I must apologize for not posting my weekend reading two weeks in a row now.  I’ve been super busy with a host of other activities.  I’m preparing to open Surfview Capital to outside accounts beyond friends and family, it’s a laborious process.  I’ve got a host of things to discuss tonight, so please allow me to rant a bit.

First off, Interactive Brokers has released an awesome portfolio analysis tool to account holders.  It’s still in beta, but a robust tool none of the less for the price, FREE.  Yes, you can find the same functionality in many different products, but as far as I know, none of the major brokers provide this for free.  If you trade with $IBKR go and check it out, if not, don’t worry about it.  The customer service at IBKR is crap, and I have small little data issues all the time, but at the end of the day, the functionality they provide for the commission structure is second to none.  I can run 500 separate accounts just as easy as I can run 1.  The era of pooled assets is quickly coming to an end in my mind.  With the type of firm I run, you have complete transparency, access to your accounts at all times, and the ability to fire your manager in mere minutes.  I don’t have to deal with any crazy legal structures or throwing down gates on a fund when it experiences an outflow of assets that would harm other investors.  There are advantages to pooled funds, but I feel with the increased functionality of certain brokerage platforms, the downside outweighs the good.  If you don’t have this ability with your money manager, I’d think long and hard about why that is.

Anyway, lets talk stock market.  Futures are up 50 basis points right now at about 12:30 AM, the market is going higher, don’t complicate it.  I ran through a lot of charts this weekend, and good short setups were a rare, if not extinct breed.  I found so many great setups on the long side that I found myself scared I wasn’t in high beta enough names to keep up with the market.  We’ve seen a period where high quality names have outperformed the crap.  I think we are about to see another major high beta crap rally.

This makes me a little scared, every time during this rally that people start calling for a melt up, we pull back hard.  Frankly, I’d love to see a 4% pullback right here, just to shake some people out, work off some overbought indicators, and allow me to dip back into some of the higher momentum names I’m looking for entries in.  The point here, I don’t think we’re on the road to a melt up, its going to be a slow slog upward toward 1200.

Let’s talk unemployment numbers for a minute here.  Last Friday’s jobs report put the official unemployment rate at 10.0%.  I don’t think I’ve got to tell you by now that this number is a sham.  The real number is closer to 18%, accounting for people who have stopped looking for jobs, and those who are only working part time but would like to be working more.  Any way you look at it, it’s bad, and it’s not getting better anytime soon.  Why, because we haven’t found the next growth industry in this country that is going to drive companies to hire.  Renewable energy isn’t it, stop kidding yourself.  Weatherproofing buildings is the most ridiculous thing I’ve ever heard of.  This country is never going to regain its manufacturing base, as it shouldn’t.  We have moved so far up the chain of production and standard of living, that it doesn’t make economic sense for us to produce heavy goods in this country.  Just look at the car manufacturers, why pay an American 60K a year when you can pay a Chinese guy 10K for the same work?  Manufacturing will flow to the labor pool that is skilled enough to get the job done at the cheapest price.  Hell, even China is moving up the production ladder, they’ve passed much of the textile manufacturing off to even poorer countries like Cambodia and Vietnam.  This is the circle of economic life.  Well, it’s not really a circle, countries really only move in one direction, up, but you get the point, it’s passed from one to another.  If you want to read a great book about this process, pick up “Pathways From the Periphery” by Stephan Haggard, it’s a classic in my mind, written back in 1990, before globalization really took off, but is so insightful as to the rules of climbing up the ladder, that it could have been written yesterday.

Anyway, back to jobs.  They aren’t coming back, get used to it.  Corporations have become so good in this mini depression at maximizing efficiency, that they don’t have any reason to rehire all of those fired people.  Payrolls were so bloated towards the middle of the last decade, people were sitting in offices doing nothing.  I hate to call on a popular culture reference, but I think the movie Office Space pretty much called a top in the job market.  So here’s what will happen.  Corporate profits are going to stay level while household incomes shrink, the number of unemployed Americans is going to keep rising, and the gap between rich and poor will continue to widen.  Our government realizes this, they understand that although corporations have rebounded, and they have, that people’s financial situations have not.  It only takes one look at the situation that state treasuries are in to understand this.  I believe we are headed in one of two directions.  Either, there is going to be a huge push to raise the corporate tax rate, or we are going to see social unrest, maybe both.  When I say social unrest, I don’t mean rioting in the streets, I mean the public getting very very angry about the fact that corporations are making profits when the American tax payer doesn’t have the ability to afford their goods.  How is that possible you ask, isn’t there a demand destruction aspect still in place?  Well, that would be true if America were a close loop economic system, but when American companies are selling the majority of their goods to emerging market consumers, it doesn’t matter.  Our corporations are the best in the world, we design the best goods, we ship production of those goods overseas, and sell those goods to rich emerging market consumers.  The profits are made by American companies, and a highly educated portion of the American workforce, but the majority of Americans don’t participate.  So to recap this little rant, corporations keep making money, the income gap between educated and non educated Americans continues to grow, social unrest ensues, corporate profits get taxed at a higher rate to “spread the wealth”, the government grows larger yet to support the uneducated and under employed.  There are only two ways out of this, either we educate our population far better than we are now, or a new “dumb job” industry pops up and gives everyone jobs.  Honestly, I’m not sure which is more far fetched.

Great wins by the Rangers and J-E-T-S JETS JETS JETS this weekend.  It’s really sad that you know Wade Redden is having a good game when he hasn’t been mentioned at all on the broadcast, if he’s being mentioned it’s for fucking something up 99% of the time.

The Cardinals and Packers played one of the most entertaining games I’ve ever watched tonight.  Neither team played any defense, but who cares.

Playoffs for my own hockey league start this week, we come in as the #1 seed.

Have a great trading week.