It is a relief to see that the markets are starting to take the price of oil into account when determining their direction. The price of gas has been rising in tandem with the market, showing no signs from the market that it could be a damper on growth. It seems the level has been reached that the price of oil is in the spotlight of traders and the political situations around the world are taken into full consideration. I will be watching to see if this trend holds and seek to align the strategy more towards this move (adding oil exposure at this point). Some negative signs for the trend would be the calming of geopolitical risks or the US opening up the reserves.
I am amazed at this rally in the face of worsening conditions in the Eurozone and the issues facing the Middle East. It seems that the realities of the situations are not taken into account due to a mixture of complacency and the misconception that all the issues are priced in. European nations are starting to consider, and in some cases support, a default of Greece and even members of their own government are starting to call for a move back to the drachma, which would be the only true way to become competitive in the short amount of time that Germany and others are looking at. The amount of further austerity that are demanded of Greece will no doubt lead to more riots and further movement of the government towards a failed state. Despite all this the futures in the US are up and risk assets are the best performing classes so far this year.
I have fixed the Virtual Stock Exchange site to allow viewing. There are two participants in the game VineInvestor and Vineinvestor2, with the latter being a plug to allow ranking and viewing access to the original VineInvestor portfolio. This will allow viewers to view the changes made and positions that were moved around. The weekly commentary will now be more or market reactions and less about the changing of positions.
And better than expected. The markets have started to let up on some of the building tensions over the concerns of Europe and growth in the US. Fixed income has moved up the risk curve where corporate bonds have gained at the costs of longer term treasuries. Equity markets have rallied greatly and gold has pulled back from its recent run. This has helped validate the fixed income and commodity section of the New Normal strategy where higher yielding assets are now becoming more attractive as the economy shows signs of stabilization, the commodity move of Oil increasing due to the prospect of more economic activity and the gold declining due to 0 yield and less concerns of downside shocks (and lower possibility of QE being needed).