Perspective is often shaped by those with control. Therefore it is helpful to look at the view of events from outside the umbrella we live under.
The headline stories in Asian Times Online give what might be a more accurate read of the recent events concerning the death of Osama bin Laden.
The story by Spengler – Bin Laden a casualty of the Arab revolt is particularly informative. While U.S. forces may have done the deed in bin Laden’s death, there is a bigger story at work. The Asian Times suggests bin Laden was a causality of the Saudi’s need to develop an ally in Pakistan in its cold war between itself and Iran.
Why bring this up in a stock newsletter? Today the markets appear to be up because of bin Laden’s death – oil is down for the same reason. The Asian Times article reveals a bigger picture that suggests the game is entering a “new phase” and not an “end game” for the U.S. in its dealing with radical groups. The Saudi no longer views the U.S. as a strong friend. In the war on terror this is not a good development.
The market is somewhat over bought. Certainly there are still attractive deals available for investing and trading.
LOTM is bullish as long as the U.S. and China have an easy money policy. Having said that, the easy money from QE2 in the U.S. will be ending in June. That leads to some “taking of the fuel” away from the market. Additionally, there could be some back lash from al-Qaeda as mentioned in the Asian Times article Osama’s al-Qaeda ready for a fight. LOTM does not believe there will be any tightening of monetary policy as the system is still very fragile. There is room for negative surprise and concern, however, so be vigilant.
Raise some cash on rallies and buy some shares of what you like on weakness. With QE2 ending in June, one might want to be a bit cautious going into summer.
One result from the ending of QE2 could very well be a stronger than expected US Dollar. This would be negative for the price of gold and oil.
Stocks and cash would be the favored asset classes from among the choices – stocks, cash, bonds, gold & oil. LOTM likes dividends and there are still some very attractive dividend stocks available. We will tend to stay focused on dividend ideas for new purchases for now.
That was a lot to think about for a Monday morning…