or worry about for a couple of days in terms of an immediate threat but we knew very early that it was going to be declared a Type 1 incident, the most serious, because of how tricky the terrain was and the massive values at risk (houses). I got a call on Sunday from the Type 1 Incident Management Team (IMT) liaison on Sunday the 25th inviting me to a briefing Monday at 11am at the Incident Command Post (ICP). I worked with the same liaison in 2012 when the Gladiator threatened Walker, far less of a threat than the Goodwin Fire turned out to be. This first meeting was not worrying as the fire was a long way from threatening my area (Pine Flats and Turkey Creek on the other side of the fire were different stories). I had plenty of time to take pictures of fire apparatus at the ICP. Before that first briefing on Monday I had gone several times to one spot that offered a great lookout of the fire, and Monday afternoon I took our...