This morning while I was looking at the US Dollar Index chart I asked myself "What will Obama do when he becomes president next year?" I needed to know whether I should change my investment strategy of focusing on emerging markets.
If you look at the chart you will see that the U.S. dollar has appreciated by 22% in a span of 3 months and it doesn't look like it is about to stall.
This means that imports are cheaper, U.S. exports are more expensive, overseas profits are shrinking and the manufacturing sector is becoming less competitive. Combined together, all this effects would drive U.S. companies to offshore their operations.
It didn't take long for me to find out what Obama would do regarding the situation at hand. Just after 3 pm Eastern Time, someone in Washington leaked to the Wall Street Journal Obama's choice for the Treasury Secretary.
So now we know how Barack Obama will deal with the currency situation. He's going to do exactly what the president is expected to do. Restore the competitiveness of the United States.
And the markets now understand that the president will do all it takes. The end will always justify the means.
I guess this proves that Barack Obama cares a lot about America and I don't think I would be any different if I was in his shoes.
One thing that I have discovered, is that the stock market operates like a cough. You can't hold it back. And if you try, you may end up chocking.
The markets coughed loudly yesterday but we held in the cough today.
For the better part of the day, the major indices refused to bulge from yesterday's low. As the day proceeded, it looked like we were headed into another ugly close. It was not going to be any other close but a weekly close. You have to understand that not all closes are created equal.
A new weekly low close would have caused many a trader some serious bout of insomnia over the weekend. And that is why the powers that be decided to inject a dose of 'good' news into the markets.
It did not matter that President-elect Obama is 59 days away from occupying the White House. Rumours, or news as the media likes to call it, of his choice of Treasury Secretary is all it took to lift the Dow above the psychological 8,000 level.
In less than an hour, what looked like a horrible close was turned into a spectacular finish complete with fire works and champagne.
Unfortunately, the numbers beneath the headlines are clear. We are now back to the usual and it's going to be more of the same until the market finally lets the cough out.
You'd have to be in it to believe it. We just closed 6.55% on the Dow Jones Industrial Average on rumors that New York Federal Reserve President Timothy Geithner will be nominated as President-elect Barack Obama's Treasury secretary.
I guess everyone is relieved that Hank Paulson will depart when George Bush leaves office early next year.
None the less, we have to go through the motions of finding a bottom before this market can stabilize.
I'm disappointed that I only got to buy UYG and missed out on the other companies which have been trading higher today. I'm already up 19% on this position as I got in close to the all time lows.
Now I guess I'll have to spend the rest of the weekend trying to figure my next move in the casino that is now known as the stock market.
I just took my first position in UYG. Boy, did I get the chills when the message came through my blackberry. For a minute, I froze when I realized my limit order has been filled at $3.35.
I say we are on track for a lower close because a lot of people did not sleep well last night and I don't think traders can bear two more sleepless nights. It now feels like we are attending a wake for a burial that never comes.
Here's to the next 80 minutes. Never Say Die!
My Mom joined a church sometime ago that is headed by a woman who has the gift to ‘see’. And recently at the behest of my parents, I agreed to pay her a visit. When I went to her place, we had a chat and this is what she told me: that my given name ‘Njuguna’ has a curse associated with it. The reason is because of the history of the man that I am named after; my grandfather from my mother’s side. He had two wives, and my grandmother was the second. The first wife was so bitter that she consulted powers of the darkness and in the process putting a curse on all the ‘Njuguna’ that will come in the lineage of her rival. She said that the curse has the power to affect the lives of all those named ‘Njuguna’ in our family negatively. I happen to be one of them.
And so I asked the seer, what the solution would be. And she jokingly suggested that I could change my name. But then she said that in her next fasting and prayer session, she would present the issue to God for a resolution. She also instructed me on how to pray in order to break that curse – not just for me but also for the other males names ‘Njuguna’ in the family. I did as she instructed and believed that it was done. That was about a month ago.
A friend of mine actually changed her name some time ago. She went about it through the legal system. When I asked her the reason why she changed it, she said that because it meant ‘The one who keeps going back, or going round and round’ – which is what she believes she has been doing all her life, and which she didn’t like. That is why she changed her name to one more in line with what she wants out of life. I remember that at that time, she asked me if I knew what my name means.
What’s in a name? I would have to say everything and nothing, depending on who you are.
I got the following story from a friend this morning. I want to share it with you:
Today God has taken me for a walk. It all started when I asked Him questions early this morning. “Why do you not answer my prayers?” “Why are you so silent?”…questions flowed and so did my tears. Then the answers came, not the ones I wanted to hear, but they came. He told me that Monday was still days away, it was not late…that Xmas was still a month away, so why the tears?
Then came my frustrated answer, “Because I need reassurance God that all will be well.” And he took me for a walk…..in a ‘matatu’ on my way to town.
The first seat I took, I felt that I had to move. And so I went and sat at the back seat where I had a view of everyone. Usually I would have reasoned that I am inconveniencing others by changing seats but I didn’t. A few minutes later, a lady entered the ‘matatu’ and she was wearing a blouse similar to mine which got lost months ago. I was even convinced it was the one. It was a unique blouse and all I was thinking about was that I needed to check one little mark and confirm it was indeed mine.
Then the voice came to me again and started a revelation by answering some of my most persistent questions to God: “How do I know that you will answer my prayers? How do I know I am not doing this in vain?”
He told me this; “Just listen to your heart, for your mind sometimes will work against you by starting to have reasons and logic. When you pray or do something and in your heart it feels right, then it is right. There should never be reason to question your actions if they feel right in your heart. You will just know it.” And for the first time in many days, I felt that whatever I was doing was right, that He is listening to me….I felt it in my heart.
Then came the reassurance I had asked for: He made me realize that He has our life story before we even start living it. By taking the case of the blouse, he made me see sense. When I was given the top, I had sawn it at the back using a very bright thread which was visible against its black color. And all the time I considered re-sewing it with black thread, but I did not bring myself to do it. So, that bright thread was today going to help me identify this blouse. “You see, months ago when you sew the blouse with the bright thread, you had no idea why you did it, but I did, for I knew this day would come….and this is the same way that I know your life story. You may not know why some of these things happen today this way, but they happen for your life story to be. And you should not worry, for I know your future.” As I alighted from the ‘matatu’, the blouse didn’t seem to be important anymore, for the lessons I have learnt are worth much more.
You may not understand my point or story, but it was the most amazing thing I have ever experienced. The conversation and the walk in the spirit.
My favorite shirt has a plain beige color, is short sleeved and has a light material. It is not my most expensive and neither is it at the top of my most spectacular outfit list, but still I often choose it over all my other shirts. And this is because it is just right for Nairobi on a sunny day. Unlike the long sleeved shirts, it enables me to directly feel the sunlight on my forearms and unlike the heavier shirts, I like the way it allows the air to circulate over my upper body.
For God to use you, you do not require to be very smart, or wealthy, or good looking. For when God has work for you, you are the right person for the job. When God uses you, it might seem like you have to go through more trouble than other people. That just means that He needs to sanctify you a little bit more than others – just as a favorite shirt goes through more washing that all the other shirts.
When I picked up the shirt that I wanted to wear today, it was creased and needed to be straightened out. And so I rigged up a temporary ironing station by spreading a towel on top of my dining table, and plugged the iron box into the socket. As the iron box was heating up, I laid out the shirt on top of the towel and was soon passing the hot box over the shirt. With each pass, the material would flatten and all the creases would magically disappear. And as I passed the iron box over the shirt and in different sections, I could see it transforming into what I wanted.
As I thought about what I was doing to the shirt, I realized that this must be what God does with us each day we come to Him. When the many cares of the day crease our spirits, the temptation we cannot resist creases our resolve, the doubts that creep upon us crease our faith, and the disappointments of life crease our hope, God is there to straighten us out using the hot iron of his word, our prayers, and communion with Him. And as I ironed one shirt after another, I realized that the different types of cloth required different treatment in order to be straight. Some were easy and required minimal heat, while some were tough and required the iron box to be set to maximum heat. Some stubborn ones even needed to be sprinkled with water in order to straighten. Isn’t this just like the days that we have? In some days all our affairs are in order and our interaction with God is easy, some days are flaky and we need to spend a bit more time presenting our grievances to God, other days are simply unmanageable and we surrender and break down in His presence. Whatever the day might be like, He is capable of straightening us out, just as I managed to straighten out all those different clothes this morning.
At today's levels it's hard to imagine that stocks can get cheaper. From last year, analyst after analyst have been saying that stocks are cheap. It's no wonder that thousands are being laid off from the financial sector.
All the logic has been thrown out of the window thanks to fear. Even the Feds have discovered that all the liquidity in the world is no match against fear. A testament to the power of human emotions.
Like with all bubbles, the fear bubble will one day burst. And when that happens, you'll see the equity markets explode. With all the money sitting on the sidelines and then some, we'll get one of the most viscous rally on the upside.
My money is on financials. The problem is that they'll spike up and then come down. It for this reason that I'm interested in UYG, a financials Exchange Traded Fund that has been battered 90% year to date.
The ETF consists of some of this year's worst performing stocks and the also some Credit Default Swaps. In other words this is one of the most toxic ETF available out there.
If we are to consider the NYSE McClellan Oscillator, we are barely into oversold territory. The index closed the day at -99.97, just shy of the -100 level that is considered to be oversold conditions and a couple of points higher than the October 10 reading. This means that we still have room to move lower in the coming days.
My guess is that stocks will close in the negative on Friday because traders don't have the nerve to hold onto stocks over the weekend. In the current situation, it's like traders are afraid of sleeping over their holdings because no one knows what news the night will bring.
If this plays out and UYG drops lower tomorrow, I'll pick up several hundred shares towards the end of the day for a speculative trade.
I could get burned like in AIG but that is a story for another day.