While we had some recovery today so far 2016 is off to a less than wonderful start for equity investors. For a brief period we were 10% off the highs and in legitimate correction territory but todays rally changed that. The rally was attributed to a lack of bad news out of China, a bid in oil for the first time this week and decent earnings from JP Morgan (JPM). We had decent results out of Intel tonight but the outlook was a little dim so we will see what that means for tomorrow. It is still a fairly volatile environment for equities and we will see what the next week or two brings us.

Looking at the economy I see that there is still a lot of talk about who wonderful the US economy is right now. The president in his State of the Union drug out that tired old canard about the US being the strongest in the world. I am sorry but being the tallest short person does not mean you will be starting at center for the New York Knicks tonight (see how I shamelessly pandered to those readers in the heart of the financial world there?) We are better than most of the economies because the other economies are horrific right now not because we are seeing wonderful surge of economic activity. Listen to what Steelcase, the office furniture company, CEO Jim Keane had to say last week He told his investors that” “I will also comment I am a member of various groups where CEOs come together and talk about what they see. And for these large customer CEOs, some of the outlooks, for example, business roundtables, commentary recently about business capital spending, would confirm that are large customers are seeing this headwind. So, whether we look at our data or we look at economic data or we just listen to what other CEOs are saying, we’re seeing consistent concerns from that customer group about the economic outlook.” Better, not good.

Oil continues to be a driver of market direction and I would not leap to the conclusion that todays little gain means a bottom is in. We own a lot of energy related equities so I would love to be able ot say that but the Saudis continue to pump away. We ae seeing more dissent form inside OPEC but so far the Saudi and their emirate allies are committed ot the market share strategy. We may learn a little more when OPEC releases it oil market report on Monday but I don’t expect much of a change in direction. Eventually we will see a policy change and prices will firm but I think we will have to see a change in the Saudi Oil minister first. The current one is all in on the current strategy and we will see how long the Royal family puts up with budget deficits before making a change. After talking to folks , both bulls and bears, with in depth knowledge on the oil markets, I have picked my double down point on energy equites and will double down when we get to that price level.

My plan this weekend is to drive over to Daytona Beach, drink heavily in a biker bar down on the drag and get a tattoo that says “no more stocks where price is driven by macro commodity market factors, no matter how cheap they look.” I was going to go with skull with a flaming dagger driven into it with “American Badass “on a scroll underneath but the former will be more practical and valuable going forward.

I love out banks and REITs in both Deep Value, and of course, Banking on Profits going forward. I think that they will be the drive of much of our 2016 returns. I am finding some very attractive REITs right now and added do the list doing research for my REIT Week features I did on Real Money this week. Community Banks should have another solid earnings season and the recent market weakness grew out buy list a little. We will have that info out to subscribers tomorrow. I have some REIT orders keyed up and am hoping for an ugly opening tomorrow so we can buy some real cheap property.

Now, he wife has some steaks on the grill and I have the whiskey and popcorn all ready for tonight’s debate so its about time for me to scoot I try to stay away from politics here but I have to say that the only good thing about this slate of candidates on both sides is that they represent an extraordinary opportunity for political cartoonists and satirists. If I thought every election would be like this I would send our youngest to drawing and sarcasm school because it would be the opportunity of a lifetime

Have a great week everyone.

Tim

The first two weeks of the year the market appears to be giving us a

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